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https://www.courtlistener.com/api/rest/v3/opinions/2472383/ | 137 F. Supp. 2d 879 (2001)
Michael NEAL, Petitioner,
v.
Barbara BOCK, Respondent.
No. 99-10398-BC.
United States District Court, E.D. Michigan, Southern Division.
March 28, 2001.
*880 *881 Michael Neal, Coldwater, MI, pro se.
Vincent J. Leone, Michigan Dept. of Atty. Gen., Habeas Corpus Div., Lansing, MI, for Barbara Bock.
OPINION AND ORDER GRANTING RESPONDENT'S MOTION TO DISMISS
LAWSON, District Judge.
Petitioner, Michael Neal, presently confined at the Saginaw Correctional Facility in Freeland, Michigan, has filed a petition seeking the issuance of a writ of habeas corpus pursuant to 28 U.S.C. § 2254. In his pro se application, petitioner challenges his conviction on one count of first-degree murder, Mich. Comp. L. § 750.316, and one count of possession of a firearm during the commission of a felony. Mich. Comp. L. § 227. The petition presents claims of 1) admission of an involuntary confession; 2) improper refusal of the trial court to hear arguments in support of the defendant's motion for a directed verdict in the trial court; 3) improper finding of probable cause to believe petitioner committed the crimes charged through reliance upon a confession petitioner denied making; 4) violation of the corpus delecti rule; 5) admission of petitioner's alleged confession in violation of the rule against admission of hearsay; 6) prejudicial error in the jury instructions concerning reasonable doubt; *882 7) prosecutorial misconduct; 8) ineffective assistance of trial counsel; and 9) ineffective assistance of appellate counsel. Respondent has filed a motion to dismiss the petition, contending that it was not timely filed in accordance with the statute of limitations contained in 28 U.S.C. § 2244(d)(1). Petitioner has submitted an answer to respondent's motion, contending that his petition is not time barred. Because petitioner did not file his petition within the period of limitation set forth in 28 U.S.C. § 2244, the Court will grant respondent's motion to dismiss.
I.
Petitioner was convicted of the above offenses after a jury trial in the Recorder's Court for the City of Detroit. Petitioner's convictions were affirmed on direct appeal by the Michigan Court of Appeals on February 20, 1990. The Michigan Supreme Court denied petitioner's application for leave to appeal to that court on October 17, 1990. Petitioner did not file a petition for writ of certiorari in the United States Supreme Court. Therefore, his conviction became final ninety days after his appeal was concluded in the Michigan courts. 28 U.S.C. § 2244(d)(1)(A); Sup.Ct. R. 13(1); Lambrix v. Singletary, 520 U.S. 518, 117 S. Ct. 1517, 137 L. Ed. 2d 771 (1997); see Bronaugh v. Ohio, 235 F.3d 280, 285 (6th Cir.2000). In this case, his conviction became final on January 16, 1991.
On March 20, 1995, the trial court denied petitioner's first motion for relief from judgment. There is no indication in the record that petitioner sought leave to appeal this denial.
On April 8, 1997, petitioner filed another motion for relief from judgment, which was denied by the trial court. On November 12, 1998, the Michigan Court of Appeals denied petitioner's application for leave to appeal the denial of his second motion for relief from judgment. On July 27, 1999, the Michigan Supreme Court denied petitioner's application for leave to appeal the denial of his second motion for relief from judgment.
For the purpose of adjudicating respondent's motion, the Court shall assume without deciding that the petition for writ of habeas corpus now before the Court was filed with this Court on September 20, 1999, the date that petitioner signed his petition.[1]
II.
Respondent has filed a motion to dismiss the pending habeas corpus petition as untimely. The Antiterrorism and Effective Death Penalty Act of 1996, Pub.L. No. 104-132, 110 Stat. 1214 ("AEDPA" or *883 "the Act") applies to all habeas petitions filed after the effective date of the Act, April 24, 1996. Petitioner's application for habeas corpus relief was filed after April 24, 1996. Therefore, the provisions of the AEDPA, including the limitations period for filing an application for habeas corpus relief, apply to petitioner's application. Lindh v. Murphy, 521 U.S. 320, 336, 117 S. Ct. 2059, 138 L. Ed. 2d 481 (1997).
Among other amendments, the AEDPA amended 28 U.S.C. § 2244 to include a one-year limitation period within which habeas petitions challenging state court judgments must be filed. A petition for writ of habeas corpus now must be filed within one year of:
(A) the date on which the judgment became final by the conclusion of direct review or the expiration of the time for seeking such review;
(B) the date on which the impediment to filing an application created by State action in violation of the Constitution or laws of the United States is removed, if the applicant was prevented from filing by such State action;
(C) the date on which the constitutional right asserted was initially recognized by the Supreme Court, if the right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review; or
(D) the date on which the factual predicate of the claim or claims presented could have been discovered through the exercise of due diligence.
28 U.S.C. § 2244(d)(1).
Where a prisoner's conviction became final prior to the effective date of the AEDPA, the prisoner is permitted one year from the AEDPA's effective date to file a petition for habeas corpus relief in federal court. Austin v. Mitchell, 200 F.3d 391, 393 (6th Cir.1999). The court must dismiss a case where a petitioner for a writ of habeas corpus does not comply with the one-year statute of limitations. Thomas v. Straub, 10 F. Supp. 2d 834, 835 (E.D.Mich.1998).
Petitioner's conviction became final before the AEDPA's effective date, April 24, 1996. Therefore, absent state collateral review, petitioner would have been required to file his application for habeas corpus by April 24, 1997 to comply with the one-year limitations period. However, the time during which a prisoner seeks collateral review of a conviction does not count toward the limitations period. Section 2244(d)(2) provides:
The time during which a properly filed application for post-conviction or other collateral review with respect to the pertinent judgment or claim is pending shall not be counted toward any period of limitation under this subsection.
28 U.S.C. § 2244(d)(2). See also Matthews v. Abramajtys, 39 F. Supp. 2d 871, 874 (E.D.Mich.1999); Hudson v. Jones, 35 F. Supp. 2d 986, 988 (E.D.Mich.1999).
In the present case, petitioner's post-conviction motion for relief from judgment was filed on April 8, 1997, with sixteen days remaining before the expiration of the one-year limitations period. Consequently, petitioner had that amount of time sixteen days to file his habeas petition in federal court after the Michigan Supreme Court denied review of his motion for relief from judgment.
Petitioner argues that his petition is timely, citing Lovasz v. Vaughn, 134 F.3d 146, 149 (3rd Cir.1998) and Hudson v. Jones, 35 F. Supp. 2d 986 (E.D.Mich.1999). These cases stand for the rule that, once a properly filed petition for post-conviction relief is filed in the state court, the habeas statute of limitations period is tolled as long as the state court or the state post-conviction procedures allow for review. Petitioner is mistaken as to the effect of a pending state court petition for collateral *884 review and its effect on the "shall not be counted" language contained in 28 U.S.C. § 2244(d)(2). This statutory provision does not call for establishing a new period of limitation; rather, it incorporates the concept of "tolling" into the period of limitation contained in the statute.
"Toll" means "to stop the running of" or "to abate." Black's Law Dictionary 1495 (7th ed.1999). A tolling statute "interrupts the running of a statute of limitations in certain situations." Id. "Tolling" has been defined as "a temporary cessation, without any express statutory authority, of the running of the [one-year] period; it is not an extension, although it may have the same practical effect." 54 A.L.R. Fed. 335 n. 2 (1981).
In addressing an analogous issue, the United States Supreme Court has held that the "[p]rinciples of equitable tolling usually dictate that when a time bar has been suspended and then begins to run again upon a later event, the time remaining on the clock is calculated by subtracting from the full limitations period whatever time ran before the clock was stopped." United States v. Ibarra, 502 U.S. 1, 4 n. 2, 112 S. Ct. 4, 116 L. Ed. 2d 1 (1991).
Likewise, the Court of Appeals for the Second Circuit has held that tolling in the habeas context does not reset the limitations clock. Smith v. McGinnis, 208 F.3d 13, 17 (2d Cir.2000), cert. denied, ___ U.S. ___, 121 S. Ct. 104, 148 L. Ed. 2d 63 (2000). In Smith, the petitioner was convicted in 1987 of second-degree murder and criminal possession of a weapon. The conviction became final on July 2, 1991. On May 1, 1997, Smith filed a state petition which was denied on November 17, 1997. Eighty-seven days later, Smith filed a federal habeas corpus petition which was dismissed as untimely.
The Smith Court stated that petitions for convictions that were final prior to April 24, 1996 have until April 27, 1997, absent any tolling during that one-year "grace period," to file a habeas petition. The Court held that the tolling provision of 28 U.S.C. § 2244(d)(2) "excludes time during which properly filed state relief applications are pending but does not reset the date from which the one-year statute of limitations begins to run." Smith, 208 F.3d at 17. Smith's grace period ran 364 days, was tolled for 208 days while the state petition was pending, resumed November 17, 1997 and expired November 18, 1997, 86 days before the federal petition was filed. The Court noted that resetting the statute of limitations could allow state prisoners to "manipulate the deadline for federal habeas review by filing additional petitions in state court." Id. at 17.
The Tenth Circuit has held that in the context of equitable tolling the limitations period is suspended but does not begin the period again. Benge v. United States, 17 F.3d 1286 (10th Cir.1994). In Benge, the plaintiff filed administrative claims alleging medical malpractice by doctors at a naval hospital. The claims were denied on June 23, 1991. The plaintiff filed an initial complaint in federal court two days before the end of the six-month statute of limitations period. The initial complaint was dismissed, and the petitioner refiled the complaint nearly six weeks after the dismissal. The Court barred the petitioner's claim on statute of limitations grounds because only two days remained in the limitations period.
In the instant case, the limitation period likewise did not begin to run anew when the Michigan Supreme Court denied leave to appeal. The time during which petitioner had a properly filed application for collateral review pending in state court is excluded from the one-year limitation period, but the limitation period is not reset upon the conclusion of state collateral review.
*885 The Michigan Supreme Court denied petitioner's application for leave to appeal denial of his motion for relief from judgment on July 27, 1999. Thus, petitioner had until August 12, 1999 to file his habeas petition in compliance with the statute of limitations. Petitioner filed his federal habeas corpus petition on September 20, 1999, over one month after the one-year statute of limitations had expired. Consequently, petitioner filed his habeas petition after the limitations period had expired and his petition is barred by the statute of limitations. Isham v. Randle, 226 F.3d 691, 693 (6th Cir.2000), cert. denied, ___ U.S. ___, 121 S. Ct. 1211, 149 L. Ed. 2d 124 (2001)(holding that habeas petition filed thirteen days after the one year statute of limitations expired was barred as untimely); Bronaugh v. Ohio, 235 F.3d 280 (6th Cir.2000).
Nor may petitioner avoid the application of the statute of limitation under the doctrine of "equitable tolling." "Equitable tolling stops the running of the statute of limitations in light of established equitable considerations." New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1125 (3d Cir.1997). At least one federal appellate court has concluded that the statute of limitations period set forth in § 2244(d) is subject to equitable tolling. Calderon v. United States District Court for the Central District of California, 128 F.3d 1283, 1288-89 (9th Cir.1997). Equitable tolling under the AEDPA should be found, and an extension of time granted, only if "`extraordinary circumstances' beyond a prisoner's control make it impossible to file a petition on time." Moore v. Hawley, 7 F. Supp. 2d 901, 904 (E.D.Mich. 1998). In the present case, petitioner has not offered any reasons for failing to file his petition for writ of habeas corpus within the one year limitations period. Likewise, petitioner fails to offer any reasons for waiting over six years following the denial of his direct appeal by the Michigan Supreme Court to file his second motion for postconviction relief with the state courts or to seek habeas relief with the federal courts.[2] A habeas petitioner must diligently pursue habeas relief to avail himself of the doctrine of equitable tolling. Craddock v. Mohr, 215 F.3d 1325, 2000 WL 658023, *2 (6th Cir. May 8, 2000). Because petitioner has not adequately explained his failure to diligently pursue post-conviction relief in the state courts or to seek a writ of habeas corpus with this Court, he is not entitled to equitable tolling of the limitations period. See Jones v. Gundy, 100 F. Supp. 2d 485, 488 (W.D.Mich. 2000).
Some courts have suggested that a claim of actual innocence of a habeas petitioner might permit the filing of an untimely habeas petition. Cromwell v. Keane, 33 F. Supp. 2d 282, 286-87 (S.D.N.Y.1999); Thomas v. Straub, 10 F. Supp. 2d 834, 836. This Court need not address that issue in this case, however, because petitioner has failed to make a credible showing of actual innocence; he has offered no new reliable evidence of innocence in support of his claim.
III.
The Court concludes that petitioner failed to file his application for a writ of habeas corpus within the one-year limitations period established by 28 U.S.C. § 2244(d). The Court further concludes *886 that petitioner failed to demonstrate any exceptional circumstances which would warrant equitable tolling of the limitations period.
Accordingly, it is ORDERED that Respondent's Motion to Dismiss [dkt # 8] is GRANTED and the petition for a writ of habeas corpus is DISMISSED with prejudice.
NOTES
[1] Respondent contends that petitioner filed his petition on October 25, 1999. The Court's electronic records indicate that a rejection of a habeas petition submitted by petitioner occurred on October 5, 1999, and that a habeas petition was accepted and filed by the court on October 25, 1999. Under the "prison mailbox rule," a federal habeas petition is filed when the prisoner gives his petition to prison officials for mailing to the federal courts. Underlying this rule is recognition of the fact that prisoners can generally control when they present materials to their custodians for mailing, but they cannot control when these materials are actually mailed. Hudson v. Martin, 68 F. Supp. 2d 798, 799, n. 2 (E.D.Mich.1999). Absent evidence to the contrary, a federal court will assume that a prisoner gave his habeas petition to prison officials on the date he signed it, for the purposes of the AEDPA's one year limitations period. Id. (citing Torres v. Irvin, 33 F. Supp. 2d 257, 270 (S.D.N.Y.1998)); see also Colarte v. Leblanc, 40 F. Supp. 2d 816, 817 (E.D.La.1999). Because petitioner's habeas petition is signed and dated September 20, 1999, this Court shall assume that this was the date that petitioner actually filed his petition, despite the existence of some evidence that it may have been filed later.
[2] Petitioner filed an earlier motion for relief from judgment which was denied on March 20, 1995. This 1995 motion is not a factor in computation of petitioner's entitlement to statutory tolling of the one year limitations period, because it was denied by the trial court before the effective date of the AEDPA and there is no indication that petitioner sought leave to appeal this denial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472385/ | 137 F. Supp. 2d 130 (2001)
UNITED STATES of America, Plaintiff,
v.
Harold MORRELL and Michael F. Morrell, Defendants.
No. 97 CV 5344(NG).
United States District Court, E.D. New York.
March 23, 2001.
*131 Stephen T. Lyons, Tax Division, Department of Justice, Washington, DC, for plaintiff.
Paula Schwartz Frome, James Druker, Kase & Druker, Gardon City, NY, for defendant.
ORDER
GERSHON, District Judge.
The United States moves pursuant to Rule 56, Fed.R.Civ.P., for summary judgment to declare the validity of certain tax liens and to order foreclosure on the liens and sale of property, consisting of a residence conveyed by taxpayers to their son and an annuity traceable to securities that had been transferred by taxpayers to their son, that is subject to the liens. Defendants oppose the motion, arguing that there are factual issues for trial: (1) that the son's interests in the real and personal property that had been transferred to him are superior to the tax liens; (2) that some of the funds used to purchase the annuity came from the son's independently accumulated assets, or alternatively, from property transferred by the taxpayers before the liens attached; and (3) that the government is not entitled to the appreciation in the value of assets after the transfers by the parents to the son.
The Facts
The facts, which in part are set forth in a Joint Agreed Statement of Material Facts ("Joint Statement") entered into by the parties, are undisputed except as indicated. Defendant Harold Morrell invested in tax shelters and claimed deductions on his joint income tax returns filed with his wife, Dolores Morrell, for the years 1977 1980.[1] The IRS disallowed the deductions for these four years and assessed deficiencies. Harold and Dolores Morrell contested the deficiencies in Tax Court. On August 13, 1990, the Tax Court entered an agreed decision finding deficiencies for those years, exclusive of interest, of $182, *132 645, which with interest had grown to over $750,000 as of the date of the decision and approximately $1.4 million when the parties entered into the Joint Statement.
The IRS separately assessed the deficiencies and demanded payment for each of the years 1977 1980 between November 15 and December 10, 1990, thereby creating liens against all property of Harold and Dolores Morrell pursuant to 26 U.S.C. §§ 6321 and 6322. These statutes provide that a lien attaches at the time of assessment to "all property and rights to property" of the taxpayer for the amount of the assessment, including interest that may accrue, and continues until the liability is satisfied or becomes unenforceable by lapse of time. Tax liens were filed against Harold and Dolores Morrell in Suffolk County on September 11, 1991. Harold Morrell does not contest the deficiencies, and agrees that judgment should be entered against him for the full amount of the liability.
Harold and Dolores Morrell transferred real estate, stocks and other securities to their son, defendant Michael F. Morrell. The real estate, a home in Suffolk County having a fair market value of approximately $400,000 at the time, was transferred by deed dated May 24, 1991, after the assessment and attachment of the government's lien.[2] Harold and Dolores Morrell continued to reside there after the transfer as they had before. There was no mortgage on the property. Harold and Dolores Morrell also transferred to Michael Morrell in May 1991 their holdings in municipal trusts worth over $217,000. The transfer was effectuated by transferring the holdings from the parents' account at Dean Witter to Michael's account at Dean Witter. Michael subsequently transferred the municipal trusts to a joint Dean Witter account of Michael and his spouse. In April 1992, Harold and Dolores Morrell transferred stock holdings worth approximately $200,000 from their Dean Witter account to the Dean Witter account of Michael and his spouse.
Harold Morrell claimed in his deposition that all of these transfers, which admittedly followed the assessment, were not undertaken to avoid payment of tax deficiencies. Instead, he asserted, the assets were transferred in light of the declining health of Dolores Morrell, so that the parents would qualify for government medical assistance. Michael Morrell testified in his deposition that he shared the same understanding of the reason for the transfers of assets, and was not aware at that time of his parents' tax difficulties. For purposes of the summary judgment motion, the government does not contest motivation, but asserts that it is entitled to foreclose on its liens regardless of motivation.
Michael Morrell's assertion of an interest superior to the government liens is based upon the defendants' claim that in exchange for the transfer of assets, Michael orally agreed to support his parents and in fact did so. Defendants argue that Michael Morrell therefore is a "purchaser" protected under 26 U.S.C. § 6323(a) or, alternatively, that he is entitled to an equitable lien for the hundreds of thousands of dollars he spent to support his parents over the years following the transfers of assets.
Harold Morrell testified at his deposition that he and his wife transferred their residence, stocks and securities pursuant to a unitary plan to divest themselves of all assets, and that no other assets were left *133 after the transfers.[3] Harold Morrell testified as follows as to the timing of the alleged support agreement in relationship to the transfer of property:
Q. In connection with the transfer of the assets, did your son later make some promises to you as to what he would do for you?
A. Well, we had set up for a planned estate, and he agreed after we transferred everything over to his name he would support us. We were concerned about our health, my wife's health, which subsequently has died, but concerned about Medicare, so we didn't want to have anything around. So we made a deal. We decided that we'll have Michael take everything now and then support us so that we wouldn't be exposing the assets to Medicaid.
* * * * * *
Q. At the time of the transfers that you made to your son, had your son agreed to give you support?
A. Yes.
* * * * * *
Q. And your recollection is that his promise for the support was before the transfers were made, not after?
A. I don't remember whether it was before or after. I don't remember that part, before or after.
Q. It could have been one or the other?
A. Yeah, it could have been.
* * * * * *
Q. Everything was oral?
A. Oral.
Q. Did your son ever tell you what he would do for you in the way of providing you support?
A. He would support us the way we were ____ the way we lived, you know.
Michael Morrell admitted at his deposition that he first found out about the transfer of property to him during a telephone call from his father saying, "here is what I've done, and I'm really doing this because of these Medicare issues." As far as Michael knew, the documentation for effecting the transfer of securities consisted simply of a name change in ownership of the Dean Witter account. Michael Morrell testified that the circumstances surrounding the support arrangement "was simply, We're going to give you this money, and, you know, I agreed to support them. I mean it was no ____ there was no formal arrangement." Michael reiterated that he thought "the transfer took place and then we had the discussion," which could have taken place one or two months after the transfer. The discussion was: "I would just pay all their expenses." In the deposition, Michael Morrell recollected that the transfer of securities occurred after the real estate had been transferred; he believed the transfer of securities took place in late 1991.
Michael Morrell's affidavit submitted in opposition to the summary judgment motion simply states, in reference to the purported agreement: "In exchange for the transfer of the assets, I agreed to support my parents for their lifetime," and that he "kept that promise" by the substantial deposits to his parents' bank accounts and his purchase of a townhouse in 1996 where his father lives rent free. The affidavit identifies the transferred assets as his parents' entire portfolio of stock and municipal bonds, and their home. The affidavit states that the home was transferred in *134 May 1991, and the securities in May 1991 and April 1992.
In October 1995, Michael Morrell liquidated his joint Dean Witter account and used all of the proceeds to purchase a variable annuity for approximately $833,000. The government claims that its lien attaches to the entire amount of the annuity, which had increased in value to over $1 million as of March 31, 1998. In opposition to the summary judgment motion, Michael Morrell claims that at least $380,000 in the Dean Witter account that was used to purchase the annuity represented separate savings accumulated by Michael and his wife and did not come from his parents. Michael also argues that the government should not be entitled to payment of the portion of the proceeds from his Dean Witter account used to purchase the annuity that represents appreciation in the Dean Witter account; Michael attributes that appreciation in asset value to his prudent and skillful management of the account.
The government agrees in principle that, to the extent that Michael could show that a portion of the annuity was purchased with funds that were not traceable to transfers from his parents after the lien attached, Michael would be entitled to retain a pro rata share of the proceeds of the annuity. However, the government contends that there is no genuine factual dispute that all of the funds in the Dean Witter account that were used to purchase the annuity are traceable to transfers made by Harold and Dolores Morrell after the tax liens had attached. The government also contends that, since the lien follows the property, it is entitled to foreclose on the entire value of the annuity, including any appreciation in value of the annuity or the Dean Witter fund used to purchase the annuity, until the deficiency, including accrued interest, is fully satisfied.
The property that Michael Morrell asserts had been purchased with his own funds is a tax free fund of Dean Witter. Neither Harold Morrell nor Michael Morrell produced most of their securities account records in discovery for the critical period of 1990 through the first few months of 1992, which would have shown all holdings and activity in the accounts in the periods preceding and following the assessments. Michael Morrell's affidavit in opposition to summary judgment attached his Dean Witter account statement for June 1991, which reflected a holding of 33,769 shares of Dean Witter New York Tax Free Inc. Fund, then worth approximately $378,000, as well as approximately $2,000 in a U.S. government money market fund. Michael claimed that these investments were acquired with his own funds and were not derived from property his parents transferred to him. Michael explained his failure to produce that statement and others or to discuss those holdings at his deposition by stating that he had only recently located some of these records, and that his memory had been impaired because of a heart condition. Michael Morrell did not produce any records that showed that he in fact purchased shares of this tax free fund from his own savings. The government responded to this new information by obtaining other records from Dean Witter, including the account statement for Harold and Dolores Morrell as of April 30, 1990, showing that the exact same quantity, 33,769 shares of Dean Witter New York Tax Free Inc. Fund, then worth approximately $364,000, was held in the parents' account.
Because the account statements produced by the defendants and those obtained by the government from Dean Witter are incomplete, there is a gap between *135 the April 1990 statement of the taxpayers and the June 1991 statement of Michael Morrell. Therefore, no document shows when, after April 1990, the 33,769 shares of Dean Witter New York Tax Free Inc. Fund were withdrawn from the taxpayers' account or where it went, or when, before June 1991, 33,769 shares of Dean Witter New York Tax Free Inc. Fund first were carried in Michael's account or where it came from. Defendants argue that there are factual issues, precluding the granting of summary judgment to the government, as to whether this fund was transferred from the parents to Michael Morrell, and if it was, when the transfer took place, i.e., before or after the tax liens attached in November and December, 1990.
Examination of the Dean Witter monthly statements for the account of Michael Morrell and his spouse from the end of 1991 until its liquidation in October and November 1995, when Michael used the entire proceeds to purchase the annuity, confirms the government's assertion that no new money or other assets were put into the account except for securities transferred by Harold and Dolores Morrell in April 1992. Defendants were afforded an opportunity after oral argument to identify any such assets that Michael put into the account, but their counsel notified the court that they had no further information to offer. The account statements show that there were few purchases and sales of securities, except for liquidations to withdraw funds from the account, and that all purchases of securities in the account during this time period were made with the proceeds from redemption of other securities held in the account and accumulated dividends and interest from those securities. Although Michael Morrell placed no new money in the account, he frequently made withdrawals from it between December 1992 and September 1995, for a total of approximately $119,000. The record contains no explanation of these withdrawals. As a result of these withdrawals, there was in fact negligible increase in the value of the account: it had a value of approximately $778,000 on March 31, 1992, $807,000 on November 30, 1992, $781,000 on February 28, 1995, and $814,000 on May 31, 1995, before being liquidated for approximately $833,000 in October and November, 1995.
Discussion
Summary Judgment Standards
Motions for summary judgment are granted if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. See Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir.1995). The moving party must demonstrate the absence of any material factual issue genuinely in dispute. See id. A material fact is one whose resolution would "affect the outcome of the suit under governing law," and a dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The court must view the inferences to be drawn from the facts in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). However, the nonmoving party may not "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir.1986). Nor may the non-moving party "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec., 475 U.S. at 586, 106 S. Ct. 1348. The party must produce specific facts sufficient to establish that there is a genuine factual *136 issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
"Purchaser" Under 26 U.S.C. § 6323(a)
Section 6323(a) of Title 26, United States Code, provides that "[t]he lien imposed by section 6321 shall not be valid as against any purchaser" until notice of the lien has been filed. A "purchaser" is defined in Section 6323(h)(6) as "a person who, for adequate and full consideration in money or money's worth, acquires an interest ... in property which is valid under local law against subsequent purchasers without actual notice." The Treasury Regulations define "adequate and full consideration" to require "consideration in money or money's worth having a reasonable relationship to the true value of the interest in the property acquired." 26 C.F.R. § 301.6323(h)-1 (f)(3). "Money or money's worth" is defined in the regulation as including "tangible or intangible property, services and other consideration reducible to a money value," but excluding such things as "love and affection ... or any other consideration not reducible to a money value." Id. § 301.6323(h)-1(a)(3).
No reasonable juror could find that Michael Morrell was a "purchaser" within the meaning of this provision. First, defendants conceded during oral argument of the summary judgment motion that the purported oral agreement by Michael Morrell to support the taxpayers for their lives is unenforceable under the statute of frauds. Obviously, an unenforceable promise of future support is not "adequate and full consideration in money or money's worth" under any rational construction of the statute.
Second, there is no genuine issue of fact as to the existence of an agreement, even an oral one, in which Michael Morrell furnished consideration in exchange for which Harold and Dolores Morrell transferred these properties to him. Michael Morrell testified at his deposition that his best recollection was that any discussion he had with his father concerning support occurred after the property had already been placed in his name by the unilateral action of his parents. Viewed most favorably to him, Harold Morrell admitted that he could not recall whether any such discussion preceded or followed the transfers. Accordingly, there is no basis for a reasonable jury to find that consideration was furnished in exchange for the transfers of property, even if any such promise would have been enforceable.
Third, even if there had been an agreement that was enforceable before the transfers took place, Michael Morrell's promise to support his parents is not "adequate and full consideration in money or money's worth" for the immediate conveyance of unencumbered assets worth over $800,000 (or almost $1.2 million when the Dean Witter New York Tax Free Inc. Fund is included, see pp. 13-14 infra). The issue of adequate consideration is a matter of federal and not state law, and as the Second Circuit has stated, "a finding that [taxpayer] conveyed the Property to her daughters for adequate consideration under New York law, while helpful, does not provide a rule of decision that [the daughters] are federally protected `purchasers' under Section 6323(a)." United States v. McCombs, 30 F.3d 310, 330 (2d Cir.1994). Nevertheless, in the absence of reported federal cases construing Section 6323's requirement of "adequate and full consideration" when the consideration furnished by the reputed purchaser is a promise of parental support, and notwithstanding the variations in statutory language, the New York decisions that have construed the requirement of "fair consideration" under Section 273 of New York Debtor and Creditor Law in similar circumstances *137 are persuasive.[4] Courts have rejected repeatedly the argument that promises of future support constitute fair consideration within the meaning of Section 273. Schmitt, 98 A.D.2d at 936, 471 N.Y.S.2d 365 (purchaser's promises to take over payments on mortgage, furnace and taxes, to permit debtors to remain in house rent-free, and to convey ten acres to debtors' sons did not constitute "fair consideration" under § 273; "[s]uch promises ... are akin to promises of future support, which are insufficient as a matter of law to be considered a fair equivalent of the property transferred"); Petition of National City Bank of New York, 269 A.D. 1040, 58 N.Y.S.2d 620 (2d Dep't 1945) (promise of future support is not fair consideration); see United States v. Bushlow, 832 F. Supp. 574, 582 (E.D.N.Y.1993) (promises of future services are not "fair consideration" under § 273).
Defendants concede that Harold and Dolores Morrell divested themselves of virtually all their assets when they conveyed their real and personal property to their son, which rendered them unable to satisfy their tax obligations, and received nothing in return except at most an oral promise of support. It is not reasonable to find this promise to be "adequate and full consideration in money or money's worth."
Equitable Lien
Defendants argue that, even if Michael Morrell is not a purchaser within the meaning of Section 6323(a), he is entitled to an "equitable lien," that is superior to the government's lien, for the hundreds of thousands of dollars he spent to support his parents. Pursuant to 26 U.S.C. § 6323(i)(2), equitable subrogation applies in certain circumstances where a transferee of property or a junior lienor has satisfied a lien that is superior to the tax lien. The statute provides: "Where, under local law, one person is subrogated to the rights of another with respect to a lien or interest, such person shall be subrogated to such rights for purposes of any lien imposed by section 6321." Equitable subrogation is designed to avoid the unjust enrichment that would occur if the government could reap the benefit of having the senior lien satisfied but deprive the party who satisfied that senior lien of any benefit in a foreclosure proceeding. To avoid such unfairness, the party that satisfied the senior encumbrance is allowed to assume the position that had been occupied by the original holder of the senior lien, if equitable subrogation is authorized by state law. See United States v. Avila, 88 F.3d 229, 237-39 (3d Cir.1996); Mort v. United States, 86 F.3d 890, 893-95 (9th Cir.1996); Progressive Consumers Federal Credit Union v. United States, 79 F.3d 1228, 1234-37 (1st Cir.1996).
Even assuming arguendo that the Second Circuit would recognize a non-statutory equitable doctrine applicable to tax liens, equitable principles do not point to the relief requested.[5] Michael Morrell did not satisfy a senior encumbrance on any of *138 these properties; indeed, there was no mortgage on the real property. Nor did Michael's payments to his parents confer any benefit upon the government. Michael Morrell received property from his parents that they should have used to satisfy their indebtedness to the government and then gave money back to his parents so that they could continue to live in the same style as that to which they were accustomed, as if they had never incurred liability pursuant to an agreed judgment. Equity is not served by giving Michael Morrell credit for these payments to his parents.
Source of Funds for Annuity
It is undisputed that the residence and over $400,000 worth of securities were transferred from Harold and Dolores Morrell to Michael Morrell after the assessments were made. On review of the entire record, the undisputed facts also establish that additional securities worth approximately $380,000, consisting of 33,769 shares of Dean Witter New York Tax Free Inc. Fund also were transferred to Michael by his parents. With no supporting documentation of any kind, Michael Morrell claims that he purchased the 33,769 shares of the Dean Witter New York Tax Free Inc. Fund with his own money. There is no explanation for the astounding coincidence that a year before, the taxpayers had the exact same number of shares of the same fund in their account. Moreover, Harold Morrell testified that he transferred all of his assets to his son, ostensibly so that Harold and Dolores could qualify for government medical assistance, and defendants offer no other EXPLANATION for the fact that the 33,769 shares of the fund the parents held in 1990 were no longer owned by them later. Since all other securities were conveyed from parents to son by directing transfer of the securities from the parents' Dean Witter account to the son's Dean Witter account, there is no rational basis for concluding that the 33,769 shares in Michael Morrell's account had not also been transferred in the same manner.
Furthermore, no rational juror could find that the transfer of this fund was made by the parents to their son before the liens had attached. As set forth in the Facts section above, Harold Morrell testified that the transfer of all assets held by him and his wife to Michael took place pursuant to one plan to divest themselves of all assets. Michael Morrell testified that all securities he received from his parents were transferred after the residence had been conveyed to him; it is undisputed that the real property was transferred approximately six months after the assessments. The parties agree that the assessments were made in November and December 1990, the real property was conveyed in May 1991, and that other securities were transferred in May 1991 and April 1992. Accordingly, there is no basis in the undisputed evidence for finding that the Dean Witter New York Tax Free Inc. Fund was transferred before the assessments.
Appreciation
Michael Morrell's argument that the government is not entitled to foreclose on the annuity to the extent that it represents appreciation in the value of the security holdings after the transfers of assets from the taxpayers is erroneous. He does not question the well-settled principle that the lien follows the property. "The transfer of property subsequent to the attachment of the lien does not affect the lien, for `it is of the very nature and essence of a lien, that no matter into whose hands the property goes, it passes cum onere ....'" United States v. Bess, 357 U.S. 51, 57, 78 S. Ct. 1054, 2 L. Ed. 2d 1135 (1958) (citations *139 omitted). This principle has been held to mean that the lien attaches to any appreciation in the value of the property until the taxpayer's liability has been discharged. Avila, 88 F.3d at 231, 233-34 (government lien is not limited to taxpayer's equity when he conveyed the property subject to the lien, it also attaches to the appreciation in the value of the property after the conveyance); Han v. United States, 944 F.2d 526, 528-29 (9th Cir.1991) (same); see United States v. Librizzi, 108 F.3d 136 (7th Cir.1997) (government's lien extended to appreciated fair market value of deceased taxpayer's interest in the property at the time of foreclosure and is not limited to value at death).
Furthermore, the premises of defendant's argument, that the annuity was purchased with appreciated assets and that the appreciation is attributable to Michael Morrell's skillful and prudent management of his Dean Witter account, are unfounded under the undisputed facts recited earlier. Almost all of the appreciated value in the Dean Witter account was taken out of it by Michael between 1992 and the account's liquidation in late 1995; and, with the inclusion of approximately $380,000 from the New York Tax Free Inc. Fund that defendant omitted in advancing his contention, the remaining minimal appreciation is attributable to passive reinvestment of interest and dividends which there is no persuasive reason to exempt from the government lien.
Conclusion
The motion of plaintiff United States of America for summary judgment is granted. The government should submit a proposed judgment on fourteen days' notice to the defendants.
SO ORDERED.
NOTES
[1] Dolores Morrell died after this action was commenced and is no longer a party.
[2] The parties agree that the fact that certain transfers were made after the attachment of the liens but preceded their filing, is not determinative in this case.
[3] Harold and Dolores Morrell in fact continued to retain ownership of a condominium, but the government is not seeking to foreclose on that property in this proceeding.
[4] N.Y. Debtor & Creditor Law § 273 declares that any conveyance made by a person who is thereby rendered insolvent is constructively fraudulent as to creditors regardless of the transferor's "actual intent if the conveyance is made or the obligation is incurred without a fair consideration." Section 272 provides that "fair consideration" is given for property when, as a fair equivalent for it and in good faith, property is conveyed or an antecedent debt is satisfied, or when the property is received in good faith to secure a present advance or antecedent debt in an amount not disproportionately small as compared with the value of the property. Schmitt v. Morgan, 98 A.D.2d 934, 935, 471 N.Y.S.2d 365 (3d Dep't 1983), appeal dismissed, 62 N.Y.2d 914, 479 N.Y.S.2d 9, 467 N.E.2d 893 (1984).
[5] In McCombs, 30 F.3d at 333, the court in dictum apparently applied the equitable subrogation doctrine of § 6323(i)(2) without citing the statute. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472400/ | 761 F. Supp. 2d 1123 (2009)
Rodney MILLER, Plaintiff,
v.
MONUMENTAL LIFE INSURANCE COMPANY, and Nasra TPA, Inc. and its successor, HCC Administrators, Inc. and/or Gallagher Bassett Services, Inc., Defendants.
No. CIV 04-0970 JB/RHS.
United States District Court, D. New Mexico.
March 31, 2009.
*1125 James Rawley, Albuquerque, NM, for Plaintiff.
Bruce S. McDonald, Lucinda Siembieda, Law Offices of Bruce S. McDonald, Albuquerque, *1126 NM, and Bernie E. Hauder, Adkerson, Hauder & Bezney P.C., Dallas, TX, for Defendants.
MEMORANDUM OPINION AND ORDER
JAMES O. BROWNING, District Judge.
THIS MATTER comes before the Court on: (i) Monumental Life Insurance Company's Supplemental Brief on Sole Cause Issue, filed December 17, 2007 (Doc. 50) ("Brief"); (ii) Plaintiff Rodney Miller's Supplemental Memorandum of Law in Support of Motion for Summary Judgment, filed January 7, 2008 (Doc. 52) ("Memo."); (iii) Monumental Life Insurance Company's Reply and Motion to Strike Plaintiff's Supplemental Brief, filed January 11, 2008 (Doc. 54) ("Reply"); and (iv) Plaintiff Rodney Miller's Response to Monumental's Motion to Strike, filed January 25, 2008 (Doc. 56) ("Response"). The Court held a hearing on February 8, 2008. The primary issues are: (i) whether the Court should find that the accident in question in this case was the sole-cause of Plaintiff Rodney Miller's disability; (ii) whether the Court should strike portions of Miller's brief in which he requests attorney's fees; (iii) whether, if the Court declines to strike the request for attorney's fees, the Court should award Miller attorney's fees; and (iv) whether the Court should remand the case to the administrator so that a record can be developed on the sole cause issue. While the Court finds that the language in the Policy regarding "sole" and "direct" cause is unambiguous, and imposes the requirements that the disability resulted directly from the work injury and not from any other source, the Court does not believe the record is sufficiently developed for the Court to make a fair determination on the sole-cause issue. The Court will therefore remand the case to the Plan Administrator. The Court will also decline to strike Miller's request for attorney's fees and will not grant attorney's fees at this time.
FACTUAL BACKGROUND
The facts underlying this lawsuit are largely laid out in the Court's Memorandum Opinion and Order, entered June 30, 2005 376 F. Supp. 2d 1238 (D.N.M.2005) ("June 2005 MOO"). In September 1997, Miller was injured in a motor vehicle accident. The primary determination the Court must make at this time is whether the injuries from the accident were the sole cause of Miller's disability. The Court will therefore focus on the facts that pertain to that issue.
1. The Policy.
Miller's employer, Aycock Transportation, established a Plan under the Employee Retirement Income Security Act, 29 U.S.C. § 1132 ("ERISA"). See Brief at 1. Monumental Life Insurance Company issued a Master Group Policy to Aycock Transportation, and a Certificate of Insurance under the Master Group Policy to Miller, that provided certain medical, Temporary Total Disability, and Continuous Total Disability ("CTD") benefits. See Reply at 1. The Policy provides that Monumental Life will pay CTD Benefits when: (i) it receives proof that the Insured is Totally Disabled; (ii) the Insured Person has been granted a Social Security Disability ("SSD") Award for such disability; and (iii) the Total Disability "resulted solely and directly from Injury." Master Policy at 10, filed April 29, 2005 (Doc. 28) ("Policy"). The Policy defines Total Disability for purposes of the CTD to mean that "the Insured Person is unable to perform every duty pertaining to any occupation for which he is or may become qualified by education, training or experience and has been granted a Social Security Disability *1127 Award." Id. at 5. The insurance is no longer offered. See Reply at 8. Thus, the Policy states that Monumental Life would pay monthly CTD Benefits if the Total Disability "resulted solely and directly from Injury." Policy at 10. The primary issue in the briefing at this point is whether the Total Disability "resulted solely and directly from the Injury."
It is undisputed that the Plan gave the administrator no discretion and that the Court's review of the denial of benefits is de novo. See Brief at 2. The Court recognized these principles in its order granting Monumental Life's motion for summary judgment, see June 2005 MOO, 376 F. Supp. 2d at 1248-49, and the United States Court of Appeals for the Tenth Circuit also recognized these principles in its opinion, see Miller v. Monumental Life Ins., 502 F.3d 1245, 1250 (10th Cir.2007).
Aycock Transportation was the ERISA plan sponsor, and ERISA required Aycock Transportation, Monumental Life, HCC, or any other entity, to provide Miller with a summary plan description. Miller states that he was not provided with a "summary plan description." Reply at 2 & n. 1. There is also no evidence whether Aycock Transportation provided a "summary plan description." Id.
2. Miller's Pre-Accident Condition.
Miller had some medical conditions that pre-dated the work injury. See Memo. at 13. There is also no evidence in the record when the other conditions arose. See Reply at 2. Nevertheless, those conditions did not prevent him from working as a truck driver. See Memo. at 13. It is undisputed that Miller was physically able to work before the accident of September 15, 1997, and was working as a truck driver. See Memo. at 2. Miller was able to perform all the truck-driving duties that his employer required before the accident. See id.
It is also undisputed that, on September 15, 1997, while employed by Aycock Transportation and while in the course and scope of his employment with Aycock Transportation, Miller was involved and injured in a motor vehicle accident. See id. The accident caused a back injury. See Memo. at 10. Miller contends that it is further undisputed that, since the motor vehicle accident, Miller became and has been totally disabled, and unable to work and to continue employment. See Memo. at 2. Miller contends that Monumental Life "concedes [he] is totally disabled." Memo. at 2. Monumental Life contends that it has not conceded or admitted that Miller is totally disabled. See Reply at 1.
Miller admits that he became disabled "due to the combined effects of chronic back pain associated with facet arthropathy with cervical and lumbar radiculopathy, carpal tunnel syndrome, bi-polar affective disorder and valvular heart disease with valve replacement." Defendants' Notice of Removal, Complaint for ERISA Plan Benefits ¶ 8, at 6, filed August 27, 2004 (Doc. 1) ("Complaint").
3. The SSA's Findings.
Miller applied for SSD and for Supplemental Security Income ("SSI") benefits. See Brief at 2. The Social Security Administration ("SSA") denied Miller's request for SSD benefits, but found that he met the requirements for SSI benefits, found that he was entitled to those benefits up through at least June 1, 2005, and approved his request for SSI benefits. See Exhibit 5 to Motion for Summary Judgment, Notice of DecisionFavorable at 1, dated March 1, 2001 ("SSI Decision") (granting SSI benefits); Exhibit 4 to Motion for Summary Judgment, Notice of DecisionUnfavorable at 1, dated August 28, 2003 (denying Miller SSD benefits). *1128 The SSA paid Miller a "Supplemental Security Income Award." SSI Decision at 1.
In the decision on Miller's request for SSI benefits, the SSA framed the general issue the Administrative Law Judge ("ALJ") was to determine as:
[W]hether the claimant is disabled under Section 1414(a)(3)(A) of the Social Security Act. The specific issue is whether he is under a disability, which is defined as the inability to engage in any substantial gainful activity by reason of any 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.
SSI Decision at 1. The ALJ determined that "the medical evidence establishes that claimant has the following severe impairments: chronic neck and back pain associated with facet arthropathy with cervical and lumbar radiculopathy, carpel tunnel syndrome, bipolar affective disorder and valvular heart disease with valve replacement." SSI Decision at 3. Although the ALJ found that none of these impairments met the criteria of any listed impairment, the ALJ concluded that, because Miller was unable to perform the physical and mental requirements of any past relevant work, because Miller had no transferrable skills to work he could perform, and because Miller could not make an adjustment to any work that exists in significant numbers in the national economy, Miller was disabled within the framework of medical-vocational rule 201.00(h). SSI Decision at 3. The ALJ also found that Miller was under a disability, as defined in the Social Security Act, which continued for a sufficient period of time to qualify for the SSI benefit. See id. at 4. Accordingly, Miller received a monthly SSI Award from May 1, 2001 through June 1, 2005. See Brief at 2.
4. The Administrative Record.
Miller submitted a claim for CTD benefits under the Policy. See Brief at 2. It is undisputed that Miller's claim was the first and only claim the Plan Administrator or Monumental Life ever faced where an insured received an SSI Award and sought Continuous Disability Benefits ("CDB") under the policy. See Reply at 8. Monumental Life was not the Plan Administrator or third-party administrator. See Reply at 4 n. 2. Monumental Life did not administer or make the decisions on Miller's claim for benefits under the Policy. See id.
In the letter setting forth her decision to deny Miller CTD benefits, the Plan Administrator did not mention sole cause, and she gave no inclination regarding whether Miller was Totally Disabled, as defined in the Policy. See Letter from Madelynn Collins to Rodney Miller at 1, dated November 19, 2003 ("Plan Administrator's Letter"). In its entirety, the body of the letter states:
Based on a review of your policy terms it does not appear that you are eligible for continuous total disability.
According to the terms of the policy in order to be eligible for continuous total disability you must be unable to engage in any gainful employment for which you can be reasonably trained for [sic].
You must be awarded a social security disability award for injuries sustained from this accident of 9-15-97. The information you have provided to us from the social security office is for supplemental security income and not a social security disability award. Therefore, no benefits are available.
Plan Administrator's Letter at 1. Thus, the Plan Administrator denied the claim on one basis: that Miller did not receive a social security disability award. See id.
*1129 Monumental Life contends that Miller admits the administrative record included the SSA decision on Miller's request for SSD and SSI benefits. See Reply at 2. When the Plan Administrator denied Miller's claim, she was in possession of the entire decision of the Social Security ALJ regarding Miller's Social Security Disability Award. See Memo. at 6. The evidence presented to and before the Plan Administrator included Miller's medical records, and the findings of the SSA as set forth in its decisions on Miller's request for SSD and SSI benefits. See Brief at 2. The Policy was also before the Plan Administrator. See Brief at 2. Miller never alleged, and presented no evidence, that he was Totally Disabled, as defined in the Policy, or that any such Total Disability "resulted solely and directly from Injury." Reply at 2.
Miller asserts that Monumental Life did not argue that Miller's Total Disability did not result solely and directly from the injury at the administrative level. See Memo. at 4. Miller argues that the first time that Monumental Life raised this issue was in its initial motion for summary judgment. See id.
Miller contends that, after he applied for CTD benefits, Monumental Life denied his claim based on its position that Miller did not receive a "Social Security Disability Award." Memo. at 5. As Miller had not, in the opinion of the Plan Administrator, received a "Social Security Disability Award," as the Policy ostensibly states, and as the Plan Administrator read the Policy to require, the Plan Administrator denied Miller's claim for CTD benefits, finding that Miller had not received a SSD Award. See Brief at 2. Miller contends that it is without dispute that Monumental Life at no time based its decision to deny Miller CDB based on the Policy exclusion that a total disability "resulted solely and directly from the Injury." Memo. at 5. Miller argues that the decision to deny Miller benefits was based on what was an erroneous application of the term "Social Security Disability Award." Id. Miller asserts that the Plan Administrator based the denial solely on her contention that what Miller presented to her was not a Social Security Disability Award. See id. In its Supplemental Brief on the Sole Cause issue, in the section headed "Summary of Facts," Monumental Life admits that the only reason that Miller was denied CDB was that Miller had not received a "Social Security Disability Award." Brief at 2 ("As Miller had not received a `Social Security Disability Award' as the Policy states and as the Plan [A]dministrator read the Policy to require, the Plan [A]dministrator denied Miller's claim for CTD benefits finding Miller had not received a Social Security Disability Award."). Thus, it is undisputed that the denial was based on its Plan Administrator's position that Miller did not receive a "Social Security Disability Award." As the Tenth Circuit made clear in its decision, as a matter of law, Monumental Life's denial on this basis was erroneous. See Miller v. Monumental Life Ins., 502 F.3d at 1252.
5. The Plan Administrator.
Miller contends that information about the onset of disability, medical evidence, accident reports, and employment history was not made part of the administrative record. See Memo. at 6. Miller asserts that the only document identified as the administrative record is the denial letter, which references the Social Security Disability award issue. See Memo. at 4. Monumental Life contends that "[t]he evidence presented to and before the Plan [A]dministrator included Miller's medical records and the findings of the SSA as set forth in its decisions on Miller's request for SSD and SSI benefits." Brief at 2. Monumental Life argues that "[t]his Court's de novo *1130 review can and should include consideration of the evidence before the Plan [A]dministrator and terms of the Policy." Id. at 3. Miller admits that he became disabled "due to the combined effects" of these impairments. Complaint ¶ 8, at 6.
A possible ground for denying Miller's claim for Policy benefits was Miller's disability did not result "solely and directly" from accidental bodily injury sustained "solely through external, violent and accidental means and independently of all other causes," and did not arise "solely out of or in the course of his usual and customary duties of his regular occupation." Brief at 2. Monumental Life maintains that the evidence to support this reason for denial was before the Plan Administrator at the time it made the decision on Miller's claim for Policy benefits. See id. at 2-3. Miller contends that information regarding the onset of his disability, his medical evidence, the accident reports, and his employment history were not made part of the administrative record, because the Plan Administrator did not rely on this information to find that Miller failed to establish sole cause, as the Policy requires. See Memo. at 6 (citing Buzzard v. Holland, 367 F.3d 263, 270-71 (4th Cir.2004) (reversing trustees' decision to deny benefits for their failure to consider claimant's SSDI award and its evidence that work exacerbated pre-accident medical conditions)).
PROCEDURAL BACKGROUND
Miller filed this suit on July 16, 2004, in the Second Judicial District, Bernalillo County, New Mexico. See Complaint at 1. Miller's action is for group welfare benefits under ERISA. The only claim that Miller asserts is for the breach of contract. Miller and his counsel have a standard forty-percent fee plus tax fee agreement. See Memo. at 16. Miller requested attorney's fees in his Complaint. See Complaint at 7.
1. Proceedings in the District Court.
Miller requested attorney's fees in his motion for summary judgment. See Motion for Summary Judgment at 2, filed April 29, 2005 (Doc. 27) ("Motion for Summary Judgment"). Nevertheless, Monumental Life contends that Miller never raised any issue in the summary judgment proceeding of his entitlement to attorney's fees. See Reply at 5. Monumental Life asserts that Miller did not raise the issue in his Motion for Summary Judgment nor in his responses to Monumental Life's Motion for Summary Judgment. See id. Monumental Life contends that no evidence was produced regarding attorney's fees, and they were never raised or addressed before Miller addressed them in his memorandum on the sole cause issue. See id.
The Court determined Miller's "Supplemental Security Income Award" was not a "Social Security Disability Award" and thus no CTD Benefits were owing under the Policy. See Miller v. Monumental Life Ins., 502 F.3d at 1248 (noting that the Court "granted Monumental's motion for summary judgment on the theory that the Plan unambiguously provided that a Title XVI award was not a Social Security Disability Award."). In his motion for summary judgment, Miller suggested "he is entitled to Continuous Total Disability Benefits under the Policy because of his SSI award." June 2005 MOO, 376 F. Supp. 2d at 1251.
[S]uch benefit would be reduced 100% by his SSI award and, as a result of any such payment of Continuous Total Disability, his SSI Award would cease. Once the SSI award ceases, Miller would lose entitlement to Continuous Total Disability Benefits as those benefits end when his "Social Security Disability Award ceases." Policy at 10. Miller's *1131 construction is unreasonable and leads to an absurd and unintended result.
June 2005 MOO, 376 F. Supp. 2d at 1251-52.
2. The Tenth Circuit.
The Tenth Circuit applies federal common law in ERISA cases. See Miller v. Monumental Life Ins. Co., 502 F.3d at 1249. The Tenth Circuit held Miller could have "reasonably expected" that his receipt of a "Supplemental Security Income Award" was sufficient to satisfy the Policy requirement of a "Social Security Disability Award" and entitled him to the initial receipt of the monthly benefit. Id. at 1251. The Tenth Circuit did not address the result that occurs from such an interpretation.
On appeal, the Tenth Circuit noted that, "[i]n interpreting an ERISA plan, [it] examine[s] the plan documents as a whole and, if ambiguous, construe[s] them as a matter of law." 502 F.3d at 1250 (internal quotations omitted). The Tenth Circuit held that the ERISA plan at issue is ambiguous. See 502 F.3d at 1250. The Tenth Circuit decided that "[a]n examination of the programs' respective regulations strengthened [its] conclusion that a reasonable plan participant could reasonably believe that either a Title II or a Title XVI award was a Social Security Disability Award." 502 F.3d at 1251. "In contrast[, however,] to the Title XVI Decision, the ALJ's findings in the Title II proceeding bore no relation to ... Miller's ability to engage in productive labor." 502 F.3d at 1251. Thus, "to be eligible for Title II benefits, an individual must be both insured for disability benefits and disabled within the meaning of the Act." 502 F.3d at 1251. "Hence, [the Tenth Circuit held] that the Plan is ambiguous because the term Social Security Award is reasonably susceptible to more than one meaning." Id. at 1253 (internal quotations omitted).
The Tenth Circuit held that Monumental Life delegated the substantive disability determination to the SSA. See id. at 1250. The Tenth Circuit noted: "The Plan mandates that a beneficiary be incapable of engaging in productive labor. However, it provides no mechanism for assessing his physical condition, other than whether he has received a Social Security Disability Award." Id. at 1250-51. Thus, "Monumental [Life]'s delegation suggests that a reasonable person could have expected Mr. Miller's Title XVI award and the SSA's finding of disability to have satisfied the Social Security Award requirement." Id. at 1251. The SSA's conclusion that Miller "was unable to perform every duty pertaining to any occupation for which he is or may become qualified by education training or experience ... seems to satisfy the Plan's requirement that a recipient of Continuous Benefit be unable to perform the physical and mental requirements of any past relevant work." Id. (internal quotations omitted).
The Tenth Circuit then applied the doctrine of contra proferentem which "construes all ambiguities against the drafter." Id. It noted that it has "rejected contra proferentem in cases where the [P]lan [A]dministrator retains discretion and where [it] review[s] only to consider whether the administrator abused discretion." Id. (citing Kimber v. Thiokol Corp., 196 F.3d 1092, 1100 (10th Cir.1999)). The Tenth Circuit nevertheless applied the doctrine in "reviewing an ambiguous ERISA plan de novo." Miller v. Monumental Life Ins. Co., 502 F.3d at 1253. The Tenth Circuit "construe[d] the Plan's terms in favor of Mr. Miller and held that his Title XVI award coupled with a finding of disability satisfied the Social Security Disability Award requirement." Id. at 1255.
*1132 The Tenth Circuit remanded the case to the Court to address the issue whether Miller's work-related injury was the "sole cause" of his disability. Miller v. Monumental Life Ins. Co., 502 F.3d at 1255. The Tenth Circuit explained: "We note that Monumental [Life] also moved for summary judgment on the grounds that Mr. Miller's accident was not the `sole cause' of his disability.... Because the district court did not address this issue, we must remand for further proceedings." Id. The Court allowed the parties to provide supplemental briefing on this issue, directing
the parties to rebrief the issue related to the "sole cause" of Plaintiff Rodney Miller's disability. Alternatively, the parties may rely on their prior briefing by submitting their prior briefs highlighted to show precisely what the Court should consider and resolve. The parties should respond to this order within 10 days of the date of the order.
Monumental Life submitted additional briefing only on the issue whether the Court can consider the "sole cause" argument. See Brief at 1. On December 17, 2007, Monumental Life filed its Supplemental Brief on the issue of sole cause. See id. In its Background portion, Monumental Life again argues that it is entitled to summary judgment, this time on sole cause. See id. Monumental Life relies upon the facts and its Briefs filed herein on its Motion for Summary Judgment on the issue of "sole cause." Id. For the reasons set forth in its Supplemental Brief and in its earlier briefing, Monumental Life maintains that it is entitled to summary judgment on Miller's claim for benefits under the Policy. See id.
On January 7, 2008, Miller submitted, pursuant to rule 56(b), his Supplemental Memorandum of Law in Support of his Motion for Summary Judgment. See Memo. at 1. Miller incorporates the original Motion for Summary Judgment as if fully set out in his Supplemental Memorandum. See id. In addition, Miller offers his Supplemental Memorandum in light of the Tenth Circuit's "decision on appeal. See id. Miller, by the motion for summary judgment, responds to Monumental Life's Supplemental Motion on sole cause. See id.
In its Reply and Motion to Strike, Monumental Life argues that the Court should strike that portion of Miller's Supplemental Memorandum discussing attorney's fees and deny his request for attorneys' fees. See Reply at 9.
At the February 8, 2008 hearing, Miller contended that the Tenth Circuit does not favor remand to Plan Administrators as a remedy. See Transcript of Hearing at 14:13-15:9 (taken February 8, 2008) (Court & Rawley) ("Tr.").[1] Miller asserted that Hall v. UNUM Life Insurance Co. of America, 300 F.3d 1197 (10th Cir.2002), supports his contention that the Tenth Circuit disfavors remand as a remedy. See Tr. at 14:22-24 (Court & Rawley). Miller argued that a finding of disability by the SSA is a finding of total disability. See id. at 16:24-17:1 (Rawley). Miller contended that the burden is on Monumental Life to inform him of the basis for its denial of benefits to him. See id. at 20:19-21:5 (Rawley). Miller also asserts that the "sole cause" language is not a policy exclusion. Id. at 21:7-10 (Rawley). Miller described the Plan Administrator's review as follows:
THE COURT: How is it normally done? Does the plan administrator say, give two or three reasons as to why they're *1133 denying the policy, that tips the beneficiary off that those are the things in issue and then there's a motion to reconsider or an appeal and that's when you bring in the evidence?
MR. RAWLEY: It's not that difficult or legalistic. The administrator would send a letter saying it looks as though you failed to meet this requirement. We'll need to have additional evidence or we'll have to deny you at this time. I see those sorts of letters all the time. Frequently they're saying we can't decide this yet because you don't have an opinion from this doctor and we sent out disability statement to a doctor, things like that. So all the time you're going back and forth making sure that they get what they need in order to have the medical evidence in the record or you're telling them we're waiting for the Social Security decision we'll send that to you. So there is communication about genuine issues. But it doesn't and then when there's a final denial, even then you can if they said they'll usually say but if you have additional medical record you know or something to change our opinion you know you can then appeal it. There's a lot of mechanisms. You can come in later, too, if you have new evidence. I mean, the whole idea is that they're going to give you your disability if you show them you're entitled it's just a matter of getting your ducks in a row or getting your evidence in front of them.
Id. at 23:3-24:3 (Court & Rawley). Miller represented that he did not raise the attorney's fees issue earlier because it was too early to think he had prevailed. See id. 24:18-19 (Rawley). Miller clarified that "[c]ertainly all I'm asking for is if we prevail that the Court would then allow us to submit the evidence concerning the hours and the times and all of that." Id. at 25:1-3 (Rawley). Miller acknowledged that "it's a legal question as to whether [the Court finds] that we meet the factors under Gordon v. United States Steel Corp., 724 F.2d 106, 108 (10th Cir.1983)." Tr. at 25:3-5 (Rawley). Miller conceded that, were Monumental Life to pay him long-term disability benefits, then his Title 16 benefits would cease. See id. at 27:7-10 (Court & Rawley). Miller asserts that he has met his summary-judgment burden with the evidence accepted by the SSA's decision regarding onset of his disability and the determination of total disability from the date of onset in the SSA's decision. See id. at 73:7-11 (Rawley). Miller contends that he met the burden of proof at the administrative level when he presented the administrator with his medical records to prove Miller was disabled. See id. at 74:11-13 (Rawley). Miller does not believe that supplementation of the record is appropriate. See id. at 74:25-75:1-6 (Court & Rawley). Miller contends that Monumental Life has stated that the Plan Administrator had access to the findings of the SSA when making the decision. See id. at 75:15-18 (Court & Rawley).
Monumental Life contended that "[i]t doesn't matter what the [Plan] [A]dministrator said, period. You're reviewing it de novo ... you don't have to worry about giving any type of weight or anything to the evidence." Id. at 36:4-7 (Hauder). Monumental Life asserted that it thinks "on de novo review ... the Court is allowed to consider this additional ["sole cause"] argument." Id. at 37:14-16 (Hauder). Monumental Life argued that the "sole cause requirement" is separate from the requirement that Miller be "totally disabled." Id. at 39:1-4 (Hauder). Monumental Life conceded that the Court is stuck with the SSA's determination of the cause of the disability, including the SSA's determination that the work-related injury included the previous impairments. See id. at 42:21-43:2 (Court & Hauder).
*1134 MR. HAUDER: ... How can we say not say that's what the ... cause of disability.
THE COURT: I think we're all stuck with that right.
MR. HAUDER: What the cause of the disability is.
THE COURT: Right.
MR. HAUDER: So if all of these things are the cause of the disability then how can the work relate injury be the sole cause if valvular heart disease wasn't ... a part of the work-related injury.
THE COURT: How do I know that? From this reward? I mean I'm not a doctor. How do I know that the accident didn't cause the [heart] problem? [Is there a way] in the record to disconnect those? ...
MR. HAUDER: You're right.
THE COURT: It's almost silent. It it doesn't it doesn't tell me anything about what his prior condition was, what the cause of.
MR. HAUDER: So then the proper thing for[ ] the Court to do is deny the motion for the sole cause issue and have the parties present evidence of that. Because what you're saying is there's not enough evidence there's not enough evidence for me to move or for you to grant the sole cause issue and that issue is still there before the Court .... [B]ut I'm also concern that there's not evidence to grant it for the plaintiff. The record is almost silent on the sole cause.
Id. Monumental Life represented that it had found only Hillstrom v. Kenefick, 484 F.3d 519 (8th Cir.2007), and Hall v. UNUM Life Insurance Co. of America, 300 F.3d 1197 (10th Cir.2002), as guidance for whether the Court can address an issue that was not decided by the Plan Administrator and whether the Court may address the administrative record relied upon by the Plan Administrator. See Tr. at 46:15-19 (Hauder). Monumental Life contended that the phrase "sole cause" is not ambiguous in its Policy. See id. at 60:12-13 (Hauder). Monumental Life asserted that the Court should retain the case and decide it, because if the Plan Administrator decides the issue, then its decision will be relitigated in federal court by Monumental Life if the decision is in favor of Miller. See id. at 61:3-7 (Hauder). Monumental Life argues that the "sole cause" language in the Policy is not an exclusion. See id. at 61:24-25 (Hauder). Monumental Life asserted that Miller has the burden of proof to show he is entitled to the benefits he claims under the Policy. See id. at 62:8-12 (Hauder). Monumental Life asserted that, "out of fairness... maybe the thing to do is allow a supplementation of the record" considering that Miller did not have any notice that the "sole cause" language in the Policy was going to be an issue, and considering that there is no record whether the Plan Administrator relied on that language to deny benefits. Id. at 62:19-63:9 (Court & Hauder). Monumental Life conceded that "[t]here's no doubt the [Plan] administrator didn't get to [the sole cause] issue." Id. at 64:9-11 (Hauder). Monumental Life admitted that the SSA found Miller disabled, but would not admit that he was totally disabled the way that "totally disabled" is defined under the Policy. Id. at 65:15-18 (Hauder).[2]
LAW REGARDING DE NOVO REVIEW OF AN ERISA PLAN ADMINISTRATOR'S DECISION
ERISA's goal is "uniform national treatment of pension benefits." Patterson v. *1135 Shumate, 504 U.S. 753, 765, 112 S. Ct. 2242, 119 L. Ed. 2d 519 (1992). Under ERISA, Congress has authorized the courts "to formulate a nationally uniform federal common law to supplement the explicit provisions and general policies set out in [the Act]." Peterson v. Am. Life & Health Ins. Co., 48 F.3d 404, 411 (9th Cir.1995). The Tenth Circuit applies the federal common law in ERISA cases in recognition of the Congressional intent that ERISA plans are administered uniformly nationwide. See Miller v. Monumental Life Ins. Co., 502 F.3d at 1249.
1. Burden of Proof.
The burden is on an insurance beneficiary to prove his or her total disability benefits under an ERISA plan. See Morales-Alejandro v. Medical Card System, Inc., 486 F.3d 693, 700 (1st Cir.2007) ("A claimant seeking disability benefits bears the burden of providing evidence that he is disabled within the plan's definition."); Fuja v. Benefit Trust Life Ins. Co., 18 F.3d 1405, 1408 (7th Cir.1994) ("The trial court determined that because the `medically necessary' provision of the insurance contract is set forth in the contract benefits section, as opposed to the `exclusions' section, that Fuja bore the burden of establishing her entitlement to the insurance benefits. We agree with the trial court's determination on this issue."); Gable v. Sweetheart Cup Co., Inc., 35 F.3d 851, 855 (4th Cir.1994) ("Moreover, plaintiffs bear the burden of proving that their employer's ERISA plan contains a promise to provide vested benefits."); Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1040 (11th Cir.1998) (holding that a plaintiff suing under a section allowing a beneficiary to bring a civil action to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan bears the burden of proving his entitlement to contractual benefits, but noting that, if the insurer claims that a specific policy exclusion applies to deny the insured benefits, the insurer generally must prove the exclusion prevents coverage); Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir.1992) (agreeing that it was the beneficiary's burden to show that he was entitled to the benefits under the terms of his plan) (citing 29 U.S.C. § 1132(a)(1)(B)).
2. De Novo Review.
A de novo review is restricted to the administrative record. As the Tenth Circuit explained in Hall v. UNUM Life Insurance Co. of America:
[T]he best way to implement ERISA's purposes in this context is ordinarily to restrict de novo review to the administrative record, but to allow the district court to supplement that record when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.
300 F.3d at 1202 (internal quotations omitted). The Tenth Circuit further "emphasize[d] that it is the unusual case in which the district court should allow supplementation of the record." Id. at 1203 (citing Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1025 (4th Cir.1993) (en banc) ("In most cases, where additional evidence is not necessary for adequate review of the benefits decision, the district court should only look at the evidence that was before the [P]lan [A]dministrator or trustee at the time of the determination.")). The Tenth Circuit in Hall v. UNUM Life Insurance Co. listed exceptional circumstances that may warrant the admission of additional evidence: (i) claims that require consideration of complex medical questions or issues regarding the credibility of medical experts; (ii) the availability of very limited *1136 administrative-review procedures with little or no evidentiary record; (iii) the necessity of evidence regarding interpretation of the terms of the plan rather than specific historical facts; (iv) instances where the payor and the administrator are the same entity and the court is concerned about impartiality; (v) claims that would have been insurance contract claims before ERISA; and (vi) circumstances in which there is additional evidence that the claimant could not have presented in the administrative process. See 300 F.3d at 1203.
In Hall v. UNUM Life Insurance Co., the insurance company's principal argument on appeal was that "the district court improperly considered evidence outside of the administrative record relied upon by [the insurance company] when it terminated [the plaintiff]'s benefits." Id. at 1199. The plaintiff worked as a regional vice president and was a participant in her employer's group long-term disability-insurance plan. See id. Under that plan, she was entitled to benefits if she was disabled and "unable to perform the material duties of [her] regular occupation." Id. (internal quotations omitted). The plaintiff injured her shoulder in a bicycle accident. See id. The insurance company concluded that the plaintiff was disabled and approved the payment of long-term disability benefits to her. See id. Approximately a year later, an insurance company employee investigated whether the plaintiff remained disabled. See id. The insurance company determined that the plaintiff was no longer disabled "because the restrictions on her physical activities did not prevent her from undertaking work as a vice-president of sales." Id. The reevaluation included "surreptitious video surveillance of" the plaintiff. Id. The plaintiff sought additional medical treatment because of continuing pain in her shoulder. See id. at 1200. The plaintiff informed the insurance company of the additional treatment, when she sought to have her termination of disability payments reconsidered, but the insurance company was not informed of additional surgeries that the plaintiff underwent. See id. The plaintiff filed suit against the insurance company, contending that the insurance company had violated ERISA by improperly terminating her disability benefits. See id. The district court found that the insurance company breached its duty to the plaintiff under ERISA, and ordered the insurance company to pay pre-judgment interest and attorney's fees to the plaintiff. See id. The insurance company appealed, arguing that the district court erred in allowing admission of evidence outside of the administrative record and awarding the plaintiff attorney fees. See id.
The Tenth Circuit explained in Hall v. UNUM Life Insurance Co. that the Tenth Circuit agreed "that the best way to implement ERISA's purposes ... is ordinarily to restrict de novo review to the administrative record, but to allow the district court to supplement that record when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision." Id. at 1202. The Tenth Circuit was concerned that, "[u]nless [it] allow[s] employees the possibility of supplementing the record in such circumstances, [it] run[s] the risk of providing employees fewer procedural rights than they had prior to the enactment of ERISA." Id. The Tenth Circuit noted that a "variety of ERISA cases ... are brought to the federal courts." Id. (internal quotations omitted). The Tenth Circuit explained:
Some of these cases reach the courts with substantial administrative records because of the [P]lan [A]dministrator's detailed procedures and record-keeping for benefit determination decisions. Other cases arrive with very limited records *1137.... ERISA cases also may involve plans in which the payor and administrator are one and the same, or different entities, and they may involve complex issues of medicine, law, and plan interpretation.... Given this diversity, providing the district courts with flexibility to admit additional evidence in limited circumstances is appropriate and even necessary in order to address the varied situations in which the administrative record alone may be insufficient to provide proper de novo review.
We emphasize that it is the unusual case in which the district court should allow supplementation of the record.... In most cases, where additional evidence is not necessary for adequate review of the benefits decision, the district court should only look at the evidence that was before the plan administrator or trustee at the time of the determination.... The party seeking to supplement the record bears the burden of establishing why the district court should exercise its discretion to admit particular evidence by showing how that evidence is necessary to the district court's de novo review.
Id. at 1202-03 (internal citations and quotations omitted). In considering a motion to supplement the record, the court should "address why the evidence was not submitted to the [P]lan [A]dministrator ... and should only admit the additional evidence if the party seeking to introduce it can demonstrate that it could not have been submitted to the plan administrator at the time the challenged decision was made." Id. at 1203 (internal quotations omitted). On the other hand, if the Plan Administrator did not allow for or permit the introduction of the new evidence, then "its admission may be warranted." Id.
3. Coverage Cannot be Created by Waiver or Estoppel.
Principles of waiver and estoppel cannot be used to modify the express terms of an ERISA plan. See Miller v. Coastal Corp., 978 F.2d 622 (10th Cir.1992) (stating that "ERISA's express requirement that the written terms of a benefit plan shall govern forecloses the argument that Congress intended for ERISA to incorporate state law notions of promissory estoppel."); Bakery & Confectionery Union & Indus. Int'l Pension Fund v. Ralph's Grocery Co., 118 F.3d 1018, 1027 (4th Cir.1997) (stating that, "[i]n this circuit, equitable estoppel is not available to modify the written terms of an ERISA plan in the context of a participant's suit for benefits."); Mullins v. Blue Cross and Blue Shield of Va., Inc., 79 F.3d 380, 381 (4th Cir.1996) (noting "[e]quitable estoppel... [has] not been permitted to vary the written terms of a plan.") (internal quotations omitted). This rule is based on ERISA's exacting requirement that the express terms of the ERISA benefit plan be followed.
In Hillstrom v. Kenefick, 484 F.3d 519 (8th Cir.2007), the United States Court of Appeals for the Eighth Circuit held that, on de novo review of a denial of benefits under an ERISA plan, "`a trial court must consider all of the provisions of the policy in question if these provisions are proffered to the trial court as a reason for denial of coverage,' even where [such provisions were] ... `not relied upon by the [P]lan [A]dministrator at the time the denial was made.'" 484 F.3d at 528 (quoting Weber v. St. Louis Univ., 6 F.3d 558, 560 (8th Cir.1993)). The Eighth Circuit in Hillstrom v. Kenefick stated: "To do otherwise would permit the oral modification of employee welfare plans governed by ERISA, a result manifestly in conflict with the intent of the statute and with the case *1138 law governing it." 484 F.3d at 528 (internal quotations omitted). The Eighth Circuit, in Hillstrom v. Kenefick, noted that "de novo review on an expanded record would produce the same conclusion as de novo review of the administrative record alone." Hillstrom v. Kenefick, 484 F.3d at 528 (citing Conley v. Pitney Bowes, 176 F.3d 1044, 1049 (8th Cir.1999), cert. denied, 528 U.S. 1136, 120 S. Ct. 979, 145 L. Ed. 2d 930 (2000)).
The plaintiff in Hillstrom v. Kenefick contended that the insurance company denied his benefits because he was not a "Salaried Employee" under the policy, and because the "Salaried Employee" language was "merely a boilerplate or orphan definition in the policy, and [wa]s not found in the substantive terms of the policy, [the plaintiff] conten[ded] that he was not required to be a Salaried Employee in order to be covered by the policy." 484 F.3d at 527 (internal quotations omitted). The Eighth Circuit reasoned that "the record reflects that by no means did [the Plan Administrator] rely on that explanation alone." Id. The Eighth Circuit explained: "Numerous times over the months that [the plaintiff]'s claim was pending, [Plan Administrator] employees corresponded with [the plaintiff's attorney], seeking additional information under the specified terms of the policy. Policy definitions were set out, and areas where evidence was lacking were identified." Id. at 527. The Eighth Circuit thus "reject[ed] the contention that [the insurance company] [wa]s now advancing post hoc rationales for denying benefits." Id. (internal quotations omitted). The Eighth Circuit rejected that contention, because
the letters from [the Plan Administrator] consistently iterated that [the plaintiff] had not shown that he was eligible to receive benefits, had not shown that he was disabled, and had not shown proof of loss as defined by the policy. Some of those letters requested specific information to verify the source of [the plaintiff]'s income; the amount of earnings received from [the employer], if any; [the plaintiff]'s duties for [the employer]; and the nature and onset of his disability. Nothing of substance has been advanced in the litigation that was not raised in the administrative process. It may be true that [the insurance company] devotes far more diligence in this litigation to challenging the existence, nature, and onset of [the plaintiff]'s asserted disability than [the Plan Administrator] did in its administrative denials. There is even some indication in the record that the insurer may have acquiesced to the fact of disability, at least on some level. But ineligibility on this basis was mentioned in the denial letters.
Id. at 527-28. Thus, the Eighth Circuit decided that, even if the insurance company "were relying on new rationales that were not part of the administrative record," the plaintiff's claim would fail, because all the rationales, except for the Salaried Employee definition, were based on specific policy requirements. Id. at 528.
The Tenth Circuit in Jewell v. Life Ins. Co. of North America, 508 F.3d 1303 (10th Cir.2007), recently confirmed that, in a district court's review of an ERISA Plan Administrator's decision, a party seeking to introduce evidence from outside the administrative record must establish the four elements that the Tenth Circuit set out in Hall v. UNUM Life Insurance Co. of America, 300 F.3d at 1202. See Jewell v. Life Ins. Co. of North America, 508 F.3d at 1309. The Tenth Circuit explained: "The best way for a district court to implement ERISA's purposes in this context is ordinarily to restrict de novo review to the administrative record compiled during the claim administration process, instead of *1139 taking new evidence, hearing witnesses, and the like." Id. (internal quotations omitted).
A party seeking to introduce evidence from outside the administrative record bears a significant burden in establishing that he may do so. In particular, [(i) ] the evidence must be "necessary to the district court's de novo review;" [(ii) ] the party offering the extra-record evidence must "demonstrate that it could not have been submitted to the [P]lan [A]dministrator at the time the challenged decision was made;" [ (iii) ] the evidence must not be "[c]umulative or repetitive;" nor [ (iv) ] may it be "evidence that `is simply better evidence than the claimant mustered for the claim review.'"
Id. (quoting Hall v. UNUM Life Ins. Co. of Am., 300 F.3d at 1203 (quoting in turn Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d at 1027)) (internal quotation marks omitted). The Tenth Circuit reiterated that the "exceptional circumstances" listed in Hall v. UNUM Life Insurance Co. of America "are not exceptions to the Hall rule; they are merely examples of circumstances that might militate in favor of a finding of necessity." Jewell v. Life Ins. Co. of N. Am., 508 F.3d at 1309. Thus, "[t]he existence of one or more of these circumstances does not make extra-record evidence automatically admissible, for if it did, then supplementation of the record would not be limited to unusual cases or extraordinary circumstances." Id. "District courts must conduct analysis case-by-case to determine whether all four prongs of the Hall test are met." Id.
4. Remand.
The Plan Administrator's failure to provide adequate findings or to explain the grounds for denial of benefits "does not mean that the claimant is automatically entitled to benefits because such a holding might provide the claimant with an economic windfall should she be determined not disabled upon a proper reconsideration." Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d 771, 776 (7th Cir.2003) (internal quotations omitted). Rather, if the Plan Administrator "fail[s] to make adequate findings or to explain adequately the grounds of [its] decision, the proper remedy is to remand the case to the administrator for further findings or explanation." DeGrado v. Jefferson Pilot Fin. Ins. Co., 451 F.3d 1161, 1175 (10th Cir.2006) (internal quotations omitted).
The Tenth Circuit explained in Caldwell v. Life Insurance Co. of North America, 287 F.3d 1276 (10th Cir.2002), that
ERISA section 1133(1) requires that a claims administrator provide adequate notice to any participant whose claim has been denied, "setting forth the specific reasons for such denial ...." The remedy when an ERISA administrator fails to make adequate findings or to explain adequately the grounds of her decision is to remand the case to the administrator for further findings or explanation. A remand for further action is unnecessary only if the evidence clearly shows that the administrator's actions were arbitrary and capricious ... or the case is so clear cut that it would be unreasonable for the [P]lan [A]dministrator to deny the application for benefits on any ground.
Id. at 1288 (internal quotations and citations omitted). See Gallo v. Amoco Corp., 102 F.3d 918 (7th Cir.1996) (stating that "[t]he remedy when a court or agency fails to make adequate findings or to explain its grounds adequately is to send the case back to the tribunal for further findings or explanation .... This is the appropriate remedy in an ERISA case just as in a conventional appeal.") (internal citations omitted).
*1140 5. Provisions of Coverage and Exclusionary Clauses.
"Questions involving the scope of benefits provided by a plan to its participants must be answered initially by the plan documents, applying the principles of contract interpretation." Chiles v. Ceridian Corp., 95 F.3d 1505, 1515 (10th Cir. 1996). Applying this principle, the Tenth Circuit in Pirkheim v. First UNUM Life Insurance, 229 F.3d 1008 (10th Cir.2000), reviewed policy language which stated: "`We agree with the Policyholder to cover each Insured for any loss described in Part I in return for the payment of premiums and subject to the provisions which follow. The loss must result directly and independently of all other causes from accidental bodily injury which occurs while this policy is in force as to the Insured, herein called `injury.'" 229 F.3d at 1009 (quoting policy) (emphasis added by Pirkheim v. First Unum Life Insurance). In light of the terms "directly" and "independently," the Tenth Circuit in Pirkheim v. First Unum Life Insurance concluded that the policy it was interpreting was unambiguous and that it imposed two conditions. "First, the loss must result directly from accidental bodily injury. Second, the loss must result independently of all other causes." Id. The Tenth Circuit therefore agreed with the district court that "the word `directly' modifies the phrase `from accidental bodily injury.' Any other interpretation in this context is contrived." Id.
Having interpreted the policy language, the Tenth Circuit in Pirkheim v. First Unum Life Insurance denied parents accidental death benefits after their four-year old son, who was born with a congenital heart defect, died from pacemaker failure after the batteries inside the pacemaker were depleted. See id. at 1009. According to the Tenth Circuit, because the child's "death did not occur independent of all other causes, e.g., his cardiac arrhythmia," one of the policy conditions was not satisfied. Id. at 1011. "Accordingly, [the Tenth Circuit] ... h[e]ld the [P]lan [A]dministrator did not err in denying accidental death benefits to [the plaintiffs]." Id.
In ERISA cases, it is "well-established that the burden is upon the insurer to demonstrate that the insured's claim falls within the terms of an exclusionary clause, and that such clauses are interpreted narrowly." Frerking v. Blue Cross-Blue Shield of Kan., 760 F. Supp. 877, 881 (D.Kan.1991). In Fought v. UNUM Life Insurance Co. of America, 379 F.3d 997 (10th Cir.2004), the Tenth Circuit dealt with disability insurance policy containing a clause which excluded coverage for preexisting conditions. The policy had a section heading styled "What disabilities are not covered under your plan?" which stated: "Your plan does not cover any disabilities caused by, contributed to by, or resulting from your ... pre-existing condition." 379 F.3d at 999. While the policy at issue in Fought v. UNUM Life Insurance Co. of America did not define "caused by," "contributed to by," or "resulting from," it stated:
[Y]ou have a pre-existing condition when you apply for coverage when you first become eligible if:
you received medical treatment, consultation, care or services including diagnostic measure or took prescribed drugs or medicines in the 3 months just prior to your effective date of coverage; or you had symptoms for which an ordinarily prudent person would have consulted a health care provider in the 3 months just prior to your effective date of coverage; and
the disability begins in the first 12 months after your effective date of coverage.
379 F.3d at 999 (internal quotation marks omitted).
*1141 The policy holder in Fought v. UNUM Life Insurance Co. of America had undergone an elective coronary artery revascularization surgery during which the surgeon discovered that she had an abnormally narrow and osteoporotic sternum. See id. As a result, she required special procedures for treating the surgical wound. See id. For the next several months, the policy holder underwent a difficult and debilitating post-operation recovery because of complications with her surgical wound. See id. at 999-1000. The policy holder applied for, and was denied, long-term disability benefits under her policy on the grounds that a preexisting condition caused her disability. See id. at 1000.
With those facts in mind, the Tenth Circuit in Fought v. UNUM Life Insurance Co. of America stated:
The major difficulty presented by this case is that UNUM's policy excludes coverage for disabilities caused by pre-existing conditions, whereas it seeks here to apply its policy as if it excludes coverage for disabilities caused by complications from surgery for pre-existing conditions. Surgery is not, of course, a pre-existing condition, but at most a necessary consequence of a pre-existing condition. In essence, therefore, this case becomes a matter of where we draw the line on chains of causation.
Id. at 1009. Facing the complex causation question that the policy's language created, the Tenth Circuit noted: "[The insurer] seems to suggest that it need not cover anything for which it can construct a but/ for story. If we were to accept this contention, we would effectively render meaningless the notion of the pre-existing condition clause by distending the breadth of the exclusion." 379 F.3d at 1010. Furthermore, the Tenth Circuit emphasized a regulation from the Department of Labor, 29 C.F.R. § 2590.701-3(a)(i)(C), to bolster its holding. See id. at 1010. The Tenth Circuit quoted the Practicing Law Institute's guidelines for interpreting 29 C.F.R. § 2590.701-3(a)(i)(C). See Fought v. UNUM Life Ins. Co. of Am., 379 F.3d at 1010. Those guidelines provided that:
Thus, before imposing a preexisting condition limitation, plan sponsors must carefully evaluate whether a particular condition is "directly attributable" to the preexisting condition. Medical conditions which merely "contribute towards" accidents or illnesses, but are not "directly attributable" to the preexisting condition may not be excluded. This causal connection requirement will undoubtedly open the door for arguments that preexisting conditions were not the "proximate cause" of a particular injury or sicknesse.g., treatment of pneumonia for an individual who was previously diagnosed with AIDS.
Id. at 1010. The Tenth Circuit cited as an essential tenet of contract law the notion that exclusions must be read narrowly, and explained that an "exclusion cannot merely require that the pre-existing condition be one in a series of factors that contributes to the disabling condition; the disabling condition must be substantially or directly attributable to the pre-existing condition." Fought v. UNUM Life Ins. Co. of Am., 379 F.3d at 1010. Thus, the Tenth Circuit in Fought v. UNUM Life Insurance Co. of America held that "the plan's language... [did] not reasonably apply to the attenuated chain of events between the [claimant]'s pre-existing coronary artery disease and her disabling staph infection and that [the insurance company]'s denial of benefits was not supported by substantial evidence." 379 F.3d at 1015.
In Weis v. Accidental Death & Dismemberment Benefit Plan of Kaiser Foundation Health Plan Inc., 442 F. Supp. 2d 850 (N.D.Cal.2006), the plan participant was *1142 entitled to coverage for accidental injury to his eye as long as that injury was the predominant and proximate cause of blindness in his eye. See 442 F.Supp.2d at 852-53. Although the claimant had congenital cataracts and a thirty-year history of eye problems, the evidence showed that he lost his eyesight after the accident. See id. at 855-56. While the district court recognized that his preexisting condition may well have contributed to the extent of his injuries, the district court nevertheless held that he was entitled to coverage as the accident was the proximate cause of his sight loss. See id. at 857.
In Buzzard v. Holland, 367 F.3d 263 (4th Cir.2004), an ERISA case, the Fourth Circuit explained:
We generally review the district court's order granting summary judgment de novo.... However, ... the Supreme Court [has] held that a denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.... If the plan confers such authority upon the [P]lan [A]dministrator, a deferential abuse of discretion standard applies to appellate review of the eligibility determination.... Because we have previously held that the 1974 Plan vests the Trustees with full and final authority to determine who is eligible for benefits, our review is limited to ascertaining whether the Trustees abused their discretion.
367 F.3d at 268 (internal quotations and citations omitted).
6. Attorney's Fees.
In any action brought by an ERISA plan participant, the court has discretion to award "a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1) (stating that "[i]n any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party."). The granting of attorney's fees under ERISA is not to be done as a "matter of course, but is discretionary in nature." Gordon v. United States Steel Corp., 724 F.2d at 108. There is a general disfavoring of attorney fee awards in ERISA cases. See San Francisco Culinary, Bartenders and Serv. Employees Welfare Fund v. Lucin, 76 F.3d 295, 298 (9th Cir.1996) ("A denial of attorney's fees in this case would also be consistent with the general disfavoring of attorney fee awards in ERISA cases.").
The Tenth Circuit listed several factors in Gordon v. United States Steel Corp. for deciding if an award of attorney's fees and costs in an ERISA action are appropriate, including: (i) the degree of the opposing parties' culpability or bad faith; (ii) the ability of the opposing parties to personally satisfy an award of attorney's fees; (iii) whether an award of attorney's fees against the opposing parties would deter others from acting under similar circumstances; (iv) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (v) the relative merits of the parties' position. See Gordon v. United States Steel Corp., 724 F.2d at 109; McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192, 1209 n. 17 (10th Cir.1992). In Atwood v. Swire Coca-Cola, 482 F. Supp. 2d 1305 (D.Utah 2007), a court awarded attorneys fees when
[t]here [wa]s no evidence of bad faith on the part of [the defendant]. But certainly [the defendant]'s culpability has been established, and that culpability outweighs any that might be attributed to [the claimant]. The court also finds *1143 that Swire, a large corporation with thousands of employees, has the ability to satisfy an award of attorney's fees and costs. As for the third factor, an award of attorney's fees here would deter other [P]lan [A]dministrators from so cavalierly treating an employee's benefit application. The fourth factor is not applicable in this situation, for [the claimant]'s claim only indirectly benefited participants and beneficiaries (and no significant legal question was presented to the court). Finally, the fifth factor certainly weighs in favor of [the claimant], who ultimately prevailed in this court despite [the defendant]'s arguments. Given the court's analysis of the above cited factors, as well as the court's concern that Swire attempted to place the blame completely on [the claimant], the court finds that [the claimant] is entitled to reasonable attorney's fees and costs.
Id. at 1317-18. Motions for attorney fees are separate from and collateral to any decision on the merits. See White v. New Hampshire, 455 U.S. 445, 451-52, 102 S. Ct. 1162, 71 L. Ed. 2d 325 (1982) (stating that "[r]egardless of when attorney's fees are requested, the court's decision of entitlement to fees will therefore require an inquiry separate from the decision on the meritsan inquiry that cannot even commence until one party has `prevailed' while discussing attorney's fees under 42 U.S.C. § 1988").
LAW REGARDING MOTIONS TO STRIKE
A motion to strike is limited to challenges of pleadings, and is not appropriate to question motions or memoranda. See E.E.O.C. v. Roswell Radio, Inc., No. CIV-06-0253 JB/LAM, 2007 WL 2305521 at *8 (D.N.M. June 12, 2007) (Browning, J.) (citing Searcy v. Soc. Sec. Admin., No. 91-4181, 956 F.2d 278 (Table), 1992 WL 43490, at *2 (10th Cir. March 2, 1992) ("[T]here is no provision in the Federal Rules of Civil Procedure for motions to strike motions and memoranda.")). "Only material included in a `pleading' may be the subject of a motion to strike, and courts have been unwilling to construe the term broadly. Motions, briefs, or memoranda, objections, or affidavits may not be attacked by the motion to strike." J. Moore, Moore's Federal Practice § 12.37[2], at 12-128 to 12-129 (3d ed. 2005). The Federal Rules of Civil Procedure define "pleadings" as a complaint or third-party complaint; an answer to a complaint, a third-party complaint, a counterclaim, or a crossclaim; and, "if the court orders one, a reply to an answer." FED. R.CIV.P. 7(a)(1-7). See Searcy v. Soc. Sec. Admin., 1992 WL 43490, *1, *4 (affirming, "for substantially the same reasons set forth" in the attached Magistrate Judge's Report and Recommendation the recommendation that a motion to strike the defendant's motion to dismiss should be denied because "there is no provision in the Federal Rules of Civil Procedure for motions to strike motions and memoranda") (unpublished); Applied Capital, Inc. v. Gibson, No. Civ. 05-98 JB/ACT, 2007 WL 5685131, *7 & *18 (D.N.M. Sep. 27, 2007) (Browning, J.) (citing Searcy v. Soc. Sec. Admin.), and refusing to strike motion to dismiss because "[m]otions to strike are reserved for striking pleadings"; Coleman v. City of Pagedale, No. 4:06-CV-1376 ERW, 2008 WL 161897, *4 (E.D.Mo. Jan. 15, 2008) (holding that a sur-reply and memorandum were not pleadings and could not be attacked with a motion to strike).
The exception to this principle is that a Court may "choose to strike a filing that is not allowed by local rule, such as a surreply filed without leave of court." Superior Prod. P'ship v. Gordon Auto Body Parts Co., No. 06-cv-916, 2008 WL *1144 2230774, at *1 (S.D.Ohio May 28, 2008). See In re Hopkins, No. 98-1186, 162 F.3d 1173, 1998 WL 704710, *3 n. 6 (10th Cir. Oct. 5, 1998) (holding that, because party's "briefs were non-complying ... it was well within the discretion of the district court to strike them") (unpublished); Jones v. United Space Alliance, L.L.C., 170 Fed. Appx. 52, 57 (11th Cir.2006) (holding that court did not abuse its discretion in striking a motion that violated the district's local rules) (unpublished).
ANALYSIS
A careful review of the sparse administrative record convinces the Court that the most appropriate course of action at this stage is to remand the case to the Plan Administrator for more complete findings. The Plan Administrator gave only one reason for denying benefits, and the Tenth Circuit has found that reason to be erroneous. The parties still dispute, however, whether either Monumental Life or Miller should be entitled to summary judgment on other grounds. The Court does not believe that Monumental Life has waived the sole-cause argument or should be estopped from raising it. While the Court concludes that the sole-cause requirement is not an exclusion, and that it should be interpreted similarly to the "directly" and "independently" language that the Tenth Circuit discussed in Pirkheim v. First Unum Life Ins., the Court believes the administrative record provides insufficient basis for a determination of whether there is a genuine issue of material fact on the sole cause question. The Court also believes that the question whether Miller is Totally Disabled, which represents another requirement for receiving CDB, is open despite some language in the Tenth Circuit opinion in this case suggesting otherwise. The Court will also deny the motion to strike and, at this stage, the request for attorney's fees.
I. MONUMENTAL LIFE HAS NOT WAIVED THE SOLE-CAUSE AND TOTAL-DISABILITY ARGUMENTS.
There are two primary reasons why the Court finds that Monumental Life has not waived the ability to argue the sole-cause and Totally Disabled issues. First, the record does not clearly illuminate what was argued to the Plan Administrator. There is no indication, however, that the sole-cause issue ever came up. One of the problems plaguing this case is the paucity of the record. The parties' briefing on the sole-cause issue is replete with arguments about what the administrative record contains, and about what arguments were raised to the Plan Administrator. The parties, however, fail to provide record citations or references to documents or to anything else that could amount to evidence of what constitutes the administrative record. The Court suspects that there is no formal record, such as what would be produced in an administrative hearing in front of a governmental agency. With no definitive record, the Court cannot say that Monumental Life failed to raise anything at the administrative level, such that it should be precluded from doing so now.
Second, the Court agrees with the Eight Circuit's holding in Weber v. St. Louis University, which stated that, when conducting a de novo review of a denial of benefits under an ERISA plan, "a trial court must consider all of the provisions of the policy in question if those provisions are proffered to the trial court as a reason for denial of coverage." 6 F.3d at 560. The Eighth Circuit in Weber v. St. Louis University stated that such a course of action was proper, "even if those provisions were not `specified ... as the basis of denial of coverage.'" Id. (quoting Farley v. Benefit Trust Life Insurance Co., *1145 979 F.2d 653, 660 (8th Cir.1992)) (ellipsis in Weber v. St. Louis University).
The reasoning that the Eight Circuit marshaled in Weber v. St. Louis University is persuasive. The Eighth Circuit explained that to prevent a party from raising other provisions which would preclude coverage would "permit the oral modification of employee welfare plans governed by ERISA, a result manifestly in conflict with the intent of the statute and with the case law governing it." Id. (internal quotation marks omitted). Without the ERISA framework overlaying this lawsuit, the dispute between Monumental Life and Miller would be a common-law contract case, and the Court's review of the denial benefits would largely consist of interpreting the contract provisions. Although ERISA alters the setting, it does not compel treatment of the Plan Administrator as analogous to a governmental administrative agency "whose decisions are subject to limited judicial scrutiny." 6 F.3d at 560. "Nor, in our view, are the materials considered by a plan administrator strictly analogous to a `record,' in the sense that the courts use that term to describe the basis for a prior adjudication by a governmental administrative agency." Id.
Miller argues that to allow Monumental Life to argue an "exclusion" for sole cause would be "without an administrative record rendered after notice and an opportunity to be heard." See Memo. at 6. Miller's fear of not having an opportunity to be heard is overwrought, given the protracted nature of this case. Moreover, the Court is able to, and has, allowed the parties to make arguments about the sole-cause issue. The Court's decision to remand this case to the Plan Administrator also alleviates any danger that due process will be denied because the parties will have the opportunity to raise their concerns to the Plan Administrator regarding sole cause. Thus, there will be no unfair surprise wrought upon either party. And, if the Court were to determine that the sole-cause or the Total-Disabilityissue was waived or finally determined in Miller's favor, the Court would be perpetrating a miscarriage of justice. The Court is not aware that there was a formal hearing in the front of the Plan Administrator. Rather, the Plan Administrator received the relevant documentation of Miller's injuries and then issued a letter stating her reasons for rejecting coverage. She did not decide whether Miller was Totally Disabled or whether the work injury was the sole cause of any disability.
To now foreclose argument on those issues based on the fact that the Plan Administrator did not base her decision on them would have the effect of granting a potential windfall to Miller. If the Plan Administrator did not reach the sole-cause issue, but would have otherwise found Miller unable to establish sole cause if not for the finding on SSI benefits, Miller would effectively be able to receive CDB without having to establish that he met all of the requirements for those benefits. In other words, Monumental Life would be forced to pay out benefits to someone not entitled to those benefits merely because the litigation posture of this case brought about the situation where the Tenth Circuit found that, as a matter of law, Miller had established one of the four elements he needed for his claim to benefits. The risk of such a windfall underscores the wisdom in the Eight Circuit's opinion in Weber v. St. Louis University mandating that a district court consider all policy provisions which the insurer raises that could potentially disallow benefits. By considering all pertinent provisions that the Plan Administrator raises, the Court assures that Miller remains liable to show he meets all of the requirements for CDB.
*1146 Furthermore, the Court avoids effectively re-writing the Policy, which requires an insured to prove that he meets the criteria for CDB. See Policy at 10. The Court is not willing to apply waiver or estoppel under the circumstances of this case to draw a line through the policy language requiring proof or the policy language laying out the elements that the policy holder must prove.
The Court is also reluctant to create a rule that imposes a burden on plan administrators duties that may make this job more complicated and claim resolution more expensive. Currently, plan administrators make quick decisions, and communication between administration and claimant is often informal. One issue is often determined, providing quick resolution of most claims. It does not benefit insurance companies or claimants to require plan administrators to decide every possible issue before there is an appeal, else the parties are estopped for raising any new issues.
To impose such a formal requirement on plan administrators would likely undercut the efficiency that ERISA was designed to guarantee. The federal appellate courts encourage district courts not to decide questions they do not have to decide, and when new issues are raised on appeal, decline to consider them and remand them to the district court. The Court should not fashion a rule for plan administrators that is more formal and onerous than what the appellate courts require of district courts.
The Court recognizes that there is an element of burden and that it is perhaps unfair to require Miller to litigate all the way to the Tenth Circuit, to allow Monumental Life to lose on the one issue on which it provided before the plan administrators, and then allow Monumental Life to return to the Plan Administrator to litigate another issue. The Court would be reluctant to remand except under extraordinary circumstances. Those circumstances appear to be present in this case. The Plan Administrator's record is thin, not clearly revealing what was advanced before her. Yet to formally grant summary judgment for Miller because the Plan Administrator did not rely on the sole cause could give Miller a windfall. Fairness dictates that the Plan Administrator explore this issue before the Court tries to determine these issues on the incomplete record it has.
II. THE SOLE-CAUSE REQUIREMENT IS NOT AN EXCLUSION.
One of the primary legal questions that emerges from the parties' briefing is the distinction between an exclusion under a policy and a requirement for coverage. In some sense, the distinction may appear hollow. Nevertheless, such a distinction is important to the outcome of this case. First, the difference between a policy provision and an exclusion weighs upon the determination of who, between the policy-holder and the insurer, has the burden of proving either entitlement or disentitlement to coverage. Second, the difference impacts which Tenth Circuit case law governs the analysis in this case regarding the interpretation of the sole-cause requirement.
A. MILLER HAS THE BURDEN OF PROVING THAT HE QUALIFIES FOR COVERAGE BECAUSE THE SOLE-CAUSE PROVISION IS A REQUIREMENT FOR COVERAGE AND NOT AN EXCLUSION.
The Tenth Circuit has stated that, under basic contract-interpretation principles, a district court should interpret policy exclusions narrowly. See Fought v. UNUM Life Ins. Co. of Am., 379 F.3d at 1010. Moreover, federal courts have held that *1147 the insurer has the burden of proving exclusions, such as for preexisting conditions. See Strickland v. Transamerica Ins., Co., 481 F.2d 138, 149 n. 12 (5th Cir.1973); Farley v. Benefit Trust Life Ins. Co., 979 F.2d at 658 (agreeing that it was the beneficiary's burden to show that he was entitled to the benefits under the terms of his plan). In contrast, policy exclusions are often characterized as affirmative defenses. See 5 C. Wright & A. Miller, FEDERAL PRACTICE AND PROCEDURE 1271, at 588-89 (3d ed. 2004). The distinction between an exclusion and a provision of coverage is therefore important because it impacts which party has the burden of proof. See Frerking v. Blue Cross-Blue Shield of Kan., 760 F. Supp. 877, 881 (D.Kan.1991) (finding it "well-established that the burden is upon the insurer to demonstrate that the insured's claim falls within the terms of an exclusionary clause, and that such clauses are interpreted narrowly").
The Policy in this case has separate sections describing the requirements for coverage and the exclusions. The Policy contains a separate section entitled GENERAL EXCLUSIONS AND LIMITATIONS. Even though there is obviously some relationship between the sole-cause requirement that appears in the section defining qualifications for CDB and certain limitations in the exclusions section, the section defining the requirements states: "We will pay the benefit described below to an Insured Person when We received due proof" that the requirements, including sole cause, are met. Policy at 10 (emphasis added). In other words, the Policy unambiguously places the burden on the policy holder seeking benefits to prove the work injury was the sole cause of the disability. While the policy holder bears the burden of establishing sole cause and the other requirements for receipt of benefits, the Tenth Circuit has held that the insurer must prove that exclusions apply. The Policy in this case separates coverage requirements from exclusions, and the Court will respect that division.
B. PIRKHEIM V. FIRST UNUM LIFE INS. APPLIES TO THIS CASE AND SUPPORTS A FINDING THAT THE SOLE-CAUSE PROVISION IS UNAMBIGUOUS.
The parties have cited two Tenth Circuit cases that might control the outcome of this case. Monumental Life relies heavily on Pirkheim v. First Unum Life Ins., while Miller argues that Fought v. UNUM Life Ins. Co. of Am. is more on point. A careful review of both cases convinces the Court that Monumental Life has applied the correct legal authority to the facts of this case.
Miller seeks to argue out from under Pirkheim v. First Unum Life Ins. by pointing out some ways in which the facts surrounding the disability in that case differ from the facts surrounding the disability in this case. While the Court does not discount Miller's arguments, the Court believes the the similarities in the language and structure of the policy in Pirkheim v. First Unum Life Ins. to the language and structure of the policy at issue in this case suggest that Pirkheim v. Unum Life Ins. should apply in this case. An important distinction between Fought v. UNUM Life Ins. Co. of Am. and Pirkheim v. First Unum Life Ins. is that, in Fought v. UNUM Life Ins. Co. of Am., the policy provision in question was an exclusion, while in Pirkheim v. First Unum Life Ins., the Tenth Circuit was dealing with a provision of coverage. It is that determination that led the Tenth Circuit in Fought v. UNUM Life Ins. Co. of Am. to interpret the policy language in question narrowly.
The policy language in Fought v. UNUM Life Ins. Co. of Am. was also fraught with ambiguities and left key terms undefined. The policy had a section *1148 heading styled "What disabilities are not covered under your plan?" which stated: "Your plan does not cover any disabilities caused by, contributed to by, or resulting from your ... pre-existing condition." 379 F.3d at 999. While the policy at issue in Fought v. UNUM Life Insurance Co. of America did not define "caused by," "contributed to by," or "resulting from," it stated:
[Y]ou have a pre-existing condition when you apply for coverage when you first become eligible if:
you received medical treatment, consultation, care or services including diagnostic measure or took prescribed drugs or medicines in the 3 months just prior to your effective date of coverage; or you had symptoms for which an ordinarily prudent person would have consulted a health care provider in the 3 months just prior to your effective date of coverage; and
the disability begins in the first 12 months after your effective date of coverage.
379 F.3d at 999 (internal quotation marks omitted).
The terms "caused by," "contributed to," and "resulting from" failed to set the metes and bounds for when the causal relationship between the preexisting condition and the disability became sufficient to compel a denial of coverage. Thus, given the policy's ambiguity and the necessity of interpreting the exclusionary provision narrowly, the Tenth Circuit in Fought v. UNUM Life Insurance Co. of America found that "[the insurer's] expansive reading of the exclusion may be overly broad: The exclusion cannot merely require that the pre-existing condition be one in a series of factors that contributes to the disabling condition; the disabling condition must be substantially or directly attributable to the pre-existing condition." Id. at 1011. Accordingly, "the plan's language ... [did] not reasonably apply to the attenuated chain of events between the [claimant]'s pre-existing coronary artery disease and her disabling staph infection and that [the insurance company]'s denial of benefits was not supported by substantial evidence." 379 F.3d at 1015.
Because the Tenth Circuit in Pirkheim v. First Unum Life Insurance was not dealing with an exclusion, and because it was not dealing with ambiguous language, the Tenth Circuit did not have to engage in the complex causation analysis that it did in Fought v. UNUM Life Insurance Co. of America. The policy in Pirkheim v. First Unum Life Insurance stated: "We agree with the Policyholder to cover each Insured for any loss described in Part I in return for the payment of premiums and subject to the provisions which follow. The loss must result directly and independently of all other causes from accidental bodily injury which occurs while this policy is in force as to the Insured, herein called `injury.'" 229 F.3d at 1009 (quoting policy) (emphasis added by Pirkheim v. First Unum Life Insurance). The requirement that a loss result "directly and independently" was unambiguous in the Tenth Circuit's view.
The Policy in this case provides, in a fashion similar to the policy in Pirkheim v. First Unum Life Insurance: "We will pay the benefit described below to an Insured Person when We receive due proof that: (1) he is Totally Disabled; and ... such Total Disability ... resulted solely and directly from Injury while insured under the Group Policy ..." Policy at 10. The Policy in this case is therefore structured similarly to the policy in Pirkheim v. First Unum Life Insurance. The Policy in Pirkheim v. First Unum Life Insurance required the loss to "result directly and independently of all other causes" while the policy in this case requires proof that *1149 the injury "resulted solely and directly" from the work injury. Both policies use the word "result" and both use "directly." Moreover, the Court sees very little meaningful distinction, as far as this case is concerned, between "independent of all other causes" and "solely" as those terms are used in the respective policies. "Solely," like "independent of all other causes," seeks to say the same thing: the covered injury must be the only cause. The Tenth Circuit interpreted the "directly and independently" language in such a fashion and upheld a denial of benefits because a child's "death did not occur independent of all other causes, e.g., his cardiac arrhythmia," and thus one of the policy conditions was not satisfied. Id. at 1011.
Given the Tenth Circuit's analysis in Pirkheim v. First Unum Life Insurance, the Court must apply similar analysis in this case. Accordingly, the Court finds that the Policy in this case, like the policy at issue in Pirkheim v. First Unum Life Insurance, requires the policy holder to prove that his disability resulted solely from the work injury. If the work injury alone was not the cause, then Miller is not entitled to coverage.
III. THE TENTH CIRCUIT DID NOT DECIDE THAT MILLER HAS ESTABLISHED TOTAL DISABILITY UNDER THE POLICY.
The Court is not convinced that the Tenth Circuit has decided that Miller has proved Total Disability, which the Policy requires as a condition of coverage. Nevertheless, certain language from the Tenth Circuit's Opinion reversing the Court's Memorandum Opinion and Order in this case gives the Court pause. Specifically, there are various passages in the Tenth Circuit's opinion that might suggest that the Tenth Circuit found that Miller established that, by receiving an SSI benefit based on disability, Miller established that he is Totally Disabled under the Policy. The Tenth Circuit stated:
It is clear that the Plan's requirement of a Social Security Disability Award serves as a delegation of substantive disability determinations to the SSA. The Plan mandates that a beneficiary be incapable of engaging in productive labor. However, it provides no mechanism for assessing his physical condition, other than whether he has received a Social Security Disability Award.
Miller v. Monumental Life Ins., Co., 502 F.3d at 1251. The Tenth Circuit also explained: "In light of his physical impairments, education, and job skills, the SSA concluded that Mr. Miller was `unable to perform every duty pertaining to any occupation for which he is or may become qualified by education, training, or experience....'" Id. at 1251 (quoting SSI Decision). The Tenth Circuit noted that "[t]his finding seems to satisfy the Plan's requirement that a recipient of Continuous Benefit be `unable to perform the physical and mental requirements of any past relevant work.'" Id. (citations omitted).
Although this language troubles the Court, in the end, the Court does not believe the Tenth Circuit decided that it was established that Miller was Totally Disabled. "Seems" is not the word the Tenth Circuit would likely have chosen to demarcate a holding. In identifying the relationship between the Policy's definition of Total Disability and the requirement for an award of Social Security Disability benefits, the Tenth Circuit intended to illustrate that a reasonable policy holder would equate an SSI benefit with an SSD benefit. It is for that reason that the Tenth Circuit pointed out that the SSA's finding seems to satisfy the disability requirement.
The Court does not believe the Tenth Circuit meant to further hold that the disability prong was, in fact, met. Accordingly, *1150 whether the Total Disability requirement has been met remains an open question that will have to be further developed with the Plan Administrator. Moreover, the Policy specifies that the policy holder must prove that the Total Disability "began within the Disability Commencement Period," "continued without interruption for at least the Waiting Period," and "is reasonably expected to continue without interruption until the Insured Person dies." Policy at 10.
Moreover, the Court did not remand the case to the Court with instructions to enter judgment for Miller on the sole-cause issue or on any other basis. Instead, the Tenth Circuit remanded the case to the Court to address the issue whether Miller's work-related injury was the "sole cause" of his disability. Miller v. Monumental Life Ins. Co., 502 F.3d at 1255. The Tenth Circuit explained: "We note that Monumental [Life] also moved for summary judgment on the grounds that Mr. Miller's accident was not the `sole cause' of his disability.... Because the district court did not address this issue, we must remand for further proceedings." Id. While the Court has been careful to read and re-read multiple times the Tenth Circuit's opinion, and wants very much to follow its directions, and is troubled by certain language in the opinion, the Court concludes that the Tenth Circuit did not decide the issue of Total Disability and remanded that issue to this Court to address it further.
Miller cites various cases from other jurisdiction to support his argument that the sole-cause language in the Policy should be interpreted narrowly to allow for coverage where the injury is a proximate or substantial cause of the disability. In other words, Miller wishes the Court to ignore the actual language of the Policy and construe it in his favor. The authorities Miller cites do not persuade the Court to do so.
Miller cites, for example, Robertson v. Connors, 848 F.2d 472 (4th Cir.1988), a case brought under the United Mine Workers of America Pension Fund in which the United States Court of Appeals for the Fourth Circuit interpreted the phrase "as a result of a mine accident" to require that the claimant show proximate cause. See id. at 475. The Fourth Circuit had to determine whether the Trustee's finding that a mine accident was not substantially responsible for the claimant's disability was arbitrary and capricious. See id. The Fourth Circuit stated:
The only reasonable interpretation of the requirement that total disability be "the result of a mine accident," therefore, is that it requires total disability to have been proximately caused by the mine accident. That is, if the plaintiff was injured in a mine accident and that injury, whether in combination with a previous or subsequent condition, is substantially responsible for plaintiff's inability to perform his job and for whatever medical and vocational reasons he is unable to perform an alternative job, then his total disability results from a mine accident.
Id. at 475 (quoting Horn v. Mullins, 498 F. Supp. 1197, 1200 (W.D.Va.1980), aff'd, 650 F.2d 35 (4th Cir.1981)). Underpinning the Fourth Circuit's reasoning was another opinion springing out of a claim of benefits under the United Mine Workers of America Pension Fund from the Western District of Virginia, in which the district court had explained:
[T]he determination of whether an individual is disabled necessarily involves vocational as well as medical considerations. A back injury which precludes an individual from performing his usual job would rarely prevent performance of *1151 light and sedentary activities. However, whether an individual with such an injury could meet the vocational demands of light or sedentary employment is an obviously different matter. The test for disability is a functional one, and a requirement that a mine accident injury alone preclude alternative work fails to take that fact into account. Given such a requirement, a plaintiff could establish that a mine accident injury is substantially responsible for preventing him from returning to his usual job, but, because other medical conditions or vocational factors preclude alternative work, it could be found that his total disability did not result from a mine accident. The only reasonable interpretation of the requirement that total disability be "the result of a mine accident," therefore, is that it requires total disability to have been proximately caused by the mine accident. That is, if the plaintiff was injured in a mine accident and that injury, whether in combination with a previous or subsequent condition, is substantially responsible for plaintiff's inability to perform his job and for whatever medical and vocational reasons he is unable to perform an alternative job, then his total disability results from a mine accident.
Horn v. Mullins, 498 F.Supp. at 1200. Such an interpretation of the language at issue in cases brought under the United Mine Workers of America Pension Fund might make sense. The language setting forth the requirement that the disability "result" from the mine accident did not contain further qualifications, such as "solely," "directly," or "independently," like the language at issue in this case. In light of the fact that a determination of Total Disability in this case also turns on both vocational and medical consideration, the Court can imagine the Tenth Circuit ruling in a similar fashion as the Fourth Circuit or the Western District of Virginia when faced with the same or similar language. Regardless, the Tenth Circuit has already interpreted a clause like the one in this case, which contained the limiters "directly" and "independently." Pirkheim v. First Unum Life Insurance, 229 F.3d at 1009. The Tenth Circuit read those two limiting phrases to impose two conditions: "First, the loss must result directly from accidental bodily injury. Second, the loss must result independently of all other causes." Id. It is therefore likely that the Tenth Circuit would read the language of the Policy at issue in this case, which uses the words "solely" and "directly," to similarly impose two requirements such as those that the policy discussed in Pirkheim v. First Unum Life Insurance imposed.
Miller also cites Weis v. Accidental Death & Dismemberment Ben. Plan, 442 F. Supp. 2d 850 (N.D.Cal.2006), in which a federal magistrate judge interpreted a policy that covered "bodily injury caused by an accident ... and resulting directly and independently of all other causes" as being satisfied by a showing that the accident proximately caused the injury. 442 F. Supp. 2d at 851. The magistrate judge applied the doctrine of reasonable expectations, which the United States Court of Appeals for the Ninth Circuit had adopted as part of the federal common law. See id. Employing the doctrine of reasonable expectations, the magistrate judge explained that claimant had only received a copy of the Summary Plan Description and not the policy itself. See id. The Summary Plan Description stated: "`Accidental Death and Dismemberment benefits are not payable for death and dismemberment due to: most natural illnesses or diseases.'" Weis v. Accidental Death & Dismemberment Ben. Plan, 442 F.Supp.2d at 851 (quoting Summary Plan Description). Because the claimant did not receive a copy of the policy and only had the Summary Plan *1152 Description, the magistrate judge stated: "The [Summary Plan Description]'s more generous language could reasonably create different expectations than the more onerous language of the Policy. In such cases, the language most favorable to Plaintiff controls...." Weis v. Accidental Death & Dismemberment Ben. Plan, 442 F.Supp.2d at 853. The magistrate judge also explained:
Any burden of uncertainty created by careless or inaccurate drafting of the summary must be placed on those who do the drafting, and who are most able to bear that burden, and not on the individual employee, who is powerless to affect the drafting of the summary or the policy and ill equipped to bear the financial hardship that might result from a misleading or confusing document. Accuracy is not a lot to ask.
Weis v. Accidental Death & Dismemberment Ben. Plan, 442 F.Supp.2d at 853 (quoting Bergt v. Ret. Plan For Pilots Employed by MarkAir, Inc., 293 F.3d 1139, 1145 (9th Cir.2002)).
Weis v. Accidental Death & Dismemberment Ben. Plan does not counsel the outcome of this case. While the policy at issue in that case was similar to the Policy in this case, the magistrate judge did not apply the Policy language strictly. Rather, a set of circumstances not present herei.e., the policy holder was presented with a summary document that contained language that was more permissive than the actual policy languageled the magistrate judge to apply the doctrine of reasonable expectations. The Court agrees with the magistrate judge in Weis v. Accidental Death & Dismemberment Ben. Plan that there is something wrong about an insurance company representing coverage to be more permissive than it really is, and then using the more onerous language found in the policy to deny a claim for benefits. This case does not raise such a danger. Instead, there is no dispute that Miller had the Policy and could read its terms, and that Monumental Life has sought to apply the policy language that Miller has at his disposal. There is therefore no reason to apply the doctrine of reasonable expectations in this case.
Finally, Miller argues that the Tenth Circuit's opinion in this case requires that the district court apply federal common law to interpret the Policy and that, under federal common law, the Court should not read the "sole" and "directly" language in a literal fashion. The Court realizes that, applying the federal common law, the Tenth Circuit held that ambiguities should be construed against the drafter. While Miller contends that the "sole-cause" language is ambiguous, the Court does not believe the language is ambiguous, given the Tenth Circuit's treatment of nearly identical language in Pirkheim v. First Unum Life Insurance.
IV. REMAND IS THE APPROPRIATE REMEDY IN THIS CASE, GIVEN THE LACK OF CLARITY IN THE RECORD.
Both parties in this case argue that they are entitled to summary judgment on sole cause. Both parties' arguments, however, lack citation to evidence that the Court can rely in determining whether either party or none is entitled to summary judgment. The Plan Administrator denied coverage without mentioning sole-cause. Moreover, there is little evidence on what the Plan Administrator relied to reach her conclusion to deny benefits. Under these circumstances, even in light of the Court's interpretation of the sole-cause language of the Policy, the most appropriate course of action is to remand to the Plan Administrator so that she can further develop her ruling, and so that the parties can create a record upon which the *1153 Plan Administrator and any reviewing court can properly rule.
A. THE PLAN ADMINISTRATOR DID NOT EXPLICITLY RELY UPON THE "SOLE CAUSE" LANGUAGE IN THE POLICY TO DENY MILLER BENEFITS.
The Plan Administrator's decision contains one hundred and one words, excluding salutations and other formalities. In its entirety, the body of the letter setting forth the decision reads:
Based on a review of your policy terms it does not appear that you are eligible for continuous total disability.
According to the terms of the policy in order to be eligible for continuous total disability you must be unable to engage in any gainful employment for which you can be reasonably trained for [sic].
You must be awarded a social security disability award for injuries sustained from this accident of 9-15-97. The information you have provided to us from the social security office is for supplemental security income and not a social security disability award. Therefore, no benefits are available.
Plan Administrator's Letter at 1. Two things are evident from the letter. First, the Plan Administrator denied for one reason: the SSI benefit did not qualify as a social-security disability award. See id. Second, the Plan Administrator reviewed "information" Miller provided from the Social-Security office. Id. The Court assumes that the Plan Administrator was referring to the SSI Decision, which was in Miller's favor. If that is the case, then the Court can likely assume that the Plan Administrator had the SSI Decision and that the SSI Decision therefore represents part of the record.
The Plan Administrator's letter is silent regarding other bases for denial of coverage. One possible reason for this silence is that the Plan Administrator, having decided a dispositive issue, considered it unnecessary to proceed to determining other issues, such as causation and Total Disability. The Court at least cannot infer from the Plan Administrator's letter that she had a position regarding issues other than the character of SSI benefits. Moreover, the fact that the parties did not make a record on this issues for the administrator is not surprising. The Plan Administrator received whatever documentation Miller was required to provide, and the Plan Administrator then applied her understanding of the policy. The process was not like an administrative adversarial proceeding.
B. THE CASE LAW CONVINCES THE COURT THAT A REMAND WOULD BE MORE APPROPRIATE THAN SUPPLEMENTATION OF THE ADMINISTRATIVE RECORD.
Under the circumstances of this case, where the record is inadequate for appropriate judicial decision-making, the Tenth Circuit recognizes two solutions: a court may allow the parties to supplement the record or the court may remand. The case law suggests that remand is the most appropriate course of action in this case. The Court will therefore remand the case to the Plan Administrator.
The Tenth Circuit has explained that when the Plan Administrator "fail[s] to make adequate findings or to explain adequately the grounds of [its] decision, the proper remedy is to remand the case to the administrator for further findings or explanation." DeGrado v. Jefferson Pilot Fin. Ins. Co., 451 F.3d 1161, 1175 (10th Cir.2006) (internal quotations omitted).
The Tenth Circuit reasoned in Caldwell v. Life Insurance Co. of North America that
*1154 ERISA section 1133(1) requires that a claims administrator provide adequate notice to any participant whose claim has been denied, "setting forth the specific reasons for such denial...." The remedy when an ERISA administrator fails to make adequate findings or to explain adequately the grounds of her decision is to remand the case to the administrator for further findings or explanation. A remand for further action is unnecessary only if the evidence clearly shows that the administrator's actions were arbitrary and capricious ... or the case is so clear cut that it would be unreasonable for the [P]lan [A]dministrator to deny the application for benefits on any ground.
287 F.3d at 1288 (internal quotations and citations omitted). See Gallo v. Amoco Corp., 102 F.3d 918 (7th Cir.1996) (stating that "[t]he remedy when a court or agency fails to make adequate findings or to explain its grounds adequately is to send the case back to the tribunal for further findings or explanation.... This is the appropriate remedy in an ERISA case just as in a conventional appeal.") (internal citations omitted).
On the other hand, the Tenth Circuit has also noted that, at times, it is appropriate for the district court to allow the parties to supplement the record before making a ruling. In a district court's review of an ERISA Plan Administrator's decision, a party seeking to introduce evidence from outside the administrative record must establish the four elements that the Tenth Circuit set out in Hall v. UNUM Life Insurance Co. of America, 300 F.3d at 1202. See Jewell v. Life Ins. Co. of North America, 508 F.3d at 1309. The Tenth Circuit explained: "[T]he best way for a district court to implement ERISA's purposes in this context is ordinarily to restrict de novo review to the administrative record compiled during the claim administration process, instead of taking new evidence, hearing witnesses, and the like." See Jewell v. Life Ins. Co. of North America, 508 F.3d at 1309. (internal quotations omitted).
A party seeking to introduce evidence from outside the administrative record bears a significant burden in establishing that he may do so. In particular, [(i)] the evidence must be "necessary to the district court's de novo review;" [(ii)] the party offering the extra-record evidence must "demonstrate that it could not have been submitted to the [P]lan [A]dministrator at the time the challenged decision was made;" [(iii)] the evidence must not be "[c]umulative or repetitive;" nor [(iv)] may it be "evidence that `is simply better evidence than the claimant mustered for the claim review.'"
Id. (quoting Hall v. UNUM Life Ins. Co. of Am., 300 F.3d at 1203 (quoting in turn Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d at 1027)). The Tenth Circuit reiterated that the "exceptional circumstances" listed in Hall v. UNUM Life Insurance Co. of America "are not exceptions to the Hall rule; they are merely examples of circumstances that might militate in favor of a finding of necessity." Jewell v. Life Ins. Co. of N. Am., 508 F.3d at 1309. Thus, "[t]he existence of one or more of these circumstances does not make extra-record evidence automatically admissible, for if it did, then supplementation of the record would not be limited to unusual cases or extraordinary circumstances." Id. "District courts must conduct analysis case-by-case to determine whether all four prongs of the Hall test are met." Id.
Even though it is therefore clear that the Tenth Circuit recommends remand to the Plan Administrator under certain circumstances and allows supplementation of the record in the district court under limited circumstances, it is not clear how a *1155 district court should choose between those two courses of action. The practical differences between remand and supplementation, however, convince the Court that this case presents appropriate circumstances for a remand.
When it chose to grant district courts the flexibility to allow parties to supplement the Plan Administrator's record, the Tenth Circuit was primarily concerned with balancing competing risks. On the one hand, if district courts were promiscuous about allowing parties to supplement the record, the district courts might begin playing the role of substitute plan administrators and frustrate the speedy administration of justice. See Hall v. UNUM Life Insurance Co. of America, 300 F.3d at 1201. On the other hand, it might be unfair to claimants because, before ERISA was enacted, claimants would have been able to supplement the record, and a prohibition on supplementing the record under ERISA would afford claimants less protection than they had before ERISA. Such a result would run counter to ERISA's purposes. See Hall v. UNUM Life Insurance Co. of America, 300 F.3d at 1201.
The Tenth Circuit carved out a middle ground between the two extremes and set forth the circumstances where supplementing the record would be appropriate. Whether to remand, however, is based on a different set of considerations. One major risk of a court refusing to remand a case to the Plan Administrator where the record is inadequate is that a claimant could face unfair surprise if the court ruled that the claimant was not entitled to coverage for a reason that the Plan Administrator did not discuss. On the flip side, a Plan Administrator's failure to provide adequate findings or to explain the grounds for denial of benefits "does not mean that the claimant is automatically entitled to benefits because such a holding might provide the claimant with an economic windfall should she be determined not disabled upon a proper reconsideration." Hackett v. Xerox Corp. Long-Term Disability Income Plan, 315 F.3d at 776. In other words, if the Court refused to remand and insisted on deciding on an incomplete or unclear record in favor of the claimant, the claimant might receive a windfall because he will receive benefits without having to fully prove he is entitled to those benefits.
Remand is therefore based mainly on the inadequacy or lack of clarity in the administrative record. A district court is not in a good position to conduct a review of a record if that record is not fully developed and before the court. This case fully implicates such concerns to a greater degree than the concerns that would counsel in favor of retaining the case and allowing the parties to supplement the record. The Court is concerned about ruling on an issue such as sole cause or Total Disability without first seeing what the Plan Administrator does with those issues. Each issue implicates highly specialized determinations based on medical evaluations which the Plan Administrator presumably faces on a routine basis.
At the hearing, Miller discussed the process that the Plan Administrator follows. The Court believes that the process illustrates why it is appropriate to send this case back. According to Miller's representations:
The administrator would send a letter saying it looks as though you failed to meet this requirement. We'll need to have additional evidence or we'll have to deny you at this time. I see those sorts of letters all the time. Frequently they're saying we can't decide this yet because you don't have an opinion from this doctor and we sent out disability statement to a doctor, things like that. So all the time you're going back and *1156 forth making sure that they get what they need in order to have the medical evidence in the record or you're telling them we're waiting for the Social Security decision we'll send that to you. So there is communication about genuine issues. But it doesn't and then when there's a final denial, even then you can if they said they'll usually say but if you have additional medical record you know or something to change our opinion you know you can then appeal it. There's a lot of mechanisms. You can come in later, too, if you have new evidence. I mean, the whole idea is that they're going to give you your disability if you show them you're entitled it's just a matter of getting your ducks in a row or getting your evidence in front of them.
Tr. at 23:3-24:3 (Court & Rawley). To the extent that Miller has accurately portrayed the Plan Administrator's review process, it is evident that the Plan Administrator can, if necessary, request further documentation from a claimant, contact the doctors whom the claimant has used, and reconsider her determination if the claimant brings back further evidence to establish entitlement. Thus, it is possible to develop a record in the administrative process, and it is possible to ascertain the basis upon which a Plan Administrator makes her decision. The problem in this case is that the Plan Administrator gave only one basis for denying benefits and was silent on the other elements of the Policy. The record does not reflect that the Plan Administrator determined whether the work injury was the sole cause of the disability or whether she believed evidence on that element was lacking. Until the Plan Administrator clarifies at what evidence it looked on the sole cause and other elements, the Court cannot review what the Plan Administrator did in a meaningful way.
Supplementing the recording is less useful than remand here because, even if the Court allows supplementation of the record, the Court would be putting itself in the shoes of the Plan Administrator and attempting to review this claim without the Plan Administrator having the opportunity to apply her expertise and make a determination on issues about which she was silent in the earlier letter. It is therefore more appropriate to allow the Plan Administrator to pass on these issues first.
V. THE COURT WILL DENY MONUMENTAL LIFE'S MOTION TO STRIKE.
Monumental Life's attempt to argue that the Court should strike Miller's motion for attorney's fees lacks merit. A motion to strike is limited to challenges of pleadings, and is not appropriate against motions or memoranda. See E.E.O.C. v. Roswell Radio, Inc., 2007 WL 2305521 at *8. "[T]here is no provision in the Federal Rules of Civil Procedure for motions to strike motions and memoranda." Searcy v. Soc. Sec. Admin., 1992 WL 43490, at *2. Thus, the Court will deny Monumental Life's motion to strike Miller's supplemental brief.
VI. MILLER IS NOT ENTITLED TO ATTORNEY'S FEES.
The Court will deny Miller's request for attorney's fees. In an ERISA case, the court has discretion to award "a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1) (stating that "[i]n any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party."). The granting of attorney's fees under ERISA is not to be done as a "matter of course, but is discretionary in nature." Gordon v. United States Steel Corp., 724 F.2d at 108. *1157 There is a general disfavoring of attorney fee awards in ERISA cases. See San Francisco Culinary, Bartenders and Serv. Employees Welfare Fund v. Lucin, 76 F.3d at 298 ("A denial of attorney's fees in this case would also be consistent with the general disfavoring of attorney fee awards in ERISA cases.").
The Tenth Circuit listed several factors in Gordon v. United States Steel Corp. for deciding if an award of attorney's fees and costs in an ERISA action are appropriate, including: (i) the degree of the opposing parties' culpability or bad faith; (ii) the ability of the opposing parties to personally satisfy an award of attorney's fees; (iii) whether an award of attorney's fees against the opposing parties would deter others from acting under similar circumstances; (iv) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (v) the relative merits of the parties' position. See Gordon v. United States Steel Corp., 724 F.2d at 109; McGee v. Equicor-Equitable HCA Corp., 953 F.2d at 1209 n. 17.
Here, the Court cannot say that Monumental Life engaged in any culpable or bad-faith conduct. While the Tenth Circuit has decided Monumental Life's interpretation of its policy was erroneous, there is no indication that Monumental Life came to its conclusion in a bad faith way. Monumental Life's problem was that it wrote an ambiguous provision and did not express its intent clearlynot that Monumental Life acted in bad faith.
The second Gordon factor also does not support an award of fees. The record is silent about Monumental Life's ability to satisfy an award of attorney's fees, but the Court assumes that Monument Life could satisfy any award. Nevertheless, that factor, without more, does not suggest that the Court should, at this time, shift Miller's expenses to Monumental Life.
It is unlikely that shifting Miller's fees to Monumental Life will deter others from acting like Monumental Life under similar circumstances. The dispute between Monumental Life and Miller was a genuine one, and it is not settled. A grant of fees in this case will probably not influence insurance companies one way or another when unresolved legal issues separate them.
The legal issue here appears to be sui generis. It has apparently not arisen before at Monumental Life. Monumental Life, and perhaps other insurance companies, can now simply draft around the issue if they wish. The Tenth Circuit's decision is unlikely to benefit more participants than Miller. While it is true that the Tenth Circuit's opinion is a published opinion, and established for the first time in the Tenth Circuit that courts should apply contra preferentem to construe ambiguous language in ERISA contracts, other circuits have so held, and the case is largely an application of established law to the facts of this case.
The reality is that the partiesboth Miller and Monumental Lifeurged the Court to apply state law at the district court level, and then, on appeal, Miller changed his position and argued that federal common-law applied. If Miller had argued that federal law applied in the district court, he might had prevailed in the district court on the legal issue that he applied to the Tenth Circuit.
In any case, while Miller has prevailed on one issue at this stage, he has not yet prevailed in the case. Miller may be entitled to fees and costs at a later point. At this stage, with the background that fees are disfavored in ERISA cases, the Court believes that it should not, under the Gordon *1158 factors, award Miller his fees and costs.
At the hearing, Miller explained: "Certainly all I'm asking for is if we prevail that the Court would then allow us to submit the evidence concerning the hours and the times and all of that." Id. at 25:1-3 (Rawley). The Court does not see a problem with Miller having asked for attorneys fees in the manner that he did, and the Court has held that it will not strike his request for attorney's fees. At this stage, however, an award of attorney's fees in not appropriate. There is still more to be done in this case. The case will at least be remanded to the Plan Administrator for further review. If the parties cannot either accept the Plan Administrator's finding or settle this case, it is likely the case will return to the district court to review the Plan Administrator's determination. In sum, it is too early in the game to start talking about attorney's fees.
IT IS ORDERED that this case is remanded to the Plan Administrator for further proceeding consistent with this Memorandum Opinion and Order. Monumental Life Insurance Company's Motion to Strike Plaintiff's Supplemental Brief is denied. The Plaintiff's request for an award of attorney's fees, interest, and costs is denied.
NOTES
[1] The Court's citations to the transcript of the hearing refer to the Court Reporter's original, unedited version. Any final transcript may contain slightly different page and/or line numbers.
[2] Monumental Life asserts that it has obtained surveillance video that undermines Miller's contention that he is, or ever has been, Totally Disabled. See Monumental's Motion to Remand and Brief ¶ 9, at 4, filed March 2, 2009 (Doc. 62). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472442/ | 755 F. Supp. 2d 132 (2010)
Col. George S. LAKNER, M.D., Plaintiff,
v.
U.S. DEPARTMENT OF DEFENSE, Defendant.
Civil Action No. 10-1200 (RMC).
United States District Court, District of Columbia.
December 15, 2010.
*134 Timothy Wayne Bucknell, Arent Fox, PLLC, Washington, DC, for Plaintiff.
Kelly Lynell McGovern, U.S. Attorney Office for District of Columbia, Washington, DC, for Defendant.
MEMORANDUM OPINION
ROSEMARY M. COLLYER, District Judge.
Colonel George S. Lakner, M.D., filed a Petition for Writ of Mandamus against the Department of Defense ("DoD"). Col. Lakner's Petition seeks to compel DoD or the Assistant Secretary of Defense for Health Affairs ("ASDHA") to set a hearing and/or issue a decision regarding Col. Lakner's appeal of the revocation of his clinical privileges by the U.S. Army Medical Command. See Pet. for Writ of Mandamus ("Pet.") [Dkt. # 1] at 1, 19-20. DoD has moved to dismiss for lack of jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), because Plaintiff has not established the prerequisites for mandamus jurisdiction. Col. Lakner's appeal already was decided by the designated authority, The Army Surgeon General. Because the ASDHA has no duty to act, Col. Lakner has failed to establish jurisdiction under the Mandamus Act and the case will be dismissed.
I. FACTS
Col. Lakner is a psychiatrist who served in the U.S. military for approximately twenty-five years. The Army revoked his clinical privileges in 2005. This suit arises from that revocation.
In July of 2004, when Col. Lakner was almost sixty-five years old, he was deployed as commander of the Mental Health Task Force in support of NATO forces in Kosovo. Shortly thereafter, in an effort to cover manpower shortages elsewhere, the U.S. Army Medical Command dispersed the Task Force and reassigned personnel. Col. Lakner objected to the disbanding of the Task Force. Subsequently, several deaths occurred among civilian DoD employees. Col. Lakner classified these deaths as suicides and reported *135 that the deaths may have been prevented if the civilians had access to the mental health care that previously had been available from the Task Force. Col. Lakner filed a complaint with the Inspector General.[1]
Thereafter, the Army terminated Col. Lakner's tour of duty.[2] In November of 2004, the Army Medical Command convened a Credentialing Committee to review Col. Lakner's medical credentials. See, Pet., Ex. 27 (Minutes of 11/8/04 Committee Meeting). The Committee examined whether certain reference letters written in support of Col. Lakner were in fact written by the individuals who signed them. Id. at 1. After further investigation, the Committee recommended that Col. Lakner's clinical privileges be revoked. Via a memorandum dated November 15, 2005, Brigadier General Carla Hawley-Bowland accepted the recommendation of the Credentialing Committee and revoked Col. Lakner's clinical privileges. See Pet., Ex. 37 (Nov. 14, 2005 Memo). The memorandum advised Col. Lakner of his appeal rights as follows:
In accordance with [Army Regulation] 40-68, para. 10-10, you have 10 duty days from the date of service of this document to submit an appeal/request for reconsideration to me. If you do not request reconsideration, the action will be submitted to the USAMEDCOM[3] QMD, with a copy furnished to MEDCOM as my next higher headquarters, for reporting to the National Practitioner Data Bank (NPDB). If you elect to appeal, I will act upon that appeal within 14 calendar days from receipt of your submission. If I deny your appeal in whole or in part, the action will be automatically endorsed to The Surgeon General (TSG) as an appeal. TSG is the final appellate authority for denying, suspending, restriction, reducing, or revoking clinical privileges.
Id. at 1-2. Col. Lakner requested reconsideration, and on December 22, 2005, BG Hawley-Bowland denied reconsideration and forwarded the appeal to the U.S. Army Medical Command Medical Appeals Board, which makes recommendation on appeals to The Army Surgeon General. Pet. at 10.
On March 16, 2006, the U.S. Army Medical Command Medical Appeals Board met to consider Col. Lakner's appeal. See Pet., Ex. 41 (Minutes of Board Meeting dated 5/2/06) at 2 ("The chairman asked whether the group agreed that [Col.] Lakner engaged in misconduct to change [sic] the letters with the intent to use them for an official purpose."). The Board voted to recommend that The Army Surgeon General uphold the "adverse privileging action." Id. at 3.
The Army Surgeon General accepted the recommendation. In a letter to Col. Lakner dated May 16, 2006, The Army *136 Surgeon General indicated that it had determined that the revocation of Col. Lakner's clinical privileges was proper. See Pet., Ex. 40 (Letter dated May 17, 2006). The letter noted that "[u]nder the provisions of Army Regulation 40-68, this is the final action in the appeals process. This action will be reported to the National Practitioner Data Bank, The Federation of State Medical Boards, and known states of licensure." Id.
Ignoring The Army Surgeon General's indication that its decision was final, on June 25, 2007, Col. Lakner appealed the decision of the Medical Command Appeals Board to the Assistant Secretary of Defense for Health Affairs ("ASDHA"). The ASDHA has not acted. On July 15, 2010, Col. Lakner filed this case against DoD, seeking a writ of mandamus to compel DoD or the ASDHA to set a hearing and/or issue a decision regarding Col. Lakner's appeal. Col. Lakner's Petition for Writ of Mandamus indicates that it is filed pursuant to: the Mandamus Act, 28 U.S.C. § 1361; the All Writs Act, 28 U.S.C. § 1651; and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 702-706. See Pet. at 1. DoD has moved to dismiss for lack of jurisdiction.
II. LEGAL STANDARD
Federal district courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994). When reviewing a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the court must review the complaint liberally, granting the plaintiff the benefit of all inferences that can be derived from the facts alleged, Barr v. Clinton, 370 F.3d 1196, 1199 (D.C.Cir.2004), although the court may consider materials outside the pleadings. Settles v. U.S. Parole Comm'n, 429 F.3d 1098, 1107 (D.C.Cir.2005). No action of the parties can confer subject matter jurisdiction on a federal court because subject matter jurisdiction is an Article III and statutory requirement. Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C.Cir.2003). The party claiming subject matter jurisdiction bears the burden of demonstrating that such jurisdiction exists. Khadr v. United States, 529 F.3d 1112, 1115 (D.C.Cir.2008).
III. ANALYSIS
Federal district courts have "original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff." 28 U.S.C. § 1361. Mandamus relief may be granted only where (1) the petitioner has a clear right to relief; (2) the respondent has a clear duty to act; and (3) there is no other adequate remedy available to the petitioner. In re Medicare Reim. Litig., 414 F.3d 7, 10 (D.C.Cir.2005). With regard to a defendant's duty to act, "The law must not only authorize the demanded action, but require it; the duty must be clear and indisputable." Lozada Colon v. Dep't of State, 170 F.3d 191, 191 (D.C.Cir.1999). A petitioner who seeks mandamus bears the burden of showing that his right to the writ is clear and indisputable. N. States Power Co. v. Dep't of Energy, 128 F.3d 754, 758 (D.C.Cir. 1997). "Even when the legal requirements for mandamus jurisdiction have been satisfied, however, a court may grant relief only when it finds `compelling . . . equitable grounds.'" Medicare Reim. Litig., 414 F.3d at 10 (citing 13th Reg'l Corp. v. Dep't of Interior, 654 F.2d 758, 760 (D.C.Cir.1980)).
Col. Lakner has not shown that he has a clear and indisputable right to a writ of mandamus because he has not shown that DoD or ASDHA has a duty to act. *137 Army Regulation 40-68 establishes the procedures by which a doctor whose clinical privileges have been revoked may appeal that revocation. See Def.'s Resp. [Dkt. # 9], Ex. A (AR 40-68 "Clinical Quality Management"). After the commander of a medical treatment facility revokes a physician's clinical privileges, the physician can make a request for reconsideration. AR 40-68 ¶ 10.10(a). If the commander denies reconsideration, the issue is automatically endorsed as an appeal to The Army Surgeon General. Id. ¶ 10.10(b). The appeal then goes to the U.S. Army Medical Command Medical Appeals Board. Id. ¶ 10.10(d), (f). The Board reviews the appeal and makes a recommendation to The Army Surgeon General. Id. The Army Surgeon General then decides the appeal. "The Surgeon General is the sole authority responsible for provider notification of the final decision associated with the appeal." Id. ¶ 10.10(f).
Col. Lakner already has followed the procedure set forth in Army Regulation 40-68. Brigadier General Hawley-Bowland revoked Col. Lakner's clinical privileges and denied Col. Lakner's request for reconsideration. Then the action was automatically endorsed to The Army Surgeon General as an appeal. The issue went before the U.S. Army Medical Command Medical Appeals Board and the Board recommended that The Army Surgeon General uphold the revocation. In a final decision, The Army Surgeon General affirmed the revocation of Col. Lakner's clinical privileges. The Army Regulation does not provide for an appeal to DoD or ASDHA, and thus neither of them has a duty to act. Accordingly, Col. Lakner has failed to show that his right to a writ of mandamus is clear and indisputable, and the Court lacks mandamus jurisdiction.
Col. Lakner also erroneously contends that the Court has jurisdiction under the All Writs Act, 28 U.S.C. § 1651, and the APA, 5 U.S.C. §§ 702-706. The All Writs Act provides that federal courts "may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a). The Act does not grant or expand the jurisdiction of district courts; it only permits the issuance of writs as necessary to protect the jurisdiction of the court. "This statutory language thus makes clear that the authority to issue writs is confined to the issuance of process `in aid of' jurisdiction which is created by some other source and not otherwise enlarged by the Act. The statute itself is not a grant of jurisdiction.. . ." West v. Spellings, 480 F. Supp. 2d 213, 218 (D.D.C.2007) (citing In re Tennant, 359 F.3d 523, 527 (D.C.Cir.2004)).
The APA also does not provide an independent basis for subject matter jurisdiction. Califano v. Sanders, 430 U.S. 99, 107, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977). The APA imposes a general duty on administrative agencies to act on matters presented to them within a reasonable time and authorizes a reviewing court to compel agency action unlawfully withheld or unreasonably delayed. The Mashpee Wampanoag Tribal Council, Inc. v. Norton, 336 F.3d 1094, 1100 (D.C.Cir.2003). Because there is no statute or regulation that requires DoD or ASDHA to act on Col. Lakner's challenge to the final decision of The Army Surgeon General, there can be no claim that a decision by DoD or ASDHA has been unlawfully withheld or unreasonably delayed. Because the Court lacks jurisdiction in this matter, the case will be dismissed.[4]
*138 IV. CONCLUSION
For the reasons stated above, DoD's motion to dismiss [Dkt. # 9] will be granted and this case will be dismissed. A memorializing Order accompanies this Memorandum Opinion.
NOTES
[1] Col. Lakner alleges that on September 22, 2004, the Inspector General determined that his complaint was founded.
[2] Col. Lakner allegedly was forcibly removed from Kosovo and detained for a few weeks in at Landstuhl Regional Medical Center in Germany. He then returned to the United States. While he was in Germany and again on his return to the United States, the Army required Col. Lakner to undergo mental health examinations. Col. Lakner asserts that the early termination of his tour of duty, his removal from Kosovo and detention in Germany, and the mental health evaluations were done in retaliation for his complaint to the Inspector General. However, on November 6, 2006, the DoD Inspector General determined that Col. Lakner's reprisal allegations were not substantiated. Reply [Dkt. # 12], Ex. 3 (Matteston Decl.) at 40-42.
[3] "USAMEDCOM" is the U.S. Army Medical Command.
[4] DoD also notes that Col. Lakner can pursue other administrative remedies. He can contact the National Practitioner Data Bank to dispute the factual accuracy of the report from The Army Surgeon General or to challenge whether the report met the relevant reporting requirements. See Def.'s Mot. at 7. Col. Lakner could also request that his military records be corrected by the Army Board for Correction of Military Records. Id. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539504/ | 712 F.Supp.2d 590 (2010)
UNITED STATES of America,
v.
Dagoberto RODRIGUEZ-CASTORENA.
No. SA-10-CR-222-XR.
United States District Court, W.D. Texas.
April 26, 2010.
*591 Matthew Lathrop, United States Attorney's Office, San Antonio, TX, for Plaintiff.
*592 Genaro R. Cortez, Law Office of Genaro Cortez, San Antonio, TX, for Defendant.
ORDER
XAVIER RODRIGUEZ, District Judge.
On this day came on to be considered Defendant's motion to suppress (docket no. 16).
Background
Dagoberto Rodriguez-Castorena (Rodriguez) is charged in an indictment with illegal re-entry into the United States in violation of 8 U.S.C. § 1326.
On February 16, 2010, a Ford Expedition was traveling north on IH 35. Border Patrol Agent Patrick Philpot was also traveling north on the interstate when he encountered the Expedition. The encounter occurred about 9:00 a.m., between mile markers 96 and 98, which is approximately 75 to 90 miles from the border (as measured from Eagle Pass, Texas).[1] Agent Philpot testified at the suppression hearing that this area is a known corridor for drug smuggling and the transportation of illegal aliens.
Agent Philpot was traveling in uniform and in a marked Border Patrol vehicle. He maneuvered his vehicle alongside the Expedition and noticed the driver and passenger talking, joking, and the passenger had his feet on the dash with no shoes on. Agent Philpot testified that when the driver and passenger noticed him, they stopped taking, the driver "stiffened up", they became "rigid", and the passenger took his feet off the dash and crouched down as if reaching for his shoes.
Prior to traveling alongside the Expedition, Agent Philpot did not notice anything unusual about the vehicle, the Expedition had not committed any traffic infractions, and he had no reason to stop the vehicle.[2]
After noticing the change in demeanor, Agent Philpot testified that he maneuvered his vehicle behind the Expedition and ran the vehicle's license plates into his computer database. The Expedition was registered to an owner that lived in Dallas, Texas. No arrest warrants were noted.
Thereafter, Agent Philpot ran the license plates into a computer database to determine whether the Expedition had crossed the border or passed through "Charlie 29", the Border Patrol checkpoint located at IH 35 and mile marker 29. The computer database had no record of the Expedition crossing the border or passing through "Charlie 29" within the last 72 hours.
Based on the above, Agent Philpot activated his lights and attempted to stop the Expedition. Rather than immediately stopping, the driver drove a short distance to an area with shrubs. The driver thereafter stopped his vehicle and the driver and passenger fled the scene. Agent Philpot approached the vehicle and at that *593 time noticed five individuals in the rear cargo area of the Expedition. The Defendant was one of the five individuals found in the vehicle. Agent Philpot detained the five individuals. They were later transported to another location, where they were interviewed and fingerprints were taken.
Defendant argues that the vehicle he was in was stopped with no reasonable suspicion. Defendant seeks suppression of any verbal statements he made and seeks suppression of any fingerprints taken at that time. In addition, Defendant argues that he was questioned by agents without first being read his Miranda rights.[3] Defendant also seeks suppression of his A-file.[4]
The Government argues that the Defendant has no standing to challenge the stop of the vehicle. Alternatively, the Government argues that Agent Philpot had reasonable suspicion to stop the Expedition. Lastly, the Government argues that in any event, Defendant's fingerprints and the A-file are not subject to suppression.
Analysis
A. Standing argument
Rodriguez did not have a possessory or privacy interest in the vehicle. Accordingly, he lacks standing to challenge the search of the vehicle. See United States v. Roberson, 6 F.3d 1088, 1091 (5th Cir.1993). But in this case, Defendant is not contesting any search of the vehicle. When the vehicle was stopped, the driver and passenger opened their doors and fled. Agent Philpot saw the Defendant and four other aliens in plain view.
Nevertheless, because the stop resulted in Rodriguez's seizure, he does have standing to challenge the legality of the stop which caused the subsequent seizure of his person. See Brendlin v. California, 551 U.S. 249, 127 S.Ct. 2400, 168 L.Ed.2d 132 (2007); U.S. v. Lara, 271 Fed.Appx. 404 (5th Cir.2008). Accordingly, the Government's argument that Defendant lacks standing is overruled.
B. Vehicle Stop
Because this case involves a roving Border Patrol stop, the Court applies the principles enunciated by the Supreme Court in United States v. Brignoni-Ponce, 422 U.S. 873, 95 S.Ct. 2574, 45 L.Ed.2d 607 (1975). Under Brignoni-Ponce, a temporary investigative stop of a vehicle may be made by a roving patrol if the Border Patrol agents are aware of "specific articulable facts, together with rational inferences from those facts, that reasonably warrant suspicion" that the vehicle is involved in illegal activities. Brignoni-Ponce, 422 U.S. at 884, 95 S.Ct. 2574. The totality of the circumstances is to be considered by a court in assessing reasonable suspicion. U.S. v. Lopez, 911 F.2d 1006, 1009 (5th Cir.1990). Relevant factors include known characteristics of a particular area, previous experience of the arresting agents with criminal activity, proximity to the border, patterns of traffic, characteristics of the vehicle stopped, including its *594 type and appearance, and finally the behavior of the driver of the vehicle. Brignoni-Ponce, 422 U.S. at 884-85, 95 S.Ct. 2574. Although any single factor taken alone may be insufficient, under a "totality of the circumstances" analysis, the absence of a particular factor will not control a court's conclusions. Lopez, 911 F.2d at 1009.
In this case the Government argues that the following factors justified the vehicle stop: (1) the change in demeanor by the driver and passenger; (2) the passenger stooped down to put his shoes on; (3) the vehicle was registered to someone who lived in Dallas; (4) the area was a known smuggling route; and (5) the vehicle did not pass through the "Charlie 29" checkpoint earlier in that morning. The Government, citing U.S. v. Arvizu, 534 U.S. 266, 122 S.Ct. 744, 151 L.Ed.2d 740 (2002), argues that all these factors taken collectively support the agent's belief that the vehicle had likely begun its trip near Laredo, Texas, the five aliens walked around the Charlie 29 checkpoint, boarded the Expedition thereafter, and were then being taken to a major urban center (San Antonio or Dallas) where "stash houses" are located.
Relying upon U.S. v. Rangel-Portillo, 586 F.3d 376 (5th Cir.2009), Defendant argues that any change in demeanor by the driver and passenger should be afforded little weight. Further, Defendant argues that the distance from the border in this case weighs heavily against a finding of reasonable suspicion.
In Arvizu, a Border Patrol agent was working at a border patrol checkpoint approximately 30 miles north of the border city of Douglas, Arizona. The agent received reports of sensor activity in the area. One sensor report indicated that a vehicle was heading westbound on Rucker Canyon Road. The agent travelled to the area and saw the dust trail of an approaching vehicle about a half mile away. The agent had not seen any other vehicles and, based on the timing, believed that this was the one that had tripped the sensors. The vehicle was a minivan, a type of automobile that the agent knew smugglers used. As it approached, it slowed dramatically, from about 50-55 to 25-30 miles per hour. The agent saw five occupants inside. The driver appeared stiff and his posture very rigid. He did not look at the agent and seemed to be trying to pretend that the agent was not there. The agent thought this suspicious because in his experience on patrol most persons look over and see what is going on, and in that area most drivers give border patrol agents a friendly wave. The agent radioed for a registration check and learned that the minivan was registered to an address in Douglas that was four blocks north of the border in an area notorious for alien and narcotics smuggling. After receiving the information, the agent decided to make a vehicle stop. The agent asked the driver if he could look inside and search the vehicle. Arvizu agreed, and the agent discovered marijuana in a black duffel bag under the feet of two children in the back seat. Another bag containing marijuana was behind the rear seat. In all, the van contained 128.85 pounds of marijuana, worth an estimated $99,080. Arvizu was charged with possession with intent to distribute marijuana. He moved to suppress the marijuana, arguing among other things that the agent did not have reasonable suspicion to stop the vehicle as required by the Fourth Amendment. After holding a hearing where the agent and Arvizu testified, the District Court denied the motion to suppress. The District Court pointed to a number of the facts described above and noted particularly that any recreational areas north of Rucker Canyon would have been accessible from Douglas via 191 and another paved road, making it unnecessary *595 to take a 40-to-50-mile trip on dirt roads. The Ninth Circuit reversed. The Supreme Court granted certiorari "because of its importance to the enforcement of federal drug and immigration laws."
The Supreme Court stated that because "the `balance between the public interest and the individual's right to personal security,' United States v. Brignoni-Ponce, 422 U.S. 873, 878, 95 S.Ct. 2574, 45 L.Ed.2d 607 (1975), tilts in favor of a standard less than probable cause in such cases, the Fourth Amendment is satisfied if the officer's action is supported by reasonable suspicion to believe that criminal activity `may be afoot.'" Arvizu, 534 U.S. at 273, 122 S.Ct. 744.
The Supreme Court further stated that a reviewing court should make reasonable-suspicion determinations looking at the "totality of the circumstances of each case to see whether the detaining officer has a `particularized and objective basis' for suspecting legal wrongdoing." Id. "This process allows officers to draw on their own experience and specialized training to make inferences from and deductions about the cumulative information available to them that `might well elude an untrained person.'" Id. An officer's reliance on a mere "`hunch'" is insufficient to justify a stop, but the "likelihood of criminal activity need not rise to the level required for probable cause, and it falls considerably short of satisfying a preponderance of the evidence standard." Id. at 274, 122 S.Ct. 744.
The Supreme Court held that the agent had reasonable suspicion to believe that Arvizu was engaged in illegal activity. "It was reasonable for Stoddard to infer from his observations, his registration check, and his experience as a border patrol agent that respondent had set out from Douglas along a little-traveled route used by smugglers to avoid the 191 checkpoint. Stoddard's knowledge further supported a commonsense inference that respondent intended to pass through the area at a time when officers would be leaving their backroads patrols to change shifts. The likelihood that respondent and his family were on a picnic outing was diminished by the fact that the minivan had turned away from the known recreational areas accessible to the east on Rucker Canyon Road. Corroborating this inference was the fact that recreational areas farther to the north would have been easier to reach by taking 191, as opposed to the 40-to-50-mile trip on unpaved and primitive roads. The children's elevated knees suggested the existence of concealed cargo in the passenger compartment. Finally, for the reasons we have given, Stoddard's assessment of respondent's reactions upon seeing him and the children's mechanical-like waving, which continued for a full four to five minutes, were entitled to some weight." Id. at 277, 122 S.Ct. 744.
In Rangel-Portillo, the Fifth Circuit concluded that the detention of Rangel-Portillo's vehicle lacked reasonable suspicion even though the stop occurred a mere 500 yards from the border. The Fifth Circuit concluded that reasonable suspicion could not be concluded from the fact that all of the passengers in the vehicle wore seatbelts, sat rigidly, refrained from talking to one another, and had no shopping bags as they exited a Wal-Mart parking lot. In addition, the Fifth Circuit rejected the Government's request to defer to the agent's expertise in recognizing these factors as reasonably suspicious behavior.
Other recent Fifth Circuit opinions have reached a different result. In U.S. v. Serrano-Villalobos, 326 Fed.Appx. 274 (5th Cir.2009), the Fifth Circuit concluded that "the fact that the agent observed the vehicle exiting from a ranch that borders the Rio Grande "contributes significantly" to *596 the reasonableness of the agent's suspicion." Id. at 275. Further, the agent testified that the ranch was located in a "high traffic" area, that numerous seizures of aliens and narcotics had occurred in this area, and that he had made arrests in that particular area. The Court concluded that these factors weighed in favor of reasonable suspicion. The agent also testified that he had seen only the ranch owner on the property, and he did not recognize this particular vehicle or its occupants.
In U.S. v. Hernandez-Moya, 353 Fed. Appx. 930 (5th Cir.2009), the Fifth Circuit concluded that the fact that a border patrol agent initially observed six Hispanic occupants in a Tahoe near Midland, Texas and after running a computer check on the vehicle observed that the Tahoe now appeared to only contain two individuals-the driver and the front passenger, allowed the agent to infer that the four passengers in the back had ducked down to hide.
Viewing the evidence in this case in its totality, Agent Philpot had only a "hunch" that illegal immigrants would be found in the vehicle. He testified that he did not see anyone in the rear cargo area and he did not notice whether the vehicle was "riding low." He saw a change in demeanor in the driver and passenger. That factor is entitled to little weight. The fact that the area was a known smuggling route does favor the Government's position. But it should be noted that the stop occurred at 9:00 a.m. on a well-traveled interstate highway, not a rural or secluded road in the dead of the night. The stop occurred well outside the immediate border area. The fact that the passenger took his feet off the dash and reached for his shoes is not indicative of criminal behavior. Otherwise, the remaining points articulated by the Government were grounds developed by the agent after he stopped the vehicle. Prior to activating his lights, Agent Philpot had no reason to suspect that the vehicle started out that morning in Laredo and circumvented the checkpoint. Indeed, it is just as plausible that the vehicle could have traveled along various state highways and never originated in Laredo, Texas or ever came upon the checkpoint.
Reviewing the facts in their totality, the Court concludes that there was no reasonable basis for this stop.
C. Fingerprints
"Under the fruit of the poisonous tree doctrine, all evidence derived from the exploitation of an illegal search or seizure must be suppressed, unless the government shows that there was a break in the chain of events sufficient to refute the inference that the evidence was a product of the constitutional violation." United States v. Dortch, 199 F.3d 193, 200-01 (5th Cir. 1999).
The Government, relying upon U.S. v. Olivares-Rangel[5], and U.S. v. Ortiz-Hernandez,[6] argues that since the Defendant's fingerprints were only taken as part of the regular "booking" process, the fingerprints should not be subject to suppression. This Court in U.S. v. Hernandez-Reyes, 501 F.Supp.2d 852 (W.D.Tex.2007) (J. Martinez) adopted the position in Olivares-Rangel concluding that if an illegal arrest is used as an investigatory device to obtain fingerprints, the fingerprints are then regarded as inadmissible fruit of an illegal detention. However, if fingerprints are taken as part of a routine booking procedure following an arrest (that later is determined to be illegal), such fingerprints will not be poisoned fruit of an illegal *597 arrest and should not be suppressed. Id. at 861.
In this case, the Defendant does not argue that his arrest was an investigatory device to obtain his fingerprints. The Fifth Circuit has not squarely addressed this issue. See U.S. v. Lopez-Pocazo, 84 Fed.Appx. 366 (5th Cir.2003) ("This court has not decided whether fingerprint evidence is suppressible in a prosecution pursuant to 8 U.S.C. § 1326."). However, the Fifth Circuit has held that "neither a defendant's identity or his Immigration and Naturalization Service ("INS") file are suppressible, and this is true even if such evidence is obtained through exploitation of an illegal detention." Id. at 366-67.
This Court concludes that since the Defendant's fingerprints were only taken as part of the regular "booking" process, the fingerprints should not be subject to suppression.
Conclusion
Defendant's motion to suppress is granted in part and denied in part. Any verbal statements Defendant made are suppressed because of the lack of reasonable suspicion to stop the vehicle and because Defendant was not administered his Miranda warnings. Defendant's fingerprints taken after the stop and his A-file are not subject to suppression.
It is so ORDERED.
NOTES
[1] At the time Agent Philpot stopped the vehicle he did not know where the vehicle originated its journey. Typically, the Fifth Circuit has stated that "[v]ehicles traveling more than fifty miles from the border are usually a `substantial' distance from the border." See United States v. Orozco, 191 F.3d 578 (5th Cir.1999) ("a car traveling more than fifty miles from the border is usually viewed as being too far from the border to support an inference that it originated its journey there") (quoting United States v. Jones, 149 F.3d 364, 368 (5th Cir. 1998)).
[2] Agent Philpot testified that from the time he eyeballed the vehicle to the time he pulled the vehicle over, he didn't notice "illegal activity as cut and dry, black and white. I really didn't see anything black and white." He further testified that the only things that aroused his suspicion were the driver and passenger's change in demeanor and their communication stopped. Finally, he testified that he had a suspicion there "was something going on." "In my opinion, from my observation, my experience, I believed that the vehicle contained illegal aliens or contraband. That's why I pulled it over."
[3] Defendant argues in his motion that his Miranda rights were only read to him after he was interviewed. The Government did not address this issue at the suppression hearing. The Government also did not address the issue in any of its briefing. In U.S. v. Montalvo-Rangel, Slip Copy, 2010 WL 1417745 (W.D.Tex.2010), the Government conceded in that case that there is apparently a custom or practice that ICE agents interrogate individuals first and provide Miranda warnings afterward.
[4] Defendant concedes that this argument is foreclosed by Fifth Circuit precedent, but nevertheless has made the argument in order to preserve the issue for appeal. See U.S. v. Pineda-Chinchilla, 712 F.2d 942 (5th Cir. 1983).
[5] 458 F.3d 1104 (10th Cir.2006)
[6] 427 F.3d 567 (9th Cir.2005). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472297/ | 29 F. Supp. 2d 423 (1998)
James CARTER, Plaintiff,
v.
Tim McCALEB, individually; and County of Calhoun, a public body; and Marcia Leavel, individually; jointly and severally, Defendants.
No. 4:97 CV 139.
United States District Court, W.D. Michigan, Southern Division.
November 12, 1998.
*424 William F. Piper, Durant, Piper & Connelly, L.L.P., Kalamazoo, MI, for Plaintiff.
John L. Thurber, Frank J. Kelley, Attorney General, Lansing, MI, Richard H. Winslow, Cummings, McClorey, Davis & Acho, PC, Battle Creek, MI, for Defendants.
JUDGMENT
ENSLEN, Chief Judge.
In accordance with the Opinion entered this date:
IT IS HEREBY ORDERED that Defendants' Motions for Summary Judgment (dkt.# 51, 52) are GRANTED, and that judgment is entered in favor of Defendants and against Plaintiff as to Plaintiff's federal law claims;
IT IS FURTHER ORDERED that Plaintiff's state law claims are DISMISSED without prejudice;
IT IS FURTHER ORDERED that Plaintiff's Cross Motions for Summary Judgment (dkt.# 57, 58) are DENIED.
OPINION
This matter is before the Court on the parties' cross motions for summary judgment and/or dismissal. Plaintiff brings suit, pursuant to 42 U.S.C. § 1983, against the County of Calhoun, probation officer Tim McCaleb, and Sgt. Marcia Leavell of the County Sheriff's Department. He alleges: (1) violations "of liberty interest and the interest against cruel and unusual punishment" against all defendants; (2) First Amendment retaliation against Defendant McCaleb; (3) *425 denial of access to the courts by Defendant County; and (4) supplemental state law claims against Defendants Leavell and McCaleb.
On October 4, 1994, Plaintiff James Carter pled guilty to two counts of delivery of cocaine, less than 50 grams. On June 26, 1995, he was sentenced. The sentence included lifetime probation and a twelve month jail sentence, with credit for 61 days. A form titled "Judgment of Sentence" included a section titled "Release Authorized for the Following Purpose" and a box was checked indicating "to work or seek work." In the transcript of the judgment issued from the bench, the court stated that "[t]he plea agreement contemplated that you will be receiving a sentence on each of the two cases, possible sentence, two cases of lifetime probation with the one year county jail. Sentence will involve work release on one of the two. And I intend to follow that because the plea agreement, as I understand, has been carried out on your part." The court later stated that "the release only from the county jail on work release contemplates that you are working." The court asked if the Plaintiff was working at the time, to which he responded yes.[1] The Court went on:
To make sure that you understand what I say, that you may be on work release, that's simply an okay that you may be put on that status. It's a sheriff's work release program. It belongs to the sheriff, not the court system. I have nothing to do with it.
And you go over to the county jail and allow you to be on work release, they can disallow you from being on work release. They have rules and regulations and you are found to have marijuana on you for instance, they can revoke the Sheriff can revoke the work release. He doesn't have to come to the Judge.
So the the Sheriff's program you have to understand that the Judge does not interfere with the work release program. The only thing I have to do with it is to say it's okay with me.
If the sheriff wants to put you on it as part of your sentence, keep in mind that you have to abide by all the rules and regulations of the Sheriff's Department with regard to work release.
It appears that the Defendants did not process Plaintiff's work release in a timely fashion, and did not check his employment reference until one week after sentencing, at which time no job was available with the putative employer. Plaintiff subsequently sought to be released to pursue work, but was not released. He allegedly wrote numerous complaints, or "kites," in this regard, which received no response. He then wrote to the attorney who represented him at sentencing, and allegedly to the sentencing judge, but still received no action on his request for work release.
On August 25, 1995, Defendant McCaleb wrote a letter to Plaintiff, accusing him of "misrepresenting" and "manipulations to get out of jail early." He stated that he would not support early release in any form, and that since one of Plaintiff's sentences did not permit work release, it was "practically irrelevant" that the other did. He concluded:
To put it bluntly, you were given 12 months in jail, and I think it's important that you do them. If you cannot accept this reasonable retribution without the continuing whining machinations you've demonstrated thus far, you will merely confirm that you have to be more closely monitored and inflexibly responded to when you are released. I trust you see my point.
(emphasis in original)
At some point in this process, the Plaintiff alleges he again sought the help of his former attorney, but was told that a retainer would be required. He also alleges that he asked jail officials for access to materials in order to perform legal research, but was told *426 the jail did not have a law library. The Plaintiff served his entire sentence in the County Jail.
Legal Standards
Under Rule 12(b)(6), a complaint may be dismissed "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984). The complaint must be construed in the light most favorable to the plaintiff, and its wellpleaded facts must be accepted as true. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). However, the Court need not accept as true legal conclusions or unwarranted factual inferences. Lewis v. ACB Business Serv., Inc., 135 F.3d 389, 405 (6th Cir.1998).
"Federal Rule of Civil Procedure 56(c) provides that summary judgment is proper `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 judgment as a matter of law.'" City Management Corp. v. U.S. Chemical Co., 43 F.3d 244, 250 (6th Cir.1994).
"A party seeking summary judgment bears the initial burdens of specifying the basis upon which it contends judgment should be granted and of identifying that portion of the record which, in its opinion, demonstrates the absence of a genuine issue of material fact." Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 800 (6th Cir.1994) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). Under this test, the moving party may discharge its burden by "pointing out to the district court ... that there is an absence of evidence to support the nonmoving party's case." Hall v. Tollett, 128 F.3d 418, 422 (6th Cir.1997) (quoting Celotex, 477 U.S. at 325, 106 S. Ct. 2548). "Once this initial burden is met, it becomes the burden of the non-moving party to come forward with specific facts, supported by the evidence in the record, upon which a reasonable jury could find there to be a genuine fact issue for trial." Bill Call Ford, Inc. v. Ford Motor Co., 48 F.3d 201, 205 (6th Cir.1995) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). Mere conclusory assertions or speculation will not suffice to avoid summary judgment, however. Moore v. Philip Morris Cos., 8 F.3d 335, 343 (6th Cir.1993). The non-moving party must go beyond the pleadings and provide sufficient facts to establish the dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (citing Fed. R. Civ. Pro. 56(e)).
"`[C]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences are jury functions, not those of a judge. The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [the non-movant's] favor.'" Id. (quoting Anderson, 477 U.S. at 255, 106 S. Ct. 2505). The factual record presented must be interpreted in a light most favorable to the non-movant. Matsushita, 475 U.S. at 587, 106 S. Ct. 1348. This Court "cannot resolve issues of fact, but is empowered to determine only whether there are issues in dispute to be decided in a trial on the merits." Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir.1987); In re Atlas Concrete Pipe, Inc., 668 F.2d 905, 908 (6th Cir. 1982).
Analysis
Procedural due process
While there are a number of subsidiary claims, this case revolves around the contention that Defendants "violated [Plaintiff's] liberty interest" in being placed on work release. While inartfully phrased by Plaintiff, this is a procedural due process claim, complaining that Plaintiff did not receive due process before being deprived of his putative liberty interest. As well, it may present a substantive due process claim. In order to succeed on either, a liberty interest must first be identified.
The due process playing field was dramatically altered by the Supreme Court in Sandin v. Conner, 515 U.S. 472, 115 S. Ct. 2293, 132 L. Ed. 2d 418 (1995). Before Sandin, an inquiry into the source of a protected liberty interest was critical. Then, an enforceable liberty interest could be conferred upon prisoners *427 through the enactment of "statutory or regulatory measures which place substantive limitations on prison officials' discretion." Klos v. Haskell, 48 F.3d 81, 86 (2d Cir.1995). In order to confer such an interest, a finding was necessary that the state law placed "substantive predicates" on the discretion of officials, and employed mandatory language requiring that the officials adhere to those predicates. See Kentucky Dep't of Corrections v. Thompson, 490 U.S. 454, 462-63, 109 S. Ct. 1904, 104 L. Ed. 2d 506 (1989). After Sandin, the language used in a statute or regulation is irrelevant. The Court has created a new regime in which the nature of an interest, not its source, determines whether it is constitutionally protected. A court must now determine if a condition of imprisonment "imposes atypical and significant hardship on [an] inmate in relation to the ordinary incidents of prison life." Sandin, 515 U.S. at 484, 115 S. Ct. 2293. From the language of Sandin, it is apparent that comparisons must be drawn to determine typicality and significance. Sandin provides two guidelines for making the necessary comparison. First, the Court looked at whether there was a "dramatic departure from the basic conditions" of defendant's sentence. 515 U.S. at 485, 115 S. Ct. 2293. It then analyzed whether "[b]ased on a comparison between inmates inside and outside disciplinary segregation, the State's actions in placing him [in segregation] for 30 days [amounted to] a major disruption in his environment." Id. at 486, 115 S. Ct. 2293.
In a recent, apposite case, the First Circuit has held, applying Sandin, that a work release program does not give rise to a property interest. Dominique v. Weld, 73 F.3d 1156 (1st Cir.1996). In Dominique, the plaintiff had been on work release for almost four years when his status was revoked. The court, in determining whether the plaintiff had been subjected to "atypical and significant hardship," noted that the duration of the plaintiff's sentence had not changed and that he was subjected to "conditions no different from those ordinarily experienced by large numbers of other inmates serving their sentences in customary fashion." Id. at 1160. In this regard, the court further noted that "confinement within four walls" is an "ordinary incident of prison life," and is not "atypical." Id. The court concluded that the Supreme Court, in Sandin, "plainly intended to eliminate the basis for federal due process claims stemming from internal transfers and status changes that do not result in ... hardship beyond the norms of ordinary prison life." Id.
In Lee v. Governor of New York, 87 F.3d 55 (2nd Cir.1996), plaintiffs challenged a law which rendered them ineligible to participate in work release, a program in which they had not previously participated. While the Second Circuit's conclusion that plaintiff's confinement would not be disrupted was partially directed by their prior non-participation, the court also noted that "[p]laintiffs will simply continue in the regular prison program until the end of their sentences, as do many other inmates." Id. at 58. In other words, the court treated a lack of work release as an "ordinary incident of prison life."
Other courts have also considered whether an inmate has a liberty interest in participation in a release program such that some process is due before the inmate can be removed from the program. The courts have split on the resolution of this issue. Compare Callender v. Sioux City Residential Treatment Facility, 88 F.3d 666 (8th Cir. 1996) (inmate who had not yet participated in work release program, and whose sentence was not increased, did not suffer atypical hardship); Asquith v. Volunteers of America, 1 F. Supp. 2d 405 (D.N.J.1998) (after reviewing the various cases addressing the issue, concluding that work release is a "species of incarceration" which does not give rise to a liberty interest); with Greaves v. New York, 951 F. Supp. 33, 35 (S.D.N.Y.1996) (in a case where prisoner lived at home five days a week, the practical effect of deprivation of temporary release program "caused a `major disruption' and a `significant hardship.' Thus, [prisoner] had a liberty interest in his continued participation"); Roucchio v. Coughlin, 923 F. Supp. 360, 374 (E.D.N.Y. 1996) ("[a]n objective evaluation of the circumstances attending [plaintiff's] participation in the work release program warrants the conclusion that the revocation of this conditional freedom, that enabled him to live *428 five days a week outside the prison walls, worked a `major disruption' in his prison environment, and imposed an `atypical and significant hardship [upon him] in relation to the ordinary incidents of prison life'"); Quartararo v. Catterson, 917 F. Supp. 919, 940 (E.D.N.Y.1996) ("the removal of a prisoner from a work release program in which he has been gainfully employed imposes an atypical, significant hardship.").
The above cases locating a liberty interest in work release have distinguishable facts. First, in both Greaves and Roucchio, the prisoners lived at home for most of the week. In Quartararo, the prisoner was "gainfully employed" rather than prospectively employed. In these contexts, it is easier to conclude that a "major disruption" would be worked by denial of work release.
The Supreme Court has offered some language which would appear to support the suggestion that work release is subject to the procedural protections of the Fourteenth Amendment. In Young v. Harper, 520 U.S. 143, 117 S. Ct. 1148, 137 L. Ed. 2d 270 (1997), the Court held that a placement in a so-called "preparole" program in Oklahoma could not be revoked without the process available to parolees under Morrissey v. Brewer, 408 U.S. 471, 92 S. Ct. 2593, 33 L. Ed. 2d 484 (1972). The Court noted the following characteristics of preparole release in determining that it was dissimilar to incarceration: "[h]e kept his own residence; he sought, obtained, and maintained a job; and he lived a life generally free of the incidents of imprisonment." Young, 117 S. Ct. 1148. To be sure, an Oklahoma preparolee and a Michigan prisoner on a work release program share the characteristic of gainful employment. The similarity ends there, however. When not at work, a work release participant remains a prisoner. He does not keep his own residence, and, since he is imprisoned during non-work hours, he is in no way "free of the incidents of imprisonment." Accordingly, his status is different in kind from that of the preparolees in Young.
The Sixth Circuit has not yet issued a published decision construing Sandin in the context of work release programs. It has, however, issued two unpublished decisions concluding that no liberty interest is implicated in a denial of work release. Thompson v. Thompson, No. 96-6352, 1998 WL 211775 (6th Cir. April 23, 1998) ("removal from the work release program was not an atypical and significant hardship"); Little v. Campbell, No. 96-5515, 1997 WL 242050 (6th Cir. May 8, 1997) ("[d]enial of placement in a work release center does not implicate a liberty interest protected by the Due Process Clause because it is not a significant and atypical hardship.")
Plaintiff appears to argue that even if he has no liberty interest in work release in itself, he somehow has a liberty interest in the sentencing judgment's language authorizing work release. Sandin instructs, however, that regardless of the source a regulation, a statute, or a court order a liberty interest is not implicated in a condition of sentence unless an "atypical hardship" must be endured in its absence. For instance, in Bulger v. United States Bureau of Prisons, 65 F.3d 48 (5th Cir.1995), exclusion from a federal prison work assignment was governed by explicit procedural rules that the government did not follow. Id. at 49-50. The government's failure to follow its procedures was of no import, in the absence of an atypical, significant hardship. Id. at 50. That a condition is included in a court order no more creates an interest than does its inclusion in a regulation or statute. Moreover, there is no question that the Court's judgment did not require work release, but rather permitted it.
Mich. Comp. Laws § 801.251 provides that "a sentence or commitment of a person to a county jail for any reason may grant to the person the privilege of leaving the jail" to work or seek employment. The sentencing judge granted that privilege, but with a number of conditions. The form judgment issued by the court "authorized" work release. As the judge himself noted at the sentencing hearing, this authorization was "simply an okay," and the program is administered by the Sheriff, who decides if he "wants to put you on it as part of your sentence." There is nothing mandatory about this part of the sentencing judgment. If work release were somehow mandated as part of the Plaintiff's *429 sentence, he might be able to claim that its absence was "a dramatic departure from the basic conditions" of his sentence. Sandin, 515 U.S. at 485, 115 S. Ct. 2293. It was not mandated by the judgment, however. Instead, it was simply permitted. In the absence of a requirement in the sentence, work release was not a "basic condition" of Plaintiff's incarceration.[2]
In conclusion, the Plaintiff was not yet a participant in the County's work release program when it failed to process him. Nor was he actually working at the time. Accordingly, the failure did not work a "major disruption" in his incarceration or employment. As well, imprisonment, when a sentence calls for it, with work release authorized but not effected, is an "ordinary incident of prison life." Finally, work release was not a "basic condition" of Plaintiff's sentence. On these facts, and against the background of the cases reviewed above, the Court concludes that Plaintiff did not have a liberty interest in participation in the County's work release program.
In the absence of a liberty interest, no process is constitutionally due. Cf. Morrissey v. Brewer, 408 U.S. 471, 481, 92 S. Ct. 2593, 33 L. Ed. 2d 484 (1972) ("Once it is determined that due process applies, the question remains what process is due."). The Constitution defers to essentially any state action until a liberty or property interest is implicated. Whether Defendants could or should have done things differently, the Constitution takes no position. There may be state law restrictions on state behavior such as that alleged here, e.g., a state mandamus or damages proceeding may lie, but there is no federal interest in the state's execution of its laws until a constitutionally protected liberty interest is established. See, e.g., Levine v. Torvik, 986 F.2d 1506, 1515 (6th Cir.1993) ("[a] state cannot be said to have a federal due process obligation to follow all of its procedures; such a system would result in the constitutionalizing of every state rule, and would not be administrable."). There remains no genuine issue of material fact as to whether Plaintiff's procedural due process rights were violated. They were not.
Substantive due process
A substantive due process claim cannot exist in a vacuum. As is true for procedural due process claims, in order to state a claim of violation of substantive due process rights, a liberty or property interest must first be shown. See, e.g., Cassady v. Tackett, 938 F.2d 693, 697 n. 5 (6th Cir.1991); Silver v. Franklin Township, 966 F.2d 1031, 1035 (6th Cir.1992). "Certainly the constitutional right to `substantive' due process is no greater than the right to procedural due process. Accordingly, the absence of any claim by the plaintiff that an interest in liberty or property has been impaired is a fatal defect in her substantive due process argument." Jeffries v. Turkey Run Consol. Sch. Dist., 492 F.2d 1 (7th Cir.1974) (opinion by Circuit Judge (now Justice) John Paul Stevens) (quoted in Sullivan v. Brown, 544 F.2d 279, 282 (6th Cir. 1976)). Since there is no liberty interest in work release, there can be no substantive due process violation in its denial.
Denial of Access to the Courts
"It is now established beyond doubt that prisoners have a constitutional right of access to the courts." Bounds v. Smith, 430 U.S. 817, 821, 97 S. Ct. 1491, 52 L. Ed. 2d 72 (1977). That right "requires prison authorities to assist inmates in the preparation and filing of meaningful legal papers by providing prisoners with adequate law libraries or adequate assistance from persons trained in the law." Id. at 828, 97 S. Ct. 1491. Bounds has its limits, however. In Lewis v. Casey, 518 U.S. 343, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996), the Supreme Court made clear that denial of an adequate law library or adequate assistance *430 is not actionable unless the inmate can show that he suffered actual injury as a result of the inadequacy. Id. at 2180. "[A]n inmate cannot establish relevant actual injury simply by establishing that his prison's law library or legal assistance program is sub-par in some theoretical sense." Id. The inmate "must go one step further and demonstrate that the alleged shortcomings in the library or legal assistance program hindered his efforts to pursue a legal claim." Id. The legal claim impaired must be one cognizable under the access to the courts law developed by the Supreme Court.
Lewis stated that "Bounds does not guarantee inmates the wherewithal to transform themselves into litigating engines capable of filing everything from shareholder derivative actions to slip-and-fall claims." Id. at 2182. Rather, "[t]he tools it requires to be provided are those that the inmates need in order to attack their sentences, directly or collaterally, and in order to challenge the conditions of their confinement." Id. This last term, "conditions of confinement" is more restrictive than it appears. Under Lewis, constitutional access to the courts is limited to the access necessary for vindication of "basic constitutional rights." Id.
With this understanding of the limitations of a denial of access claim, it is apparent that the Plaintiff's cannot succeed. Had he brought a claim, it would have been intended not to challenge his conviction or sentence,[3] but its implementation by jail officials. As has already been explained, this implementation did not implicate constitutional rights. As is noted by Plaintiff, he would most likely have pursued a writ of mandamus, based on state law. Since any contemplated suit would neither attack his sentence, nor pursue vindication of a constitutional right, no access to the courts was constitutionally mandated.
Cruel and Unusual Punishment
Plaintiff does not respond to Defendants' motion for summary judgment on Plaintiff's Eighth Amendment claim. Accordingly, he appears to concede that he has not made out such a claim. If not, it could not succeed in any event. As the Sixth Circuit stated in Parrish v. Johnson, 800 F.2d 600, 609 (6th Cir.1986):
In generalities, the Eighth Amendment proscribes disproportionate punishments, [] "unnecessary and wanton infliction of pain," [] and conduct repugnant to "evolving standards of decency[."] In concrete terms, the Eighth Amendment protects prisoners from being severely beaten, [] intentionally denied medical care for serious medical needs, [] recklessly subjected to violent attacks or sexual assaults, [] and denied "the basic elements of hygiene."
(citations omitted). It should go without saying that Plaintiff's complaints do not reach this level of mistreatment, especially in the absence of a liberty interest in the program he was denied.
First Amendment Retaliation
Plaintiff alleges that McCaleb's letter, threatening that Plaintiff's "continuing whining machinations ... will merely confirm that [Plaintiff will] have to be more closely monitored and inflexibly responded to when [he is] released," constitutes retaliation against Plaintiff in response to his exercise of his First Amendment rights. First Amendment retaliation claims are a species of substantive due process law, essentially concluding that a property interest inheres in the rights protected by the First Amendment. To make out a claim of retaliation, the conduct of an alleged retaliator must "shock the conscience." See McLaurin v. Cole, 115 F.3d 408, 410 (6th Cir.1997). This standard is also phrased as requiring a showing of "egregious abuse of governmental power." Cale v. Johnson, 861 F.2d 943, 949-50 (6th Cir.1988). McCaleb's letter, while inappropriate, neither shocks the conscience, nor appears to be an egregious abuse of power.
State claims
Under 28 U.S.C. § 1367(c)(3), a district court may decline to exercise supplemental *431 jurisdiction over a claim if it "has dismissed all claims over which it has original jurisdiction[.]" Indeed, "`if the federal claims are dismissed before trial, ... the state claims [generally] should be dismissed as well.'" Taylor v. First of Am. Bank-Wayne, 973 F.2d 1284, 1287 (6th Cir.1992) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 16 L. Ed. 2d 218, (1966)). The Court, therefore, in its discretion, will dismiss Plaintiff's state claims without prejudice.
Conclusion
On the record presented to the Court, the actions of the Defendants which led to this case do not appear blameless. However, these acts do not rise to the level of constitutional violations. Summary judgment as to Plaintiff's federal claims will therefore be entered in favor of Defendants. Plaintiff's state law claims will be dismissed without prejudice.
NOTES
[1] In fact, contrary to his representation to the Court, the Plaintiff was not working at the time of sentencing. He may, however, have had a job offer, with an expected start on the day of sentencing. Two factual issues arise in this regard: (1) whether the Plaintiff actually had a job offer at the time of sentencing and (2) whether the Sheriff's office considered a job offer to be equivalent to "gainful employment" under its regulations. Ultimately, however, the Court concludes that these issues are not material to its determination.
[2] Plaintiff's complaint that his sentence required that he be released to seek work is also incorrect. While the sentence form did check a box authorizing release "to work or seek work," the sentencing judge said at sentencing that work release "contemplates that you are working." Moreover, as noted at length above, the sentence included no work release "requirement" of any kind. While Plaintiff has a strong argument that if his job offer was impeded by Defendants, fairness dictates he should have been permitted to seek work in lieu of the thwarted offer, the argument does not produce a constitutional question.
[3] Any claim attacking his conviction based on failure to receive the benefit of his plea bargain would be frivolous. His plea bargain required the prosecutor to recommend a one year sentence with work release. The prosecutor did so. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472336/ | 29 F. Supp. 2d 232 (1998)
Francisco RIOS, Petitioner,
v.
Ron WILEY, Respondent.
No. 1:CV-98-1507.
United States District Court, M.D. Pennsylvania.
December 8, 1998.
Francisco Rios, Montgomery, PA, Donald Cameron, New York City, for Francisco Rios, petitioner.
David M. Barasch, United States Attorney's Office, Harrisburg, PA, Kate L. Mershimer, Williamsport, PA, Diane Cagino, Office of the United States Attorney, James T. Foley U.S. Courthouse, Albany, NY, for Ron Wiley, respondent.
MEMORANDUM
CALDWELL, District Judge.
I. Introduction
Francisco Rios has filed a counseled petition for writ of habeas corpus pursuant to 28 U.S.C. § 2241. The petition was originally filed in the United States District Court for the Northern District of New York, but it was transferred here because Rios was an inmate at the Federal Prison Camp at Allenwood, Pennsylvania, at the time he filed the petition. (He is still at Allenwood.)
Rios is contesting the refusal of the Bureau of Prisons (BOP) to grant him credit on his federal sentence for about 22 months he spent in federal custody on a writ of habeas corpus ad prosequendum issued to New York State authorities. At the time the writ was issued, Rios was serving a state sentence. *233 The BOP has refused to grant him credit on the ground that 18 U.S.C. § 3585(b) allows credit only for time that "has not been credited against another sentence" and New York has already credited him for this time on his New York sentence.
II. Background.
The parties' submissions provide the following facts. On August 6, 1991, Rios was arrested on New York State charges arising from possession of a narcotic on February 13, 1991, and taken into state custody. These charges were related to one of the two charges on which the defendant was later found guilty in federal court. On November 6, 1991, the petitioner was indicted on these federal charges, among others. On November 7, 1991, the state court sentenced him to five to 10 years imprisonment. He remained in state custody.
On November 21, 1991, the United States took Rios for one day pursuant to a writ of habeas corpus ad prosequendum. On March 20, 1992, the United States again took Rios pursuant to a writ of habeas corpus ad prosequendum. While he was with the federal authorities on this second writ, the petitioner was tried and convicted on two of the federal counts against him: (1) conspiracy to distribute heroin and cocaine in violation of 21 U.S.C. § 846; and (2) distribution and possession with the intent to distribute heroin in violation of 21 U.S.C. §§ 812, 841(a)(1) and 841(b)(1)(C).
On January 31, 1994, he was sentenced by the United States District Court for the Southern District of New York to 90 months on each count to run concurrently with each other and concurrently with the state sentence the petitioner was then serving. The sentencing order specifically directed that the petitioner was to receive credit for time served. On February 18, 1994, Rios was returned to New York State authorities.
In calculating the time to be served on the sentence, on May 10, 1994, the BOP designated, nunc pro tunc to January 31, 1994, the New York State Department of Correctional Services as Rios' place for service of his federal sentence. This designation was the BOP's attempt to comply with the sentencing court's directive that the federal sentence run concurrent with the state sentence. However, the BOP did not credit the petitioner for about 22 months of incarceration from March 20, 1992, the date federal authorities took him on his second ad prosequendum writ, until January 31, 1994, the date of his federal sentencing. This time had been credited to his state sentence by state authorities, and the BOP decided that under section 3585(b) petitioner could not also receive credit for it on his federal sentence.
On August 2, 1996, Rios was paroled from his state sentence and released into federal custody for service of the remainder of his 90-month federal sentence. Under current calculations, which assume he will qualify for good-time credits, his scheduled release date is February 12, 2000.
Rios contested the BOP's refusal to give him credit for this 22-month period and exhausted his administrative remedies.
III. Discussion.
In seeking habeas relief, Rios makes three arguments. First, citing Brown v. Perrill, 28 F.3d 1073 (10th Cir.1994), supplementing and clarifying 21 F.3d 1008 (10th Cir.1994), he contends that because he was held for so long under the second ad prosequendum writ, this period became federal custody for which he is entitled to credit on his federal sentence. In fact, the government should now be estopped from refusing him credit for this time since he spent it cooperating with the government in other investigations. Second, it is simply irrational for the length of his sentence to depend on the happenstance of how long after his conviction his sentencing took place. Third, the BOP's refusal to grant him credit for this 22-month period has in effect increased his sentence in contradiction to the authority exercised by the sentencing court to impose a concurrent sentence. In support of the last argument, he cites United States v. Benefield, 942 F.2d 60 (1st Cir.1991).
In opposition, the respondent relies on certain general principles dealing with sentence calculations and the award of credit for presentencing detention time. First, a defendant *234 remains in the primary custody of the sovereign that first arrests him, see Chambers v. Holland, 920 F. Supp. 618, 622 (M.D.Pa.1996) (citing cases), and here that would be New York State. Second, when a defendant is serving a state sentence, an ad prosequendum writ only borrows him for the limited purpose of his appearance at federal proceedings and the defendant is still considered to be in state custody for the purpose of sentencing calculations. See Thomas v. Brewer, 923 F.2d 1361, 1367 (9th Cir.1991). See also United States v. Evans, 159 F.3d 908 (4th Cir.1998). Third, 18 U.S.C. § 3585(b) governs the award of credit for time spent in official detention before sentencing and allows it only when it has not been credited against another sentence.[1] Fourth, under the BOP's interpretation of section 3585(a),[2] the earliest a federal sentence can commence is the date of sentencing. See The Bureau of Prisons' Sentence Computation Manual at 1-13, Program Statement 5880.28 (noting that a prisoner in state custody can begin serving his federal sentence while in state custody as long as the BOP designates the state prison as the place for serving his federal time but emphasizing that: "In no case can a federal sentence of imprisonment commence earlier than the date on which it is imposed.").
Applying these general principles here, the BOP argues that it calculated the petitioner's sentence correctly and properly refused him credit for the 22 months he was with federal authorities under the second ad prosequendum writ. First, Rios had only been "borrowed" from state authorities under the writ and was considered to have remained in the primary custody of the state for this period of time. Second, the petitioner has received credit on his state sentence for this time period and hence awarding credit on his federal sentence is prohibited under section 3585(b) as a "double credit." Third, the BOP gave effect to the concurrent nature of the federal sentence by designating the state prison as the place of federal incarceration from the date of the federal sentencing, the earliest date that the federal sentence could be considered commenced.
Because we find Benefield, supra, persuasive, we agree with the petitioner that he must receive credit on his federal sentence for the 22 months he spent under the second ad prosequendum writ. In Benefield, the defendant was convicted of a federal offense arising from the same set of facts giving rise to the state-court conviction. The defendant was already serving his state sentence at the time of his federal conviction, and the federal court sentenced him to a concurrent sentence. On appeal, the defendant sought, among other things, credit for time served before sentencing, which the government opposed because this time had been credited against his state sentence. The First Circuit granted relief and gave the defendant double credit for this time, explaining:
Benefield was being held in state custody for related state law violations when he was charged with the federal firearm violation currently before us on appeal. He was convicted in both fora. Credit for time served prior to sentencing was awarded against his state sentence. The district court, however, imposed a concurrent federal sentence without granting similar credit. While we appreciate that multiple credit for the same period of presentence incarceration is prohibited under certain circumstances, see 18 U.S.C. § 3585(b) ("A defendant shall be given credit toward the service of a term of imprisonment for any time he has spent in official detention prior to the date the sentence commences ... *235 that has not been credited against another sentence."); United States v. Wilson, 916 F.2d 1115, 1118 (6th Cir.1990) (presentencing custodial detention by the state court may be credited against a federal sentence; however, such credit may not be awarded if the time has already been used against another sentence), an across-the-board prohibition under all circumstances would lead to illogical results. For example, in the instant case any credit granted by the state court was rendered meaningless when not similarly reflected in Benefield's concurrent federal sentence. Thus, in order to avoid this unsuitable result, the federal court should, on remand, impose a period of incarceration commensurate with Benefield's corresponding state sentence.
Id. 942 F.2d at 66-67 (footnote omitted).
Benefield provides us with the correct approach to the issue presented here. A concurrent sentence is a sentence that runs simultaneously in whole or in part with another sentence, see Bullard v. Department of Corrections, 949 P.2d 999 (Colo.1997), but if, as here, a sentence is made to turn on the vagary of when a defendant is sentenced, thereby effectively causing the sentence to be partially consecutive to the other sentence by increasing the total period of incarceration, the sentences are not truly concurrent. Benefield prevents this illogical result, and effectuates the intent of the federal sentencing court to make its sentence concurrent with a related state sentence, by granting credit on the federal sentence for the time spent incarcerated before the federal sentencing, even if this result appears to be prohibited by the literal language of section 3585(b).
Thus, applying Benefield to the instant case requires that the petitioner be granted credit for the 22-month period he spent on the second ad prosequendum writ. The federal court sentenced the petitioner to a concurrent sentence at a time when he was serving his state sentence on the related offense. To effectuate the federal sentence the petitioner must be given credit for this 22-month period, time spent incarcerated before the federal sentencing. Otherwise, the mere happenstance of the timing of the federal sentencing will cause the petitioner to serve a partially consecutive sentence, contrary to the intent of the sentencing court.
This is not a unique circumstance. A double credit can happen in at least one other situation. Federal defendants are entitled to a so-called Willis credit, see Willis v. United States, 438 F.2d 923 (5th Cir.1971), credit for time between the date of arrest and the date of the state sentencing, even though this time might be credited to the state sentence as well.
The BOP's position here would have been correct before 18 U.S.C. § 3584, a part of the Sentencing Reform Act of 1984, Pub.L. No. 98-473, Title II, 212(a)(2), Oct. 12, 1984, 98 Stat.2000, became law. Section 3584 confers authority on the sentencing court to impose a concurrent or consecutive sentence. Before this section became law, district courts had no authority to impose a sentence concurrent to a state sentence. See Cozine v. Crabtree, 15 F. Supp. 2d 997, 1020 (D.Or.1998) (citing, among other cases, Gomori v. Arnold, 533 F.2d 871, 875 (3d Cir.1976)). Whether a sentence turned out to be concurrent depended on how the BOP decided to treat it, Cozine, supra, 15 F.Supp.2d at 1020, essentially by its authority to designate an institution where it would be served. Gomori, supra, 533 F.2d at 875. This previous authority must now give way to the district court's current authority to impose a concurrent sentence, which includes the implicit requirement that a defendant receive credit on the federal sentence for time served on the related state offense so that the sentences are truly concurrent. See generally, United States v. Kiefer, 20 F.3d 874, 876 (8th Cir.1994) (requiring credit under U.S.S.G. § 5G1.3(b) for time spent in state custody on a related, concurrent state sentence even though this time had already been credited to the state sentence, noting the purpose of section 5G1.3(b) was to insure that the federal sentence "mostly nearly approximates the sentence that would have been imposed had all the sentences been imposed at the same time.") (quoting the "Background" commentary to section 5G1.3(b)).
*236 Based on the foregoing, we need not address the petitioner's remaining arguments. We will issue an appropriate order.
NOTES
[1] Section 3585(b) reads as follows:
A defendant shall be given credit toward the service of a term of imprisonment for any time he has spent in official detention prior to the date the sentence commences
(1) as a result of the offense for which the sentence was imposed; or
(2) as a result of any other charge for which the defendant was arrested after the commission of the offense for which the sentence was imposed;
that has not been credited against another sentence.
[2] Section 3585(a) reads as follows:
Commencement of sentence. A sentence to a term of imprisonment commences on the date the defendant is received in custody awaiting transportation to, or arrives voluntarily to commence service of sentence at, the official detention facility at which the sentence is to be served. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472344/ | 726 F. Supp. 2d 368 (2010)
Corporal Timothy SHOCKLEY, Plaintiff,
v.
Governor Ruth Ann MINNER, individually; Colonel Thomas F. MacLeish, in his official capacity as the Superintendent, Delaware State Police; and Division of State Police, Department of Safety and Homeland Security, State of Delaware, Defendants.
C.A. No. 06-478-JJF.
United States District Court, D. Delaware.
June 25, 2010.
*370 Thomas S. Neuberger, Esq. and Stephen J. Neuberger, Esq. of the Neuberger Firm, P.A., Wilmington, DE, for Plaintiff.
Barry M. Willoughby, Esq., and Margaret M. DiBianca, Esq. of Young Conaway Stargatt & Taylor, LLP, Wilmington DE, for Defendant Governor Ruth Ann Minner.
MEMORANDUM OPINION
FARNAN, District Judge.
Presently before the Court is Defendant Governor Ruth Ann Minner's Motion For Summary Judgment (D.I. 63). For the reasons to be discussed, this Motion will be denied.
PROCEDURAL BACKGROUND
Plaintiff Corporal Timothy Shockley ("Plaintiff") filed the instant action against Defendants Governor Ruth Ann Minner, Colonel Thomas F. MacLeish, and the Division of State Police, Department of Safety and Homeland Security of the State of Delaware pursuant to 42 U.S.C. § 1983 alleging that he was denied a promotion on the basis of intentional gender discrimination in violation of the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. (D.I. 1.) More specifically, Plaintiff alleges that he was denied a promotion to the rank of Sergeant on the orders of Defendant Governor Ruth Ann Minner because he was *371 male, and she wanted a female to lead her security detail, known as the Executive Protection Unit ("EPU"). (Id.)
On March 11, 2010, a joint stipulation was entered which voluntarily dismissed all claims against Defendants Colonel Thomas F. MacLeish, and the Division of State Police. (D.I. 62.) Accordingly, the only remaining defendant in the instant action is Defendant Governor Ruth Ann Minner ("Defendant"), in her individual capacity.
FACTUAL BACKGROUND
I. The Parties
Plaintiff is a male who holds the rank of Corporal in the Delaware State Police ("DSP"). He has been with the DSP since 1992, and served on the EPU from December 2000 to May 2005. (D.I. 1 ¶ 7.) Defendant is the former Governor of the State of Delaware. She served as Governor from 2001 to 2009.
II. The Promotion Process At The Delaware State Police
The parties agree that the promotions process within the DSP for corporals seeking to become sergeants is done according to a banded eligibility list. (D.I. 64, at 8; D.I. 67, at 6.) In order to qualify for placement on a promotional band, a corporal must participate in a multi-part process. (D.I. 65, at A20-A23; Shockley Dep. 29-31 at A130-A132.) First, candidates must take a written examination. (A20-A23; Shockley Dep. 29-30 at A130-A131.) Those who attain a certain cut-off score are then eligible for an oral interview. (A20; Shockley Dep. 30 at A131.) Next, upon completion of oral interviews, candidates are assigned final combined scores and are divided into groups called "bands," based on those final scores. (A22, A25; Shockley Dep. 30 at A131.) There are bands "A" through "E," with the highest-scorers grouped in band "A," the second-highest scorers in band "B," and so on. (Chaffinch Dep. 11 at A31.) Finally, when a sergeant position becomes available, the Superintendent of the DSP must promote candidates from the highest available band before promoting anyone from the next highest band. (Chaffinch Dep. 11 at A31.) Once all candidates on a given band are promoted, the next highest band is published, and those candidates become eligible for promotion. (Chaffinch Memo, at B1362-B1363.) Placement on a band, however, does not guarantee promotion, as the promotional bands are typically used for two year periods. (Chaffinch Memo, at B1362-1363; Shockley Dep. 36-36 at A137-A138.) At the end of a promotional period, the process starts over, and new promotional bands are produced. (Chaffinch Memo, at B1362-B1363.)
With the exception of promotions within the EPU,[1] the parties agree that the Superintendent of the DSP makes all promotions decisions. (D.I. 64, at 10; D.I. 67, at 7.) The Superintendent passes the promotions list to the Secretary of Public Safety and Homeland Security, who then passes the list on to the Governor as a matter of courtesy. (Ford Dep. 5-6 at A60-A61.) The Governor does not have the authority to approve or veto the Superintendent's promotions. (Ford Dep. 183-184 at B1342; Blunt-Bradley Dep. 103 at B1172; Minner Dep. 47 at A68.) Rather, the Governor approves the expenditure of State funds for promotions within the DSP, as well as for promotions in other state agencies. (Minner Dep. 94-95 at A71-A72.)
*372 The parties dispute, however, the extent of the Superintendent's discretion to leave a sergeant position vacant. (D.I. 64, at 9; D.I. 67, at 8.) Plaintiff contends that whenever any vacancies or "operational needs" arise in the DSP, a promotion is required to be made. (D.I. 67, at 8.) Defendant contends that the Superintendent may elect to not fill a vacant sergeant position because even those in the highest band can only be promoted if they are qualified and well-suited, in terms of experience and background, for the available position. (Shockley Dep. 31 at A132; Chaffinch Memo, at B1362-B1363.)
III. The EPU And Promotions Within The EPU
The EPU is a unit staffed by four DSP troopers with the primary mission of providing security for the Governor of the State of Delaware. (Executive Protection Standard Operating Procedure at A4-A5.) Among other things, the EPU protects the Governor and the Governor's immediate family and designees, investigates threats, and coordinates with other local, state, and federal law enforcement agencies. (Id.) The ranking trooper within the EPU is designated as the officer-in-charge, and reports directly to the Superintendent. (Id.) Although the general practice is to have a sergeant serve as Non-Commissioned-Officer-In-Charge ("NCOIC"), officers of other ranks, such as lieutenant or captain, could be in charge of the EPU. (Chaffinch Dep. 30 at A43.) The Governor can choose the four troopers whom he or she wants to serve in the EPU. (Chaffinch Dep. 27, 30 at A40, A43.) Defendant contends that the Governor has complete discretion to select the NCOIC. (Chaffinch Dep. 35 at A47; Minner Dep. 145 at A79.) Plaintiff, however, contends that the Superintendent retains final authority over promotions to sergeant, including when the vacant sergeant position is that of the NCOIC of the EPU. (Marcin Dep. 58 at A330; Ford Dep. 183-84 at A198.)
IV. Plaintiff's Allegations Of Gender Discrimination Against Defendant In Her Selection Of NCOIC
Many of the underlying facts to this action are not in dispute. In November 2000, after Defendant's election as Governor, Sergeant Steven Montague ("Sergeant Montague") was named as NCOIC of the EPU. (Minner Dep. 225 at A100.) The three other troopers appointed to the EPU were Corporal Siobhan Sullivan ("Corporal Sullivan"), Corporal Mark Rainford, and Plaintiff. (Minner Dep. 225-226 at A100-A101.) At the time of their appointment to the EPU in 2000, Corporal Sullivan had approximately thirteen and a half years of service with the DSP, and Plaintiff had approximately seven years of service. (Chaffinch Dep. 21 at A36.) Additionally, Corporal Sullivan had served on Governor Carper's EPU for five years. (Montague Aff. at A169.) Because she had the most seniority of any of the three junior troopers in the EPU, Corporal Sullivan served as Sergeant Montague's second-in-command. (Shockley Dep. 45-46 at A141-A142.)
Sergeant Montague retired from the DSP in 2003, going on terminal leave April 30, 2003. (Minner Dep. 13 at A65.) Effective May 1, 2003, Corporal Sullivan became acting NCOIC of the EPU. (Minner Dep. 151 at A83.) Both parties agree that it was proper for Corporal Sullivan to assume this temporary position as the most senior of the other three EPU troopers. (D.I. 64, at 5-6; D.I. 67, at 3 n. 5.) At this time, the promotional bands promulgated on November 21, 2001 (the "2001 Eligibility List") were in effect. (Memo. No. 37-01 at B31-32; Memo. No. 10-03 at B34.) Plaintiff was on Band "D." (Memo. No. 10-03 at B34.) Corporal Sullivan was not on any *373 promotional band. (Chaffinch Dep. 16-17 at B5-6.)
The parties versions of events diverge with regard to the selection and promotion of a permanent NCOIC. Plaintiff contends that on August 21, 2003, Colonel L. Aaron Chaffinch ("Colonel Chaffinch"), Superintendent of the DSP, and James Ford, Secretary of Public Safety and Homeland Security ("Secretary Ford"), met with Defendant to apprise her of the promotions being made from promotion Band D. (Chaffinch Dep. 36 at B10.) Plaintiff contends that Colonel Chaffinch advised Defendant that Plaintiff was being promoted to sergeant and would be NCOIC of the EPU. (Id.) According to Plaintiff, Defendant vetoed Plaintiff's promotion, commenting that Corporal Sullivan was going to be the first female NCOIC of the EPU. (Shockley Dep. 67, 69 at B499, B501.) In addition, Plaintiff contends that the true reason he was not promoted (i.e., Plaintiff's gender) was not disclosed to him, and that neither Defendant, Colonel Chaffinch, nor Secretary Ford told anyone about the conversation with Defendant, or her decision regarding the NCOIC position. (Chaffinch Dep. 38-39 at B11.) Plaintiff argues that he only learned of Colonel Chaffinch's intent to promote him, and the fact that the Colonel had tried to promote him, in April or May 2005. (Shockley Decl. at B2762.) During a conversation at Colonel Chaffinch's home, Plaintiff alleges that Colonel Chaffinch told him that Defendant had vetoed his promotion. (Shockley Decl. SI 9 at B2762.)
Defendant disputes Plaintiff's versions of both the August 21, 2003 conversation and the April/May 2005 conversation. With regard to the August 21, 2003 conversation, Defendant asserts that she told Colonel Chaffinch that she had no problem with Plaintiff's promotion, but that she reserved the option of naming the NCOIC of the EPU. (Minner Dep. 164 at A93.) Additionally, Defendant denies making any statement about wanting to have a female NCOIC. (Minner Dep. 230-231 at A105-A106.) With regard to the April/May 2005 conversation, Defendant notes that Colonel Chaffinch flatly denies ever having told Plaintiff that she vetoed his promotion, or that Defendant made a statement concerning a female NCOIC. (Chaffinch Dep. 62-65 at A55-A57.) Further, Defendant contends that Plaintiff was ultimately not promoted because Colonel Chaffinch determined that he was not qualified for any available position. (Minner Dep. 157 at A88.)
Plaintiff transferred out of the EPU on May 16, 2005. (Shockley Request For Transfer at A17.) New promotional bands went into effect on May 28, 2004, and Corporal Sullivan was placed on Band B. (Chaffinch Dep. 26 at A39.) Plaintiff was not banded. (Shockley Dep. 34-35 at B466-B467.) Subsequently, on October 1, 2005, Corporal Sullivan was promoted to sergeant and named as permanent NCOIC. (Minner Dep. 152 at B178.)
LEGAL STANDARD
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law," then the court should grant summary judgment. Fed. R.Civ.P. 56(c). When considering whether a genuine issue of material fact exists, the court must view the evidence in the light most favorable to the non-movant, and resolve all reasonable inferences in the non-movant's favor. Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir.2007). However, a court should not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 *374 U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000). "Facts that could alter the outcome are `material,' and disputes are `genuine' if evidence exists from which a rational person would conclude that the position of the person with the burden of proof on the disputed issue is correct." Horowitz v. Fed. Kemper Life Assurance Co., 57 F.3d 300, 302 n. 1 (3d Cir.1995) (internal citations omitted).
The movant bears the burden of proving the absence of a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Once the movant offers such proof, the non-movant "must come forward with `specific facts showing [a] genuine issue for trial.'" Id. (quoting Fed.R.Civ.P. 56(e)). The mere existence of some evidence in support of the non-movant will not be sufficient to survive a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Thus, in ruling on a summary judgment motion, the court must perform the "threshold inquiry of determining whether. . . there are any genuine factual issues that properly can be 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.
DISCUSSION
By her Motion, Defendant contends that she is entitled to summary judgment for three reasons: (1) the statute of limitations bars Plaintiff's claim, and Plaintiff is precluded from invoking the doctrine of equitable tolling; (2) Plaintiff cannot establish a prima facie case of gender discrimination or point to any evidence of pretext; and (3)Plaintiff's suit is barred by the doctrine of qualified immunity.[2] The Court will examine each contention in turn. (D.I. 64.)
I. Whether Defendant Is Entitled To Summary Judgment Because Plaintiff's Claim Is Barred By The Statute Of Limitations
In determining the applicable statute of limitations period for a cause of action brought pursuant to 42 U.S.C. § 1983, federal law looks to the law of the state in which the cause of action arose, and uses the period which the state provides for personal injury torts. Wallace v. Kato, 549 U.S. 384, 387, 127 S. Ct. 1091, 166 L. Ed. 2d 973 (2007) (citing Owens v. Okure, 488 U.S. 235, 249-50, 109 S. Ct. 573, 102 L. Ed. 2d 594 (1989)). Delaware provides a *375 two-year statute of limitations period for personal injury claims. See 10 Del. C. § 8119[3]; Gillis v. Taylor, 626 F. Supp. 2d 462, 466 (D.Del.2009). Both parties agree that a two-year limitation period is applicable.
It is axiomatic that the statute of limitations begins to run when the plaintiff's cause of action accrues. E.g., Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1385 (3d Cir.1994). The accrual date of a § 1983 cause of action is a question of federal law, and "[a]spects of § 1983 which are not governed by reference to state law are governed by federal rules conforming in general to common-law tort principles." Wallace, 549 U.S. at 388, 127 S. Ct. 1091. "Under those principles, it is `the standard rule that [accrual occurs] when the plaintiff has `a complete and present cause of action.'" Id. (citing Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 201, 118 S. Ct. 542, 139 L. Ed. 2d 553 (1997)). Further, "[a] section 1983 claim accrues when a plaintiff knows or has reason to know of the injury that forms the basis of his or her cause of action." Johnson v. Cullen, 925 F. Supp. 244, 248 (D.Del.1996) (citing Deary v. Three Un-Named Police Officers, 746 F.2d 185, 197 n. 16 (3d Cir.1984)); see also Moody v. Kearney, 380 F. Supp. 2d 393, 397 (D.Del.2005) (stating that the limitations period for a § 1983 claim begins to run at the time the plaintiff should have known about the injury).
Defendant contends that Plaintiff's cause of action accrued on December 31, 2003, the day on which the 2001 Eligibility List expired, and that the statute of limitations expired two years from this day, on December 31, 2005. (D.I. 64, at 18.) Plaintiff responds that his action is timely under either the discovery rule or under equitable tolling principles. (D.I. 67, at 22-28.) Defendant contends, however, that Plaintiff cannot rely on either the discovery rule or equitable tolling because Plaintiff failed to exercise reasonable diligence. (D.I. 64, at 16.) The Court will examine the applicability of each doctrine in turn.
A. The Discovery Rule
Defendant argues that the discovery rule does not delay the running of the statute of limitations because Plaintiff knew, or should have known through the exercise of reasonable diligence, of his alleged injury on December 31, 2003. (D.I. 64, at 18-19.) According to Defendant, the expiration of the 2001 Eligibility List provided Plaintiff with clear notice that he would not be promoted. (Id.) Defendant contends that Plaintiff's deposition testimony reveals that he was aware of the requisite facts regarding his potential action. Defendant further contends that Plaintiff's duty to use reasonable diligence to investigate why he was not promoted was triggered on December 31, 2003. (Id.)
Plaintiff responds that his claim accrued in April or May of 2005, when Plaintiff discovered his injury (i.e., his non-promotion because of alleged gender discrimination). (D.I. 67, at 23.) Plaintiff contends that he was not aware that a promotion opportunity had existed until April or May 2005, and therefore, he could not have possibly challenged or investigated his non-promotion until that time. (Id. at 25-26.) Specifically, Plaintiff contends that there was no way he could have known anything about Defendant's decision regarding his promotion *376 until his conversation with Colonel Chaffinch. (Id.)
In the case of an alleged unlawful employment practice, the
Third Circuit has summarized the discovery rule thusly: the accrual date is not the date on which the wrong that injures the plaintiff occurs, but the date on which the plaintiff discovers that he or she has been injured. There will, of course, be times when the aggrieved person learns of the alleged unlawful employment practice, for example, at the very moment the unlawful employment practice occurs; in such cases the statutory period begins to run upon the occurrence of the alleged unlawful employment practice. However, there will also be occasions when an aggrieved person does not discover the occurrence of the alleged unlawful employment practice until some time after it occurred. The discovery rule functions in this latter scenario to postpone the beginning of the statutory limitations period from the date when the alleged unlawful employment practice occurred, to the date when the plaintiff actually discovered he or she had been injured.
Oshiver, 38 F.3d at 1385-86 (internal citations omitted). The "polestar" of the discovery rule is not plaintiff's actual knowledge of his injury, but whether the knowledge was known or knowable, through the exercise of reasonable diligence, to plaintiff. Id.
The determination of when a reasonable person knew or should have known of the facts constituting a claim is a fact intensive inquiry. Cantor v. Perelman, 414 F.3d 430, 441 (3d Cir.2005). Defendant contends that Plaintiff knew he would not be promoted to the rank of sergeant as of December 31, 2003, the day on which the 2001 Eligibility List expired. See Hood v. N.J. Dept. Of Civil Serv., 680 F.2d 955, 958-59 (3d Cir.1982) (holding that the failure-to-promote claims of New Jersey police officers were time-barred because the 180-day limitations period had accrued upon the expiration of the promotion eligibility list, when the officers had clear notice they would not be promoted). As the Court has previously explained, however, with regard to the application of the discovery rule, "the Court does not read Oshiver to hold that a limitations period always begins at the moment a potential plaintiff learns he or she has been denied promotion, regardless of his or her knowledge of the motivations underlying the denial." (D.I. 22, at 7.)
There is evidence that the appointment of Corporal Sullivan as temporary NCOIC in May 2003 was in keeping with DSP policy due to her seniority in the EPU (Chaffinch Dep. 22 at A37), supporting Plaintiff's contention that he had no reason to believe that he should have been named acting NCOIC. Further, it appears that no written or verbal communication about the choice of NCOIC was made. (Chaffinch Dep. 38-39 at Bll.) Yet, as Defendant notes, both Plaintiff and his wife testified that Plaintiff was disappointed and frustrated he was not named acting NCOIC. (Shockley Dep. 76 at A165; Tina Shockley Dep. 29 at A168.) Defendant contends that Plaintiff could not have been disappointed about the position unless he was aware that a decision against his selection had been made. (D.I. 64, at 18.) On the other hand, at the time the 2001 Eligibility List expired in December 2003, no permanent NCOIC had been named or promoted to sergeant, and Corporal Sullivan was still serving in a temporary capacity. (Minner Dep. 152 at B178.) Importantly, though, it appears that Plaintiff never made any inquiry into why he was not promoted from the 2001 Eligibility List. (Shockley Dep. 49, 58, 62, 74-76 at A145, A149, A152, A163-165.) In light of *377 these circumstances, the Court concludes that there is a genuine issue of material fact as to whether Plaintiff knew or should have known, through the exercise of reasonable diligence, of his alleged injury more than two years prior to August 2006, when the present action was initiated. Because the date on which Plaintiff knew or should have known the facts constituting his claims is a material dispute of fact, summary judgment is not appropriate at this juncture.
B. The Doctrine Of Equitable Tolling
Defendant contends that the statute of limitations cannot be equitably tolled because Plaintiff has presented no evidence that Defendant "actively misled" him about the reasons for his non-promotion. (D.I. 64, at 19-20.) Moreover, Defendant contends that even if Plaintiff was actively misled, Plaintiff has presented no evidence that the deception caused Plaintiff's late filing. (Id.) Finally, according to Defendant, there are no "extraordinary circumstances" that justify application of equitable principles. (Id. at 20-21.) Plaintiff contends that even if Plaintiff's claim did accrue in 2003, equitable tolling applies. Plaintiff argues that Defendant actively concealed the promotion opportunity, as well as the veto of that opportunity, and therefore, Plaintiff was lulled into inaction. (D.I. 67, at 27-28.) Thus, Plaintiff maintains that his claim is not barred by the statute of limitations.
A federal court may invoke the doctrine of equitable tolling to stop the statute of limitations from running when the date on which the claim accrued has already passed. Lake v. Arnold, 232 F.3d 360, 370 (3d Cir.2000). This doctrine "can be applied to suits brought under the federal civil rights statutes when the state statute of limitations would otherwise frustrate federal policy." Id. Although not an exclusive list, the Third Circuit has specifically noted three instances in which equitable tolling may be warranted: "(1) where the defendant has actively misled the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum." Oshiver, 38 F.3d at 1387 (citing School Dist. of City of Allentown v. Marshall, 657 F.2d 16, 19-20 (3d Cir.1981)). The Supreme Court has repeatedly recognized equitable tolling, but has cautioned that it should be invoked sparingly. Moody, 380 F.Supp.2d at 397 (citing Seitzinger v. Reading Hosp. & Med. Ctr., 165 F.3d 236, 240 (3d Cir.1999)).
The Court concludes that the doctrine of equitable tolling is not implicated in this instance. Although Plaintiff has come forth with evidence that Defendant never informed Plaintiff about the existence of the promotion opportunity or her alleged veto of that opportunity, Defendant has also produced evidence that Plaintiff made no inquiries regarding his non-promotion. In the Court's view, the record facts in this action do not represent the type of active concealment or misleading required to invoke equitable tolling.
II. Whether Defendant Is Entitled To Summary Judgment Because Plaintiff Has Failed To Establish A Prima Facie Case Of Gender Discrimination And/Or Evidence Of Pretext
Defendant contends she is entitled to summary judgment because Plaintiff cannot meet his burden of establishing a prima facie case of gender discrimination or the existence of a pretextual motive. (D.I. 64, at 22.) Plaintiff responds that both burdens have been met. (D.I. 67, at 30.)
*378 When considering equal protection claims brought pursuant to 42 U.S.C. § 1983, the Court must use the burden-shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See Stewart v. Rutgers, the State Univ., 120 F.3d 426, 432 (3d Cir.1997) (applying McDonnell Douglas framework to plaintiff's allegations of racial discrimination brought under § 1983). Under this framework, a plaintiff has the initial burden of establishing a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817. In order to establish a prima facie case, Plaintiff must offer evidence of the following elements: (1) he is male; (2) he applied for and was he was qualified for a position for which Defendant was seeking applicants; (3) despite his qualifications, he was rejected; (4)the position was ultimately filled by a female. See id. at 802, 93 S. Ct. 1817 (setting forth elements of prima facie case of racial discrimination under Title VII); Goosby v. Johnson & Johnson Med., Inc., 228 F.3d 313, 318-19 (3d Cir.2000) (setting forth elements of prima facie case of gender discrimination under Title VII); Iadimarco v. Runyon, 190 F.3d 151, 157-64 (3d Cir.1999) (explaining prima facie case requirement in reverse discrimination suits).
Once the plaintiff has established a prima facie case of discrimination, the burden shifts to the defendant to "articulate some legitimate, nondiscriminatory reason" for its conduct. Id. at 802, 93 S. Ct. 1817. If the defendant produces a sufficient nondiscriminatory reason for its actions, the burden shifts back to the plaintiff to demonstrate that the reasons articulated by the defendant are merely a pretext for discrimination. Fuentes v. Perskie, 32 F.3d 759, 763 (3d Cir.1994). To defeat a motion for summary judgment, a plaintiff must point to some evidence from which the "factfinder could reasonably either (1) disbelieve the employer's articulated legitimate reasons; or (2) believe that an invidious discriminatory reason was more likely than not a motivating or determinative cause of the employer's action." Id. at 764. To accomplish this, a plaintiff can show a defendant's reasons are so weak, incoherent, implausible, or inconsistent such that they lack credibility. Id. at 765.
Reviewing the record in the light most favorable to Plaintiff, the Court concludes that Plaintiff has established a prima facie gender discrimination case. There is no dispute that Plaintiff is male, and that Corporal Sullivan, a female, was named acting NCOIC, and was eventually promoted to sergeant and made permanent NCOIC. Defendant contends that Plaintiff cannot show that applicants were being sought for the NCOIC position in August 2003, and moreover, that Plaintiff can point to no evidence that he was as qualified or more qualified than Corporal Sullivan for the NCOIC position in August 2003. However, Plaintiff has produced evidence that the NCOIC position, and corresponding sergeant rank, became available upon Sergeant Montague's retirement in May 2003. Also, Plaintiff was eligible for promotion at that time because of his status on promotion Band D. With regard to Plaintiff being promoted to NCOIC, Colonel Chaffinch testified that Plaintiff "was an exceptional trooper," "fit the bill well," and "his qualifications [were] great." (Chaffinch Dep. 36-36 at B10.)
Further, the Court concludes that Defendant has met its burden of articulating a legitimate, non-discriminatory reason for why Plaintiff was not promoted, namely, that Sullivan was the most appropriate candidate for NCOIC in light of her seniority and experience. Finally, the Court finds that Plaintiff has adduced sufficient evidence so that a reasonable jury could find that Defendant's stated reasons for not promoting Plaintiff were a pretext *379 for gender discrimination. At the time the NCOIC position became available, Plaintiff was on a band eligible for promotion and Corporal Sullivan was not. Nevertheless, Corporal Sullivan served as NCOIC in a temporary capacity for approximately 29 months until the 2001 Eligibility List expired. Defendant also testified to numerous issues with Plaintiff's job performance as a basis for why he was not selected as NCOIC, such as late paperwork and a failure to properly complete advance work (Minner Dep. 165-168 at B182), but the performance evaluations in the record do not mention any such issues (see B63, B73). In fact, Sergeant Montague wrote that "I have received nothing but positive comments from [Defendant]" regarding Plaintiff. (Shockley Sponsorship Record at B63.)
Because Plaintiff has established a prima facie case and has adduced sufficient evidence upon which a reasonable factfinder could conclude that Defendant's articulated non-discriminatory reasons for not selecting him as NCOIC and promoting him to sergeant were pretextual, summary judgment will be denied.
III. Whether Defendant Is Entitled To Qualified Immunity
Defendant contends that Plaintiff's suit is barred by the doctrine of qualified immunity. (D.I. 64, at 31.) Defendant argues that Plaintiff cannot demonstrate the existence of a constitutional violation because, even if Defendant considered gender in her decision to make Corporal Sullivan acting NCOIC, consideration of gender for the purpose of promoting equal employment does not violate the Constitution. (Id.) Further, Defendant argues that Plaintiff has failed to identify any precedent which is sufficiently similar to the factual allegations of this action such that Defendant could have been on notice that her conduct was unconstitutional. (Id. at 34.)
Plaintiff contends that the facts establish a constitutional violation, and moreover, that Plaintiff's constitutional rights were clearly established. (D.I. 67, at 34.) According to Plaintiff, the precise conduct at issue need not have been previously held unlawful because Defendant could not have reasonably believed her conduct was lawful in light of decided case law. (Id. at 35-37.) Specifically, Plaintiff contends that a public employee's right to be free of gender discrimination has been established in the Third Circuit since at least 1986. (Id. at 37-38.)
A public official is entitled to qualified immunity if the official's conduct does not violate clearly established statutory or constitutional rights that a reasonable person would have known. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982). Whether an official is entitled to qualified immunity is a purely legal question. Acierno v. Cloutier, 40 F.3d 597, 609 (3d Cir.1994). In determining a question of qualified immunity, the court first considers whether, when taken in the light most favorable to the party asserting the injury, the factual allegations demonstrate a constitutional violation. Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001). Next, the court considers whether "the right that the defendant's conduct allegedly violates was a clearly established one, about which a reasonable person would have known." Gruenke v. Seip, 225 F.3d 290, 298 (3d Cir.2000). In order for a right to be clearly established, "[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). Exact factual correspondence between the right asserted and prior case law is not required, however, as "officials can still be *380 on notice that their conduct violates established law even in novel factual circumstances." Hope v. Pelzer, 536 U.S. 730, 741, 122 S. Ct. 2508, 153 L. Ed. 2d 666 (2002). Rather, application of qualified immunity turns on the "objective legal reasonableness of the action, assessed in light of the legal rules that were clearly established at the time it was taken." Doe v. Delie, 257 F.3d 309, 318 (3d Cir.2001) (internal quotes and citations omitted). In sum, the purpose of qualified immunity is "to protect public officials from liability in situations involving extraordinary circumstances and where they neither knew nor objectively should have known the appropriate legal standard." Andrews v. City of Phila., 895 F.2d 1469, 1480 (3d Cir.1990) (citing Harlow, 457 U.S. at 819, 102 S. Ct. 2727).
The Court concludes, as a matter of law, that Defendant is not entitled to qualified immunity. As discussed previously, Plaintiff has adduced facts which demonstrate a constitutional violation.[4] In addition, "the general right . . . to be free of discrimination based upon sex on the workplace [] was well grounded in law and widely known to the public" well before 2003, when Defendant's alleged conduct took place. See id. at 1479-80 (finding that based on clearly established law at the time, defendants should have understood that allowing and/or participating in the verbal harassment of plaintiffs based on gender violated plaintiffs' rights). Although Plaintiff has not pointed to any precedents with precisely similar facts to the present action, in the Court's view, an objectively reasonable person in Defendant's position should have had notice that engaging in promotion practices based on gender discrimination would violate Plaintiff's rights.
CONCLUSION
For the reasons discussed, Defendant's Motion For Summary Judgment will be denied.
An appropriate Order will be entered.
ORDER
At Wilmington, this 25 day of June 2010, for the reasons discussed in the Memorandum Opinion issued this date;
NOW THEREFORE, IT IS HEREBY ORDERED that Defendant Ruth Ann Minner's Motion For Summary Judgment (D.I. 63) is DENIED.
NOTES
[1] For a discussion of the promotion process within the EPU, and the parties' dispute over the extent of the Governor's authority to determine who is promoted within the EPU, see infra p. 372.
[2] In her Reply Brief, Defendant also takes issue with Plaintiff's reliance on deposition transcripts from a previous case, Bullen v. Chaffinch, C.A. No. 02-1315-JJF (D.Del.). (D.I. 82, at 4.) Defendant contends that these depositions may not be used against her under Rule 32 of the Federal Rules of Civil Procedure. (Id. at 4-5.) In a letter submitted to the Court, Plaintiff responds that Defendant was clearly on notice of his intent to use the deposition and trial record from Bullen in this action. (D.I. 83.)
In relevant part, Rule 32 of the Federal Rules of Civil Procedure provides that deposition testimony may be used against a party at trial if: (1) the party was present or represented at the taking of the deposition and had reasonable notice of it; (2) it would be admissible under the Federal Rules of Civil Procedure if the deponent were present and testifying; (3) it is otherwise admissible under Rule 32. Fed.R.Civ.P. 32(a). Plaintiff apparently does not dispute the Defendant was not present at, nor given notice of, the depositions taken in the Bullen action. Further, Defendant was not a party to the Bullen action, and is not a successor in interest to a party in the Bullen action. See Fed. F. Civ. P. 32(a)(8). Accordingly, in reviewing the summary judgment contentions in this Motion, the Court will not consider the deposition transcripts from the Bullen action.
[3] In pertinent part, 10 Del. C. § 8119 provides: "No action for the recovery of damages upon a claim for alleged personal injuries shall be brought after the expiration of 2 years from the date upon which it is claimed that such alleged injuries were sustained ..."
[4] The Court is not persuaded by Defendant's contention that no constitutional violation could have occurred because consideration of gender for the promotion of equal employment opportunity does not violate the Constitution. The Supreme Court has recognized that "[s]ex classifications may be used to . . . promote equal employment opportunity." U.S. v. Virginia, 518 U.S. 515, 533, 116 S. Ct. 2264, 135 L. Ed. 2d 735 (1996). This is not a per se rule that gender classifications will never be found to violate the Constitution such that Defendant's alleged conduct could not amount to a violation of Plaintiff's rights. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472045/ | 732 F. Supp. 2d 614 (2010)
Steven C. LEFEMINE, d/b/a Columbia Christians for Life, Plaintiff,
v.
Tony DAVIS, Sheriff, in his official capacity; Dan Wideman, individually and in his official capacity; Mike Frederick, individually and in his official capacity; Lonnie Smith, individually and in his official capacity; Brandon Strickland, individually and in his official capacity, Defendants.
C.A. No. 8:08-3638-HMH.
United States District Court, D. South Carolina, Anderson/Greenwood Division.
July 8, 2010.
Douglas A. Churdar, Douglas A. Churdar Law Office, Greenville, SC, Douglas E. Myers, National Legal Foundation, Virginia Beach, VA, for Plaintiff.
Russell W. Harter, Jr., Chapman Harter and Groves, Greenville, SC, Katy A. Rice, Robert David Garfield, Davidson Morrison and Lindemann, Columbia, SC, for Defendants.
*617 OPINION & ORDER
HENRY M. HERLONG Jr., Senior District Judge.
This matter is before the court on the parties' cross motions for summary judgment. For the reasons set forth below, the court grants in part and denies in part Plaintiff's motion for summary judgment and grants in part and denies in part Defendants' motions for summary judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
This matter arises out of an incident that occurred on November 3, 2005, in Greenwood County, South Carolina. (Am. Compl. ¶ 23.) Plaintiff, Steven C. Lefemine, is the sole proprietor of Columbia Christians for Life ("CCL"), an organization that "actively seeks to raise public awareness of the horrors of abortion throughout the State of South Carolina." (Id. ¶ 17.) In order to fulfill CCL's mission, Plaintiff "and other like-minded persons, preach and carry signs" which "depict aborted babies in order to shock the consciences of those who see the signs to the horror of abortion." (Id. ¶¶ 19-20.) On "Thursday, November 3, 2005 at approximately 3:45 p.m., [] [Plaintiff] and about twenty other individuals began to establish a Christian pro-life witness" in Greenwood County, South Carolina. (Id. ¶ 23.) Specifically, the demonstration took place at the intersection of U.S. Highway 25 North and the S.C. 72 Bypass ("the intersection") which is "the busiest intersection in [Greenwood] County." (Defs. Mem. Supp. Summ. J. Attach. 6 (Mike Frederick ("Chief Deputy Frederick") Dep. 16).)
During the demonstration, Major Lonnie Smith ("Major Smith") received a telephone call from Lieutenant Randy Miles ("Lt. Miles") notifying him of complaints that had been received from motorists driving near the intersection. (Id. Attach. 8 (Major Smith Dep. 15).) In particular, Major Smith was informed that protestors were in the roadway holding graphic signs and one mother called saying that her son "was in the back seat screaming, crying because [he] had seen those signs." (Id. Attach. 8 (Major Smith Dep. 17).) Major Smith proceeded to the intersection to investigate. Deputy Brandon Strickland ("Deputy Strickland") also proceeded to the intersection to serve as backup after hearing of the complaints over the dispatch. (Id. Attach. 9 (Deputy Strickland Dep. 17).)
Prior to Major Smith or Deputy Strickland's arrival at the intersection, Lt. Miles *618 informed Plaintiff that he "had several complaints about the graphic photographs and this was causing a disturbance in the traffic flow at th[e] intersection." (Id. Attach. 2 (Incident Report).) When Major Smith arrived at the intersection, he observed a number of individuals holding signs and megaphones. (Defs. Mem. Supp. Summ. J. Attach. 8 (Major Smith Dep. 21-22).) Major Smith requested that Deputy Strickland take multiple pictures of the scene. Prior to approaching the CCL members, Major Smith called Chief Deputy Frederick to report the events occurring at the intersection. (Id. Attach. 8 (Major Smith Dep. 22).) According to Major Smith, Chief Deputy Frederick informed him that "if we were getting complaints and these signs are graphic and people in the community were complaining, then we were to tell [them] that they could continue to protest but they would either have to put away or take down the signs or . . . possibly be ticketed for breach of peace." (Id. Attach. 8 (Major Smith Dep. 22).)
Major Smith then approached Plaintiff and the following conversation ensued, in part:
Major Smith: How are you doing, sir?
Lefemine: Alright, sir, how are you?
Major Smith: Lonnie Smith with Greenwood County Sheriff's Office.
Lefemine: Steve Lefemine.
Major Smith: OK, we have a number of complaints from people that find this offensive and . . . they don't want this on the street. So, at this time, I'm gonna ask you to put them up, OK? Put these signs up, because you can't distinguish what age of people are seein' these signs. OK, I'm asking you to put `em up and go ahead, and if you want to stand out here on the corner, that's fine, but we cannot have these signs up because people do consider this is offensive material. OK?
Lefemine: Major Smith, if you're ordering us to leave under threat of arrest or being ticketed, we will leave, but I want you to know you're violating our constitutional right [Major Smith: OK] because you're discriminating based upon content of our signs.
Major Smith: Right, people do find this offensive, and this is an offensive manner, OK? This is offensive because you've got small childrenyou've got different ones that are seeing this. We have had so many complaints about people that this is offensive. . . . You're free to stay here, whatever, but we can't have these type of signs up where people can see 'em.
Lefemine: We will leave if you're ordering us to leave under threat of being ticked or being arrested. . . . Being offensive is not a basis for violating First Amendment rights. . . .
Major Smith: You do not have a right to be offensive to other people in that manner.
. . . .
Major Smith: . . . I'm asking you if you will please take the signs down. If you do not take the signs down we will have no other choice we're gonna ticket you for breach of peace.
Lefemine:. . . . These are not obscene signs.
. . . .
Major Smith: And I'm not saying you gotta leave the sidewalk. I'm not sayin' that. I'm just sayin' you got to put these signs down.
. . . .
Major Smith: Like I said, this is the last warning. You can either go ahead and put 'em down or [I'll] ticket you.
Lefemine (to others in the group): Go ahead and remove the signs, he's violating *619 our constitutional rights. Go remove the signs . . . remove the signs.
(Id. Attach. 3 (Transcript).) Following the conversation with Major Smith, Plaintiff and the other members of the CCL "packed up their signs and left shortly thereafter." (Am. Compl. ¶ 35.)
On November 13, 2006, an attorney from the National Legal Foundation ("NLF") wrote a letter to Sheriff Dan Wideman ("Sheriff Wideman") of Greenwood County to inform Sheriff Wideman that "CCL volunteers will be returning to the Greenwood area in the near future to exercise their First Amendment freedoms by highlighting the national tragedy of abortion." (Pl. Mem. Supp. Summ. J. Ex. 5 (Nov. 13, 2006 Letter to Sheriff).) The letter continued to state that Sheriff Wideman was "hereby put on notice that any further interference with CCL's message by you or your officers will leave us no choice but to pursue all available legal remedies without further notice." (Id. Ex. 5 (Nov. 13, 2006 Letter to Sheriff).) The NLF lawyers also mailed the same letter to Chief of Police Gerald Brooks ("Chief Brooks") of the City of Greenwood Police Department. (Id. Ex. 6 (Nov. 13, 2006 Letter to Police Dept.).)
On November 17, 2006, Chief Brooks responded to the NLF's letter stating that CCL was welcome to visit the community and exercise their rights as there are "many public places where CCL can park, assemble, and convey their message." (Id. Ex. 7 (Nov. 17, 2006 Letter).) On November 28, 2006, Chief Deputy Frederick responded to the NLF stating, in part, that Major Smith's response in 2005 was based on CCL's methodology not their content and "should we observe any protester or demonstrator committing the same act, we will again conduct ourselves in exactly the same manner: order the person(s) to stop or face criminal sanctions." (Id. Ex. 8 (Nov. 28, 2006 Letter).) On November 25, 2006, Plaintiff "and others held their prolife demonstration on the Greenwood city side of U.S. 25/S.C. 72 Bypass for fear of criminal sanctions from Greenwood County." (Am. Compl. ¶ 40.) No problems occurred during this demonstration.
CCL held another pro-life demonstration in 2007 "on the Greenwood city side of U.S. 25/S.C. 72 Bypass for fear of criminal sanctions from Greenwood County." (Id. ¶ 42.) Plaintiff currently desires to conduct a "Show the Truth Tour" in Greenwood County but alleges that he fears criminal prosecution. (Id. ¶¶ 43-44.)
Plaintiff filed a complaint against Sheriff Wideman, former Chief Deputy Frederick, Major Smith, and Deputy Strickland on October 31, 2008, alleging violations of his First Amendment rights. On February 27, 2009, Plaintiff filed an amended complaint adding Sheriff Tony Davis ("Sheriff Davis") as a Defendant. On April 5, 2010, Sheriff Davis, Major Smith, Deputy Strickland, and Sheriff Wideman filed a motion for summary judgment. On the same day, Plaintiff filed a motion for summary judgment. On April 9, 2010, former Chief Deputy Frederick filed a motion for summary judgment. Sheriff Davis, Major Smith, Deputy Strickland, and Sheriff Wideman filed a memorandum in opposition of Plaintiff's motion for summary judgment on April 22, 2010. On the same day, Plaintiff filed a memorandum in opposition of Defendants' motion for summary judgment. Former Chief Deputy Frederick filed a memorandum in opposition to Plaintiff's motion for summary judgment on April 26, 2010. On the same day, Plaintiff filed a memorandum in opposition to Chief Deputy Frederick's motion for summary judgment. Plaintiff filed replies to Defendants' motions for summary judgment on May 3, 2010 and May 7, 2010. A hearing was held on the cross motions for *620 summary judgment on June 23, 2010. This matter is now ripe for consideration.
II. DISCUSSION OF THE LAW
A. Summary Judgment Standard
Summary judgment is appropriate only "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). Rule 56(c) mandates 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 case." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
In deciding whether there is a genuine issue of material fact, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in the nonmovant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). However, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 248, 106 S. Ct. 2505.
Moreover, "[w]hen a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading; rather its response mustby affidavits or as otherwise provided in this ruleset out specific facts showing a genuine issue for trial." Fed.R.Civ.P. 56(e) (2).
B. Cross Motions for Summary Judgment
Plaintiff argues that his speech is "chilled and he is deterred from demonstrating with the graphic abortion signs in Greenwood County because he fears criminal prosecution for his message." (Am. Compl. ¶ 44.) Accordingly, Plaintiff brings this action under 42 U.S.C. § 1983 seeking damages, injunctive and declaratory relief for the violation of his rights of free speech, peaceable assembly, and the free exercise of religion. (Id., generally.)
Plaintiff argues that he is entitled to summary judgment because Defendants' restrictions on his speech were based on the content of his message. (Pl. Mem. Supp. Summ. J. 7.) Defendants argue that they are entitled to summary judgment because Plaintiff cannot show a violation of his federally protected rights. (Defs. Mem. Supp. Summ. J., generally); (Chief Deputy Frederick Mem. Supp. Summ. J., generally.) Specifically, Defendants argue that their restrictions on CCL's speech constituted a reasonable time, place, and manner restriction and they "could lawfully sanction or threaten sanctions for violation of any lawfully imposed restrictions." (Defs. Mem. Supp. Summ. J. 13.) Defendants also argue that they are entitled to qualified immunity. (Defs. Mem. Supp. Summ. J., generally); (Chief Deputy Frederick Mem. Supp. Summ. J., generally.)
1. Freedom of Speech and Assembly
The First Amendment of the United States Constitution protects an individual's right to freedom of expression through speech and public assembly. Virginia v. Black, 538 U.S. 343, 358, 123 S. Ct. 1536, 155 L. Ed. 2d 535 (2003); Nat'l Socialist White People's Party v. Ringers, 473 F.2d 1010, 1016 (4th Cir.1973). "The protections afforded by the First Amendment, however, are not absolute, and . . . the government may regulate certain categories of expression consistent with the Constitution." Id. "The right to use government property for one's private expression depends upon whether the property has by law or tradition been given the status of a public forum, or rather has *621 been reserved for specific official uses." Capitol Square Review & Advisory Bd. v. Pinette, 515 U.S. 753, 761, 115 S. Ct. 2440, 132 L. Ed. 2d 650 (1995). In traditional public forums, such as streets, public sidewalks, and parks, "a State's right to limit protected expressive activity is sharply circumscribed: It may impose reasonable, content-neutral time, place, and manner restrictions . . ., but it may regulate expressive content only if such a restriction is necessary, and narrowly drawn, to serve a compelling state interest." Id.
It is undisputed that CCL's November 3, 2005 demonstration took place within a traditional public forum. As such, Defendants could not impose a content-based restriction on CCL's speech unless the "restriction [wa]s necessary to serve a compelling state interest and . . . [wa]s narrowly drawn to achieve that end." Perry Educ. Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 45, 103 S. Ct. 948, 74 L. Ed. 2d 794 (1983).
Plaintiff asserts that Defendants'"demand that CCL put down only the graphic Signs was a content-based restriction" improperly based on "the reaction of the public." (Pl. Mem. Supp. Summ. J. 9, 11.) Specifically, Plaintiff contends that
[in his dialogue at the intersection,] Major Smith did not say that CCL was too close to the road, obstructing traffic, impeding lines of sight for drivers. Such at least facially content-neutral statements would have presumably prompted a different type of request from the Sheriffranging from a request to move back from the road several feet or to a specified intersection to the use of smaller signs. Further, the request would have been as to all CCL's signs and not simply the Signs the Sheriff and the two citizens disfavored. Instead the demand from the Sheriff simply reinforces its improper regard for the content of the Signsnotably, its only demand was that the Signs be put down or a citation would [be] issue[d]. The problem for the Sheriff was not the size or location of any signs; it was the existence of the Signs, the ones depicting aborted babies, a patently content-based demand.
(Id. at 17 (footnote omitted).) Defendants argue, however, that they
did not base their action on disagreement with [Plaintiff's] viewpoint or otherwise on the content of the speech, but rather on the harmful effects of the method [Plaintiff] used . . . . [D]efendants' actions, which were limited to ordering [Plaintiff] to remove the graphic signs and threatening to ticket him if he did not, were directed at the breach of the peacenot at the protestors' viewpoint... . [D]efendants' actions, therefore, were not based on the content of [Plaintiff's] message, on disagreement with his beliefs or opinions, but rather, on the fact that extremely graphic representations were disturbing motorists and causing traffic issues.
(Defs. Mem. Supp. Summ. J. 15.)
Upon review of the totality of the evidence within the record, the court finds that Defendants' restriction on Plaintiff's speech was content-based. While Defendants contend that their restriction is content-neutral because it was not motivated by disapproval or disagreement with Plaintiff's pro-life stance, this argument confuses viewpoint neutrality with content neutrality. The United States Supreme Court has consistently "rejected the argument that viewpoint-neutrality equals contentneutrality." Capital Area Right to Life, Inc. v. Downtown Frankfort, Inc., 511 U.S. 1135, 1135, 114 S. Ct. 2153, 128 L. Ed. 2d 878 (1994) (O'Connor, J., dissenting) (citing cases); see e.g., Boos v. Barry, 485 U.S. 312, 319-20, 108 S. Ct. 1157, 99 L. Ed. 2d 333 (1988) (explaining that while a restriction *622 is viewpoint neutral that "does not render [it] content neutral"). "[C]ontent-neutral speech restrictions . . . are justified without reference to the content of the regulated speech." Boos, 485 U.S. at 320, 108 S. Ct. 1157 (internal quotation marks omitted). The restriction imposed upon Plaintiff's speech was motivated solely based upon the content of the graphic signs.[1] As such, Defendants' restriction was content-based. See World Wide Street Preachers' Fellowship v. City of Owensboro, 342 F. Supp. 2d 634, 641 (W.D.Ky.2004) (finding government restriction on graphic anti-abortion sign content-based); United States v. Marcavage, 609 F.3d 264, 285-86 (3d Cir.2010) (finding government restriction on graphic anti-abortion sign content-based).
Content-based restrictions on speech "are presumptively invalid and subject to strict scrutiny." Ysursa v. Pocatello Educ. Ass'n, ___ U.S. ___, 129 S. Ct. 1093, 1098, 172 L. Ed. 2d 770 (2009) (internal quotation marks omitted). Therefore, Defendants' restriction on Plaintiff's speech must (1) serve a compelling state interest and (2) be narrowly drawn to achieve that end. Perry Educ. Ass'n, 460 U.S. at 45, 103 S. Ct. 948. In World Wide Street Preachers' Fellowship, 342 F.Supp.2d at 637, the court reviewed whether a content-based ban on a graphic anti-abortion sign survived strict scrutiny. In World Wide, the city prohibited an evangelical group from displaying a large sign containing an enlarged photograph of a mutilated fetus. Id. at 636. The city argued, in part, that protecting young children was a compelling government interest justifying the ban. Id. at 640-41. The court concluded that assuming protecting children from these images was a compelling state interest, the defendants' blanket ban on the sign was not narrowly tailored. Id. at 641. The court explained, while the government "is not required to employ the least restrictive means conceivable . . . [i]t must, however, demonstrate narrow tailoring of the challenged regulation to the asserted interest-a fit that is not necessarily perfect, but reasonable." Id. (internal quotation marks and citation omitted). Ultimately, the court concluded that
the City of Owensboro [could not] show that its actions were narrowly drawn to achieve that compelling state interest. The City made no attempt to establish any type of "fit" between its interest of protecting children and the street preachers' interest in exercising free speech. While depriving the Plaintiffs of the sign enabled the City of Owensboro to attain its compelling state interest, the means employed did not account in any way for a less restrictive alternative that would enable the street preachers to exercise their right to free speech. Completely banning the signs is not narrow tailoring.
Also problematic, as the Plaintiffs point out, is the City's reliance that the images are too "graphic." Who decides when an image is too "graphic?" Is it the police or the heckler? In either case, the term is too vague to be constitutional. As such, the City of Owensboro's actions are unconstitutional.
Id.
Here, Defendants allege that their concerns for traffic safety and protecting young children served as compelling interests for preventing a breach of the peace and requiring Plaintiff and CCL members *623 to take down all graphic signs. Specifically, Defendants contend that
the following factors [created a breach of the peace]: (1) the signs were gruesome, gory, graphic, in full color, and large; (2) the intersection at which the signs were being displayed was the busiest intersection in Greenwood County, and the signs were being displayed at a time and in such a manner as to interfere with traffic; (3) the protestors were positioning the signs along the sidewalk in such a way that motorists would not be able to both avoid looking at them and drive safely; and (4) parents with children in the car would not be able to shield the children from the images. In other words, the protesters, were forcing unwilling recipients to view the offensive images on their signs, and more importantly, were depriving parents of the ability to shield their children from images that could be harmful to them.
(Defs. Mem. Supp. Summ. J. 16-17.) Despite Defendants' argument that traffic safety was a compelling interest, in his conversation with Plaintiff, Major Smith did not mention traffic safety as his reason for wanting the graphic signs down. The record evidences that two citizens made complaints; however, neither complaint stated that the signs were interfering with traffic.[2]See (Defs. Mem. Supp. Summ. J. Attach. 2 (Incident Report).). The only mention of disturbance of traffic is found in the incident report written by Lt. Miles. The incident report states that when Lt. Miles arrived on the scene, he
talked to STEVE LEFEMINE. He told me he was leading the protest for the organization [CCL]. I told Mr. Lefemine that the Sheriff's Dept. has had several complaints about the graphic photographs and this was causing a disturbance in the traffic flow at the intersection. I told Mr. Lefemine that he would have to quit using the blow horn while showing the photographs because it was disturbing people and upsetting traffic flow.
(Id. Attach. 2 (Incident Report).) The record is devoid, however, of any evidence of car accidents, unusual or dangerous congestion, or any similar traffic concerns. As such, the court finds that traffic safety, under the facts of this case, was not a compelling interest to justify Defendants' restriction.
Defendants also argue that protecting young children from viewing graphic pictures was a compelling state interest that justifies their ban on the graphic pictures. One parent complained that her child saw one of the graphic signs and became frightened. (Defs. Mem. Supp. Summ. J. Attach. 2 (Incident Report).) In his conversation with Plaintiff, Major Smith explained that the signs were offensive because "small children" may see the signs. (Id. Attach. 3 (Transcript).) The court agrees that protecting children may be a compelling interest. However, strict scrutiny requires a two-step analysis. Once a compelling government interest is shown, the court must then determine whether the government's restriction was narrowly tailored to meet that compelling interest. Perry, 460 U.S. at 45, 103 S. Ct. 948.
Similar to the defendants in World Wide Street Preachers' Fellowship, Defendants restricted Plaintiff's speech by banning all graphic signs. 342 F. Supp. 2d at 636. *624 Plaintiff, therefore, was faced with the choice of either taking down all of the graphic signs or receiving a citation for breach of the peace. Such a blanket ban, under the facts of this case, does not constitute narrow tailoring. Defendants made no attempt to satisfy its interest, protecting children from seeing the signs from the main road, without completely banning Plaintiff's right to communicate a message utilizing the signs. Rather, Defendants' sole motivation was to completely ban all of the graphic signs which they clearly found to be "offensive." (Defs. Mem. Supp. Summ. J. Attach. 3 (Transcript).) The United States Supreme Court has "consistently stressed that we are often captives outside the sanctuary of the home and subject to objectionable speech." Cohen v. California, 403 U.S. 15, 21, 91 S. Ct. 1780, 29 L. Ed. 2d 284 (1971) (internal quotation marks omitted). Accordingly, the court finds that Defendants did not narrowly tailor its restriction to achieve its interest in protecting children. As such, Defendants' restriction of Plaintiff's speech on November 3, 2005, was unconstitutional. See e.g., Frye v. Kansas City Missouri Police Dep't, 375 F.3d 785, 792 (8th Cir. 2004) (finding government restriction on graphic abortion sign constitutional because officers narrowly tailored the restriction by allowing graphic signs to be displayed at a location further from the road.)
Based on the foregoing, the court grants Plaintiff's motion for summary judgment as to the freedom of speech and assembly claims.
2. Free Exercise of Religion
Plaintiff also seeks summary judgment on his free exercise of religion claim. Plaintiff asserts that "[i]n the exercise of [his] religious beliefs, CCL either displays or supervises the display of pro-life signs in Greenwood County." (Am. Compl. ¶ 57.) Therefore, "[a]s a direct and proximate result of the Sheriff's actions and policies, Mr. Lefemine's speech is chilled, and he is deterred from freely exercising constitutionally protected religion." (Id. ¶ 59.) Plaintiff alleges that Defendants' "threat of arrest or ticketing clearly forced [him] to `modify his behavior' and thereby `violate his beliefs.'" (Pl. Mem. Supp. Summ. J. 18.)
"The Free Exercise Clause of the First Amendment, applicable to the states through the Fourteenth Amendment, forbids the adoption of laws designed to suppress religious beliefs or practices unless justified by a compelling governmental interest and narrowly tailored to meet that interest." Booth v. Maryland, 327 F.3d 377, 380 (4th Cir.2003). Likewise, the government, through its actions, may not suppress religious beliefs absent a compelling governmental interest and narrow tailoring.
"The Free Exercise Clause, however, does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes)." Id. (internal quotation marks omitted). However, as discussed above, Defendants' prohibition of the graphic signs was not neutral and therefore must survive strict scrutiny. For the reasons discussed above, the court finds that Defendants' prohibition upon Plaintiff was not narrowly tailored to meet its interest. Defendants' prohibition was not narrowly tailored in order to balance meeting the government's interest in protecting children with Plaintiff's right to freely express his religious beliefs.[3]*625 Therefore, the court grants Plaintiff's motion for summary judgment as to his free exercise of religion claim.
3. Qualified Immunity
a. Individual Capacity
Defendants allege that they are entitled to qualified immunity because there was no clearly established law indicating that their conduct would violate Plaintiff's constitutional rights. (Defs. Mem. Supp. Summ. J. 23.); (Chief Deputy Frederick Mem. Supp. Summ. J., generally.) "[G]overnment officials performing discretionary functions generally are granted a qualified immunity and are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Wilson v. Layne, 526 U.S. 603, 614, 119 S. Ct. 1692, 143 L. Ed. 2d 818 (1999) (internal quotation marks omitted).
What this means in practice is that whether an official protected by qualified immunity may be held personally liable for an allegedly unlawful official action generally turns on the objective legal reasonableness of the action, assessed in light of the legal rules that were clearly established at the time it was taken.
Id. (internal quotation marks omitted).
[C]learly established for purposes of qualified immunity means that [t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. This is not to say that an official action is protected by qualified immunity unless the very action in question has previously been held unlawful, but it is to say that in the light of pre-existing law the unlawfulness must be apparent.
Id. at 614-15, 119 S. Ct. 1692 (internal quotation marks omitted).
In Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001), the United States Supreme Court established a "two-step sequence for resolving government officials' qualified immunity claims." Pearson v. Callahan, 555 U.S. 223, 129 S. Ct. 808, 815, 172 L. Ed. 2d 565 (U.S.2009). "First, a court [has to] decide whether the facts that a plaintiff . . . allege[s] . . . [set] out a violation of a constitutional right. Second, if the plaintiff . . . satisfie[s] this first step, the court . . . decide[s] whether the right at issue was `clearly established' at the time of defendant's alleged misconduct." Id. at 815-16 (internal citations omitted). In Pearson, however, the United States Supreme Court held that "while the [Saucier test] is often appropriate, it should no longer be regarded as mandatory." Id. at 818. "The judges of the district courts . . . should be permitted to exercise their sound discretion in deciding which of the two prongs of the qualified immunity analysis should be addressed first in light of the circumstances in the particular case at hand." Id. Thus, Pearson "does not prevent the lower courts from following the Saucier procedure; it simply recognizes that those courts should have the discretion to decide whether that procedure is worthwhile in particular cases." Id. at 821.
The court finds that the Saucier procedure is worthwhile in the instant case particularly because the first prong has *626 been satisfied. As discussed above, Defendants violated Plaintiff's constitutional right to free speech in a traditional public forum. The question now becomes whether a reasonable officer could have believed that prohibiting demonstrators from displaying large signs containing pictures of dismembered, aborted fetuses at a major intersection was lawful, in light of clearly established First Amendment law and the information they possessed.
In November 2005, there was no clearly established law provided by the United States Court of Appeals for the Fourth Circuit regarding the extent to which government officials may proscribe the use of photographs of aborted fetuses in a traditional public forum. "[R]eliance on decisions from other circuits to determine that a given proposition of law is clearly established is inappropriate as a general matter." Wilson v. Layne, 141 F.3d 111, 117 (4th Cir.1998). While it was clearly established that individuals have a right to freely express their views in a traditional public forum such as sidewalks, that is not enough. "[T]he right the official is alleged to have violated must have been clearly established in a more particularized, and hence more relevant, sense." Saucier, 533 U.S. at 202, 121 S. Ct. 2151 (internal quotation marks omitted). "The relevant, dispositive inquiry in determining whether a right is clearly established is whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted." Id.
The court finds that, under the specific facts of this case, it was not unreasonable for Defendants to believe that their prohibition was lawful. After arriving at the intersection, Major Smith called his superior, Chief Deputy Frederick, now former Chief Deputy Frederick, to describe what was taking place. After speaking with Major Smith, Chief Deputy Frederick advised Major Smith that "the disturbance could be addressed as a breach of the peace based on the combination of the graphic nature of the signs and their proximity to the road, and that, in keeping with the law, he could order the protestors to stop waving the graphic signs; he further directed [Major] Smith to have the signs removed from areas visible from the roadway." (Defs. Mem. Supp. Summ. J. 3.); (Id. Attach. 6 (Chief Deputy Frederick Dep. 40-44).) Chief Deputy Frederick explained that based on "various constitutional law classes [he's] had, FBI Academy and in-service type training" he believed that he had a duty to "protect the public from what we see as, for example, roadway hazards, distracted motorists, et cetera. And that in this particular instance, [he] made the judgment that the danger to the motorist outweighed their right to stand six inches from the roadway and conduct themselves as they were." (Chief Deputy Frederick Mem. Supp. Summ. J. Add'l Attach. 4 (Chief Deputy Frederick Dep. 26-27).)
At the instruction of Chief Deputy Frederick, Major Smith spoke with Plaintiff about removing the graphic signs while Officer Strickland took pictures at the scene. As counsel for Plaintiff and Defendants stated during the hearing on the cross motions for summary judgment, Major Smith and Officer Strickland behaved professionally and courteously at all times during their interaction with Plaintiff and members of CCL. When faced with fulfilling its obligation to protect citizens on the roadways without infringing upon the free speech rights of Plaintiff, Defendants' decision to prohibit the graphic signs, while ultimately failing to survive scrutiny, was not unreasonable under the circumstances. "The qualified immunity standard gives ample room for mistaken judgments by protecting all but the plainly incompetent or those who knowingly violate the law. *627 This accommodation for reasonable error exists because officials should not err always on the side of caution because they fear being sued." Hunter v. Bryant, 502 U.S. 224, 229, 112 S. Ct. 534, 116 L. Ed. 2d 589 (1991) (internal citation and quotation marks omitted). Accordingly, Defendants are immune from suit in their individual capacity.[4]
b. Official Capacity
Plaintiff also brings suit against Defendants in their official capacity. "Official-capacity suits . . . generally represent.. . another way of pleading an action against an entity of which an officer is an agent." Kentucky v. Graham, 473 U.S. 159, 165, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985) (internal quotation marks omitted). As such, Plaintiff's claims against Defendants in their official capacity are merely claims against the Greenwood County Sheriff's Office ("Sheriff's Office"). Sheriff Wideman "was the Greenwood County Sheriff at all times pertinent to the specific events alleged within this First Amendment Complaint. In his official capacity, he was responsible for enforcement of Greenwood County's laws, ordinances, and policies." (Am. Compl. ¶ 12.) "To hold [the Sheriff's Office] liable for a single decision (or violation), the decisionmaker must possess final authority to establish municipal policy with respect to the action ordered." Love-Lane v. Martin, 355 F.3d 766, 782 (4th Cir.2004) (internal quotation marks omitted).
The Sheriff's Office cannot be held liable pursuant to respondeat superior for the constitutional violations of their employees. Monell v. Dep't of Social Services of City of New York, 436 U.S. 658, 692-94, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). Instead, "it is when execution of a government's policy or custom, . . . inflicts the injury that the government as an entity is responsible." Id. at 694, 98 S. Ct. 2018. Plaintiff has not sufficiently pled facts to support the conclusion that it is the policy or custom of the Sheriff's Office to violate a citizen's First Amendment rights. Further, Plaintiff has not shown a policy or custom of the Sheriff's Office to utilize breach of the peace violations as a way to infringe upon a citizen's First Amendment rights. As such, Defendants are immune from suit in their official capacity. Therefore, Plaintiff is not entitled to monetary damages.
4. Attorney's Fees
Pursuant to 42 U.S.C. § 1988(b), a prevailing party in a § 1983 action may, in the court's discretion, receive attorney's fees. Under the totality of the facts in this case the award of attorney's fees is not warranted.
Therefore, it is
ORDERED that Defendants' motions for summary judgment, docket numbers 41 and 46, are granted in part and denied in part; it is further
ORDERED that Plaintiff's motion for summary judgment, docket number 42, is granted in part and denied in part; it is further
ORDERED that Plaintiff's request for attorney's fees is denied; and it is further
ORDERED that Defendants are enjoined from engaging in content-based restrictions on Plaintiff's display of graphic signs without narrowly tailoring its restriction to serve a compelling state interest.
IT IS SO ORDERED.
NOTES
[1] CCL members also carried large textual signs, some of which were larger than the graphic posters, that were not banned by Defendants. See (Defs. Mem. Supp. Summ. J. Attach. 12 (Officer Strickland Aff., pictures attached).). As such, it does not appear that neutral aspects, such as the size of the posters, was the motivating force behind the ban on the graphic posters.
[2] According to the incident report, Keith Fisher informed Lt. Miles "that when he was traveling through the intersection he saw several people standing on the corners holding and carrying large posters of graphic photographs of aborted fetuses." (Defs. Mem. Supp. Summ. J. Attach. 2 (Incident Report).) Another complainant, Patience Payne, complained that her five-year-old-son saw one of the graphic signs and became "frightened and upset." (Id. Attach. 2 (Incident Report).)
[3] The court acknowledges that the free exercise of religion "embraces two concepts, freedom to believe and freedom to act. The first is absolute but, in the nature of things, the second cannot be. Conduct remains subject to regulation for the protection of society." Cantwell v. State of Connecticut, 310 U.S. 296, 303-04, 60 S. Ct. 900, 84 L. Ed. 1213 (1940). However, for the reasons explained in the free speech analysis above, the court concludes that Defendants' blanket ban on Plaintiff's use of graphic pictures was not narrowly tailored.
[4] Defendant Sheriff Davis is sued only in his official capacity. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472080/ | 29 F. Supp. 2d 1 (1998)
UNITED STATES of America,
v.
Jack L. WILLIAMS and Archibald R. Schaffer III, Defendants.
Criminal Action No. 96-0314 (JR).
United States District Court, District of Columbia.
September 22, 1998.
*2 Robert W. Ray, Chief Assoc. Independent Counsel, Will Frentzen, Assoc. Independent Counsel, Alexandria, VA, for U.S.
Barry W. Levine, Dickstein, Shapiro, Morin & Oshinsky, L.L.P., Washington, DC, for Jack L. Williams.
William H. Jeffress, Jr., Miller, Cassidy, Larroca & Lewin, LLP, Washington, DC, W.W. "Woody" Bassett, Bassett law Firm, Fayetteville, AK, for Archibald R. Schaffer III.
MEMORANDUM
ROBERTSON, District Judge.
On June 26, 1998, a jury found Jack L. Williams guilty on two counts of making false statements to federal agents in violation of 18 U.S.C. § 1001 and Archibald R. Schaffer III guilty on one count of violating the federal gratuity statute, 18 U.S.C. § 201(c), and one count of violating the Federal Meat Inspection Act, 21 U.S.C. § 622. Messrs. Williams and Schaffer have both moved pursuant to F.R.Crim.P. 29 for judgments of acquittal or in the alternative pursuant to F.R.Crim.P. 33 for new trials. For the reasons set forth in this memorandum, both of Mr. Williams' motions will be denied, and Mr. Schaffer's motion for judgment of acquittal will be granted.
1. Applicable legal standards
After a jury has spoken, a court considering a motion for judgment of acquittal must "view the evidence in the light most favorable to the government, allowing the government the benefit of all reasonable inferences that may be drawn from the evidence, and permitting the jury to determine the weight and credibility of the evidence." U.S. v. Thorne, 997 F.2d 1504, 1509 (D.C.Cir.) cert. denied, 510 U.S. 999, 114 S. Ct. 568, 126 L. Ed. 2d 467 (1993) (citation omitted). The prosecution's evidence supporting a guilty verdict must be found sufficient if, "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the central elements of the crime beyond a reasonable *3 doubt." Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979) (emphasis in original); U.S. v. Apple-white, 72 F.3d 140, 142 (D.C.Cir.1995), cert. denied 517 U.S. 1227, 116 S. Ct. 1864, 134 L. Ed. 2d 962 (1996).
A district court may grant a new trial "if required in the interest of justice." F.R.Crim.P. 33. To succeed on his motion for a new trial, a defendant "must overcome a strong presumption ... in favor of upholding the jury verdict." U.S. v. Rogers, 918 F.2d 207, 213 (D.C.Cir.1990), cert. denied, 510 U.S. 906 (1993) (citation omitted). In considering such a motion, the trial court "weighs the evidence and evaluates the witnesses' credibility and decides whether `a serious miscarriage of justice may have occurred.'" Rogers, at 213, quoting Tibbs v. Florida, 457 U.S. 31, 38 n. 11, 102 S. Ct. 2211, 72 L. Ed. 2d 652 (1980).
2. Jack Williams' motion for judgment of acquittal
The case against Mr. Williams involved statements he made in two interviews. The first was conducted by two agents of the Department of Agriculture on March 22, 1994. The jury heard testimony from one agent that, in response to questions about whether or not Secretary Mike Espy had attended a Dallas Cowboys football game in January of that year as the guest of Tyson Foods, Mr. Williams
"said he didn't know if that had happened. He said he'd read some news sources that said it may have happened. He heard some rumors. But he didn't know if it actually he didn't know if the Secretary actually went, he didn't know if it actually happened. I asked him do you have any firsthand knowledge about whether the Secretary went down there and attended that game in the presence of Don Tyson. He said that he didn't have any firsthand knowledge. He said he didn't have any." (Tr. 192).
The other agent, testifying about the same interview, said that he asked Mr. Williams whether he "knew about how Mr. Espy got to the game, who paid for it, and so forth," Tr. 781, and that Mr. Williams responded
"that he had only heard through rumor ... and news report that [Secretary Espy] had been at the game and he did not know if he had actually attended." (Tr. 781).
The evidence that Mr. Williams' statements were false included the testimony of Cleta Selman, an executive secretary at Tyson Foods, that Mr. Williams contacted Tyson Foods to coordinate the travel schedules of Secretary Espy and his girlfriend to attend the football game and to coordinate their hotel accommodations and ground transportation (Tr. 267-68). A travel agent also testified that Mr. Williams purchased an airline ticket for Secretary Espy's girlfriend to travel from Washington, D.C. to Dallas on January 15, 1994 and return to Washington the next day, and that he charged the ticket to his Visa credit card account (Tr. 1179-1181).
Clearly Mr. Williams had knowledge about Secretary Espy's attendance at the game that went beyond rumors and news reports. Mr. Williams argues, however, that the questions put to him at the March 22 interview were not precise enough to require him to tell what he knew; that the testimony of the two agents, unsupported by a recording or a verbatim transcript, was insufficient proof of exactly what the questions were; that the questions were ambiguous; that his statements were literally true; and, that, in any event, considering the knowledge USDA already had that Secretary Espy had indeed attended the football game, the statements were not material.
The second interview was conducted on June 9, 1994, by two FBI agents. The jury heard testimony that, in that interview, Mr. Williams said that "he had never spoken to (Secretary Espy's girlfriend) on the phone, he had never called her and she had never called him," (Tr. 665); that "he had not spoken to her for any reason at all including to make travel arrangements," (Tr. 665); and that "he learned about those trips that Secretary Espy took after they occurred. He wasn't involved in making any arrangements for them, and ... he didn't know about Secretary Espy going to [sic] those trips ahead *4 of time." (Tr. 666).[1] The evidence that Mr. Williams' statements were false included Cleta Selman's testimony about travel arrangements, supra, and the testimony of Secretary Espy's girlfriend that she had indeed talked to Jack Williams by telephone about a Tyson Foundation scholarship (Tr. 1099) and about her need for an airline ticket to get to Dallas (Tr. 1110-1112).
Mr. Williams' arguments about the June 9 interview, like his argument about the March 22 interview, assert the insufficiency of the government's proof of what the questions were, the literal truth of his statements, the immateriality of his statements, and the ambiguity of the agents' questions. Mr. Williams also argues with regard to the June 9 interview that he must be granted a judgment of acquittal because the verdict does not specify which of the statements the jury found false and because the agents did not warn him that his statements might subject him to criminal liability.
a. The agents' questions and Mr. Williams' answers
Mr. Williams invokes the cautionary language of the Court of Appeals in United States v. Poindexter, 951 F.2d 369, 388 (D.C.Cir.1991), about "the difficulty of proving beyond a reasonable doubt exactly what the defendant said and whether he intended to deceive his audience as to a material question of fact...." He points out that all four of the testifying agents, in various ways, conceded their inability to recite the exact questions or Mr. Williams' exact answers (Tr. 216, 672-73, 765, 1200). There is, however, no requirement that a conviction under 18 U.S.C. § 1001 be supported by stenographic transcripts or electronic recordings of the questions and answers. Marzani v. U.S., 168 F.2d 133 (D.C.Cir.), aff'd, by an equally divided court, 335 U.S. 895, 69 S. Ct. 299, 93 L. Ed. 431 (1948). In his opening statement, his cross-examination of the agents, and his closing argument, counsel urged pointedly and repeatedly that the jury should have no confidence in the agents' testimony because there was no recording or transcript. The jury disagreed. Viewing the evidence in the light most favorable to the prosecution, I cannot say that no rational trier of fact could have found beyond a reasonable doubt that the questions and the answers were as the agents testified.
b. Literal truth
Mr. Williams asserts that it was literally true that he had no firsthand knowledge that Secretary Espy had been at the Dallas game. The jury was given the instruction on literal truth requested by the defense (Tr. 1782). They could easily have determined on the basis of the testimony that Mr. Williams had more information than what he had heard through rumors and news reports.
c. Materiality
A false statement is material if it "ha[s] a natural tendency to influence, or [is] capable of influencing the decision of the decisionmaking body to which it [is] addressed," U.S. v. Gaudin, 515 U.S. 506, 508-10, 115 S. Ct. 2310, 2313, 132 L. Ed. 2d 444 (1995) (citation omitted). Materiality is a fact issue for the jury. Id. at 2311. There was testimony that the agents in the first interview were trying to find out, not only whether or not Secretary Espy actually attended the Dallas game, but also what else Mr. Williams knew about the subject. The second interview involved more targeted questions about travel arrangements for Secretary Espy's girlfriend. The government's proof that it did not learn until October 20, 1994, that Mr. Williams had actually paid for her airfare, Tr. 759, was sufficient to support the jury's verdict as to materiality.
d. Ambiguity of the questions
Mr. Williams argues that the verdict is defective as a matter of law because the agents' questions were fundamentally ambiguous. The charges against Mr. Williams were that his statements were false, however. The jury could reasonably have concluded that Mr. Williams' statements that he had only heard about Secretary Espy's attendance *5 at the Dallas game "through rumor ... and news reports," and that he had never spoken to Secretary Espy's girlfriend on the telephone for any reason, were false statements, no matter what the questions were that elicited them.
e. Ambiguity of the verdict
Mr. Williams asserts that because it cannot be known which one or ones of the four false statements charged in Count Fifteen was or were the basis of the jury's verdict, judgment must be entered for the defendant if any one was too ambiguous to support conviction. I ruled on this point after Mr. Williams' first trial (June 4, 1997 transcript, p. 32) and adhere to that ruling: there was nothing fundamentally ambiguous in any of the four statements made to the FBI agents.
f. Warnings to Jack Williams
Mr. Williams reasons that, because government agencies often choose to warn citizens that making a false written statement to the government is a crime, F.B.I. agents are obligated to issue warnings before interviews that making a false oral statement is also a crime. This proposition is not the law. Appellant was not in custody, and there was no criminal charge pending against him. Compare Massiah v. U.S., 377 U.S. 201, 207, 84 S. Ct. 1199, 12 L. Ed. 2d 246 (1964); Miranda v. Arizona, 384 U.S. 436, 444, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
3. Jack Williams' motion for a new trial
a. Prosecution misstatements made in closing argument
The first ground of Mr. Williams' motion for a new trial is that the prosecution misstated the record in a prejudicial way in final argument. Mr. Williams attempts both to rely on language found in United States v. North, 910 F.2d 843, 895 (D.C.Cir.1990), and to distinguish the result of that case (no substantial prejudice), by pointing out that the case against him was markedly thinner than the case against Colonel North. After reviewing the record, however, I conclude that the prosecutor's misstatement of the record does not come close to meeting the applicable testwhether "the prosecutors' comment so infected the trial with unfairness as to make the resulting conviction a denial of due process." Darden v. Wainwright, 477 U.S. 168, 181, 106 S. Ct. 2464, 91 L. Ed. 2d 144 (1986). The jury was promptly advised, and later formally instructed, that its recollection would control.
b. Jury instructions
The jury was instructed that the first element of a § 1001 violation is "ma[king] a statement or representation to the government ... as testified to by the government's witnesses." (Tr. 1781). Mr. Williams asserts that that instruction improperly allowed the jury to find him guilty of making false statements that were not alleged in the indictment. Mr. Williams did not object to the instruction. In fact, the transcript reflects an "ad lib" attempt to conform the prepared instruction to Mr. Williams' request that the indictment not be sent back to the jury during its deliberations. (Tr. 1781, 1665-66). In any event, every alleged false statement about which government agents testified was included in the indictment.
Mr. Williams also assigns error to my decision not to instruct the jury that, in order to find defendant guilty on Count Fifteen, it must decide unanimously as to at least one of the four charged statements. Mr. Williams did not object to the instruction as given.
Mr. Williams asserts that it was error to refuse his proposed instruction that the jury should "not ... examine the isolated segments of the question and answer exchange, but instead ... view Mr. Williams' answers within the context of the entire line of questioning for both interviews." Similarly, Mr. Williams argues that I erred in giving a Redbook[2] instruction as to materiality, refusing his proposed instruction about the purpose of materiality. It is established that *6 "[t]he trial court is required to give a proper instruction, and to instruct on the defendant's theory of the case if supported by the evidence. The court is not required to give the instruction in the specific language requested by the defendant." U.S. v. Tarantino, 846 F.2d 1384 (D.C.Cir.1988) (citation' omitted).
Mr. Williams' final contention, with regard to jury instructions, is that the jury should have been instructed that he could not be found guilty of a § 1001 violation in the absence of proof that he understood that the statements he made were false. The jury was indeed instructed that in order to convict, it must find that Mr. Williams acted knowingly "with awareness and comprehension" and wilfully "deliberately, voluntarily, and intentionally" (Tr. 1781-82).
4. Archibald Schaffer's motion for judgment of acquittal
Mr. Schaffer was found guilty of providing things of value to Secretary Espy on two separate occasions, first in connection with President Clinton's inaugural dinner in January 1993, and then in connection with Don Tyson's birthday party in Russellville, Arkansas, in May 1993. The jury found that Mr. Schaffer violated the federal gratuity statute with respect to the inaugural dinner and the Meat Inspection Act with respect to the Russellville birthday party.
The details of Mr. Schaffer's actual involvement with these two events and the extent of his involvement were disputed at trial, but a reasonable jury could have found on the basis of the evidence that Mr. Schaffer gave, or aided and abetted in the giving of, things of value to Secretary Espy on or with respect to both occasions.
Also disputed at trial was an issue that is dispositive on the instant motion for judgment of acquittal, namely, the intent with which the things of value were given. Were they given for or because of official acts or with the intent to influence official acts? Or, as defendant insists, were they were given merely to keep the Secretary happy, or to create a better relationship, or in the vague hope of inducing warm feelings, or to win generalized sympathy, or to ingratiate himself or his company with the Secretary, or to celebrate Secretary Espy's status, any of which, or all of which in combination, would not amount to criminal intent under United States v. Sun-Diamond Growers, 138 F.3d 961 (D.C.Cir.1998)?
The Sun-Diamond decision required that evidence of unlawful gratuities focus on official acts. The language of the Meat Inspection Act required the same focus for Meat Inspection Act charges. That focus had an important effect on shaping the evidence at trial and the jury instructions. Mr. Schaffer moved before trial for a bill of particulars. The motion was denied, Order of March 2, 1998, upon a finding that the indictment outlined with sufficient specificity "two proposed rules and policies that were pending before the USDA in which Tyson Foods had an interest...." Id. Those two "proposed rules and polices" concerned food safety issues that became known in the lingo of the trial as "zero tolerance" and "safe handling labels." The prosecution agreed that zero tolerance and safe handling labels marked the boundaries of its case. The jury instructions under both the Meat Inspection Act and the federal gratuities statute expressly referred to zero tolerance and safe handling labels. The jury was instructed that, under the Meat Inspection Act, the requisite intent was
"to influence Secretary Espy in the performance of any duty under the Meat Inspection Act.... Among the duties prescribed by the Meat Inspection Act, the Secretary of Agriculture was responsible for enforcement of and promulgation of regulations regarding safe handling labels, and zero tolerance for contamination of beef and pork."
"If a defendant intended to influence to any degree the Secretary's actions with regard to either one of these issues by giving things of evaluate [sic], then he had the requisite criminal intent to violate the Meat Inspection Act." (Tr. 1777-78) (emphasis added).
With respect to the gratuities statute, the jury was instructed that one of the elements was *7 "[making] the gift, offer or promise for or because of any official acts." ...
"It is not a crime to give things of value to a public official merely to get cozy or in hopes of inducing warm feelings towards the giver or the giver's employer. You may find ... Mr. Schaffer guilty of the offense of giving an illegal gratuity only if you find beyond a reasonable doubt that a gift or gifts were given to Secretary Espy with the intent of rewarding him for some specific official act he had done in the past concerning safe handling labels or zero tolerance, or with the intent of making him more likely to do something in the future about one or both of those subjects that would be favorable to Tyson Foods."
"It is not necessary that the government prove that any particular gift was earmarked for any particular official, nor is it necessary for the government to prove that the gift or gifts ultimately succeeded in obtaining favorable treatment." (Tr. 1779) (emphasis added).
a. Illegal gratuities and the inaugural dinner
There was no evidence that Mr. Schaffer or anybody in Tyson Foods knew of or anticipated anything about zero tolerance or mandatory safe handling labels at the time of the inaugural dinner. The dinner was held on January 18, 1993, the same day on which the first case of E. coli 0157:H7 infection was reported to the Department of Agriculture (GX-116). That case later gave rise to a USDA initiative to implement a policy of zero tolerance for fecal matter. The zero tolerance issue simply did not exist on January 18, 1993.[3] The government's proof did not establish that any regulatory action was proposed or pending at USDA on or before January 18, 1993 with respect to safe handling labels.
There was accordingly no evidence upon which any rational trier of fact could have found that Mr. Schaffer's intent in giving inaugural dinner tickets to Secretary Espy was "for or because of" Secretary Espy's actions with respect to either zero tolerance or safe handling labels.
b. The Meat Inspection Act and the Russellville birthday party
By the time of the Russellville birthday party in May 1993, the E. coli outbreak in the Northwest and the USDA's response to it were well known. USDA had announced in February 1993 that mandatory safe handling labels would likely be part of its initiatives taken in response to the E. coli outbreak, GX-116. The prosecution presented no evidence, however, to establish that Mr. Schaffer or Tyson Foods had any objection or opposition to safe handling labels. The evidence is all to the contrary (Tr. 1428-1446; DX-AS52, AS53, AS54, AS55, AS56, AS57, AS58, AS60). The USDA announced on August 11, 1993 three months after the Russellville party that a label change would be required effective in 60 days. No evidence of any Tyson Food involvement in or concern about the USDA's proposal to require safe handling labels predated that announcement. Tyson Foods' objection, moreover, was not to the fact or content of the regulation, but to its timing. There was no issue about timing in May 1993.
Zero tolerance was a live issue in May 1993, but the E. coli outbreak that gave rise to the issue was confined to beef, and the zero tolerance policy, proposed inside USDA on February 5, 1993 (GX-116) and announced on March 2, 1993 (Tr. 433), related only to beef. The government presented no evidence of any concern on the part of Tyson Foods or Archie Schaffer with respect to the zero tolerance policy for beef. The policy had already been implemented, on March 2, 1993, so the Meat Inspection Act's requisite "intent to influence" that action could not have been present in May. Moreover, the policy related only to "cattle slaughter establishments" (Tr. 434), and there is nothing in the record that rebuts the defendant's proof *8 that Tyson Foods never owned a single cattle slaughter establishment (Tr. 910, 1305-06). The government's argument that the evidence establishes Mr. Schaffer's "clear inten[t] to influence Espy to hold off imposing `zero tolerance' for poultry," Oppos. p. 38, does not persuade, because the Meat Inspection Act does not cover poultry. See 21 U.S.C. § 601(j).[4]
No rational trier of fact could have found that Mr. Shaffer's intent in giving (or aiding and abetting the giving) of things of values to Secretary Espy in connection with the Russellville party was to influence Secretary Espy in the performances of any duty under the Meat Inspection Act regarding safe handling labels or zero tolerance.
* * * * * *
NOTES
[1] Other allegedly false statements were made in the June 9 interview, but they need not be considered here because proof of one was sufficient to violate § 1001.
[2] Young Lawyers Section of the Bar Association of the District of Columbia, Criminal Jury Instructions for the District of Columbia (4th ed.).
[3] There is some indication in the record that USDA's Food Safety & Inspection Service had developed internally a strategic initiative for inspection reform, but the OIC's own proof indicates that this initiative was not presented to Secretary Espy until after he took office on a date, of course, later than the inaugural dinner. There was no proof that either Secretary Espy or anybody in Tyson Foods knew about this initiative at the time of the inaugural dinner.
[4] It was suggested to and even urged before trial that OIC proceed only on the gratuities statute and not the Meat Inspection Act. The OIC declined that suggestion and insisted on charging Mr. Schaffer's conduct with respect to the Russellville birthday party under both statutes. The evidence about Tyson's concern for the potential expansion of zero tolerance to poultry might have supported a jury verdict for violation of the gratuities statute in connection with the Russellville birthday party on the theory that the Secretary was feted "with the intent of making him more likely to do something in the future about [zero tolerance]," (Tr. 1779, Oppos. p. 23). The jury, however perhaps unwilling to convict Mr. Schaffer twice for the same conduct acquitted Mr. Schaffer of that charge. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539981/ | 724 F. Supp. 2d 207 (2010)
James DICKEY, Plaintiff,
v.
Edward KENNEDY, Defendant.
Civil Action No. 07-11717-NMG.
United States District Court, D. Massachusetts.
June 25, 2010.
*208 James Dickey, Sudbury, MA, pro se.
Alexandra B. Alland, Kenneth J. Forton, Sean P. Nehill, City of Boston Law Department, Boston, MA, for Defendant.
MEMORANDUM & ORDER
GORTON, District Judge.
Pro se plaintiff James Dickey ("Dickey") brought suit against Edward Kennedy ("Kennedy") for 1) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), based upon extortion, attempted extortion and mail fraud and 2) conspiracy to do the same in violation of 18 U.S.C. § 1962(d). Before the Court is Kennedy's motion for summary judgment.
I. Factual Background
Plaintiff claims that Kennedy and others engaged in an unlawful scheme to "extort" real property from Boston property owners, one of whom is Dickey. The summary judgment record is expansive and these facts have been gleaned from the parties' lengthy submissions. Kennedy was an employee of the City of Boston's Inspectional Services Department ("ISD"). John Meaney ("Meaney") is a Health Inspector for ISD who also served as a Hearing Officer during condemnation hearings. Jonathan Kaye ("Kaye") is the third prominent actor in the alleged enterprise but his status is not clear. Dickey claims that Kaye is a contractor from Rhode Island but Kennedy does not confirm that.
ISD is authorized to enforce the Massachusetts sanitary code governing the condition of buildings and their fitness for human habitation. See M.G.L. c. 111, § 127A; 105 C.M.R. 400.100. That authority includes the ability to order buildings *209 deemed unfit for habitation to be vacated, put in a clean condition or placed in compliance with regulations. M.G.L. c. 111, § 127B. A court must appoint a receiver to bring a property into compliance with the sanitary code whenever 1) a petitioner demonstrates that violations will not be promptly remedied unless a receiver is appointed and 2) the court determines that such appointment is in the best interest of occupants. § 127I.[1]
Dickey contends that Kennedy exploited that process with respect to his and other properties in a scheme which generally proceeded as follows. Kennedy, in his official capacity, would condemn a building with the intention of forcing its owner to sell it to his associates at a low price. Meaney, acting as the ISD Hearing Officer, would then ensure that the condemnation was upheld. If the owner did not sell, Kennedy would allegedly
`feed' the building to an associate [i.e., Kaye or Meaney] for the purpose of extorting the building by purchasing [it] at a reduced rate.
In one instance, Dickey claims, that meant that Meaney was simply able to purchase a building for a low price and turn a quick profit. In other instances, it meant that Kennedy would have Kaye appointed as receiver for the building. Kaye would then allegedly record an excessive mortgage on the property and later foreclose once repairs were done. According to Dickey, the amount of the mortgage would, in effect, become the (reduced) purchase price because Kaye would submit exaggerated expenses for rehabilitating the property.
In support of his claim that such activity represented a pattern of racketeering activity, Dickey provides five examples of alleged predicate acts.[2] Dickey also includes various allegations with respect to properties at 18 Jerome Street in Dorchester, Massachusetts and 534-544 Dorchester Avenue in South Boston, Massachusetts. He does not, however, claim that any allegedly improper conduct regarding those two properties constituted predicate acts to his causes of action. Because it is therefore unclear what purpose the allegations serve apart from attempting to paint the defendant in a negative light, they are not repeated. The five alleged predicate acts are:
1) 199-201 Athens Street, South Boston.[3] This property is currently owned by Marian Sklodowski ("Sklodowski") and formerly belonged to Jadwiga Rochalska ("Rochalska"). In August, 2000, ISD condemned the property as unfit for habitation citing, inter alia, its dilapidated condition, the frequent presence of homeless people and occasional fires. At some point that fall, Dickey claims that Kennedy presented a written offer to purchase the building which was declined. Dickey has submitted only an affidavit from Sklodowski and not the alleged offer.
In April, 2001, Kennedy reinspected the property. He found that violations still existed and thus ordered it to be forwarded for receivership. A motion for receivership was filed in January, 2002 detailing *210 numerous violations. The City made several unsuccessful attempts to serve then-owner Rochalska personally but claimed that it could not locate her. Dickey alleges that Kennedy knew Rochalska's address as early as October, 2000 but withheld it from the City's attorney in order to ensure that a receiver was appointed pursuant to his scheme. In support of that proposition, he submits a letter addressed to Kennedy noting the change in address as well as a return receipt indicating that the letter was delivered to ISD.
In any event, without a response from Rochalska, the motion to appoint a receiver was allowed in March, 2002 and Kaye was appointed. That must have put Rochalska on notice because she filed a motion to stay the receivership shortly thereafter seeking to complete the rehabilitation herself. The Court allowed her motion but Kaye retained the limited authority to take all steps necessary to enable the Fire Department to enter the premises. In December, 2002, Kaye's receivership was dissolved and Sklodowski, who had been allowed to intervene, was ordered responsible for the building's rehabilitation.
What Kaye was due for his nine months as receiver remained to be determined by the Housing Court. Kennedy was a witness during that process and Dickey contends that Kaye exaggerated his expenses. Most of the claims he makes here were, however, considered by the Housing Court and several were discredited. That said, the Housing Court expressed some skepticism towards Kaye's submissions and noted troublesome testimony regarding certain fees. Ultimately, the Housing Court awarded about $124,000 in expenses which was less than what Kaye had requested. The Massachusetts Appeals Court then vacated the Housing Court's award and remanded the case with respect to one charge ($20,000 in security services) because it was unsupported. The Appeals Court also expressed a general skepticism towards Kaye's accounting. Rochalska, 890 N.E.2d at 167 n. 18.
According to Dickey, the resolution in that case had two consequences: it exposed the enterprise's activities but it also emboldened the enterprise because it had "withstood [its] first legal challenge, basically unscathed".
2) 724 East Second Street, South Boston. This property belongs to the plaintiff. Dickey contends that, in March, 2003, Kennedy informed him that he had noticed that someone was living in the second floor apartment of Dickey's house. Kennedy told Dickey that if he did not remove the occupant from the apartment, he would board up the house. Dickey asked the occupant to vacate the apartment and he complied forthwith. Also at that time, Kennedy allegedly asked Dickey if he was interested in selling the property but Dickey demurred.
After an inspection on March 4, 2003, Kennedy issued a notice of possible condemnation. A hearing was held (at which Meaney was not the Hearing Officer) and sufficient cause was found to hold the property unfit for habitation. Violations included exposed electrical boxes, improper smoke detectors and a rotting porch. Dickey asserts, however, that "the hearing officer never had the building seized". Dickey also claims that the condemnation was "an attempt to force a sale" but that assertion appears to be based only upon his speculation in an affidavit.
3) 27 G Street, South Boston. Dickey alleges that Kennedy condemned this property in June, 2003 for the purpose of having an associate purchase it at a reduced rate. In contrast to his submissions with respect to other properties, however, Dickey provides no document to show even that the building was condemned apart *211 from his own affidavit. In September, 2003, the property was apparently sold to three individuals including Meaney for $260,000. The property was renovated and then resold in March, 2005 for over $600,000.
4) 20 Claybourne Street, Dorchester. In August, 2003, Kennedy condemned this building (not owned by Dickey) as unfit for human habitation because it had been vacant for years and was, for example, overgrown and infested with rodents. A hearing was held the following month at which Kennedy testified and Meaney was the Hearing Officer. After the hearing, Meaney upheld the condemnation but his decision stated that the condemnation could be lifted if the owner submitted plans to renovate the property and acquired permits to do so. There is no indication that the owner attended the hearing or responded.
Kennedy reinspected the property in October, 2003. He found that no work had been done and the building remained abandoned and, therefore, ordered the case moved forward for receivership. That same month, ISD sent a letter to the Massachusetts Attorney General's Office ("the AG's Office" or "the AG") requesting that it file a petition for receivership. Although the letter does not indicate as much, Dickey contends that it was sent via U.S. Mail.
In any event, a petition was filed and, in October, 2004, Kaye was appointed as receiver. He then submitted estimates for bringing the property into compliance with the law to the Housing Court. In February, 2005, Kaye executed an Assignment of Receiver's Priority Lien pursuant to which he received a loan of $401,504 from Boston Community Capital to renovate the unoccupied building. In late 2005, after the renovation and ISD's acknowledgment that all violations had been corrected, the Housing Court entered an order authorizing the receiver to foreclose on the lien, which remained unpaid, by public auction. The auction was held on December 12, 2005 and Kaye, in his individual capacity, placed a successful bid to purchase the property for $468,000. In his final report to the Housing Court as receiver, Kaye stated that he had satisfied all liens and costs of foreclosure, repaid Boston Community Capital and reimbursed the receiver for the balance of his lien and other costs associated with the sale. He stated that their were no excess funds to deposit with the Court.
Dickey claims that Kaye again submitted exaggerated expenses because $468,000 is in excess of 1) the estimate on his construction permit ($250,000 in total costs) and 2) his original estimates to the Housing Court (ranging from about $330,000 to $386,000). Kaye has apparently refused to provide a breakdown of the $468,000 and has since sold the property for $510,000.
5) 97 Mount Ida Road, Dorchester. Dickey is the owner of this property. He claims that, at an unidentified time, the defendant's brother, John Kennedy, tried to contact him about the property but that he did not respond. On August 25, 2003, perhaps motivated by John's inquiry, Dickey obtained a permit to re-side the building. He had begun that work when, on September 16, 2003, Kennedy condemned the property and had it boarded up. Dickey was charged for the cost of the boarding and Kennedy allegedly threatened Dickey with arrest for trespass if he went near the house.
On October 7, 2003, the City held a condemnation hearing and Meaney was the Hearing Officer. Kennedy testified that, prior to the condemnation, ISD had received a letter from concerned neighbors about the building's unsafe condition. Kennedy found a history of unsafe conditions *212 at the property and discovered that Dickey had a shoddy record of responding to ISD. Kennedy then inspected the building and uncovered numerous violations including a dangerous porch, collapsed rear steps, rodents, large amounts of debris and no working hall lights. As a result, he issued an emergency order to vacate and board up the building. A tenant also testified about the building's poor condition and Dickey was offered an opportunity for rebuttal. He did not contest the majority of Kennedy's allegations but stated that he was in the process of re-siding and cleaning out the basement. He also noted that he was trying to get a permit "to pull the house back together" and had had a contractor visit.
Meaney upheld the condemnation in a Notice of Decision that repeated most of the violations reported by Kennedy. The decision also included the statement "[f]ront and rear common halls missing, broken not working (repair/replace)" and noted that condemnation could be lifted if Dickey took certain steps to remedy the problems.
On October 14, 2003, Kennedy reinspected the property. He reported that violations still existed and that no permits had been issued and, therefore, ordered the case to proceed to receivership. Two identical letters were allegedly sent to the AG's Office from ISD by U.S. Mail requesting the filing of a petition to appoint a receiver. The following month, Dickey's contractor secured a building permit for the property and Dickey was notified by the AG's Office that it would not seek the appointment of a receiver if he made the requisite repairs.
Two years later, in August, 2005, the AG sent Dickey a letter indicating that long-standing problems with the building continued to impact neighbors and threatening receivership if he did not fulfill his legal responsibility to fix them. In November, 2005, after the Post Office returned its letter as undeliverable, the AG's Office filed a motion in the Housing Court to appoint a receiver. The petition stated that many violations persisted despite "repeated promises to remedy the situation" from Dickey. A hearing was held on December 21, 2005 after which, Dickey claims, the AG's Office decided not to go forward with the case.
In May, 2006, the AG's Office filed a status report on its motion to appoint a receiver. It again indicated that Dickey was not complying with his promise to come up with a schedule for renovations and that an ISD inspector (not Kennedy) found continued violations. The officer, therefore, requested appointment of Kaye as receiver. Dickey claims, in his affidavit, that the petition was denied after he showed the judge pictures of the property at a hearing, presumably depicting some progress with repairs.
II. Procedural History
Dickey filed his complaint on September 14, 2007 and Kennedy responded with a motion to dismiss. In September, 2008, this Court allowed Kennedy's motion to the extent it sought to dismiss claims based on injuries that occurred prior to September 14, 2003 but otherwise denied it. Dickey filed an amended complaint two months later and the case then proceeded through discovery. In September, 2009, Kennedy filed a motion for summary judgment which Dickey opposed the following month.
III. Analysis
A. Legal Standard
The role of summary judgment is "to pierce the pleadings and to assess the proof in order to see whether there is a *213 genuine need for trial." Mesnick v. General Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir.1990)). The burden is upon the moving party to show, based upon the pleadings, discovery and affidavits, "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).
A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). "Factual disputes that are irrelevant or unnecessary will not be counted." Id. A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.
Once the moving party has satisfied its burden, the burden shifts to the non-moving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The Court must view the entire record in the light most hospitable to the non-moving party and indulge all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir.1993). If, after viewing the record in the nonmoving party's favor, the Court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate.
B. Application
Dickey alleges two counts: 1) a civil RICO claim based upon an alleged violation of 18 U.S.C. § 1962(c) and 2) conspiracy to do the same in violation of 18 U.S.C. § 1962(d). Kennedy moves for summary judgment with respect to both causes of action. Although Dickey has made out an arguable case of suspicious activity involving a consistent cast of characters, he has not established a viable claim under either count. The Court will, therefore, enter summary judgment in Kennedy's favor.
1. Civil RICO Claim
RICO's civil enforcement scheme allows "[a]ny person injured in his business or property by reason of a violation of section 1962" to bring suit. 18 U.S.C. § 1964(c). A valid claim based upon a violation of § 1962(c) entails 1) conduct 2) of an enterprise 3) through a pattern 4) of racketeering activity. E.g., Kenda Corp. v. Pot O'Gold Money Leagues, Inc., 329 F.3d 216, 233 (1st Cir.2003) (citation and quotation marks omitted). A "pattern" requires at least two predicate acts of racketeering activity, id., and racketeering activity, in turn, covers a wide range of unlawful conduct including extortion and mail fraud. 18 U.S.C. § 1961(1).
Kennedy argues that summary judgment is warranted because there is no evidence of either an enterprise or any racketeering activity. Dickey's opposition attempts to state his case with respect to each of the four elements. The Court need only consider whether there was any "racketeering activity". In that regard, Dickey claims liability based upon 1) extortion and attempted extortion in violation of the Hobbs Act, 18 U.S.C. § 1951, and 2) mail fraud in violation of 18 U.S.C. § 1341. Each is considered in turn.
a. Extortion and Attempted Extortion
RICO includes any act indictable under the Hobbs Act, 18 U.S.C. § 1951, as a "racketeering activity". 18 U.S.C. § 1961(1)(B). The Hobbs Act, in turn, defines extortion as
the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, *214 or fear, or under color of official right.
18 U.S.C. § 1951(b)(2). With respect to public officials, the statute mirrors the common law and "merely requires of the public official that he obtain `property from another, with his consent,... under color of official right.'" Evans v. United States, 504 U.S. 255, 263-65, 112 S. Ct. 1881, 119 L. Ed. 2d 57 (1992). Extortion therefore requires that the victim consent to give up his property and yield to an official's authority. E.g., United States v. Brock, 501 F.3d 762, 770 (6th Cir.2007) ("[A]ll victims of extortion must consent to give the money to the public official."); United States v. Zhou, 428 F.3d 361, 370-72 (2d Cir.2005). See also Camelio v. Am. Fed'n, 137 F.3d 666, 670-71 & n. 5 (1st Cir.1998) (explaining that injuries caused only by defendants' unilateral acts did not occur with plaintiff's consent and thus did not constitute extortion in violation of the Hobbs Act).
Here, Kennedy contends that there is no evidence that he extorted Dickey's property. In particular, he argues that to "obtain" property under the Hobbs Act requires an actual transfer of property from the plaintiff to the defendant. Because Dickey has no evidence that Kennedy monetarily benefitted from the alleged enterprise (a fact Dickey admits), Kennedy maintains that he cannot be held liable for extortion.
Dickey responds that RICO does not require successful extortion but only that the defendant's actions cause damage to the plaintiff. Such damage here, he contends, is his loss of rental income and other incurred costs. He then restates the general scheme that he labels extortion of real property: 1) Kennedy would condemn a building with the intention of forcing the owner to sell for a reduced rate, 2) if the owner refused, Kennedy would have the building placed into receivership, 3) an associate would be appointed receiver and 4) the receiver would then place an excessive mortgage on the property and later foreclose on it, effectively purchasing the property for a low price.
The trouble with Dickey's argument is that what he alleges is not extortion or attempted extortion under the Hobbs Act. In particular, nothing in his claims or pleadings establishes any consent on the part of the alleged victims. See 18 U.S.C. § 1951(b)(2) (defining extortion as the obtaining of property from another "with his consent"). Instead, Dickey repeatedly seeks to show that Kennedy and his crew unilaterally condemned, renovated and then sold property (or attempted to do the same) against the will of or unbeknownst to the "victims". Even crediting Dickey's theory that Kennedy sought to obtain property for low prices under color of official right (a dubious proposition for reasons stated below), neither Dickey nor any other property owner gave in to such demands or consented to giving up his property. Dickey cannot, therefore, establish a claim for extortion under the Hobbs Act.
To be sure, that is not the only problem with Dickey's claim and his allegations rest on a shaky factual foundation built upon frequent speculation. In his filings, for example, he neglects the fact that ISD acted in the face of obvious sanitary violations and that receivers were only sought after property owners proved delinquent or non-responsive, as the Massachusetts statute allows. Moreover, Kaye was only appointed receiver in two of the five allegedly predicate acts (and is only mentioned with respect to three) and Meaney was not always the Hearing Officer. Furthermore, Dickey acknowledges that the "scheme" never succeeded against him and that he has no evidence that Kennedy monetarily *215 benefitted from any alleged wrongdoing. Cf. Wilkie v. Robbins, 551 U.S. 537, 127 S. Ct. 2588, 168 L. Ed. 2d 389 (2007) (extortion under color of official right does not include taking property for the sole benefit of the government even if the official arguably stretches his authority).
Fortunately, however, the Court need not delve too deeply into the allegations and voluminous documents submitted. The fact that Dickey cannot make out a claim for extortion under the Hobbs Act is dispositive and, accordingly, the Court will allow Kennedy's motion for summary judgment to the extent that it is based thereupon.
b. Mail Fraud
A violation of the mail fraud statute may also serve as the basis for a RICO claim. 18 U.S.C. § 1961(1)(B). That statute requires proof of 1) a scheme to defraud based on false or fraudulent pretenses, representations or promises, 2) the defendant's knowing and willing participation in the scheme with the intent to defraud and 3) the use of interstate mail communications in furtherance of that scheme. 18 U.S.C. § 1341; United States v. Hebshie, 549 F.3d 30, 35 (1st Cir.2008) (citation omitted). The alleged falsehood must also be material. Neder v. United States, 527 U.S. 1, 25, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999).
The third element has been construed broadly. It requires that the defendant both cause the use of the mails (which includes reasonably foreseeable mailings) and use the mails for the purpose, or in furtherance, of executing the scheme to defraud. Hebshie, 549 F.3d at 36. For a mailing to be in furtherance of or for the purpose of executing the scheme, it need only be incident to an essential part of the scheme or a step in the plot. Schmuck v. United States, 489 U.S. 705, 710-11, 109 S. Ct. 1443, 103 L. Ed. 2d 734 (1989) (citation and quotation marks omitted). Mailings may be innocent or routine and the "relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time". Id. at 714-15, 109 S. Ct. 1443. Use of the mail, moreover, need not have been originally intended if it was a reasonably foreseeable means of executing the plan.
Kennedy contends that Dickey cannot demonstrate any mail fraud because there is no evidence that anyone 1) authored false documents with the intent to defraud or 2) used the United States mails in furtherance of any purported scheme. With respect to the latter point, Kennedy argues that Dickey has no personal knowledge about mail correspondence from ISD to the AG.
Dickey disputes Kennedy's factual allegations and responds that Kennedy and his "associates" committed mail fraud "by mailing false information to the Attorney General's Office for the purpose of extorting property". The only allegations regarding mail fraud pertain to two properties, 20 Claybourne Street and 97 Mount Ida Road, and Dickey specifically identifies only three allegedly fraudulent letters. He focuses on two, both of which were allegedly mailed from ISD to the AG's Office requesting the appointment of a receiver. In particular, he cites the statement in an attached decision regarding 97 Mount Ida Road that "[f]ront and rear common halls missing, broken not working (repair/replace)" and contends that it was fraudulent and false. The third letter is an August, 2005 mailing from the AG's Office to Dickey about his property at 97 Mount Ida Road. Dickey claims that the letter was sent at Kennedy's direction and stated that the building continued to deteriorate and was open and exposed to the elements.
*216 The Court will allow summary judgment with respect to Dickey's mail fraud claims because the three alleged mailings are too thin a reed on which to hang liability. First, Dickey has not identified any intentional material falsehood. With respect to the two letters sent to the AG's Office, the only statement specified as a misrepresentation is the nonsensical assertion "[f]ront and rear common halls missing, broken not working (repair/replace)". Dickey spills considerable ink over this phrase and its apparent falsity. Because it is difficult to imagine how hallways could go missing, however, it is likely a typographical error meant to indicate (as did testimony at the hearing) that lights or doors in the halls were missing or broken.
Moreover, even if the statement was deliberately false, it was one among many regarding the poor condition of Dickey's home prior to condemnation. No reasonable juror could find that it was a material falsehood capable of influencing the intended victim (presumably Dickey) or anyone else. See Neder, 527 U.S. at 22, 119 S. Ct. 1827 n. 5 & 24. With respect to the August, 2005 letter, there is no indication that statements about the building's condition were false at the time they were made. Dickey has submitted undated photographs of the building and claims only that, as of December, 2005, the building was not boarded up. No reasonable juror could therefore find that the letter contained a material falsehood capable of supporting a mail fraud claim.
Nor is the Court convinced that the specified letters were mailings caused by Kennedy or made for the purpose of executing his alleged scheme to defraud. To be sure, these elements have been interpreted broadly. The evidence that Dickey sets forth is, however, fatally sparse even assuming (despite the lack of concrete evidence) that all of the letters were sent via U.S. Mail. With respect to causation, he seeks to infer that Kennedy "caused" two of the three mailings to be made simply because his purported girlfriend allegedly drafted the letters. That is a significant inferential leap. The August, 2005 letter has no direct connection to Kennedy beyond Dickey's speculation. Moreover, unlike frauds involving false insurance claims, for instance, it is not at all clear why any use of the mail would have been a reasonably foreseeable part of the scheme that Dickey describes.
To build his claim, as he did for extortion allegations, Dickey piles inference upon inference. The Court is unpersuaded and finds that the specified letters are an insufficient basis from which to extrapolate a violation of RICO for mail fraud. Kennedy's motion for summary judgment will, therefore, be allowed.
2. Conspiracy Claim
Dickey's conspiracy claim pursuant to 18 U.S.C. § 1962(d) is identical to his affirmative claim under § 1962(c). Because he cannot make out a substantive RICO claim, Count II based upon an alleged conspiracy to commit the same violations also fails. E.g., Efron v. Embassy Suites (Puerto Rico), Inc., 223 F.3d 12, 21 (1st Cir.2000); Miranda v. Ponce Fed. Bank, 948 F.2d 41, 45 n. 4 (1st Cir.1991).
ORDER
In accordance with the foregoing, defendant's motion for summary judgment (Docket No. 25) is ALLOWED.
So ordered.
NOTES
[1] Dickey challenged part of that process as unconstitutional but was unsuccessful. Dickey v. Inspectional Servs. Dep't of the City of Boston, No. 08-cv-11569 (PBS), 2009 WL 2425957 (D. Mass. July 31, 2009) (upheld on appeal).
[2] Although this Court's September, 2008 ruling barred all claims based upon injury occurring prior to September 14, 2003, all of Dickey's alleged violations are included here as background.
[3] This property was at issue in City of Boston v. Rochalska, 72 Mass.App.Ct. 236, 890 N.E.2d 157 (2008). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2540111/ | 713 F. Supp. 2d 262 (2010)
P & E PROPERTIES, INC., Plaintiff,
v.
UNITED NATURAL FOODS, INC., and Millbrook Distribution Services, Inc., Defendants.
No. 08 Civ. 00553(MGC).
United States District Court, S.D. New York.
May 12, 2010.
*263 Olshan Grundman Frome Rosenzweig & Wolosky LLP, by: Robert W. Sadowski, Esq., Peter M. Sartorius, Esq., New York, NY, for Plaintiff.
Covington & Burling LLP, by: Mark P. Gimbel, Esq., Mari K. Bonthuis, Esq., New York, NY, for Defendants.
OPINION
CEDARBAUM, District Judge.
P & E Properties, Inc. ("P & E") sues Millbrook Distribution Services, Inc. ("Millbrook") for breach of contract, and sues United Natural Foods, Inc. ("UNFI") for tortious interference with contract. The complaint alleges that Millbrook failed to pay management fees to P & E and also failed to reimburse P & E for extraordinary expenses.
P & E moves for summary judgment on its claims of breach of contract, and Millbrook moves for summary judgment dismissing P & E's contract claim for extraordinary expenses. For the reasons that follow, P & E's motion is denied, and Millbrook's motion is granted only to the extent that P & E's claim of breach of contract by failure to reimburse extraordinary expenses is dismissed.
*264 BACKGROUND
The following facts are undisputed, except where specifically noted.
P & E is a provider of administrative and executive services. Millbrook is a distributor of specialty foods. On or about February 15, 2007, P & E and Millbrook entered into a General Administrative Services Agreement (the "Contract") expressly governed by New York law.
UNFI is also a distributor of specialty foods. On or about October 5, 2007, Millbrook's parent company, DHI, entered into a merger agreement with UNFI under which a UNFI subsidiary merged with DHI. The merger transaction closed on November 2, 2007, and Millbrook became an indirect wholly-owned subsidiary of UNFI.
Richard Bernstein is the sole shareholder of P & E, and has served as its Chairman, President, and Chief Executive Officer at all relevant times. Mr. Bernstein also served as the Chairman of the Board of Millbrook and was its controlling shareholder prior to the merger.[1]
Mr. Bernstein testified at his deposition that in about October of 2007, in his capacity as Chairman of the Board of Millbrook, he approved a "salary continuation plan" under which Millbrook would make "retention compensation payments" to ten P & E employees to ensure their cooperation and productivity through the merger. It is undisputed that there was never a written "salary continuation plan." It is also undisputed that there was never a writing approving payments by Millbrook to P & E employees.
On the day before the merger took effect, an employee of P & E, who also served as an officer of Millbrook, issued checks drawn on Millbrook's bank account to nine P & E employees in amounts totaling $855,023. Although four recipients were also officers of Millbrook, none of the individuals who received checks had ever before been directly compensated by Millbrook or had an employment agreement with Millbrook requiring severance payments in the event of a merger.
On about November 5, 2007, Millbrook stopped payment on these checks before they cleared.
On November 6, 2007, P & E submitted a memorandum to Millbrook with attachments including copies of the checks and check request forms. The check request forms listed the purpose of each check as "[s]everance."
On November 14, 2007, P & E sent an invoice to Millbrook for payments to ten P & E employees pursuant to the "salary continuation plan." The sum requested totaled $967,747.[2] Millbrook has refused to pay P & E's invoice.
All but two of the employees identified for payments pursuant to the "salary continuation plan" were retained by P & E following the merger, and it is undisputed that P & E has never made "retention compensation payments" to these employees.
Millbrook has not made monthly management fee payments to P & E for any month after December of 2007.
Millbrook and P & E exchanged four letters between March 21, 2008 and May 6, 2008. The parties dispute the legal significance of the letters, but in them, Millbrook purports to give notice of breach and termination *265 of the Contract, and P & E denies the alleged breaches and the propriety of the attempted termination.
DISCUSSION
Summary judgment should be granted if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). A genuine issue of material fact exists when the evidence is such that a reasonable finder of fact could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). In deciding whether a genuine issue exists, 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." Dallas Aero., Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir.2003).
Where, as here, the parties disagree about the proper construction of a contract, summary judgment may be granted if the relevant contractual language is unambiguous and conveys a definite meaning. Seiden Assocs., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir.1992). If the language of a contract is unambiguous, its proper construction is a question of law. See id. at 429. In determining whether a contract is unambiguous and should be construed as a matter of law, "the entire contract must be considered, and all parts of it reconciled, if possible, in order to avoid an inconsistency." Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir.2000).
I. Reimbursement of "Retention Compensation Payments"
Each side moves for summary judgment on P & E's claim for reimbursement of retention compensation payments, and urges the adoption of its preferred interpretation of the Contract as a matter of law. Although the parties agree that Section 3(c) of the Contract governs the question of whether these expenses are subject to reimbursement, they disagree about whether Section 12 requires that all communications pursuant to Section 3(c) be in writing. Because "[t]he language of a contract is not made ambiguous simply because the parties urge different interpretations," I turn to the contractual language to determine whether it conveys a definite meaning. Seiden, 959 F.2d at 428.
Section 3(c) of the Contract is located within a section entitled "Compensation," and provides:
The Company [Millbrook] shall also reimburse the Servicer [P & E] for any extraordinary documented out-of-pocket expenses incurred in providing the Services, the incurrence of which has been approved in advance by the Company. As a condition to the reimbursement of any such extraordinary expenses, the Servicer shall provide the Company which [sic] such documentation as the Company may reasonably request with respect to the incurrence of any such expenses.
(Contract § 3(c).)
Section 12 is entitled "Notices" and provides in relevant part that:
All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing. . . .
(Contract § 12.)
P & E argues that Section 3(c) simply requires that extraordinary expenses be approved in advance by Millbrook, and *266 that Section 12 does not mandate that such approval be in writing. P & E supports its interpretation by observing that Section 3(c) does not use the word "consent" or specifically require written approval, while other provisions of the Contract do use the words "notice" and "consent" and explicitly refer to written communications.
The plain language of the Contract is inconsistent with this interpretation. Section 3(c) obligates Millbrook to reimburse P & E for extraordinary expenses that have been "approved in advance." Section 12 requires that "[a]ll notices, demands, consents, requests, instructions and other communications" given pursuant to the Contract be in writing. The relationship between these provisions is clear: Because Section 12 covers "all" communications, approval of extraordinary expenses under Section 3(c) must be in writing.
The remaining provisions of the Contract, including those highlighted by P & E-Sections 7, 9, 10, and 14-create no ambiguity as to this requirement. While P & E is correct that Sections 7 and 14 employ the words "notice" and "consent," this language does not limit Section 12, which applies broadly to "all" communications "given or delivered or permitted" pursuant to the Contract. Similarly, although certain provisions explicitly mention written exchanges while others do not, Section 12 clearly declares that "all" communications pursuant to the Contract must be in writing.
P & E argues that even if Section 12 controls communications pursuant to Section 3(c), written approval should not be treated as a condition precedent to the obligation to reimburse because it would increase P & E's risk of forfeiture. But, express conditions must be performed as written. See Oppenheimer & Co. v. Oppenheim, 86 N.Y.2d 685, 690, 636 N.Y.S.2d 734, 660 N.E.2d 415 (1995). Moreover, there is no risk of forfeiture where the occurrence of a condition is known in advance of reliance. See Restatement (Second) of Contracts § 227 cmt. b (1981).
The language of the Contract expressly limits Millbrook's obligation to reimburse P & E to extraordinary expenses which have been "approved in advance" by Millbrook in writing. The Contract therefore unambiguously makes advance written approval a condition of reimbursement. Furthermore, there is no risk of forfeiture by P & E because any uncertainty regarding the occurrence of the condition-that is, written approval-will necessarily be resolved for P & E in advance of its reliance.
I have examined the language of the Contract as a whole and find that it unambiguously makes advance written approval of extraordinary expenses a condition of Millbrook's obligation to reimburse extraordinary expenses. It is undisputed that P & E did not obtain advance written approval from Millbrook of the so-called "retention compensation payments."[3] Accordingly, the Contract does not obligate Millbrook to pay for these expenses. Millbrook is therefore entitled to summary judgment dismissing P & E's claim for extraordinary expenses.
II. Management Fees
P & E seeks summary judgment on its claim of breach of contract with respect to Millbrook's refusal to pay monthly management fees to P & E. Under New York law, a plaintiff's performance *267 under the contract is an element of a breach of contract claim. See JP Morgan Chase v. J.H. Elec. of N.Y., 69 A.D.3d 802, 803, 893 N.Y.S.2d 237 (2d Dep't 2010) (stating that elements of cause of action for breach of contract are "the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract, and resulting damages"). Here, P & E's performance under the Contract is hotly disputed by the parties, and Millbrook has produced evidence suggesting that P & E was not performing its services in good faith. Because disputed issues of material fact remain with respect to P & E's claim for management fees, P & E's motion for summary judgment on this issue is denied.
III. Indemnification
P & E's right to indemnification under the Contract for expenses and attorneys' fees is contingent upon showing a breach of the Contract. See Contract § 8(b); Griswold Special Care of N.Y., Inc. v. Executive Nurses Home Care, Inc., 66 A.D.3d 962, 963, 887 N.Y.S.2d 672 (2d Dep't 2009) (finding award of attorneys' fees under indemnification provision of contract improper absent finding of breach of contract). Because genuine issues of material fact remain regarding P & E's claim of breach of contract, the question of indemnification is premature.
CONCLUSION
For the foregoing reasons, P & E's motion for summary judgment is denied, and Millbrook's motion for summary judgment is granted dismissing P & E's claim of breach of contract by failure to reimburse extraordinary expenses.
If UNFI wishes to pursue summary judgment on P & E's claim of tortious interference with contract, that motion should be presented in a separate notice of motion with a supporting brief.
SO ORDERED.
NOTES
[1] Mr. Bernstein was additionally the Chairman of the Board, President, and Chief Executive Officer of DHI prior to the UNFI merger.
[2] This value exceeds the sum of the nine checks previously issued. The November 14 invoice also requests payments related to "health insurance" and payment to an additional P & E employee.
[3] For this reason, it is not necessary to reach the question of whether the "retention compensation payments" are even "out-of-pocket expenses" pursuant to Section 3(c). Moreover, it is undisputed that P & E never made payments to its employees for retention compensation in connection with the merger of Millbrook. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2540120/ | 716 F. Supp. 2d 403 (2010)
Joseph L. ELY, Plaintiff,
v.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, Defendant.
Civil Action No. AW-08-3104.
United States District Court, D. Maryland, Southern Division.
June 7, 2010.
*404 Saul Marvin Schwartzbach, Law Office of Saul M. Schwartzbach, Bethesda, MD, for Plaintiff.
Elizabeth Duvigneaud Horton, Leonard A. White, White and Horton, Bethesda, MD, for Defendant.
MEMORANDUM OPINION
ALEXANDER WILLIAMS, JR., District Judge.
Plaintiff brought this action against Defendant for breach of contract related to the lease of Plaintiff's property. Currently pending before the Court are Defendant's Motion for Partial Summary Judgment (Doc. No. 23), and Plaintiff's Cross-Motion for Partial Summary Judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure (Doc. No. 25). The Court has reviewed the parties' filings with respect to the instant motions, and no hearing is deemed necessary. See Local Rule 105.6 (D. Md. 2008). For the reasons stated more fully below, the court will GRANT Defendant's Motion for Partial Summary Judgment and DENY Plaintiff's Cross-Motion for Partial Summary Judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of a dispute over rental payments. Plaintiff Joseph Ely ("Ely") is the general partner of Ely Real Estate Limited Partnership ("ERELP"). *405 In February 1999, under the Original Lease Agreement, Ely leased 5,000 square feet of commercial office space to Applied Ordnance Technology, Inc. ("AOT") at a rate of $5,000 per month. The parties amended the lease three times between February 1999 and June 2000, and after the final addendum in June 2000, the total area Ely leased to AOT was 10,000 square feet, at a rate of $10,000 per month.
AOT paid the monthly rent of $10,000 through March 2002. In April 2002, AOT began to tender only $5,000 per month, and continued to pay this sum through October 2003. From November 2003 through January 2006, AOT paid $7,200 per month in rent. Despite the fact that Ely believed that AOT had not yet paid the rent in arrears due under the Original Lease Agreement and addenda, the two entities entered into a new lease agreement in February 2006. Six months later, Science Applications International Corporation ("SAIC") acquired AOT. As a result of this merger, SAIC became liable for the existing debts of AOT.
On November 19, 2008, Ely filed suit in this Court alleging that Defendant owed $170,600 in rent, $23,000 in late fees, and $19,800 in repair costs. Defendant moved to dismiss the complaint on the ground that relief was barred by the applicable statute of limitations, but the Court denied that motion. (Doc. No. 4.) Now pending before the Court are cross-motions for partial summary judgment.
II. STANDARD OF REVIEW
Summary judgment is only appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In a motion for summary judgment, the moving party discharges its burden by showing an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325, 106 S. Ct. 2548. The court must "draw all justifiable inferences in favor of the nonmoving party, including questions of credibility and of the weight to be accorded to particular evidence." Masson v. New Yorker Magazine, 501 U.S. 496, 520, 111 S. Ct. 2419, 115 L. Ed. 2d 447 (1991) (internal citations omitted). However, the party who bears the burden of persuasion on a particular claim must present legally sufficient evidence to support each element of his claim. "[A] complete failure of proof concerning an essential element ... necessarily renders all other facts immaterial." To defeat a motion for summary judgment, the nonmoving party must come forward with affidavits or other similar evidence to show that a genuine issue of material fact exists. See Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). While the evidence of the nonmoving party is to be believed and all justifiable inferences drawn in his or her favor, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transp., Inc., 152 F.3d 326, 330-31 (4th Cir.1998); Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985).
III. ANALYSIS
A. Defendant's Motion for Partial Summary Judgment
SAIC seeks partial summary judgment on two grounds: (1) that there is no genuine issue of fact as to whether Ely's claims for rent between April 2002 and November 2005 are untimely under the three-year statute of limitations provided by § 5-101 of the Courts and Judicial Proceedings Article; and (2) that Ely can offer no evidence that the parties intended to waive *406 the applicable statute of limitation. In response, Plaintiff asserts (1) that the parties intended to waive the three-year statute of limitations, and (2) that even if the applicable statute of limitations is to be applied, Plaintiff's entire claim falls within the statutory period because the cause of action for the entire amount due under the lease accrues with each successive breach. The Court will address each issue separately.
1. Waiver
SAIC argues that the three-year statute of limitations established by § 5-101 of the Courts and Judicial Proceedings Article applies in the instant case because Ely can offer no evidence that the parties intended to create a specialty so as to waive its application. Under Maryland law, parties to a contract may waive an applicable statute of limitations. Tipton v. Partners Mgmt. Co., 364 Md. 419, 773 A.2d 488, 490 n. 3 (2001). A waiver "may result from an express agreement or be inferred from circumstances." Myers v. Kayhoe, 391 Md. 188, 892 A.2d 520, 530 (2006). A "specialty" is defined as a "promissory note or other instrument under seal; bond, except a public officer's bond; judgment; recognizance; contract under seal; or any other specialty." Md. Code, Cts. & Jud. Proc. § 5-102.
Whether or not the parties intended to waive the applicable statute of limitations is a mixed question of fact and law that this Court declined to address in its denial of Defendant's Motion to Dismiss. (See Doc. No. 10 at 6.) In his complaint, Plaintiff alleges that AOT performed the original lease and all subsequent addenda "under seal." This fact, Plaintiff asserts, is sufficient to show that the parties intended to create a specialty to waive the applicable period of statutory limitation. In President of Georgetown College v. Madden, this Court held that in determining whether or not a document was under seal and thus a specialty, "the intent of the parties is what controls." 505 F. Supp. 557, 585 (D.Md.1980). "The combined use of the word `(Seal)' and [the impression of a corporate seal] should be considered insufficient by themselves to manifest an intent to render the contract under seal, particularly where such use of the word and of such impressions would serve no purpose other than to extend the statute of limitations." Id. at 587; see also Mayor & Council of Federalsburg v. Allied Contractors, Inc., 275 Md. 151, 338 A.2d 275, 279 (1975) ("If a corporate seal is impressed on an agreement it will remain a simple contract unless . . . the body of the contract itself indicates that the parties intended to establish an agreement under seal."). The Tipton court subsequently stated that in most cases, the affixation of a seal is not sufficient evidence of the parties' objective intent so as to constitute a waiver of the period of statutory limitation. Tipton, 773 A.2d at 490 n. 3. Absent any indication in the body of the contract that the parties intended to create a specialty so as to waive the statute of limitations, other extrinsic evidence of intent to create a specialty is required. Id.
There is no such evidence in the case at bar. While the word "SEAL" appears in parentheses next to the signature lines on the lease and the addenda, there is no indication that either party affixed a corporate seal, and Plaintiff has failed to demonstrate or allege that either party did so. Furthermore, there is no indication in the body of the lease or the addenda that either party intended that it be sealed so as to waive the three-year period of statutory limitation. Plaintiff also fails to provide any extrinsic evidence of the parties' intent, though he argues in his opposition to Defendant's Motion for Partial Summary Judgment that his failure to do so is *407 the result of Defendant's repeated failure to make available a knowledgeable witness to be deposed pursuant to Federal Rule of Civil Procedure 30(b)(6). While Plaintiff states that he will "by separate motion ask the Court to prevent SAIC from offering any evidence, or relying on Plaintiff's inability to produce evidence, as to the understanding or intent of the contracting parties that cannot be ascertained from the Lease Agreement," no such motion has been filed. (Doc. No. 25 at 2.)
In contrast, there is affirmative evidence in the record that neither party intended to waive the applicable statute of limitations in the deposition testimony of Ely and Gillian Green, Ely's consultant. (See Doc. No. 23, Ex. A at 18; Doc. No. 23, Ex. B at 26.) Ely acknowledged in his testimony that the parties first discussed the statute of limitations in May 2006 when Ely initially demanded payment years after the first breach.
Having reviewed the evidence, the Court agrees that Plaintiff has failed to provide sufficient proof that a genuine issue of material fact exists as to whether or not the parties waived the three-year period of statutory limitation. As a result, the Court will grant summary judgment to Defendant on the issue of waiver.
2. Date of Accrual
As there is no genuine issue of material fact as to whether the parties waived the statute of limitations, this Court must determine whether Plaintiff's claim falls outside the three-year period of statutory limitation provided by § 5-101. SAIC argues that the rental payments Plaintiff seeks in this case were installment payments, and Plaintiff's claims for arrearages and late fees accrued on the dates that each installment came due rather than on the day the cumulative arrearage came due. The lease provides that rent is due "in monthly installments" that are "payable on the first of each and every lease month during the said term." (See Doc. No. 23, Ex. D at 2.) As Plaintiff filed this action on November 19, 2008, Defendant argues that any rental fees that were due prior to November 19, 2005, are time-barred.
Defendant cites Avery v. Weitz for the proposition that with a contract requiring payment in installments such as that at issue in this case, the statute of limitations begins to run on each rental payment when that particular installment is due. 44 Md.App. 152, 407 A.2d 769, 771 (1979) (holding that unpaid installments on promissory note which accrued before period of statutory limitation were barred). In contrast, Plaintiff contends that the lease and addenda constituted a contract for continuing services, and cites to Singer Co., Link Simulation Systems Division v. Baltimore Gas & Elec. Co. for the proposition that with a contract for continuing performance, each breach triggers a new period of statutory limitation for the entire amount then due under the contract. 79 Md.App. 461, 558 A.2d 419, 425-26 (1989) (holding that three-year statute of limitations on claims by customer against utility for breach of contractual obligation to supply electricity began running anew after each power outage rather than accruing immediately after initial breach). Defendant's last breach occurred on January 6, 2006, and thus, Ely's entire claim in this case would remain viable until January 6, 2009, under Plaintiff's theory.
The Court believes the obligation to pay successive rental installments is more analogous to the installment payments due under the promissory note in Avery than the ongoing obligation to supply electricity in Singer. Compare Avery, 407 A.2d at 771 with Singer, 558 A.2d at 425-26. But in any case, the Singer Court held that the statute of limitation restarted only for the specific breaches that occurred *408 within the limitations period and not for the entire claim. Id. ("[A]ny damage claims resulting from breaches which occurred within the limitations period [a]re not time-barred."). Thus, the court in Singer only allowed recovery for breaches occurring within the limitations period, specifically noting that the Plaintiff in that case had only asserted claims from breaches and the resulting damages that occurred within the three years prior to the filing of the suit. Id. at 426. Thus, each breach tolled the statute of limitations only for that specific breach. As such, any damages that resulted from breaches prior to the three-year period preceding the initiation of this suit are barred.
Plaintiff also cites Vigilant Ins. Co. v. Luppino to argue that this contract falls under Maryland's "continuation of events" exception for cases where compensation is sought for breach of a contract for services rendered over a period of time. See Vigilant Ins. Co. v. Luppino, 352 Md. 481, 723 A.2d 14, 18 (Md.1999). The Vigilant court stated that "[t]he general rule seems . . . settled that in the computation of the statutory period, in cases where there is an undertaking which requires a continuation of services, . . . the statute begins to run only from the time the services can be completed." Id. However, the continuation of events theory is generally only applicable in cases where a fiduciary relationship exists between the parties. See, e.g., Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 857 A.2d 1095, 1107 (2004) (applying the continuation of events theory in an action brought against government contractor by subcontractor alleging, inter alia, breach of fiduciary duty); Frederick Rd. Ltd. P'ship v. Brown & Sturm, 360 Md. 76, 756 A.2d 963, 976 (2000) (applying the continuation of events theory in a legal malpractice action). The underlying rationale is that "a relationship which is built on trust and confidence generally gives the confiding party the right to relax his or her guard and rely on the good faith of the other party so long as the relationship continues to exist." Brown & Sturm, 756 A.2d at 974-75. No such fiduciary relationship exists between the parties in the case at bar. See MacBride v. Pishvaian, 402 Md. 572, 937 A.2d 233 (2007) (holding that absent special circumstances that indicate otherwise, the landlord-tenant relationship is a contractual relationship and not a fiduciary one).
However, even if such a relationship existed here, the statute of limitation would toll when an event occurred that would alert an injured party that there had been a breach. Brown & Sturm, 756 A.2d at 974-75. Ely was aware of AOT's first insufficient rental payment in April of 2002, and could have brought suit at any point thereafter until the end of the statutory period. As such, the continuation of events theory is not applicable in the instant case.
Plaintiff next argues that all of the rent in arrears that he seeks falls within the three-year statutory limit because the terms of the lease provide that each monthly installment of rent will be applied to the earliest outstanding arrearage, thus creating one total outstanding debt that accrued and triggered a new statute of limitations on January 6, 2006, the date of Defendant's last payment. While Ely's practice of allocating payments to the earliest outstanding balance delays the date the rent accrues for accounting purposes, for the purpose of determining the timeliness of a cause of action, rent accrues when it becomes payable. See Lochner v. Martin, 218 Md. 519, 147 A.2d 749, 752 (1959) ("[Rent] accrues on the day it is payable."); see also Real Estate Bd. of Balt. v. Page, 164 Md. 500, 165 A. 701, 702 (1933) (holding that rent becomes a payable *409 debt when the time stipulated for payment arrives). Plaintiff has cited no authority to the contrary. Accordingly, the Court finds that the three-year statute of limitations was triggered as to each successive rental installment on the day each rental payment was due. The lease provides that rent is payable "in monthly installments" and "payable on the first of each and every lease month." (Doc. No. 23, Ex. D at 2.) As such, a new statute of limitations was triggered as to each specific rental arrearage on the day that rent was due (the first of every month), thus initiating a three-year period during which a claim for that specific arrearage would be timely.
Plaintiff initiated this action on November 19, 2008, for the total amount of rent in arrears for the months of April 2002 through January 2006. Plaintiff was aware that Defendant had breached the terms of the lease in April of 2002. Thus, all rental arrearages that accrued prior to November 19, 2005, are untimely. Thus, the Court will grant summary judgment to Defendant, and finds that Plaintiff's claims for the rent that came due prior to November 19, 2005, are barred by the three-year statute of limitations under § 5-101.
B. Plaintiff's Cross-Motion for Partial Summary Judgment
Ely argues that he is entitled to partial summary judgment on the issue of whether or not the parties waived the applicable statute of limitations, and alternatively on whether his claims for the rental arrearages accrued between April 2002 and January 2006 were timely filed. As discussed in the foregoing analysis, the Court finds that Plaintiff's claims for past rent that came due prior to November 19, 2005, are untimely and barred by the applicable statute of limitations. Therefore, the Court denies Ely's Cross-Motion for Partial Summary Judgment.
IV. CONCLUSION
For the foregoing reasons, the Court will GRANT Defendant's Motion for Partial Summary Judgment and DENY Plaintiff's Cross-Motion for Partial Summary Judgment. A separate Order will follow.
ORDER
For the reasons stated in the foregoing Memorandum Opinion, IT IS this 7th day of June, 2010, by the United States District Court for the District of Maryland, ORDERED:
1. That Defendant's Motion for Partial Summary Judgment (Doc. No. 23) BE, and the same HEREBY IS, GRANTED;
2. That Plaintiffs Cross-Motion for Partial Summary Judgment (Doc. No. 25) BE, and the same HEREBY IS, DENIED;
3. That the parties contact Chambers within ten (10) days of the conclusion of settlement discussions, if the settlement negotiations are not successful, for the purpose of scheduling trial; AND
4. That the Clerk of the Court transmit a copy of this Order to all counsel. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539813/ | 710 F. Supp. 2d 960 (2008)
UNITED STATES of America, Plaintiff/Respondent,
v.
Pius AILEMEN, Defendant/Petitioner.
Nos. C-04-0823 RMW, CR-94-0003.
United States District Court, N.D. California, San Jose Division.
December 30, 2008.
*965 Pius Ailemen, Sandstone, MN, for Plaintiffs.
Mark L. Krotoski, Timothy J. Lucey, Eumi L. Choi, Kevin V. Ryan, for Defendants.
*966 ORDER DENYING PETITIONER'S 28 U.S.C. § 2255 MOTION, DENYING PETITIONER'S MOTION FOR SUMMARY JUDGMENT AND DENYING PETITIONER'S MOTION FOR REFERRAL
RONALD M. WHYTE, District Judge.
Petitioner Pius Ailemen ("petitioner" or "defendant") brings this action pursuant to 28 U.S.C. § 2255 to vacate, set aside, or correct his federal criminal conviction and sentence. Petitioner also filed a motion for partial summary judgment, to which the United States government ("respondent") objected on the grounds that the motion violated this court's August 15, 2007 order. Most recently, petitioner filed a motion requesting that this court grant a prior motion he filed requesting referral of the case to Magistrate Judge Brazil.
I. BACKGROUND
A. Offense Conduct
According to respondent, petitioner was involved in both international and domestic drug enterprises. United States' Answer to Section 2255 Petition ("Answer") at 2-7. Petitioner engaged the services of a few young women to help him transport drugs and drug-related money in between San Francisco and London, Germany, Los Angeles, and Washington D.C. Id. Petitioner's operations were finally uncovered when, unwittingly, he entered into drug deals with an undercover officer. Id. at 7-8. On December 15, 1993, the police executed an arrest warrant for petitioner and a search warrant for his apartment, where they discovered $4,900 in cash. Id. at 8.
B. Procedural History
On January 22, 1998, a grand jury returned a five-count second superseding indictment charging petitioner with: (1) conspiracy to distribute heroin and cocaine; (2) engaging in a continuing criminal enterprise; (3) and three counts of distribution or aiding and abetting distribution of heroin. Answer at 2. A jury trial before the Honorable Charles R. Breyer began on February 8, 1999. Id. On April 5, 1999, petitioner was convicted of conspiracy to distribute heroin; engaging in a continuing criminal enterprise; and one count of distribution of heroin. Id. At sentencing on July 20, 1999 Judge Breyer vacated two of the counts pursuant to Rutledge v. United States, 517 U.S. 292, 116 S. Ct. 1241, 134 L. Ed. 2d 419 (1996) (precluding sentencing on counts that are based upon the same conduct) and sentenced petitioner to 292 months in federal prison, followed by five years of supervised release, for engaging in a continuing criminal enterprise. Answer at 2, 10. The judgment and commitment was filed on August 2, 1999. Docket # 2001.
Petitioner appealed to the Ninth Circuit, which affirmed his conviction on July 29, 2002. United States v. Ailemen, 43 Fed. Appx. 77 (9th Cir.2002). The Ninth Circuit held, inter alia, that: (1) petitioner did not receive ineffective assistance of counsel; (2) the trial court did not err when it ruled that the government could have impeached petitioner with evidence from suppressed wiretaps, such that petitioner was not prejudiced in his decision not to testify, and in fact waived the issue by choosing not to testify; and (3) the evidence did not support a claim of judicial bias. Id. Petitioner sought a writ of certiorari from the United States Supreme Court, but his application was denied on February 24, 2003. Answer at 11.
II. PETITIONER'S MOTION TO VACATE PURSUANT TO § 2255
On March 1, 2004, petitioner filed the current Motion Pursuant to 28 U.S.C. § 2255 to Vacate Conviction. In his papers, petitioner states that his federal trial *967 was a "travesty." Memorandum of Law in Support of Motion Pursuant to 28 U.S.C. § 2255 to Vacate Conviction at 7. He asserts that his innocence was not the focus of the trial. Id. at 2. Instead, the trial focused on "the battle between his counsel and Judge Breyer and the battle between the two attorney's [sic] representing him." Id. According to petitioner, neither of his attorneys was prepared to present the case. Id. For example, the attorneys "failed to examine important evidence . . . until several weeks after the trial began." Id. Additionally, "[petitioner's] feuding [sic] attorneys were in such disarray and were so unprepared that they were not able to prepare the [petitioner] to testify on his own behalf . . . ." Id. at 7.
Petitioner alleges that as a result of the lack of preparation of his counsel, there was open hostility between them. Id. at 3. Petitioner's attorneys "were literally at each others throats throughout the trial." Id. at 2. The result was that the jurors were seen "shaking their heads in disgust at the conduct of the attorneys." Id.
Moreover, petitioner's attorneys "were constantly at odds with and battling with the trial judge." Id. "The hostility between the attorneys and the judge was so great that it poisoned completely the adversarial process that should have provided a forum for the jury to examine the facts and reach the truth." Id. at 3. Petitioner argues that the trial judge was extremely biased in favor of respondent in his rulings, comments, and conduct; permitted ex parte contact by respondent; and made "efforts to prevent the derailment of the [respondent's] case. . . ." Id. at 4-5.
In sum, petitioner argues that:
[t]he combination of the attorneys being unprepared, the intense internal strife between counsel and the court, and the unrelenting virtual warfare between counsel and the court, created a situation where [petitioner] was, in effect, unrepresented by counsel. It was he who paid the price. . . . The results were devastating for [petitioner], because this distrust caused the court to disbelieve the declarations and offers of proof submitted by defense counsel with respect to [petitioner's] defense that he was framed. The end result was that evidentiary issues were decided on the basis of that distrust not on the merits of the issue.
Id. at 3-4.
Petitioner asserts the following five claims in support of his original § 2255 motion: (1) he was deprived of his constitutional right to testify; (2) he was improperly convicted of violating 21 U.S.C. § 848 because the jury was improperly instructed and his lawyers failed to argue for appropriate instructions; (3) he received ineffective assistance of appellate counsel; (4) he received ineffective assistance of trial counsel; and (5) prosecutorial misconduct. Further, in a supplement to petitioner's § 2255 motion filed February 4, 2005, petitioner asserts that flagrant and excessive judicial bias and misconduct evident in his trial precludes any confidence in the findings of the jury or the rulings of the trial judge and that his trial counsel inappropriately withdrew a post-trial motion regarding prosecutorial misconduct. The court analyzes below each of petitioner's claims in the order set forth in petitioner's Memorandum of Law in Support of Motion Pursuant to 28 U.S.C. § 2255 to Vacate Conviction ("P's Memo."), Supplement to Defendant's Pending § 2255 Motion ("P's Supp."), and Amendment to Defendant's Pending § 2255 Motion ("P's Amend.").
After respondent filed an answer to the petition on July 21, 2006, petitioner submitted a Reply to Government's Answer on September 4, 2007 (amended on September *968 13, 2007) as well as a Motion for Partial Summary Judgment ("SJ Mot."), in which he claims that respondent failed to answer or contest various factual assertions included in petitioner's original motion and, as a result, petitioner's motion should be decided as a matter of law.
Finally, on June 30, 2008, petitioner filed a Motion Requesting the Court to Grant Defendant's October 2005 Motion for Referral ("Ref. Mot.") asking that this court refer his § 2255 motion to Magistrate Judge Brazil, citing Judge Brazil's "singular familiarity with the unique facts and issues raised in the § 2255 [motion]. . . ." Ref. Mot. at 1.
III. ANALYSIS
A. Claim I: Defendant Was Deprived of Constitutional Right to Testify
A defendant in a criminal case has the constitutional right to testify on his own behalf. Rock v. Arkansas, 483 U.S. 44, 52, 107 S. Ct. 2704, 97 L. Ed. 2d 37 (1987) ("Even more fundamental to a personal defense than the right of self-representation. . . is an accused's right to present his own version of events in his own words. A defendant's opportunity to conduct his own defense by calling witnesses is incomplete if he may not present himself as a witness."). "Only the defendant may waive this right, not his counsel, and it must be knowing and voluntary." United States v. Mullins, 315 F.3d 449, 452 (5th Cir.2002) (citing Emery v. Johnson, 139 F.3d 191, 198 (5th Cir.1997)); see United States v. Joelson, 7 F.3d 174, 177 (9th Cir.1993).
A claim by defendant that his counsel unfairly denied him the right to testify is analyzed under the ineffective assistance of counsel standard of Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). Medley v. Runnels, 506 F.3d 857, 861 (9th Cir. 2007) (en banc), cert. denied, ___ U.S. ____, 128 S. Ct. 1878, 170 L. Ed. 2d 754 (2008). However, where a defendant claims that the court has denied him his right to testify, a different standard applies. Mullins, 315 F.3d at 452. Although the court has found no case directly on point, such interference would presumably constitute a violation of substantive due process and require no showing of prejudice to obtain relief. Petitioner claims that both his counsel and the court prevented him from testifying.[1]
Noting that an ineffective assistance of counsel claim is cognizable as a claim of denial of the Sixth Amendment right to counsel, which guarantees not only assistance of counsel, but effective assistance of counsel, the Supreme Court set forth a two-prong analysis for evaluating an ineffective assistance of counsel claim. Strickland, 466 U.S. at 687, 104 S. Ct. 2052 (emphasis added). First, petitioner must show that his counsel's performance was deficient. Id. This requires showing that *969 defense counsel made errors so serious that representation fell below an objective standard of reasonableness. Id. The relevant inquiry is not what defense counsel could have done, but rather whether the choices made by defense counsel were reasonable. Babbitt v. Calderon, 151 F.3d 1170, 1173 (9th Cir.1998).
Second, petitioner must show that the deficient performance prejudiced the defense so as to deprive him of a fair trial. Strickland, 466 U.S. at 692, 104 S. Ct. 2052. Merely showing that the defense was impaired is insufficient. Id. at 693, 104 S. Ct. 2052. The petitioner must show that "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S. Ct. 2052. A "reasonable probability" is defined as "a probability sufficient to undermine confidence in the outcome." Id.
Petitioner alleges that, during his federal trial, he had always wanted to, and expected to, testify on his own behalf. P's Memo. at 8. Petitioner submits his declaration, in which he states, "despite my insistence that I be called to testify on my own behalf, I was prevented from testifying by my appointed counsel, Mr. Rosanthal [sic] and Mr. Bloom." Ex. B at 1. Moreover, petitioner's defense counsel was fully aware of his intent to testify. P's Memo. at 8-9. However, his attorneys were so ill-prepared and so embroiled in their own conflict that "they never found the time to even begin to prepare [petitioner] to testify." Id. at 9. Petitioner also attaches the declaration of Mr. Bloom, in which he states, "I was informed from the outset by my client, Pius Ailemen, that he wanted to testify. . . . Nevertheless . . . the defense was in such disarray . . . that co-counsel and I refused to call [petitioner] as a witness." Ex. A at 1.
Petitioner claims that he received clear messages from the judge that "the court would not intervene and would not do anything to insure that [petitioner] was afforded his constitutional right to a fair trial, including his right to testify in his own behalf. . . ." P's Memo. at 10-11. Petitioner also states that his attorneys' failure to prepare him to take the stand overrode his decision to testify and that the denial of this right severely prejudiced him. Id. at 13-14. He claims that his testimony was extremely important because he was the only one with knowledge to contradict specific testimony and evidence introduced against him. Id. at 11-13.
It is not clear whether petitioner did not testify because his attorneys refused to let him because they were "in disarray" or because the defense was fearful of the effect of what he understood the court would allow to be explored on cross-examination.[2] However, assuming petitioner failed to testify because his counsel failed to call him as a witness despite his *970 request that they do so, counsel's waiver of a defendant's right to testify constitutes deficient performance. See Mullins, 315 F.3d at 453 ("It cannot be permissible trial strategy, regardless of its merits otherwise, for counsel to override the ultimate decision of a defendant to testify contrary to his advice."); Brown v. Artuz, 124 F.3d 73, 80 (2d Cir.1997) ("[I]f defense counsel refused to accept the defendant's decision to testify and would not call him to the stand, counsel would have acted unethically to prevent the defendant from exercising his fundamental constitutional right to testify"); United States v. Teague, 953 F.2d 1525, 1534 (11th Cir.1992) ("Because it is primarily the responsibility of defense counsel to advise the defendant of his right to testify and thereby to ensure that the right is protected, we believe the appropriate vehicle for claims that the defendant's right to testify was violated by defense counsel is a claim of ineffective assistance of counsel under Strickland v. Washington. . . .").
However, petitioner has a second hurdle to overcome in establishing ineffective assistance of counsel. He must show he was prejudiced. He must show a "reasonable probability" that had he been allowed to testify, "the result of the proceeding would have been different." Strickland, 466 U.S. at 694, 104 S. Ct. 2052. Although petitioner cites in his declaration a laundry list of evidence to which he would have testified (P's Memo. at Ex. B), it is insufficient to persuasively show that it would have overcome respondent's case. Petitioner's evidence was based on the theory that he had been framed. While petitioner claims that he did not have the opportunity to take the stand and make this argument himself, his attorney, Mr. Bloom, did. As a result, the jury was aware of petitioner's theory and, as rational fact finders, were able to weigh this theory against the evidence presented by respondent. This court cannot say that had petitioner testified, there is a reasonable probability that he would have convinced the jury of his theory and swayed the outcome. In fact, his testimony likely would have weakened his defense as otherwise inadmissible evidence adverse to petitioner would likely have been presented in cross-examination.
Finally, petitioner contends that the court, as well as the attorneys, effectively denied him his right to testify when it failed to make any effort to help him secure that right. Although claims of court interference should probably be treated as structural error (see Mullins, 315 F.3d at 452 (citing United States v. Brown, 217 F.3d 247, 258-59 (5th Cir. 2000); United States v. Willis, 273 F.3d 592, 598 (5th Cir.2001))), petitioner provides no evidence that the trial court thwarted his efforts to testify. This court cannot find that the trial court unconstitutionally denied defendant the right to testify based solely upon defendant's allegation or subjective belief.
B. Claim II: Defendant Was Improperly Convicted of Violating 21 U.S.C. § 848
Petitioner asserts in his Claim II that he was improperly convicted of engaging in a continuing criminal enterprise ("CCE") in violation of 21 U.S.C. § 848.
In order to prove a continuing criminal enterprise, the government must show that (1) the defendant's conduct constituted a felony violation of federal narcotics law; (2) the described conduct occurred as part of a continuing series of violations; (3) the defendant undertook the activity in concert with five or more persons; (4) the defendant acted as the organizer, supervisor or manager of the criminal enterprise; and (5) the defendant obtained substantial income or resources from the purported enterprise. *971 United States v. Sterling, 742 F.2d 521, 525 (9th Cir.1984).
United States v. Garcia, 988 F.2d 965, 967 (9th Cir.1993). Petitioner's claims relate to elements (2)-(4). Specifically, he asserts that the government failed to prove beyond a reasonable doubt that he engaged in three or more specific narcotics offenses, that the jury was not adequately instructed that it had to unanimously agree on the three predicate offenses, and that the jury was not instructed that it had to unanimously identify the five or more supervisees involved in each predicate offense.
These claims were disposed of adversely to petitioner on direct appeal. United States v. Ailemen, 43 Fed.Appx. 77, 84-85 (9th Cir.2002). Although principles of res judicata do not bar petitioner from relitigating under § 2255 issues raised in the appeal, a district court may refuse to entertain a repetitive petition absent a showing of manifest injustice or a change in law. Polizzi v. United States, 550 F.2d 1133, 1135 (9th Cir.1976). Petitioner has made no showing of a manifest injustice or change in the law. Therefore, the court exercises its discretion and declines to reconsider these issues except as a preface to petitioner's ineffective assistance of counsel claims.
1. Three or More Narcotic Transactions
The Ninth Circuit has interpreted a "`continuing series' as consisting of three or more federal narcotics violations." Sterling, 742 F.2d at 526. Petitioner argues that he was only found guilty of two predicate offenses: one count of conspiracy to distribute heroin and cocaine[3] and one count of distributing, or aiding and abetting the distribution of, heroin and cocaine. Therefore, the requirement of three predicate offenses was not met. But petitioner overlooks that a jury may rely on uncharged offenses to meet the predicate offenses requirement. Id. ("[T]here is no legal requirement that the violations which make up the continuing series be specifically listed in the indictment."). The evidence was sufficient to show narcotics violations that were not expressly set forth in the indictment. Petitioner appears to acknowledge that such evidence was offered but submits that no narcotics were seized from these events and thus the proof that they were narcotics transactions did not meet the beyond a reasonable doubt standard. P's Memo. at 17-18. However, the evidence supported the conclusion that petitioner was involved in several international drug transactions.
2. Adequacy of Instruction on Requirement that Jury Unanimously Agree on Predicate Offenses
Petitioner argues that the court failed to instruct the jury that it had to unanimously agree on the three predicate offenses giving rise to a CCE violation. Petitioner relies on Richardson v. United States, 526 U.S. 813, 119 S. Ct. 1707, 143 L. Ed. 2d 985 (1999) and United States v. Garcia-Rivera, 353 F.3d 788 (9th Cir.2003). Petitioner is correct that the jury is required to unanimously agree on the three predicate offenses. In Richardson, the Supreme Court held that jury in a CCE case must unanimously agree not only that defendant committed some "continuing series of violations," but also on which specific "violations" made up that "continuing series." Id. at 818-824, 119 S. Ct. 1707. The court's instruction here was adequate to insure that the jury unanimously agreed on the specific predicate offenses. The pertinent part of its instructions *972 in regard to the continuing criminal enterprise count stated, "Second, the offense was a part of a series of three or more offenses committed by the defendant over a definite period of time, with all of you agreeing on at least three offenses that were committed by the defendant." Tr. 6282:25-6283:3 (emphasis added). Richardson requires that the jury be instructed that it must unanimously agree on each of the predicate offenses; not that it must identify in the verdict form any specific uncharged narcotics violations it finds as predicate offenses.
The instant case presents different circumstances from those involved in Garcia-Rivera relied upon by petitioner. In Garcia-Rivera, the jury was asked to determine whether illegal possession of a firearm occurred, "(a) uninterrupted between May 19, 2001 and June 7, 2001; or (b) about a week after the purchase of the firearm, or (c) on June 7, 2001 and you must unanimously agree that the possession occurred during (a) above, or on (b) or (c) above." Id. at 790. In reviewing the instructions on appeal, the Ninth Circuit found that the phrasing of the instructions was "fatally ambiguous." Id. at 792. The court explained that "[t]he jury could have concluded that they were required to decide unanimously only that possession occurred during any of the three times enumerated, not that they had to unanimously agree on which one." Id. No such infirmity existed in petitioner's jury instructions, wherein the district court informed the jury that it must unanimously agree on the three predicate offenses. This instruction does not present the ambiguity present in Garcia-Rivera and refutes petitioner's contention that "[t]here is simply no way to know what `violations' each of the jurors relied upon." P's Memo. at 22.
Finally, as previously noted in this order, the court of appeals found the instruction adequate.
3. Adequacy of Instruction on Requirement that Jury Unanimously Agree on Each of Five People that Defendant Organized, Managed, or Supervised
In United States v. Jerome, the court found plain error and reversed the defendant's CCE conviction where the jury was presented with a variety of persons that the prosecution argued could count in making up the five persons necessary to trigger the statute. 942 F.2d 1328, 1331 (9th Cir.1991). However, some of the people named by the prosecution could not have been organized by Jerome. Id. The court in Jerome, therefore, required that the jury be given a specific unanimity instructionthat is, the jurors had to be instructed that they must unanimously agree as to the identity of each of the five people Jerome organized, managed or supervised. Id. In United States v. Garcia, however, the court explained that such an instruction was required in Jerome because the group of people presented to the jury included individuals who could not have been organized or managed by the defendant. 988 F.2d 965, 969 (9th Cir. 1993). A general unanimity instruction, however, is sufficient unless a genuine risk of juror confusion exists. Id. In the current case, the jury was instructed that in order to find defendant guilty, it must find "that the defendant committed the offense, together with five or more persons, with all of you agreeing on the five other persons with whom the defendant committed the offenses." Tr. 6283:4-7. This instruction was sufficient because the evidence supports a jury finding that defendant supervised all of the individuals who the government argued the defendant had supervised. Specifically, the government argued:
We have to prove that he was the organizer, leader, or manager of five or *973 more people. Clearly, in this case clearly, you have at least five people. You have Kali Knapp Hidalgo. You have Kristine Pearce. You have Kim Pannell. You have Kellee Cooper. You have Ellis Quarshie. Five people.
Tr. 6305:25-6306:4.
4. Inadequacy of Trial and Appellate Counsel
Petitioner claims his trial and appellate counsel were ineffective in arguing the law pertaining to the CCE charge. In particular, he faults them for not effectively arguing the requirements of Richardson and not raising Jerome. Petitioner is entitled to effective assistance; that is, representation that meets an objective standard of reasonableness. Strickland, 466 U.S. at 687, 104 S. Ct. 2052. However, merely because counsel was not successful in making an argument does not show counsel's argument fell below an objective standard of reasonableness. Here, counsel did argue the alleged inadequacy of the unanimity instruction but the court of appeal rejected the argument. Ailemen, 43 Fed.Appx. at 84-85. As to the claim that counsel failed to mention Jerome, counsel could have reasonably concluded that the argument was not a good one in light of the different factual context from that in Jerome. Even if counsel should have based an argument on Jerome, the failure to do so did not deprive petitioner of a fair trial. For the reasons discussed above, the result would not have been different had counsel made the argument petitioner claims they should have made. Strickland, 466 U.S. at 693, 104 S. Ct. 2052.
C. Claim III: Defendant Received Ineffective Assistance of Appellate Counsel
In Claim III petitioner asserts that his appellate counsel was ineffective because he failed to present, or adequately present, arguments that petitioner was prejudiced by: (1) his wrongful CCE conviction; (2) the extreme bias of the trial judge; (3) prosecutorial misconduct; (4) ineffective assistance of trial counsel; (5) the fact that recorded wiretapped conversations were not translated to English; and (6) denial of defendant's right to testify.
Claims of ineffective assistance of appellate counsel are evaluated according to the standard set out in Strickland. Cockett v. Ray, 333 F.3d 938, 944 (9th Cir.2003). Petitioner must show that appellate counsel's performance fell below an objective standard of reasonableness and that there is a reasonable probability that, but for counsel's unprofessional errors, petitioner would have prevailed on appeal. Id. Each of petitioner's alleged claim of ineffective assistance of appellate counsel in Claim III is examined.
1. Failure to Adequately Present Issues Regarding Petitioner's CCE Conviction
This claim has been addressed above.
2. Failure to Adequately Present the Bias of the Trial Judge
Petitioner acknowledges that the issue of judicial bias was raised on appeal but claims it was done so inadequately. The Supreme Court stated that courts have "consistently recognized the important role the trial judge plays in the federal system of criminal justice. `[T]he judge is not a mere moderator, but is the governor of the trial for the purpose of assuring its proper conduct and of determining questions of law.'" Geders v. United States, 425 U.S. 80, 86, 96 S. Ct. 1330, 47 L. Ed. 2d 592 (1976) (citing Quercia v. United States, 289 U.S. 466, 469, 53 S. Ct. 698, 77 L. Ed. 1321 (1933)). See U.S. v. Allsup, 566 F.2d 68 (9th Cir.1977) ("The district court, of course, is much more than a `moderator or umpire.'") (citing Smith v. United States, 305 F.2d 197, 205 (9th Cir. 1962)). While recognizing that it "occupies *974 a position of `preeminence and special persuasiveness' and, accordingly, . . . must avoid the appearance of giving aid to one party or another," the court may properly participate in the examination of witnesses. Id. at 72 (citing United States v. Trapnell, 512 F.2d 10, 12 (9th Cir.1975)). This may be allowed for the purpose of "clarifying the evidence, controlling the orderly presentation of the evidence, confining counsel to evidentiary rulings, and preventing undue repetition of testimony." Id. (citing United States v. Malcolm, 475 F.2d 420, 427 (9th Cir.1973)). Moreover, a judge's remarks or opinions will not demonstrate bias unless they "display a deep-seated favoritism or antagonism that would make fair judgment impossible." Liteky v. United States, 510 U.S. 540, 555, 114 S. Ct. 1147, 127 L. Ed. 2d 474 (1994). "[E]xpressions of impatience, dissatisfaction, annoyance, and even anger, that are within the bounds of . . . imperfect men and women" do not establish bias or partiality. Id. Finally, bias of a judge can "almost never" be demonstrated solely on the basis of a judicial ruling. Id.
Petitioner points to no actions by Judge Breyer which evidence "a high degree of favoritism or antagonism as to make fair judgment impossible." Id. Tellingly, as respondent points out, the jury acquitted petitioner on one count and hung on another. Answer at 21. Furthermore, the acquittal of petitioner's co-defendant cannot be used to reasonably infer that defendant would have achieved the same result had it not been for Judge Breyer's alleged bias and misconduct. See Liteky, 510 U.S. at 555, 114 S. Ct. 1147 (bias can "almost never" be demonstrated solely on the basis of a judicial ruling).
The court of appeal evaluated the judicial bias claim as follows:
Ailemen's contention that Judge Breyer exhibited judicial bias is without merit. A trial judge is more than an umpire, and may participate in the examination of witnesses to clarify evidence, confine counsel to evidentiary rulings, ensure the orderly presentation of evidence, and prevent undue repetition. A judge's participation justifies a new trial only if the record shows actual bias or leaves an abiding impression that the jury perceived an appearance of advocacy or partiality.
Judge Breyer's requirement that the defense present offers of proof before calling several of its witnesses was justified in light of defense counsels' repeated attempts to circumvent the court's ruling by trying to put before the jury evidence of government misconduct. Additionally, the record reveals that the judge's sua sponte objections were appropriate, his comments during testimony corrected misstatements of law or evidence, and his denial of defense requests for continuances were well within his discretion.
Ailemen, 43 Fed.Appx. at 82-3 (internal citations omitted).
Petitioner acknowledges that appellate counsel did raise some instances of judicial bias, but claims his argument was nevertheless deficient. "Although appellate counsel did present some illustrations of the bias of the judge, there were a number of rulings and instances [of] judicial misconduct that were not adequately presented by appellate counsel." P's Memo. at 38. The appellate court decision, however, shows that appellate court did consider allegations of bias of the type petitioner now complains were not adequately raised. As the Supreme Court noted in Jones v. Barnes, 463 U.S. 745, 103 S. Ct. 3308, 77 L. Ed. 2d 987 (1983), "There can hardly be any question about the importance of having the appellate advocate examine the record with a view to selecting the most promising issues for review. . . . *975 A brief that raises every colorable issue runs the risk of burying good argumentsthose that, in the words of the great advocate John W. Davis, `go for the jugular,'in a verbal mound made up of strong and weak contentions." Id. at 752-53, 103 S. Ct. 3308 (quoting Davis, The Argument of an Appeal, 26 ABAJ 895, 897 (1940)). Petitioner has not shown that appellate counsel's representation of him was deficient or prejudicial.
3. Failure to Adequately Present Prosecutorial Misconduct
Petitioner complains that the government engaged in "rampant and serious misconduct" but appellate counsel "barely mentioned this pattern of misconduct that was so highly improper and highly prejudicial to defendant." P's Memo. at 49. Petitioner claims that the government's misconduct was motivated by the fact that petitioner had previously been acquitted of drug charges brought against him in a prior trial. The alleged misconduct about which petitioner complains includes the government's payment of $30,000 and other benefits to a drug dealer to assist the DEA in the case against petitioner, the submission of a perjurious application for a wiretap, disparate treatment because defendant is Nigerian and the government's manufacture of the case against petitioner including the disappearance of audio and video tapes and various other acts.
Petitioner fails to explain how appellate counsel could have used petitioner's allegation of misconduct to benefit him on appeal. The credibility of witnesses is a factual question generally not reviewable on appeal, the wiretap evidence was suppressed, no evidence shows that petitioner was prosecuted because he is Nigerian and there is no evidence beyond petitioner's allegation that evidence was manufactured. Petitioner's claim that appellate counsel was ineffective for not more rigorously asserting a pattern of prosecutorial misconduct on appeal meets neither prong of the Strickland test.
4. Failure to Argue Ineffective Assistance of Trial Counsel
In section 4 of Claim 3 petitioner complains that appellate counsel failed to submit claims regarding ineffective assistance of trial counsel to the district court so those claims could be included in the record on appeal. For example, petitioner claims that the record does not show that attorney Rosenthal sat the rear of the court apart from defendant and his co-counsel and that many of the conflicts between the two defense attorneys never came to the attention of the court of appeals. It is unclear whether in this section of his brief petitioner is complaining about the alleged failure of his trial counsel or his appellate counsel to develop a record in the trial court. However, petitioner has failed to show what prejudicial information was not brought before the court of appeal or why any claimed prejudicial conduct occurring off the court's record cannot be asserted in the instant § 2255 motion.
5. Failure to Raise the Refusal to Translate Tapes
Petitioner claims that his appellate counsel should have claimed error because the trial court did not approve funds for the translation of the suppressed wiretap tapes. However, such a claim would have been without merit. Ailemen was given the opportunity to provide the trial judge with some evidence that the tapes contained exculpatory material but failed to do so. Ailemen had the tapes since 1994 and presumably spoke the language used on the tapes. Therefore, if they contain any useful information, he could have cited that information in an offer of proof to the trial court. Or, he could at least *976 point out that favorable information in his present § 2255 motion. Appellate counsel cannot be fairly criticized for not raising an issue on appeal relating to the translation of the suppressed tapes as there is no evidence that the tapes contain helpful material. See Jones, 463 U.S. at 752-53, 103 S. Ct. 3308 (appellate counsel should select the most promising arguments to raise on appeal).
6. Failure to Argue that Defendant Was Precluded From Testifying
Petitioner finally claims that appellate counsel neglected a "dead-bang" winner by not raising trial counsels' failure to call defendant as a witness. P's Memo. at 53. The question of whether this alleged failure constituted ineffective assistance of trial counsel has been discussed above. Appellate counsel's failure to raise this issue was not deficient because defendant has not shown that he was prejudiced, and, as noted above, the record suggests that he may have voluntarily elected not to testify.
D. Claim IV: Ineffective Assistance of Trial Counsel
Petitioner cites seven areas of alleged ineffective assistance of trial counsel which he claims separately and collectively prejudiced his case:[4] (1) trial counsel failed to call material witnesses; (2) trial counsel prevented him from testifying; (3) trial counsel failed to produce pivotal evidence promised to the jury in the opening statement; (4) trial counsel delivered an ineffective closing argument; (5) trial counsel represented him despite conflicting obligations; (6) trial counsel failed to adequately advocate for him during a pre-trial motion to dismiss the indictment; and (7) trial counsel failed to view critical evidence before trial.
1. Failure to Call Material Witnesses
Petitioner contends that counsel failed to produce two key witnesses: (1) a Nigerian cultural expert; and (2) a visual/audio tape expert. P's Memo. at 58. This failure, petitioner argues, was exacerbated by the fact that, in the opening statement, counsel had promised to present these witnesses. Id. The Nigerian cultural expert would have contradicted respondent's efforts "to paint [petitioner] as a typical large scale drug dealer, paying cash for everything and wearing tailor made clothes." Id. at 59. With respect to the loss or destruction of evidence that supposedly would have exculpated petitioner, the tape expert would have explained the technical issues which cause a body wire to malfunction and the probability that such a malfunction would occur, in support of the fact that "a body wire which worked fine for taping all but conversations with the defendant, statistically could not be attributed to chance, i.e. [,] that such a result could only be intentional tampering" by respondent. Id. at 60-61. The tape expert, petitioner says, would also have testified that respondent's practices in handling exculpatory evidence violated standard law enforcement practice and "may well have been able to scientifically prove that the tapes were deliberately altered." Id. at 61. Finally, during closing arguments, respondent "took advantage *977 of . . . counsel's failure to produce the Nigerian cultural expert and the audio/visual tape expert whose appearance was promised in opening statement." Id. at 59. As petitioner sums up, "[t]he damage caused by this debacle to [petitioner] is incalculable." Id. at 59. However, aside from the mere allegation that such incidents satisfy both prongs of Strickland, id. at 61, petitioner fails to illustrate how. Even assuming, arguendo, that defense counsel's performance was deficient, petitioner fails to make any showing that, had the witnesses taken the stand, there would have been an adequate foundation for their opinions or that they would have even testified as represented. No declarations from these allegedly omitted witnesses have been provided.
The court has already addressed the issue of the denial of petitioner's right to testify, which forms the basis for petitioner's second ineffective assistance of counsel claim. As noted above, this court finds that petitioner's failure to testify did not prejudice him, and, in fact, had he testified, harmful evidence that was otherwise inadmissible may have been admitted.
In his third ineffective assistance of counsel claim, petitioner asserts that "[l]ittle is more damaging to a criminal defendant than to fail to produce important evidence that has been promised to the jury in an opening statement." Id. at 62. Petitioner asserts that his counsel "primed the jury to hear how and by whom the defendant was framed." Id. at 63. He argues that "without the promised testimony of Agents Silano, Grevacio and AUSA Nandor Vadas" counsel could not show that petitioner had been framed. Id. at 65-66. Instead, counsel produced nothing and "[t]he only reasonable conclusion that the jury could maintain . . . is that [petitioner] was not framed and that this attorney's opening statement was meaningless garbage." Id. at 65. However, as previously mentioned, Mr. Bloom articulated in his closing statement the theory that petitioner had been framed. Although petitioner claims that additional testimony would have shored up such a theory, petitioner has not shown what the testimony would have been, that it would have been helpful or that it would have had a reasonable likelihood of affecting the result.
Petitioner's fourth ineffective assistance of counsel claim asserts that Mr. Rosenthal unfairly usurped 15-20 minutes of Mr. Bloom's time for closing arguments, which negatively affected Mr. Bloom, who "had carefully planned his closing arguments to utilize every minute of alotted [sic] time." Id. at 66. While specifically noting that Mr. Rosenthal's comments during closing were not themselves prejudicial, such an interruption forced Mr. Bloom "to leave out a significant portion of his carefully planned closing argument." Id. at 67. However, that one defense counsel argued longer than planned and the other had to argue less does not even survive the first prong of Strickland. Albeit frustrating to Mr. Bloom, Mr. Rosenthal's extended closing argument does not illustrate representation that falls below an objective standard of reasonableness. Instead, absent some other showing, Mr. Rosenthal's actions appear to have been in support of petitioner. Moreover, petitioner's assertion that the prejudice to him as a result of Mr. Rosenthal's actions was "astronomical" (id.) is insufficient to show that absent such actions, it is reasonably probable that the outcome of the proceeding would have been different. Although petitioner attempts to illustrate prejudice, more so than in his other claims, alleging that Mr. Bloom's closing statement was the sole opportunity to "tie all the loose evidentiary/testimony strands together" (id.), he fails to illustrate that the excluded portion *978 of Mr. Bloom's closing argument was so crucial as to have rebutted respondent's evidence and swayed the jury's decision.
Petitioner also asserts that defense counsel represented him despite a conflict of interest. Petitioner fails to establish that an actual and meaningful conflict even existed, abrogating any need for a Strickland evaluation. Petitioner alleges that neither of his attorneys was prepared to take his case to trial, but were forced to do so in order to avoid being held in contempt of court and sent to jail. Id. at 70. In support of their decision to go to trial, counsel told petitioner that "they had personal, business and client ethical obligations that outweighed their ethical obligation to [petitioner], and that those ethical obligations would be violated if they were jailed for not proceeding with [petitioner's] trial." Id. While such a comment may illustrate that counsel's preparation time was less than what they would have preferred, it does not show an actual conflict of interest. Petitioner's assertion that "his attorneys were required to make a choice advancing other interest [sic] to the detriment of [petitioner]"(id. at 70-71) implies that it would have been less detrimental had his attorneys refused to try the case and instead opted to be held in contempt, a conclusion this court is unwilling to reach. Further, neither defense counsel nor petitioner have proffered specific evidence they would have presented if given more time. Merely stating that counsel did not have time to locate and prepare a "tape expert," an expert on "Nigerian financial practices," and "a friend of defendant, who could have testified as to important matters that would have undermined the prosecution's case" is not enough. See Bloom Decl. at 2.
In his sixth claim, petitioner asserts that defense counsel was ineffective for failing to present critical evidence during a pre-trial motion to dismiss the allegedly tainted indictment. He asserts that "[d]efense counsel knew or should have known that Judge Breyer's determination that the grand jury would have still found sufficient evidence to indict defendant absent the tainted evidence, was fatally flawed and could be successfully challenged." Id. at 71. Specifically, defense counsel never informed Judge Breyer that the original grand jury declined to indict petitioner when respondent did not present evidence obtained through an illegal wiretap. Id. at 72. Finally, petitioner claims that, had Judge Breyer been informed of the original failure to indict, he "would have sent [respondent] back to the grand jury to attempt to obtain an untainted indictment sanitized of the poisoned evidence." Id. Although such a failure by counsel may arguably satisfy the first prong of Strickland, an issue which the court does not decide here, petitioner fails to meet the burden of illustrating prejudice. In light of the fact that Judge Breyer allowed respondent to proceed on the second superseding indictment, despite allegations of illegality, one cannot infer that Judge Breyer would have dismissed the indictment had he been aware of the earlier unsuccessful attempt to get an indictment returned.
Petitioner in his seventh contention of ineffective assistance of counsel asserts that counsel failed to view critical evidence before trial. However, petitioner's own concessions belie the merit of his claim. First, petitioner notes that Mr. Rosenthal filed motions for a mistrial on grounds that "the failure to view evidence and other earlier documented prejudicial events called into question the fact finding process." Id. at 74. However, the judge denied the motion. Id. Having later discovered allegedly important evidence, counsel sought to recall witnesses but failed to satisfy a request by Judge Breyer *979 for an offer of proof. Id. Such allegations do not illustrate objectively unreasonable behavior by counsel, who attempted to do what they could by filing motions and attempting to introduce evidence upon receipt.
In his supplemental brief, petitioner contends that counsels' decision to withdraw the post-trial motion, which alleged government misconduct, constituted ineffective assistance. P's Supp. at 33. Petitioner contends that his "counsel knew this post-trial hearing was the only opportunity remaining . . . to make the record or establish the damage [petitioner] suffered from the preclusion of Silano's testimony and other issues. . . . Yet counsel abruptly terminated the hearing." Id. at 28.
Petitioner bears the burden of rebutting the "strong presumption that counsel's conduct falls within the wide range of reasonable professional assistance, or `sound trial strategy.'" Answer at 29 (citing Strickland, 466 U.S. at 689, 104 S. Ct. 2052). Petitioner offers little to contravene respondent's argument that counsels' actions were tactical and, as such, may not form the basis of an ineffective assistance of counsel claim. As the Ninth Circuit found when it affirmed the conviction, "[t]he defense counsel made a strategic assessment that the district court was inclined to undermine the findings supporting the wiretap suppression ruling and that this could adversely affect [petitioner] on appeal or at a possible retrial." Ailemen, 43 Fed.Appx. at 83.
Neither does petitioner overcome the hurdle of showing that counsels' decision prejudiced him. In order to prevail, petitioner would need to show that, had his counsel pursued the motion, the trial court would have been likely to grant it. See Kimmelman v. Morrison, 477 U.S. 365, 373-74, 106 S. Ct. 2574, 91 L. Ed. 2d 305 (1986) (outlining prejudice prong regarding failure to file motion to suppress); Downs v. Hoyt, 232 F.3d 1031, 1038 (9th Cir.2000) (no prejudice from counsel's tactical decision not to seek mistrial where defendant failed to demonstrate it would have been granted). On a motion to evaluate government misconduct, petitioner would need to have shown that "the Government's conduct [was] so grossly shocking and so outrageous as to violate the universal sense of justice," which is considered to be an "extremely high standard." United States v. Smith, 924 F.2d 889, 897 (9th Cir.1991). To be successful, petitioner must show that "the government essentially manufactured the crime." United States v. Bogart, 783 F.2d 1428, 1436 (9th Cir.1986). Other than broad sweeping statements that the government manufactured the crime as retribution for petitioner's prior acquittal, petitioner provides no substantiating evidence.
E. Claim V: Prosecutorial Misconduct
Petitioner asserts that the "very serious misconduct by the [respondent] deprived him of a fair trial." P's Memo at 77. He cites a panoply of examples that purportedly illustrate respondent's egregious behavior including unlawful dissemination of illegally intercepted wiretap information, coercing and providing benefits to witnesses in order to solicit testimony against defendant, and lying by Agent Silano to the prosecutor about a missing tape.
In order to prove prosecutorial misconduct, petitioner must show that "the Government's conduct [was] so grossly shocking and so outrageous as to violate the universal sense of justice," which is an "extremely high standard." Smith, 924 F.2d at 897. Petitioner offers no proffer showing how the alleged unlawful dissemination harmed him. The use of plea deals and incentives to garner testimony in support of a criminal prosecution is not an *980 unusual practice and hardly amounts to behavior that is "so grossly shocking and so outrageous as to violate the universal sense of justice." Smith, 924 F.2d at 897. Finally, petitioner fails to offer persuasive evidence that the government acted in bad faith or that he was truly disadvantaged by the missing witness audio tape.
Petitioner argues that respondent's unlawful conduct precluded him from presenting alibi evidence. Citing Arizona v. Youngblood, 488 U.S. 51, 109 S. Ct. 333, 102 L. Ed. 2d 281 (1988), petitioner claims that "[w]hen a defendant is precluded by the government, in bad faith, from presenting alibi evidence, as occurred [sic] in this case, defendant is deprived of his due process rights to a fair trail [sic] and reversal is mandated." P's Memo at 79; see also Brady v. Maryland, 373 U.S. 83, 87, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963) ("The suppression by the prosecution of evidence favorable to and requested by an accused violates due process where the evidence is material either to guilt or to punishment, irrespective of the good or bad faith of the prosecution."). In support of this argument, petitioner claims that he was prevented from introducing exculpatory evidence contained in: (1) surveillance video tapes generated by petitioner; (2) surveillance video tapes generated by respondent; (3) body wire tapes generated by respondent; and (4) the testimony of Mitchell Dickerson ("Dickerson"). P's Memo at 80. Respondent allegedly destroyed surveillance video tapes and body wire tapes, which would have established petitioner's actual innocence as to certain counts. Id. Moreover, petitioner was precluded from calling Agent Silano, who would have testified as to the content of the destroyed tapes. Id. Finally, witness Dickerson was murdered and petitioner points to the fact that the San Joaquin County Sheriff Department named one of respondent's key witnesses as the primary suspect. Id. at 81. In sum, petitioner states that "[w]ith no physical evidence connecting petitioner to the crime (other than the testimony of paid, professional, biased witnesses), the alibi evidence [petitioner] was precluded from presenting was more than critical. It was his defense and the truth." Id. at 83.
However, petitioner's story is not backed by convincing evidence. Petitioner's own assertion that respondent destroyed tapes in bad faith is not corroborated and is speculative. More importantly, he fails to specify what the exculpatory evidence was. His unsupported theory of Dickerson's murder is insufficient as well to place the blame for his death on respondent.
The burden of showing prosecutorial misconduct is high and is one that petitioner fails to carry. Unsupported allegations that respondent prosecuted him, all the while engaging in nefarious behavior, because it sought vindication for a prior acquittal is insufficient to prove that the alleged acts occurred much less in a manner that is "so grossly shocking and so outrageous as to violate the universal sense of justice." Smith, 924 F.2d at 897.
F. Supplement to § 2255 Motion Detailing Alleged Judicial Bias and Misconduct
Petitioner's Supplement to § 2255 Motion focuses on his claim that overwhelming judicial bias and misconduct denied him the right to a fair trial. Among other things, petitioner points to Judge Breyer's alleged "inflexible and stringent" trial schedule, which precluded the appointment of competent counsel. Supp. Memo. at 11. Instead, Judge Breyer was forced to appoint Mr. Rosenthal, who was "lulled with promises of numerous concessions which Judge Breyer later refused to honor." Id. Judge Breyer also appointed Mr. Bloom. Id. at 12. However, neither *981 attorney, according to petitioner, was prepared for the amount of time and work that the case would require and, when they asked to withdraw from the case, Judge Breyer threatened them with, inter alia, disbarment. Id. Throughout the proceedings, conflict allegedly persisted between Judge Breyer and defense counsel, who engaged in shouting matches and altercations which, often times, required the immediate removal of the jury. Id. at 13-14. In addition, any request by defense counsel for additional time or a continuance to prepare for a witness was summarily denied by the Judge. Id. at 14.
Petitioner also points to numerous purportedly ex parte communications between Judge Breyer and respondent as evidence of judicial bias and misconduct. Id. at 19. Petitioner asserts that "[f]ollowing those exparte [sic] hearings, Judge Breyer would often adopt an adamant and hostile position toward defense counsel, denying their requests without articulated reason, and even actually testifying for government witnesses and openly belittling defense counsel's efforts before the jury." Id. Moreover, petitioner asserts that there were "situations where the judge openly indicated his belief that [petitioner] was guilty, ridiculed [petitioner's] theory of frame-up, and went on to express his sympathy for the prosecution (see sealed hearing of March 8,1999)." Id. at 24.
Finally, petitioner points to judicial bias in the termination of the post-trial misconduct hearing. Although Mr. Rosenthal terminated the hearing, id. at 30, petitioner contends that "Judge Breyer was aware of the materiality of this hearing, however he remained resistant to [petitioner's] legitimate need to complete it." Id. at 28. Moreover, petitioner alleges that "Judge Breyer was well aware that Rosenthal had been making decisions without [petitioner's] consent." Id. at 30.[5]
As evidence of prejudice, petitioner points to the result of his co-defendant's trial, which was severed from petitioner's tria'l when petitioner's original counsel, Mr. Murray, fell critically ill. Id. at 9. Noting that his co-defendant relied on the same defense that petitioner presented, petitioner states that "[w]ithin hours of deliberation, the jury found co-defendant not guilty. Their post-acquittal comment was: `The government witnesses were incredible.'" Id.
Although respondent presents an argument on the merits, respondent primarily contends that petitioner's claim for judicial bias and misconduct is untimely and thus not subject to review. Noting that "[a] conviction becomes final whenever the opportunity for direct appeal is exhausted" Answer at 11 (citing Clay v. United States, 537 U.S. 522, 527-28, 123 S. Ct. 1072, 155 L. Ed. 2d 88 (2003)), respondent points out that petition for writ of certiorari from the Ninth Circuit Court of Appeals to the United States Supreme Court was denied on February 24, 2003, 537 U.S. 1226, 123 S. Ct. 1331, 154 L. Ed. 2d 1088 (2003). Id. On February 24, 2004, petitioner filed a request for additional time to submit his 28 U.S.C. § 2255 petition, and subsequently filed his petition on or about March 4, 2004. Id. It is respondent's assertion that since petitioner's claim for judicial bias and misconduct was not asserted until petitioner filed a supplemental motion on February 4, 2005, it is time-barred.
However, this court finds some merit to petitioner's argument that his supplemental motion did not assert new claims or theories of law, but merely augmented the facts of claims addressed in his original *982 petition. Nevertheless, the petitioner's primary complaints of judicial bias and misconduct were raised and discussed in the appellate decision, United States v. Ailemen, above. The court does not find that a manifest injustice will result by the court's decision here not to relitigate the factual judicial bias and misconduct allegations the court of appeals considered. See Polizzi, 550 F.2d at 1135. The facts added by the supplement do not support vacating the verdict based upon judicial misconduct. Although Judge Breyer was faced with difficult and obstinate counsel, a review of the entire record reveals his concern to maintain and fair and impartial proceeding for defendant.
Petitioner is particularly critical of Judge Breyer's failure to hold a post-trial motion on government misconduct. However, as noted by the court of appeals, the record reveals that this motion was withdrawn by defense counsel for strategic reasons and not because the trial judge refused to hear it. "The defense counsel who withdrew the motion made a strategic assessment that the district court was inclined to undermine the findings supporting the wiretap suppression ruling and that this could adversely affect Ailemen on appeal or at a possible retrial." Ailemen, 43 Fed.Appx. at 83.
G. Amendment to Defendant's Pending § 2255 Motion
In his amendment to his § 2255 motion, petitioner "presents" additional facts: that his "APPELLATE LAWYER DID NOT EXERCISE DUE DILIGENCE AND THUS WAS INCOMPETENT." P's Amend. at 1. The essence of the amendment alleges that appellate counsel erred by raising ineffective assistance of counsel claims in petitioner's appeal rather than develop a full record and bring the claim in a § 2255 motion. Petitioner points to evidence, primarily related to the trial judge's alleged inappropriate actions, that appellate counsel allegedly did not have when he filed the appeal. Although appellate counsel did raise ineffective assistance of counsel claims in his appeal, he did not by doing so preclude additional ineffective assistance claims. Massaro v. United States holds "that an ineffective-assistance-of-counsel claim may be brought in a collateral proceeding under § 2255, whether or not the petitioner could have raised the claim on direct appeal." 538 U.S. at 504, 123 S. Ct. 1690. Although the court elected not to entertain some claims in the current petition because they were raised on appeal, the court has considered in its analysis of petitioner's claims all facts that petitioner uses to support his ineffective assistance of counsel claims including, among other things, trial counsel's declaration,[6] the alleged conflict of interest claim and Judge Breyer's recusal.[7]
H. Motion for Partial Summary Judgment
On September 4, 2007, following respondent's answer to the 28 U.S.C. § 2255 petition and petitioner's reply and amended *983 reply to respondent's answer, petitioner filed a Motion for Partial Summary Judgment claiming that respondent "admitted all the material facts that are required to resolve the constitutional and statutory claims asserted by [petitioner]." SJ Mot. at 2. On November 19, 2007, petitioner filed a request that the court grant his theretofore unopposed motion for partial summary judgment, arguing that respondent's "failure to respond is not a result of mistake or oversight; [respondent] cannot reasonably or legally controvert the assertions in the motion for summary judgment just as it could not contradict them in [petitioner's] § 2255 motion." Request to Grant Defendant's Unopposed Motion for Partial Summary Judgment at 2.
On December 7, 2007, respondent filed a brief response. United States' Response to Petitioner's Request to Grant Summary Judgment. While not addressing the merits of petitioner's motion, respondent argued that the filing violated this court's August 15, 2007 order and that it has no record of ever being served with petitioner's motion. Id. at 1-2. In his Motion for Clarification, filed December 17, 2007, petitioner swears under penalty of perjury that he served respondent with a copy of the motion and claims that respondent "misapprehends and insufficiently appreciates this Court's August 15, 2007 Order." Id. at 2. Finally, on April 4, 2008, petitioner filed a renewal motion asking this court to grant his motion. See Motion Seeking Denial of the Government's December 7, 2007 Pleading and Renewed Request to Grant Defendant's Unopposed Motion for Partial Summary Judgment.
In his motion, petitioner asserts that the court should grant summary judgment as follows: (1) the indictment under which petitioner was prosecuted was illegal; (2) trial counsel and the trial court deprived petitioner of his right to testify; (3) the conflict of interest under which trial counsel operated deprived petitioner of effective assistance of counsel; (4) respondent's destruction of exculpatory evidence violated petitioner's constitutional rights; and (5) termination of the post-trial government misconduct hearing deprived petitioner of his due process rights.
Although respondent did not file a separate response to petitioner's summary judgment motion (the court's order of August 15, 2007 contemplated only a response to the government's answer prior to submission on the merits), the court finds the answer, record of the trial and lack of evidence substantiating petitioner's allegations sufficient to justify a denial of both the summary judgment motion and the current § 2255 petition.
I. Motion for Referral
On June 30, 2008, petitioner filed a renewed motion asking this court to refer this matter to Judge Brazil. However, the court finds that, given its current ruling, said motion is moot. This court has reviewed the moving and responding papers, as well as the motion for partial summary judgment, and has rendered a decision on the merits. To refer the case to Judge Brazil at this time would not advance the interests cited by petitioner, namely the interest of expediting the matter, conserving the court's scarce time and resources, and serving the interest of justice. Further, there has been no consent to such a referral.
IV. ORDER
For the foregoing reasons, the court DENIES petitioner's 28 U.S.C. § 2255 motion, DENIES petitioner's motion for partial summary judgment and DENIES petitioner's motion for referral.
NOTES
[1] As a side note, respondent argues that petitioner has procedurally defaulted on this claim because he failed to raise it on appeal. However, in light of Massaro v. United States, 538 U.S. 500, 123 S. Ct. 1690, 155 L. Ed. 2d 714 (2003), the court finds this argument unpersuasive. Instructively, in Massaro, the Supreme Court held that "an ineffective assistance of counsel claim may be brought in a collateral proceeding under § 2255, whether or not the petitioner could have raised the claim on direct appeal." 538 U.S. at 505, 123 S. Ct. 1690. While recognizing that "the general rule [is] that claims not raised on direct appeal may not be raised on collateral review unless the petitioner shows cause and prejudice," id. at 504, 123 S. Ct. 1690, the Supreme Court found that the general rule was merely "a doctrine adhered to by the courts to conserve judicial resources and to respect the law's important interest in the finality of the judgment. . . . [R]equiring a criminal defendant to bring ineffective-assistance-of-counsel claims on direct appeal does not promote these objectives." Id.
[2] It appears that petitioner and his counsel actually decided that petitioner should not testify because they feared that the trial judge would allow certain harmful evidence to be used in cross-examination. See, for e.g., Tr. 6471:12-24:
Mr. Rosenthal: I just wanted the record to clearly reflect that, you know, Mr. Ailemen would have testified tothat, you know, Mr. Ailemen obviously would have testified to thetostatements I made in my openingin my opening statement, to the extent that they were within his personal knowledge, that he wold have testified he would have certainly testified and contradicted Carl Estelle'sunununinterpretation [sic] of the telephone call, and I think, your honorI mean, I just think we have to
The court: Why didn't he?
Mr. Rosenthal: Huh? Because you state that you were going to impeach him with the wiretap.
The court: Oh no. I never . . . .
See Ailemen, 43 Fed.Appx. at 84.
[3] A felony conspiracy offense may serve as a predicate offense. United States v. Hernandez-Escarsega, 886 F.2d 1560, 1571 (9th Cir. 1989).
[4] Petitioner asserts that claims for ineffective assistance of trial counsel should be brought in the district court, where an evidentiary hearing may be conducted and a complete record produced. Therefore, petitioner asks this court to conduct an evidentiary hearing and to rule, based upon the facts that petitioner believes will be found at the hearing, that trial counsel provided ineffective assistance. Petitioner urges that this is necessary because some of the facts supporting a finding of Ineffective assistance of counsel do not appear in the trial record. The court declines to hold such a hearing because the evidence in the record and proffered in this motion does not justify a hearing.
[5] This description is not meant to be an exhaustive list of petitioner's assertions of judicial bias and misconduct, rather a framework through which the remainder of petitioner's additional claims come into play.
[6] Counsel Robert Bloom's declaration is obviously intended to assist petitioner but is very conclusionary and to some extent appears disingenuous. He claims that "[t]he decision not to call defendant as a witness was not a tactical decision. It was another consequence of having to participate in a trial for which co-counsel and I were not prepared." Bloom Decl. at 1-2. This declaration appears inconsistent with the record which suggest that defendant did not testify because of fear of what would come out in cross-examination. See, for e.g., Tr. 6471:12-24; Ailemen, 43 Fed. Appx. at 84.
[7] The fact that Judge Breyer recused himself from further involvement in this case does not suggest any wrongdoing on his part but rather a recognition that given the allegations made against him in the § 2255 motion another judge should hear the motion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562146/ | 111 F. Supp. 2d 865 (2000)
Elena LOPEZ
v.
WAL-MART STORES, INC. et al.
No. CIV.A.G-00-393.
United States District Court, S.D. Texas, Galveston Division.
August 23, 2000.
Jim S Adler, Houston, TX, John M O'Quinn, O'Quinn Kerensky et al, Houston, TX, Russell Thomas Lloyd, O'Quinn & Laminack, Houston, TX, for Elena Lopez, plaintiffs.
Terri Truitt Griffiths, Mayer Brown & Platt, Diana L Davis, Mayer Brown & Platt, Houston, TX, for Wal-Mart Stores, Inc., a Delaware Corporation, Sams Club, an operating segment of Wal-Mart Stores, Inc., Sam's East Inc, Joe Cabrerra, Andy Flores, defendants.
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
KENT, District Judge.
Plaintiff Elena Lopez, a former employee of Defendant Wal-Mart Stores, Inc., originally filed suit in the 23rd Judicial District Court of Brazoria County, Texas, seeking, among other things, unspecified statutory penalties for the alleged failure to comply with applicable wage laws and *866 damages for allegedly unpaid wages. Asserting the existence of federal question jurisdiction, Defendants timely removed to this Court on July 10, 2000.
Now before the Court is Plaintiff's Motion To Remand, filed July 27, 2000. For reasons set forth in more detail below, Plaintiff's Motion is GRANTED.
Removal of FLSA Actions
"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of the which the district courts have original jurisdiction, may be removed by the defendant or defendants..." 28 U.S.C. § 1441(a)(emphasis added). The propriety of removal is governed by the "well-pleaded complaint rule," which looks to the plaintiff's complaint to determine whether the pleading raises issues of federal law sufficient to support federal question jurisdiction. See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir. 1999). However, it is well settled that a court is not bound by the labels Plaintiff uses to describe his cause of action. Instead, under the "artful pleading doctrine", the court is bound to look beyond the labels and examine the substance of the complaint to determine if it states a claim which arises under federal law. See In Re Carter, 618 F.2d 1093, 1101 (5th Cir.1980) ("[T]he accepted rule in this circuit is that upon removal the removal court should inspect the complaint carefully to determine whether a federal claim is necessarily presented, even if the plaintiff has couched his pleading exclusively in terms of state law."); Amoco Chem. Co. v. Tex Tin Corp., 902 F. Supp. 730 (S.D.Tex.1995).
Defendants contend that Plaintiffs have inadvertently pleaded a claim under federal law. For example, Defendants argue that Plaintiffs prayer for "statutory penalties" invokes relief which is only available under federal law, specifically the federal Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (the "FLSA"). Plaintiff responds by arguing that the relief prayed for is available under Texas state law, and thus the face of the Complaint does not reveal the existence of federal question jurisdiction.
For purposes of ruling on Plaintiff's Motion To Remand, the Court will assume that Defendants are correct: Plaintiff has prayed for relief which is only available under the FLSA. Unfortunately for Defendants, this assumption does not automatically make Plaintiff's claims removable, because the removal statute provides that certain actions are removable "[e]xcept as otherwise expressly provided by Act of Congress..." 28 U.S.C. § 1441(a)(emphasis added).
The relevant portion of the FLSA provides that an action for an FLSA violation "may be maintained ...in any Federal or State court of competent jurisdiction..." 29 U.S.C. § 216(b)(emphasis added). "The word `maintain' arguably carries the connotation that an action may not only be commenced but also carried on to conclusion." Haun v. Retail Credit Co., 420 F. Supp. 859, 862 (W.D.Pa.1976). But if the word "maintain" is understood as giving the Plaintiff a right to both institute a suit in state court, and also carry that suit to its conclusion, then § 216(b) of the FLSA constitutes the sort of express bar to removal contemplated by 28 U.S.C. § 1441(a).
For more than fifty years, the federal courts have been divided on the question of whether the presence of the word "maintain" in the FLSA precludes the removal of such suits. Cases rejecting removal include: Johnson v. Butler Bros., 162 F.2d 87 (8th Cir.1947); Esquivel v. St. Andrews Constr., 999 F. Supp. 863 (N.D.Tex.1998); Pauly v. Eagle Point Software Co., Inc., 958 F. Supp. 437 (N.D.Iowa 1997); Bintrim v. Bruce-Merilees Elec. Co., 520 F. Supp. 1026 (W.D.Pa. 1981); Haun, 420 F.Supp. at 859; Carter v. Hill and Hill Truck Line, Inc., 259 F. Supp. 429 (S.D.Tex.1966) and Wilkins v. *867 Renault Southwest, Inc., 227 F. Supp. 647 (N.D.Tex.1964).
Other decisions permit removal of an FLSA claim. See Cosme Nieves v. Deshler, 786 F.2d 445 (1st Cir.1986); Winebarger v. Logan Aluminum, Inc., 839 F. Supp. 17 (W.D.Ky.1993), and Ramos v. H.E. Butt Grocery Co., 632 F. Supp. 342 (S.D.Tex. 1986).
The Fifth Circuit, while recognizing this split of authority, has expressly declined to rule on the question of whether the word "maintain" precludes removal of an FLSA action. See Baldwin v. Sears, Roebuck, 667 F.2d 458, 461 (5th Cir.1982) ("The question of removability of FLSA actions is not before us, and we do not attempt to address that issue."). Because there is no binding Supreme Court or Fifth Circuit on this point, the Court is free to decide the issue.
It appears to the Court that the better reasoned line of authority is that which reads the word "maintain" as precluding removal. The word "maintain" plainly implies that a plaintiff is given a right to not only institute a suit in state court, but to keep it there until a final judgment is rendered, despite defendant's desire to remove it to a federal court. "Maintain...is usually applied to actions already brought, but not yet reduced to judgment. In this connection it means to continue or preserve in or with; to carry on." BLACK'S LAW DICTIONARY 953 (6th ed.1990); see also Esquivel, 999 F.Supp. at 864. If Congress merely meant that a plaintiff may institute a suit in state court, there is far more apt language available to express that intention. See, e.g., 15 U.S.C. §§ 1681-1681t (providing that an action under the Fair Credit Reporting Act "may be brought" in a district court or other court of competent jurisdiction.); Esquivel, 999 F.Supp. at 865.
The Court concludes that even if Defendants are correct that the face of Plaintiff's Complaint reveals the existence of federal question jurisdiction, Plaintiff's disguised FLSA claims are not removable. Consequently, Plaintiff's Motion To Remand is GRANTED, and this action is hereby REMANDED to the 23rd Judicial District Court of Brazoria County, Texas. All Orders and Injunctions relating to discovery and preservation of evidence REMAIN IN FORCE, and the Court retains PLENARY JURISDICTION to enforce these Orders, until such time as they are altered by a competent court of record upon remand. The parties are ORDERED to file no further motions on these issues in this Court, including motions to reconsider or the like. Any and all further relief shall be sought from the appropriate Texas state court. The parties are also ORDERED to bear their own taxable costs and expenses incurred herein to date.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8569588/ | TEXTO COMPLETO DE LA RESOLUCIÓN
I
Benny Ocasio Vending Machines (el “peticionario”) recurre de un dictamen del Tribunal de Primera Instancia, Sala Superior de Carolina, (el “TPI”) (Lydia E. Couvertier Martínez, J.) emitido el 19 de febrero de 2004, notificado el 25 de ese mes y año. El dictamen dejó sin efecto la Sentencia Parcial del 26 de enero de 2004 (Rafael L. Vissepó Vázquez, J.) mediante la cual se desestimó, con pequicio, la demanda contra tercero presentada por José A. Díaz, Hilda Ocasio y la Sociedad de Gananciales compuesta por éstos (los “recurridos”) por no haberse diligenciado el emplazamiento en el término de seis (6) dispuesto por la Regla 4.3 de las de Procedimiento Civil, 32 L.P.R.A. Ap. HI.
El 4 de marzo de 2004, el peticionario solicitó reconsideración al dictamen de 19 de febrero de 2004. Por *244otro lado, el 11 de marzo, los recurridos se opusieron a la reconsideración. Finalmente el 19 de marzo, el TPI declaró No Ha Lugar la reconsideración tomando como fundamentos los expresados en la oposición de los recurridos.
Por su parte, el 6 de mayo de 2004, los recurridos se opusieron por distintas razones a que se expidiera el auto solicitado. Por último, el 11 de mayo de 2004, el peticionario presentó Réplica a Oposición a Certiorari y Reiterando Jurisdicción del Tribunal. Resolvemos.
II
El 8 de octubre de 2002, Benedicto Ocasio presentó demanda en cobro de dinero contra los recurridos. El 21 de enero de 2003, los recurridos contestaron la demanda, levantaron varias defensas afirmativas y presentaron reconvención. Además, solicitaron se le permitiera intervenir en los procedimientos a United Laundromat Machines, propiedad de los recurridos, a los fines de reclamar mediante demanda contra tercero a Benny Ocasio Vending Machines, Inc., corporación propiedad del peticionario. En esa ocasión, los recurridos al presentar su demanda contra tercero acompañaron el emplazamiento para ser expedido por la secretaría. Por razón de tratarse de una demanda contra tercero, el emplazamiento no fue expedido de inmediato, siendo referido a la consideración del TPI, previo a su autorización.
A solicitud del peticionario, el TPI, mediante su orden del 27 de enero de 2003, notificada el 12 de febrero, le anotó la rebeldía a los recurridos, no obstante éstos haber presentado con anterioridad, es decir, el 21 de enero, su contestación. El 20 de febrero, los recurridos solicitaron reconsideración. Por su parte, el 21 de febrero, notificada el 25 de ese mes, el TPI dejó sin efecto la anotación de rebeldía, aceptó la contestación a la demanda y la reconvención. Por otro lado, ordenó al demandante replicar en veinte (20) días a la reconvención. No obstante el TPI tener ante su consideración la demanda contra tercero y el emplazamiento que se acompañó, nada dispuso, como tampoco autorizó la expedición del emplazamiento contra tercero según solicitado por los recurridos.
Así las cosas, mediante su orden del 6 de mayo, notificada el 9 de ese mes y año, el TPI anotó, motu proprio, la rebeldía al peticionario por no haber contestado la reconvención de los recurridos y señaló el juicio para el 30 de septiembre de 2003. Posteriormente, el 27 de mayo de 2003, el peticionario solicitó reconsideración. Mediante su orden de 3 de junio de 2003, el TPI dejó sin efecto la anotación de rebeldía y aceptó la contestación a la reconvención formulada por el peticionario. Por otro lado, autorizó a la Secretaria General expedir el emplazamiento a la tercera demandada Benny Ocasio Vending Machines, Inc., quien lo expidió el 11 de junio de 2003.
Así las cosas, tras otros incidentes, el 10 de octubre de 2003, el peticionario, sin someterse a la jurisdicción del TPI, solicitó la desestimación de la demanda contra tercero en su contra, por haber transcurrido nueve (9) meses desde su presentación, 21 de enero de 2003, sin que se le hubiere emplazado y sin que se hubiere solicitado prórroga para extender el término de seis (6) meses para emplazar dispuesto por la referida Regla 4.3.
Posteriormente, el 10 de diciembre de 2003, el peticionario, sin someterse a la jurisdicción del TPI, reiteró su solicitud de desestimación. Alegó, que no fue hasta el 8 de diciembre de 2003, aproximadamente once (11) meses después de presentada la demanda contra tercero en su contra, que se le emplazó, sin haberse solicitado prórroga para extender el término para emplazar. Su planteamiento fue acogido por el TPI (Rafael L. Vissepó Vázquez, J.), emitiéndose, como hemos informado, el 26 de enero de 2004, Sentencia Parcial desestimando, con peijuicio, la demanda en su contra. No obstante, como también hemos informado, el 19 de febrero de 2004, notificada el 25 de ese mes y año, el TPI (Lydia E. Couvertier Martínez, J.) motu proprio dejó sin efecto la Sentencia Parcial.
Así las cosas, el 2 de marzo de 2004, durante una vista de estado de los procedimientos, el TPI concedió *245término al peticionario para solicitar por escrito la reconsideración a su dictamen de 19 de febrero de 2004, quien así lo hizo el 4 de marzo. Por otro lado, el 11 de marzo, los recurridos se opusieron a la reconsideración. Finalmente el 19 de marzo, el TPI declaró No Ha Lugar la reconsideración tomando como fundamentos los expresados en la oposición.
Inconforme, el peticionario le imputa al TPI haber errado al: a) adoptar el argumento de los recurridos de que el término de seis (6) meses para emplazar comienza desde que se expidieron los emplazamientos y no desde que se presentó la demanda contra terceros; b) adoptar el argumento de los recurridos de que lo resuelto en Monell v. Municipio de Carolina, 146 D.P.R. 20 (1998), no aplica a las demandas contra terceros.
III
El emplazamiento es el mecanismo procesal de notificación que se utiliza para que un tribunal pueda adquirir jurisdicción sobre la persona del demandado, de forma tal que éste quede obligado por el dictamen que finalmente se emita. “[E]l propósito principal del emplazamiento es notificar al demandado que se ha instado una acción judicial en su contra, para así garantizarle su derecho a ser oído y defenderse. ” El concepto de jurisdicción in personam está intrínsecamente atado al debido proceso ley. (Citas Omitidas.) Márquez v. Barreto, 143 D.P.R. 137, 142-143 (1997). A fin de cuentas, se trata de un importante mecanismo procesal que hace viable la consecución o privación de derechos sustantivos. (Citas Omitidas.) Reyes v. Oriental Fed. Savs. Bank, 133 D.P.R. 15, 21 (1993).
Sabido es que la jurisdicción in personam, puede ser adquirida por un tribunal de dos maneras: utilizando . adecuadamente los mecanismos procesales de emplazamiento provistos en las Reglas de Procedimiento Civil; o mediante la sumisión voluntaria de la parte demandada a la jurisdicción del tribunal. Esta sumisión, la puede hacer de forma explícita o tácita. Sterzinger v. Ramírez, 116 D.P.R. 762, 789 (1985); Franco v. Corte, 71 D.P.R. 686 (1950). Véase, además, Insurance Corp. v. Compagnie Des Bauxites, 456 U.S. 694, 703-704 (1982). Así pues, la falta de jurisdicción sobre la persona es una defensa afirmativa que le pertenece a la persona que quedó afectada por la falta de notificación adecuada y puede ser renunciada por ésta, expresa o tácitamente. Regla 10.8 (a) de Procedimiento Civil, 32 L.P.R.A. Ap. HI. Márquez, 143 D.P.R. a la pág. 143. No obstante, la falta de jurisdicción in personam es un impedimento infranqueable que veda todo trámite judicial y macula de nulidad el ya efectuado. Reyes v. Oriental Fed. Savs. Bank, 133 D.P.R. a la pág. 28.
Sobre la expedición de los emplazamientos y el término para diligenciarlos, disponen las Reglas 4.1 y 4.3 (b) de las de Procedimiento Civil vigentes, lo siguiente:
“Regla 4.1 Expedición
Presentada la demanda, el secretario expedirá inmediatamente un emplazamiento y lo entregará al demandante o a su abogado. A requerimiento del demandante, el secretario expedirá emplazamientos individuales o adicionales contra cualesquiera demandados.
Regla 4.3 Quién puede diligenciarlos; término para el diligenciamiento
[...]
(b) El emplazamiento será diligenciado en el término de seis (6) meses de haber sido expedido. Dicho término sólo podrá ser prorrogado por un término razonable a discreción del tribunal si el demandante demuestra justa causa para la concesión de la prórroga y solicita la misma dentro del término original. Transcurrido el término original o su prórroga sin que el emplazamiento hubiere sido diligenciado, se tendrá a la parte actora por desistida con perjuicio. ”
*246Al interpretar las disposiciones transcritas, nuestro Tribunal Supremo expresó en el caso de Monell, 146 D. P.R. a las págs. 25-26, lo siguiente:
“Es forzoso interpretar, pues, que cuando la Regla 4.3 de Procedimiento Civil, supra, establece que el emplazamiento será diligenciado dentro de los seis (6) meses de haber sido expedido, equipara la fecha de su expedición con la presentación de la demanda. Aunque puede haber unos pocos días de diferencia debido a demoras legítimas y comprensibles -atribuibles a los cientos, por no decir miles, de documentos y escritos que se presentan en las secretarías de los tribunales en el país-, no cabe otra interpretación. No podemos dejar al arbitrio de un demandante o su abogado la fecha cuando se tramitarán o procurarán los emplazamientos y, por ende, cuando serán expedidos. Equivaldría a, injustamente y sin autoridad judicial, extender el período de tiempo que nuestro ordenamiento ha establecido como apropiado para emplazar a una parte. Véase Ostolaza v. F.S.E., 116 D.P.R. 700 (1985). Además, ello acarrearía serios perjuicios a un demandado, amén de contravenir el principio rector de resolver las controversias de forma justa, rápida y económica, eje central del debida proceso de ley. Regla 1 de Procedimiento Civil, 32 L.P.R.A. Ap. III. En fin, el propósito de la Regla 4.3 (b) de Procedimiento Civil, supra, es acelerar la litigación y despejar los calendarios desde el inicio del pleito. ” Banco Metropolitano v. Berrios, 110 D.P.R. 721, 724 (1981). (Énfasis Nuestro.)
Establecimos esta regla en reconocimiento de que en nuestros tribunales, la práctica es que es el demandante o su abogado el que prepara y somete al tribunal, conjuntamente con la demanda, los emplazamientos. Banco de Desarrollo Económico v. AMC Surgery, y Otros, Op. de 11 de junio de 2002, 2002 J.T.S. 83, pág. 1239. Es decir, a partir de Monell, 146 D.P.R. a las págs. 25-26, no cabe interpretar la Regla 4.3 (b) en el sentido de que corresponde únicamente al secretario del tribunal de instancia la responsabilidad de tramitar la expedición del emplazamiento.
En el caso de autos, los recurridos presentaron su demanda contra el tercero demandado el 21 de enero de 2003, conjuntamente con los emplazamientos para que fueran expedidos por la secretaría. Por razón de tratarse de una demanda contra tercero, el emplazamiento no fue expedido de inmediato y automáticamente como se hace de ordinario, siendo referido a la consideración del TPI, previo a su autorización. Posteriormente, el TPI (Rafael L. Vissepó Vázquez, J.) mediante su orden del 3 de junio de 2003, notificada el 11 de junio, autorizó la demanda de tercero y ordenó expedir los emplazamientos contra el tercero demandado Benny Ocasio Vending Machines, Inc.. Así lo hizo la Secretaria General del TPI el 11 de junio de 2003. Posteriormente, el emplazamiento fue diligenciado el 8 de diciembre de 2003, es decir dentro de los seis (6) meses de expedido como dispuesto por la referida Regla 4.3, en la persona de Benny Ocasio, presidente del tercero demandado, Benny Ocasio Vending Machine.
En consecuencia, contado el término de seis (6) meses para emplazar al tercero demandado, a partir del momento en que el TPI autorizó la demanda contra tercero y desde que expidió el emplazamiento el 11 de junio de 2003, no cabe duda alguna de que el diligenciamiento realizado el 8 de diciembre de 2003, fue dentro del término para su diligenciamiento. Resolver en sentido contrario sería una injusticia.
En mérito a lo expuesto, denegamos la expedición del auto de certiorari, pues el emplazamiento fue diligenciado dentro del plazo de seis (6) meses de ser autorizada la demanda de tercero.
Lo acordó el Tribunal y lo certifica la señora Secretaria General.
Aida Ileana Oquendo Graulau
Secretaria General | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2562148/ | 111 F. Supp. 2d 190 (2000)
Jerome GLOVER and Michelle Glover, Plaintiffs,
v.
UNITED STATES of America, Defendant.
No. CIV.A. CV-99-547 (DGT).
United States District Court, E.D. New York.
July 24, 2000.
*191 Fred R. Profeta, Jr., Profeta & Eisenstein, Jay H. Tannenbaum, New York City, for Plaintiffs.
Sandra L. Levy, Assistant U.S. Attorney, Eastern District of New York, Brooklyn, NY, for Defendant.
MEMORANDUM AND ORDER
TRAGER, District Judge.
Plaintiffs brought this action under the Federal Tort Claims Act to recover damages arising from injuries sustained by Jerome Glover ("Glover" or "Mr. Glover") during an automobile accident involving a United States Postal Service ("USPS") vehicle. Defendant now moves to dismiss, or in the alternative, for summary judgment, on the grounds that (1) Glover failed to commence this action within sixty days after his claim was denied by the USPS, and (2) his wife, plaintiff Michelle Glover ("Mrs.Glover"), failed to present a notice of claim to the USPS within two years after the accident.
Background
On February 14, 1998, Glover was injured in a collision with a USPS vehicle. By a letter dated March 4, 1998, and sent by certified mail, return receipt requested, Glover's attorney requested a standard claim form from the USPS and forwarded a copy of a police report regarding the accident. (Gallaudet Decl. ¶ 3, Ex. A.) On June 2, 1998, Glover's attorney mailed a completed claim form to the USPS, which was received on June 4, 1998. (Plybon Decl. ¶ 3, Ex. A.) The form asserted a claim for property damage in the amount of $15,000 caused by the loss of Glover's Porsche automobile, and a claim for Glover's personal injuries, including "multiple serious injury [sic] to his head, neck, back and limbs including brain damage, contusion, coma, fractures of cervical spine, and ribs," in the amount of $25,000,000. (Id., Ex. A.) The form did not, however, include any claim on behalf of Mrs. Glover. (Id.)
By a letter dated June 24, 1998 and sent to Glover's attorney by certified mail, return receipt requested, the USPS denied Glover's claim on the ground that its investigation indicated that the accident resulted from Glover running a red-light and striking the USPS vehicle. (Id., Ex. C, at 1.) The June 24th letter advised Glover that if he was dissatisfied with the USPS's decision, he was entitled to file suit in the appropriate United States District Court not later than six months from the date of the letter. (Id.) The letter further advised:
Regulations of the Postal Service provide that prior to the commencement of suit and prior to the expiration of the six-month period allowed for filing suit, you have the right to file a request for reconsideration of your client's claim. To be timely filed, the request for reconsideration must be received within the six-month period.
(Id. at 1-2 (emphasis added).) The letter then supplied the address to which a request for reconsideration should be sent, and closed by explaining the form and required content of such a request. (Id. at 2.) The letter also referred Glover's attorney to the USPS regulation that outlines the procedures for submitting requests for reconsideration, 39 C.F.R. § 912.9. (Id.)
In a sworn affidavit, Glover's attorney, Jay H. Tannenbaum ("Tannenbaum"), states that on July 27, 1998, he drafted a letter requesting reconsideration of the USPS's decision on the ground that his investigation and the police report indicated that it was not Glover's vehicle, but the USPS vehicle that ran the red light and struck Glover's automobile. (Tannenbaum *192 Aff. ¶ 3, Ex. A.)[1] Glover has submitted an unsigned copy of the letter, which bears the address indicated in the USPS's June 24th letter. (Id., Ex. A.) Tannenbaum further states that he verified that the address was correctly printed on the envelope before giving it to his secretary to send to the USPS's claims office by regular mail, no return receipt requested. (Id. ¶ 5, 9.) Tannenbaum's secretary states that she then delivered the letter directly to the post office. (D'Agnese Aff. ¶¶ 1-2.) The USPS, however, has submitted affidavits stating that it has no record of having received Tannenbaum's July 27th letter. (Gallaudet Decl. ¶¶ 4-6; Plybon Decl. ¶¶ 8-11.)
On January 28, 1999 approximately seven months after the USPS denied Glover's claim, plaintiffs filed this complaint, seeking personal injury damages with respect to Mr. Glover and loss of consortium damages with respect to Mrs. Glover. Plaintiffs have not alleged that they or their attorney made any effort during the period from July 27, 1998, to January 28, 1999, to determine whether the July 27th letter was received by the USPS or whether the USPS had decided the request for reconsideration.
Defendant now moves to dismiss, or, in the alternative, for summary judgment.
Discussion
It is well-settled that "`the United States, as sovereign, "is immune from suit save as it consents to be sued ... and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit."'" Lehman v. Nakshian, 453 U.S. 156, 160, 101 S. Ct. 2698, 2701, 69 L. Ed. 2d 548 (1981) (quoting United States v. Testan, 424 U.S. 392, 399, 96 S. Ct. 948, 953, 47 L. Ed. 2d 114 (1976) (quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S. Ct. 767, 769, 85 L. Ed. 1058 (1941))). The Federal Tort Claims Act ("FTCA") provides a limited waiver of the sovereign immunity of the United States for certain torts. See 28 U.S.C. §§ 1346(b), 2401(b), 2671-2680. In order to maintain a claim under the FTCA, a plaintiff attempting to assert it must comply with several strictly construed prerequisites to suit. See Johnson v. Smithsonian Inst., 189 F.3d 180, 189 (2d Cir.1999) (citing United States v. Kubrick, 444 U.S. 111, 117-18, 100 S. Ct. 352, 357, 62 L. Ed. 2d 259 (1979) ("[T]he [FTCA] waives the immunity of the United States and that in construing the statute of limitations, which is a condition of that waiver, we should not take it upon ourselves to extend the waiver beyond that which Congress intended.")). Pertinently:
A tort claim against the United States shall be forever barred unless [1] it is presented in writing to the appropriate Federal agency within two years after such claim accrues or unless [2] action is begun within six months after the date of mailing, by certified or registered mail, of notice of final denial of the claim by the agency to which it was presented.
28 U.S.C. § 2401(b). "Unless a plaintiff complies with th[ese] requirements, a district court lacks subject matter jurisdiction over a plaintiffs FTCA claim." Smithsonian, 189 F.3d at 189 (citing Kubrick, 444 U.S. at 117-18, 100 S. Ct. at 357); accord Millares Guiraldes de Tineo v. United States, 137 F.3d 715, 717 (2d Cir.1998); see also Johnson v. Al Tech Specialties Steel Corp., 731 F.2d 143, 146 (2d Cir.1984) (stating that "[s]ome statutory time limits are treated as jurisdictional requirements, with the result that failure to timely file deprives the court of subject matter jurisdiction and the plaintiffs complaint can be dismissed at any time regardless of the excuse proffered for the delay" and citing FTCA). The burden is on the plaintiff to plead and prove compliance with § 2401(b). See Smithsonian, 189 F.3d at 189 (citing In re Agent Orange Prod. Liab. Litig., 818 F.2d 210, 214 (2d Cir.1987)).
The six-month period for filing an action in district court after final denial of a claim by the agency to which it was *193 presented will, however, be tolled by a timely-filed request for reconsideration by the agency that denied the claim here, the USPS. USPS regulations provide that:
Prior to the commencement of suit and prior to the expiration of the 6 month period provided in 28 U.S.C. 2401(b), a claimant, his duly authorized agent, or legal representative, may file a written request with the postal official who issued the final denial or with the Assistant General Counsel, Claims Division, U.S. Postal Service, Washington, D.C. 20260, for a reconsideration of a final denial of a claim ....
39 C.F.R. § 912.9(b). A "request for reconsideration of a final denial of a claim shall be deemed to have been filed when received in the office of the official who issued the final denial or in the office of the Assistant General Counsel, Claims Division, U.S. Postal Service, Washington, D.C. XXXXX-XXXX." Id. § 912.9(c) (emphasis added). If a claimant files a timely request for reconsideration and the USPS fails to render a decision on the request within six months after it is filed, the claimant may, at his option, deem the request to have been denied at any time after the expiration of the six-month period and may then commence an action in district court. See 28 U.S.C. § 2675(a); 39 C.F.R. § 912.9(b).
(1)
Mrs. Glover's claim for loss of consortium must be dismissed for failure to comply the FTCA's two-year limitations period for presenting a notice of claim to the USPS. Under FTCA regulations the validity of which plaintiffs do not dispute, a claim is "deemed to have been presented [for the purposes of 28 U.S.C. §§ 2401(b), 2675(a)] when a Federal agency receives from a claimant, his duly authorized agent or legal representative" a written notice of claim. 28 C.F.R. § 14.2(a) (emphasis added). The Government has submitted affidavits stating that the USPS has no record of receiving any claim from or on behalf of Mrs. Glover during the two-year limitations period or any time thereafter, see Plybon Decl. ¶¶ 10-11; Gallaudet Decl. ¶¶ 4-5,[2] and plaintiffs do not dispute the accuracy of those statements. In a pre-motion letter dated May 14, 1999, plaintiffs' attorney acknowledged that no claim had been made on behalf of Mrs. Glover as of that date, but stated that in light of the fact that the two-year claims period had not yet expired at that point, he would be filing a claim on her behalf within the next five days. (See Letter from Plaintiffs' Counsel to Chambers of 5/14/99.) Plaintiffs' attorney, however, apparently never did so, and the time for filing a claim on Mrs. Glover's behalf has now expired. Accordingly, defendant's motion for summary judgment is granted with respect to Mrs. Glover's claims.
(2)
Mr. Glover's claim presents a more substantive issue for the court. There is no question that Glover complied with § 2401(b)'s requirement that he present a notice of claim to the USPS within two years of the date of the accident. Defendant, however, argues that Glover failed to meet § 2401(b)'s second requirement, viz., that he commence a district court action within six months after the denial of his claim by the USPS. Although Glover acknowledges that his complaint was not filed until seven months after the USPS's denial of his claim, he argues that he is entitled to a tolling of the six-month period on the ground that he mailed a request for reconsideration to the USPS within the six-month period and that the USPS never acted upon his request.
*194 In response, the Government correctly notes that under 39 C.F.R. § 912.9(c), a request for reconsideration is deemed to be filed on the date that is received by the USPS, not on the date that it is mailed. The Government has also offered evidence that the USPS has no record of having received a request for reconsideration from Glover during the six-month period after his claim was denied, or indeed, at any time thereafter. Moreover, because Glover's request for reconsideration was sent by regular mail, with no return receipt requested, and because neither he nor his attorney inquired as to the status of the request during the six-month period, Glover has produced, and can produce, no direct proof that the request was actually received.
Nonetheless, Glover argues that the common-law presumption that a properly addressed and stamped, timely-mailed letter will arrive at its destination eliminates the need for direct proof of receipt. See generally Hagner v. United States, 285 U.S. 427, 430, 52 S. Ct. 417, 419, 76 L. Ed. 861 (1932) (mail fraud prosecution) (reciting the common-law "mailbox rule"). Glover contends the affidavits of his attorney and the attorney's secretary swearing that the request was mailed to the USPS just over a month after the final denial of claim, when coupled with the rebuttable presumption of delivery created by the common-law mailbox rule, establish a genuine issue of material fact as to whether the request was received by the USPS within the six-month period, thus precluding the Government's motion.
The Government argues that the common-law mailbox rule has no application in the FTCA context. The Government reasons that allowing the common-law presumption of receipt to operate in the FTCA context would effectively replace the regulatory requirement of proof of "receipt" with a requirement of proof of mailing alone, and thus contravene the principle that a waiver of sovereign immunity must be strictly construed in favor of the sovereign. In support of its argument, the Government cites a number cases from outside this circuit which have held that, in the context of a FTCA action, proof that a request for reconsideration has been mailed is not sufficient to prove receipt or even to establish a genuine issue of fact on the question of receipt. See Gonzales v. United States, No. 96-2167, 1998 WL 39255, at *2-3, 134 F.3d 382 (10th Cir. 1998) (Table) (action against Veterans Administration) (rejecting "the concept of any `presumed delivery'" in case where plaintiff submitted affidavit by her attorney in which attorney stated that request for reconsideration had been sent (apparently) by regular mail); Moya v. United States, 35 F.3d 501, 503-04 (10th Cir.1994) (action against Veterans Administration) (rejecting plaintiffs argument that request should be presumed to have been received where her attorney submitted affidavit stating that request had been mailed by certified mail); Dark v. United States, Civ. A. No. 91-1438, 1991 WL 147544, at *2-3 (E.D.Pa. July 26, 1991) (action against USPS) (finding plaintiffs counsel's allegation that he had mailed request and an unsigned copy of request letter insufficient to prove receipt), aff'd, 961 F.2d 1566 (3d Cir.1992); Polk v. United States, 709 F. Supp. 1473, 1474 (N.D.Iowa 1989) (action against USPS) (holding that even if plaintiffs allegation that he mailed a request was accepted as true, this fact would not prove receipt); cf. Rhodes v. United States, No. 92-2016, 1993 WL 212495, at *2, 995 F.2d 1063 (4th Cir.1993) (Table) (action against Animal and Plant Health Inspection Service) (proof of mailing insufficient to establish receipt of initial notice of claim); Drazan v. United States, 762 F.2d 56, 58 (7th Cir.1985) (action against Veterans Administration) (same); Bailey v. United States, 642 F.2d 344, 346-47 (9th Cir.1981) (action against Air Force) (same).
There are two problems with the Government's argument and the authorities on which it relies. First, it is not clear that *195 the principle that a waiver of sovereign immunity must be strictly construed in favor of the sovereign applies to agency reconsideration regulations with the same force that it does to the statute itself or to the regulation defining "present[ment]" to mean receipt by the relevant agency. The evident purpose behind individual government agencies', such as the USPS's, adoption of reconsideration procedures is to facilitate the settlement of claims by asking the agency to take a second look at the claim, perhaps with additional evidence. The purpose is not to provide the Government with another opportunity to investigate the legitimacy of claims or to otherwise place a stumbling block in the path of plaintiffs. Any concerns about the Government's ability promptly to investigate claims is dealt with by § 2401(b)'s notice of claim requirement. Moreover, unlike the statutory notice of claim requirement which is mandatory, the regulatory reconsideration procedure is elective. As a result, the policy considerations that underlie the limitations periods set forth in § 2401(b) and which make strict construction appropriate, see Kubrick, 444 U.S. at 117, 100 S. Ct. at 357, are (at the very least) not obviously applicable to the USPS's reconsideration regulation.
Second, there is contrary authority on the instant question within this circuit, which, disturbingly, neither party in this action cited in its briefs. In Cordaro v. Lusardi, 354 F. Supp. 1147 (S.D.N.Y.1973) (Gurfein, J.), the district court, without discussion, applied the rebuttable presumption of receipt of a mailed letter in denying a Government motion to dismiss for failure to comply with the two-year limitations period for presentment, where a FTCA plaintiff submitted an affidavit from his attorney's secretary stating that she had sent a notice of claim to the relevant agency by regular mail seventeen months after the accident. See id. at 1148-49.[3]
Although Cordaro is not controlling authority, it is not necessary for the court to determine whether the decisions relied upon by the Government are more soundly reasoned, for the Government's motion may be decided on other grounds. Regardless of whether those latter decisions are correct in holding that the mailbox rule is not applicable in the FTCA context, they are clearly unwarranted in their apparent conclusion that a rejection of the mailbox rule renders plaintiffs' attorney's affidavit of no evidentiary value whatsoever. For instance, in Moya, the Tenth Circuit rejected an attorney's affidavit that he had mailed a request for reconsideration by certified mail, commenting: "There is no independent evidence in the record indicating that plaintiffs request was ever sent, let alone received by defendant." Moya, 35 F.3d at 503 (emphasis added); see also Gonzales, 1998 WL 39255, at *2 (using shudder quotes when referring to an attorney's affidavit as "`evidentiary' matter"). Although the public's and perhaps the judiciary's opinion of the integrity of the legal profession is said to be at an all-time low, I know of no legal rule under which an affidavit by an attorney is presumptively false. Nor is there any evidentiary rule that facts within the personal knowledge of a party's attorney that are sworn to by the attorney can be taken as established only if corroborated by non-party testimony or documentary evidence. Nor, finally, was any evidence offered in the cases cited by the Government or in this case that lawyers are as a matter of empirical fact more prone to perjury than other classes of persons. Therefore, in light of the penalties *196 of perjury that attach generally to individuals who submit false affidavits to the court,[4] and the disciplinary consequences that attach to attorneys who submit such affidavits,[5] Tannenbaum's and his secretary's affidavits are entitled to some weight, especially on summary judgment, see Burtnieks v. City of New York, 716 F.2d 982, 983-84 (2d Cir.1983) (holding that factual allegations of non-moving party must accepted as true on summary judgment if supported by admissible evidence).
Thus, regardless of whether the legal presumption of delivery and receipt applies in FTCA cases, plaintiffs' affidavits, if coupled with evidence regarding the actual rate at which the USPS successfully delivers first class mail, could establish as a matter of fact that, or at least create a genuine issue of material fact as to whether, Glover's request for reconsideration was delivered to the USPS claims office in Washington. Nothing in the USPS regulations precludes plaintiffs from proving receipt of a request in this manner, for 39 C.F.R. § 912.9 (or 28 C.F.R. § 14.2, for that matter) does not specify the means by which receipt must proven.[6] In addition, discovery regarding the USPS claims office's internal procedures for handling requests for reconsideration that have been delivered to the office might reveal possible evidence of negligent handling that would explain the absence of a record of receiving Glover's request and permit the inference that request was in fact received by the office, but mislaid, misfiled, or otherwise lost.[7]
In reaching this decision, I fully recognize that allowing proof to be taken on the issues of mailing and probability of accurate delivery might encourage unscrupulous attorneys who, through neglect, have failed to comply with § 2401(b)'s filing requirements to submit false affidavits stating that they mailed notices of claim or requests for reconsideration within the pertinent limitations periods.[8] It is most certainly not my intent to encourage perjury. On the other hand, a plaintiff with a meritorious claim should not be penalized by an unfortunate coincidence of negligence on the part of their attorneys in failing to take measures that would have created direct proof of receipt, see infra note 9, and negligence on the part of the government agency in mishandling their requests once received. Therefore, until proven otherwise, Tannenbaum's affidavit will be accepted as true, and plaintiffs will be given an opportunity to establish that the USPS claims office received Glover's request for reconsideration.
Accordingly, defendant's motion for summary judgment is denied with leave to renew upon the completion of certain limited discovery, which should be focused as follows: (1) plaintiffs may take discovery relevant to the issues of (a) the rate at which the USPS successfully delivers first class mail, (b) the USPS claims office's procedures for handling mail upon delivery to the Washington office, from the moment *197 a request letter arrives at the office until the point that the letter lands on a claims officer's desk, (c) the procedures whereby requests for reconsideration are logged into the USPS's claims database, (d) the rate at which requests for reconsideration that have been received by the claims office are misfiled or otherwise lost within the office, and (e) how often the claims office asserts that requests not sent by certified or registered mail were never received; and (2) the Government may take whatever discovery it deems relevant to these issues, including depositions of Tannenbaum and his secretary.
Plaintiffs' additional arguments in opposition to defendant's motion are without merit and, in light of the above ruling, moot.[9]
Conclusion
For the foregoing reasons, defendant's motion for summary judgment is granted with respect to Mrs. Glover's claim for loss of consortium, but denied with respect to Glover's claims for property damage and personal injury. The parties are given leave to conduct discovery within the guidelines stated above. At the close of discovery, defendant may renew its motion for summary judgment. If defendant elects to do so, both parties may submit supplemental briefs in accord with a schedule to be approved by the court.
SO ORDERED.
NOTES
[1] Neither party has provided a copy of the police report.
[2] Defendant styled the present motion as a motion to dismiss, or in the alternative, for summary judgment. Because defendant's motion relies on matters outside the pleadings, the motion will, pursuant to Federal Rule of Procedure 12(b), be construed as a motion for summary judgment. Plaintiffs have not objected to the court's deciding defendant's motion under Rule 56 and, indeed, expressly requested that the court apply the summary judgment standard to defendant's motion. (See Pl.'s Mem. Opp'n at 3.)
[3] After denying the Government's motion, the case was tried without a jury, and the district court entered a verdict for the Government. See Cordaro v. Lusardi, No. 72 Civ. 3644 MIG, slip op. at 2, 6 (S.D.N.Y. Jan. 7, 1974). Naturally, on appeal the Cordaro plaintiff did not challenge the district court's decision on the motion to dismiss, see Brief for Appellant, Cordaro v. Lusardi, No. 74-1347 (2d Cir.), and the Second Circuit affirmed without an opinion, see 513 F.2d 624 (2d Cir.1975) (Table), thus never passing on the propriety of the district court's mailbox rule holding.
[4] See 18 U.S.C. § 1623.
[5] See N.Y. Judiciary Law § 90(2) (providing, inter alia, for disbarment of attorneys who violate state bar disciplinary rules). See generally 22 N.Y.C.R.R. § 1200.33(a)(4)-(6) (New York Code of Professional Responsibility Disciplinary Rules regarding the making of knowingly false statements and knowing presentation of false evidence by attorneys).
[6] This is something that Congress and presumably agencies such as the USPS know how to do. Cf., e.g., Deutsch v. Commissioner, 599 F.2d 44, 46 (2d Cir.1979) (holding that 26 U.S.C. § 7502 provides exclusive list of means by which taxpayer may prove the date on which a tax court petition was mailed, hence "filed").
[7] By the same token, evidence that the USPS's first class mail delivery rate is sufficiently high and the USPS claims office's intra-office mail handling is sufficiently careful, would lead to the rejection of Glover's claim.
[8] This apprehension may well explain the Moya's court remarks regarding the evidentiary value of attorney's affidavits on the issue of mailing.
[9] Plaintiff describes the requirement that he prove actual receipt of his request as an "impossible burden." (Pl.'s Mem. at 3.) Clearly, it is not. Glover's attorney could have easily attached a return receipt card to his request when he mailed it and could have thereby obtained direct proof of receipt. Cf. Bailey, 642 F.2d at 347 (finding no excuse for plaintiffs' lack of proof of receipt of their notice of claim where plaintiffs' counsel "did not send it by certified or registered mail, a well known and easy way to establish receipt of the claim"). In his affidavit, plaintiff's attorney responds to this obvious suggestion by pointing out that the FTCA and the USPS regulations do not expressly require that notice be sent by certified or registered mail and explaining that he just decided to avail himself of the option of sending the notice by regular mail. (See Tannenbaum Aff. ¶ 9; see also Pls.' Mem. Opp'n at 10.) Ironically, in their brief, plaintiffs observe that "[t]he failure of the Post Office to properly deliver the mail is not an impossible event; it is something we have all experienced." (Pls.' Mem. Opp'n at 13.) In light of this acknowledged fact, when an attorney is handling a claim he asserts is worth $25 million and it is an absolute prerequisite to bringing that claim to court that the attorney prove that the Government received a request for reconsideration of the administrative denial of that claim, it is in all probability legal malpractice not to send the notice by certified or registered mail. Cf. DellaGala v. Brown, 178 Misc. 2d 445, 450, 679 N.Y.S.2d 526, 529 (N.Y.City Ct., 1998) (holding that attorney committed legal malpractice by sending his client $100,000 certified check by regular mail, rather than certified or registered mail, where settlement check was lost in the mail). To the suggestion that plaintiffs' attorney could have sent the request by certified mail, plaintiffs merely pose the rhetorical question: "But what happens when the post office does not return the receipt?" (Pls.' Mem. Opp'n at 9.) Again, the answer is that a competent attorney handling a claim for such "enormous and permanent injuries," (id. at 11), would make an inquiry with the government agency to determine whether it had received the request, if more than a couple of weeks had passed without receiving the return receipt. Moreover, plaintiffs' attorney could have easily placed a telephone call to the USPS claims office to verify whether it had received his request when, after several months had passed, he had received no acknowledgment of, or decision on, the request.
For the same reasons, plaintiffs' argument that Glover's claim should not be dismissed on summary judgment given that all of the evidence relevant to whether the request for reconsideration was received is in the possession and control of the moving party, also fails to state a ground for denying defendant's motion. As defendant aptly responds, the only reason that plaintiffs possess and control no evidence relevant to the issue receipt is that plaintiffs' attorney failed to take the steps necessary to create such evidence, e.g., attaching a return receipt card to the request for reconsideration. (See Def.'s Reply Mem. at 5.) Plaintiffs' attorney's own lack of diligence and care in handling his clients' claims is no reason to deny defendant's motion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562156/ | 111 F. Supp. 2d 551 (2000)
UNITED STATES of America
v.
David M. GRIGGS, a/k/a David Briggs, a/k/a David Greggs, a/k/a James Brook, a/k/a David Drummond, and Eric Spencer Saunders, a/k/a Eric Spencer, Defendants.
No. 4:CR-00-0072.
United States District Court, M.D. Pennsylvania.
August 15, 2000.
*552 John J. McCann, Assistant U.S. Atty., United States Attorney's office, Williamsport, PA, for Government Counsel.
D. Toni Byrd, Assistant Federal Public Defender, Williamsport, PA, for defendant Saunders.
Douglas B. Chester, Spring Mills, PA, for defendant Griggs.
MEMORANDUM
McCLURE, District Judge.
BACKGROUND:
On March 8, 2000, a grand jury sitting in the Middle District of Pennsylvania returned an indictment charging defendants David M. Griggs and Eric Spencer Saunders with possession with intent to distribute in excess of 50 grams of cocaine base (crack cocaine), in violation of 21 U.S.C. § 841(a)(1), (b)(1)(A)(iii). Both defendants entered pleas of not guilty at arraignment on March 29, 2000 (Griggs), and April 11, 2000 (Saunders). Jury selection currently is scheduled for September 6, 2000.
Before the court is a motion by Saunders to compel discovery. A pending motion by Saunders to suppress evidence will be addressed by separate order, an evidentiary hearing on the motion having been held August 11, 2000.
DISCUSSION:
I. STATEMENT OF FACTS
Because this is a criminal matter, of course, no record has been created from which the court may recite established facts.[1] The following facts are presented in the parties' briefs and are set forth only for the purpose of placing the legal discussion into context. Factual matters relating to the issue of probable cause are omitted.
*553 On February 29, 2000, at approximately 9:15 p.m., Corporal Terrance Jankouskas of the Pennsylvania State Police was patrolling Interstate Highway 80 in Luzerne County, Pennsylvania. He conducted a traffic stop of a vehicle driven by Saunders with Griggs, the owner, in the passenger seat. After obtaining consent to search the vehicle, Jankouskas found a quantity of crack cocaine hidden in a hoagie[2] wrapper. Saunders and Griggs were arrested and given their Miranda warnings. Saunders admitted to driving Griggs to Philadelphia to get the crack and to being a user himself. At the Hazleton State Police Barracks, Saunders signed a written waiver of his Miranda rights, then gave a full statement inculpating himself. According to the government, he admitted to having transported crack for Griggs on previous occasions and to knowing that the crack was in the vehicle on this occasion.
On May 24, 2000, counsel for Saunders was given copies of the relevant State Police report concerning the instant charges, copies of a laboratory report showing that 82.8 grams of crack was found, and the substance of all statements of the defendant. The notes made by the interrogating officers were not provided, however.
II. DISCOVERY OF ITEMS SOUGHT
Saunders seeks three items or classes of items: a written warning issued after the traffic stop by the arresting officer; information relating to open case files and investigations which are referenced in the police reports provided in discovery; and handwritten notes of the interview of Saunders following his arrest.
The government indicates in its brief in opposition to the motion to compel that the written warning relating to the traffic stop has been provided, and, indeed, the same was presented as the government's first exhibit at the suppression hearing. This request is therefore moot.
Saunders cites no authority for the proposition that he is entitled to discovery of investigative reports generally, and we are aware of none. That request will be denied.
The government opposes disclosure of the rough notes of interview because it already has provided a copy of a typewritten version of the statement prepared from the rough notes. The governing rule provides in part:
Upon request of a defendant the government must disclose to the defendant and make available for inspection, copying, or photographing: ... that portion of any written record containing the substance of any relevant oral statement made by the defendant whether before or after arrest in response to interrogation by any person then known to the defendant to be a government agent; ...
Fed.R.Crim.P. 16(a)(1)(A). The statement which would be contained in the rough notes was made to a Trooper with the Pennsylvania State Police, not a "government agent." See generally United States v. Brazel, 102 F.3d 1120, 1150 (11th Cir.) (evidence possessed by local law enforcement offices not in possession of "government"), cert. denied, 522 U.S. 822, 118 S. Ct. 78, 79, 139 L. Ed. 2d 37 (1997); United States v. Ramos, 27 F.3d 65, 71-72 (3d Cir.1994) (municipal police officers not federal agents for purposes of rule requiring preservation of rough notes of interview); Fed.R.Crim.P. 54(c)("attorney for the government" refers to Attorney General, U.S. Attorney, and their assistants, and attorneys authorized to act on behalf of territories); 18 U.S.C. § 6 (for purposes of Title 18, "agency" refers to department, independent establishment, etc., of the United States). But see United States v. Burns, *554 15 F.3d 211, 214 (1st Cir.1994) (noting in dicta that a "government agent" would include persons with criminal law enforcement responsibilities, not limited to federal officers; the latter portion of the definition is dicta because the agent in question was a Postal Service employee). While it is not clear that handwritten notes of an interview must be disclosed under Rule 16(a), as opposed to Brady v. Maryland, see United States v. Coe, 220 F.3d 573, 583 (7th Cir.2000) (rough notes need not be provided under Rule 16 if government provides written report containing all information in agent's notes), it is clear that Saunders would not have known that the State Troopers were agents or potential agents of the federal government at the time that he gave the statement. Cf. United States v. Bailey, 123 F.3d 1381, 1399 (11th Cir. 1997) (oral statement not subject to disclosure because defendant did not know that person to whom he gave statement was a government agent).
We believe that, at a minimum, the "agent" must be (1) an agent employed by a federal entity, (2) a person acting on behalf of a federal entity such as a confidential informant, or (3) a person allied with the prosecution once a federal investigation or prosecution commences, such as a state officer working on a joint task force or with the U.S. Attorney's Office. Since, at the time that Saunders' statement was given, the Troopers did not fit any of these descriptions, they were not "government agents."
We are constrained to note, however, the fundamental unfairness which the operation of Rule 16(a)(1)(A) works in this case. If Saunders had made his statement to a DEA agent or an FBI agent, the notes likely would be discoverable, despite Coe, because the language of the rule is to the effect that any written record of an oral statement by the defendant to a known government agent must be disclosed. See United States v. Fritz, No. 4:CR-99-0042 (M.D.Pa. Aug. 9, 1999) (Muir, J.).[3] It is only because Saunders' statement was made to a state law enforcement officer that the notes are not discoverable.
In addition to that unfairness, there is the likelihood that the rough notes contain impeachment material. See Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963) (government must disclose evidence which is exculpatory and material to the defense); United States v. Bagley, 473 U.S. 667, 105 S. Ct. 3375, 87 L. Ed. 2d 481 (1985) (impeachment evidence is Brady material). In Ramos, the Third Circuit recognized the value of rough notes as impeachment material. 27 F.3d at 70. See also United States v. Pelullo, 105 F.3d 117, 122 (3d Cir.1997). However, it stopped short of holding that rough notes must be presumed to constitute Brady material, instead concluding that the defendant in that case had failed to demonstrate the exculpatory nature of destroyed notes, and that concluding that the notes were Brady material was speculation. Ramos at 71.
The problem here is that the court has no opportunity to undertake the usual Brady analysis, i.e. to consider whether the questioned evidence would have been favorable to the defense and whether there is a reasonable probability that, had the evidence been disclosed to the defense, the outcome of the trial would have been different. Pelullo at 123. See also United States v. Kimssy, No. 4:CV-99-0252, slip op. at 5 (M.D.Pa. May 17, 2000) (McClure, J.; noting difficulty of reviewing pre-trial motion for Brady material due to lack of context; citing Strickler v. Greene, 527 U.S. 263, 266, 119 S. Ct. 1936, 144 L. Ed. 2d 286 (1999)). We have not been provided with a copy of the rough notes and we do *555 not know the defense theory of the case (to determine the impeachment value or otherwise exculpatory nature of the notes), nor have we heard the other evidence in the case (to determine the materiality of the notes).
Also, we question our authority to order disclosure of potential Brady material under these circumstances, since the initial decision regarding whether to make such disclosure rests with the government.
The Third Circuit appears to take a more restrictive approach to discovery in criminal matters than other Courts of Appeals. In Ramos, the Third Circuit pointed out that Rule 16 delineates the categories of material which are discoverable, supplemented only by statutory pronouncements and the Due Process Clause. Ramos at 68.
In contrast, the Fifth Circuit has recognized an inherent authority on the part of a district court to take actions which are "reasonably useful to achieve justice." United States v. Webster, 162 F.3d 308, 339 (5th Cir.1998) (citation omitted), cert. denied, ___ U.S. ___, 120 S. Ct. 83, 145 L. Ed. 2d 70 (1999). This power would include the administration of criminal discovery. Id. While a district court could not exercise this power in contravention of a rule, statute, or constitutional provision, it could exercise its power in a manner consistent with such authorities. Id. (citing Fed.R.Crim.P. 57(b)). The Fifth Circuit also pointed out that federal courts have "supervisory powers" to "formulate procedural rules not specifically required by the Constitution or the Congress ... to preserve judicial integrity by ensuring that a conviction rests on appropriate considerations validly before the jury..." Id. (quoting United States v. Hasting, 461 U.S. 499, 505, 103 S. Ct. 1974, 76 L. Ed. 2d 96 (1983)).
Given the limiting language in Ramos, it seems unlikely that the Third Circuit would recognize as broad an authority to regulate discovery or countenance a wide-ranging exercise of any inherent authority on the part of the district courts in such matters. However, we think that the language of Rule 57(b) does give some authority to permit discovery not specifically required by Rule 16.
We emphasize, however, that our holding is limited. We have taken what may be considered a narrow view of "government agent" as that term is used in Rule 16(a)(1)(A). Because of that view, this defendant is not entitled under Rule 16 to discovery material which would be available to other defendants in similar situations, with the only difference being the employer of the person to whom a statement is given. That is, another defendant may be arrested in the same manner as Saunders, be charged with the same crime as Saunders, give the same statement in response to the same questions during interrogation, and have the arresting agent take the same notes, and yet the notes are discoverable in one case and not the other. In addition, the notes are a matter of considerable importance to a defendant, given the potential (actually, likelihood) that they constitute, or at least contain, Brady material.
Thus, our conclusion that the notes should be the subject of discovery is more than merely holding that ordering the notes is consistent with and does not violate the Federal Rules of Criminal Procedure and the Constitution. We believe that ordering disclosure of the notes is necessary to effectuate the purpose of Rule 16(a)(1)(A)[4] and to prevent a likely Brady problem, in circumstances which are unfair on their face. It is only under such conditions that we believe a limited exercise of our limited authority is appropriate, *556 and this order should not be construed as broadening discovery in any significant way.
Saunders' request for the rough notes of the interrogation by the Pennsylvania State Police after he was arrested on February 29, 2000, will be granted.
* * * * * *
An order consistent with this memorandum will issue.
ORDER
For the reasons stated in the accompanying memorandum, IT IS ORDERED THAT:
1. Defendant Eric Spencer Saunders' motion (record document no. 31) to compel discovery is granted in part and denied in part.
2. The motion insofar as it constitutes a request for discovery of the written warning issued by the arresting officer on February 29, 2000, is denied as moot.
3. The motion insofar as it constitutes a request for discovery of investigative reports relating to other matters is denied.
4. The motion insofar as it constitutes a request for discovery of the written notes taken by the officer or officers who interrogated Saunders on February 29, 2000, otherwise denominated the officers' "rough notes," is granted.
5. The government shall provide copies of the officers' rough notes, or shall make the rough notes available for inspection and copying by counsel for Saunders, within fifteen days from the date of this order.
6. The government may redact from the rough notes any material that is not the substance of any relevant oral statement by Saunders.
NOTES
[1] On August 11, 2000, the court heard testimony and received exhibits regarding the motion to suppress, but has not yet ruled on the motion. That evidence is not utilized in this memorandum.
[2] For readers unfamiliar with the word, "hoagie," also spelled "hoagy," is a regional variation of "hero sandwich," used in Pennsylvania and New Jersey, but primarily Philadelphia. THE RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE 908 (2d ed.1987).
[3] In Fritz, Judge Muir ordered disclosure of the notes of interrogation by "law enforcement agents" under Rule 16(a)(1)(A) because they contained the substance of the defendant's oral statement. The issue of whether the law enforcement agents were federal agents was not raised.
[4] See Rule 16, Advisory Committee Notes, 1991 Amendment (Rule 16(a)(1)(A) expanded to cover oral statements by defendant in response to interrogation because "the defendant has some proprietary interest in statements made during interrogations regardless of the prosecution's intent to make any use of the statements"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562170/ | 111 F. Supp. 2d 1164 (2000)
Beverly A. MEDINA, as Personal Representative for the estate of John R. Medina, Plaintiff,
v.
FOUR WINDS INTERNATIONAL CORPORATION, a Delaware corporation; and Thor Industries, Inc., a Delaware corporation, Defendants.
Dolores A. Gonzales, as Personal Representative for the estate of Levi E. Gonzales, Plaintiff,
v.
Four Winds International Corporation, a Delaware corporation; and Thor Industries, Inc., a Delaware corporation, Defendants.
Nos. 99-CV-246-B, 99-CV-247-B.
United States District Court, D. Wyoming.
August 11, 2000.
*1165 R. Daniel Fleck, Spence, Moriarity & Schuster, Jackson, WY, for plaintiff.
Patrick J. Murphy, Williams, Porter, Day & Neville, Casper, WY, for defendant.
ORDER GRANTING THOR INDUSTRIES, INC.'S MOTIONS FOR SUMMARY JUDGMENT
BRIMMER, District Judge.
This case stems from an accident involving a recreational vehicle owned by Four Winds International Corporation ("Four Winds"). The matter is before the Court on motions by Defendant Thor Industries, Inc. ("Thor") for summary judgment, filed by Thor in each of the above captioned cases, 99-CV-246 and 99-CV-247. Thor contends that the Court lacks personal jurisdiction over it because its only connection to Wyoming is its status as the parent company of the other Defendant in this case, Four Winds. Plaintiff counters that the parent company, Thor, is accountable for the acts of Four Winds within the forum state either based on its control of Four Winds or its status as Four Winds' alter ego. The motions came before the Court for a hearing on July 6, 2000. In a July 10, 2000 Order, this Court stayed decision on Thor's summary judgment motions pending further discovery responses by Thor pertaining to the corporate relationship between Thor and Four Winds. After reading Plaintiffs' supplemental submission and the other briefs on file, hearing oral arguments, and being fully advised in the premises, the Court hereby FINDS and ORDERS as follows:
Background
In the accident at the heart of this case, a recreational vehicle ("RV") owned by Four Winds and driven by Gail H. Baker crossed the median of Interstate 80 near Rawlins, Wyoming, striking the vehicle that John R. Medina was driving and in which Levi E. Gonzalez was a passenger, killing Messrs. Medina and Gonzales. Mr. Baker died in the fire that followed the crash. Mr. Baker had a history of heart disease which may have precipitated the accident. The RV was a new RV manufactured by Four Winds, and was being transported from Four Winds' manufacturing facility in Elkhart, Indiana to Reno, Nevada. Plaintiffs bring negligence claims against Four Winds and its corporate parent, Thor, arguing essentially that Defendants were negligent in hiring and retaining Mr. Baker, and in failing to properly train and supervise him. Plaintiffs further seek recovery from Defendants under the theory of respondeat superior based on the negligent driving of Mr. Baker.
Analysis
At issue in the current motion is whether this Court has personal jurisdiction over Thor. Where a court's in personam jurisdiction is challenged,
[t]he plaintiff bears the burden of establishing personal jurisdiction over the defendant. Prior to trial, however, when a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing. The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting *1166 affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.[1]
Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir.1984) (citations omitted). To establish personal jurisdiction, a plaintiff must show both that jurisdiction is proper under the forum state's long-arm statute and that exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. See Equifax Servs., Inc. v. Hitz, 905 F.2d 1355, 1357 (10th Cir.1990). Wyoming's long-arm statute provides that "[a] Wyoming court may exercise jurisdiction on any basis not inconsistent with the Wyoming or United States constitution." Wyo.Stat. § 5-1-107(a) (1999). Thus, in Wyoming, "this two part inquiry collapses into a single due process analysis." Rambo v. American Southern Ins. Co., 839 F.2d 1415, 1416 (10th Cir.1988) (applying Oklahoma's similar long-arm statute); see also Dobbs v. Chevron U.S.A., Inc., 39 F.3d 1064, 1067-68 (10th Cir.1994) (recognizing that the limits of Wyoming's long arm statute are coextensive with federal due process requirements).
"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful `contacts, ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985) (quoting International Shoe v. Washington, 326 U.S. 310, 319, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). To stay within due process limitations, a forum has personal jurisdiction only over defendants that have "certain minimum contacts [with the jurisdiction] ... such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316, 66 S. Ct. 154 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 85 L. Ed. 278 (1940)).
In this case, there is no dispute that Four Winds, as the employer of Gail Baker and the owner of the RV involved in the accident, is subject to personal jurisdiction in Wyoming. More difficult is the question of whether Thor is likewise subject to personal jurisdiction. While Plaintiffs are less than clear on the theories upon which they contend that such jurisdiction is proper, their argument appears to be twofold. First, Plaintiffs assert that Thor is subject to jurisdiction based on its own activities having an effect within the forum, those being primarily its alleged control and involvement in the hiring and retention of Mr. Baker. Second, Plaintiffs contend that jurisdiction over Thor is proper based on Four Winds's forum activities, under the theory that Thor is the alter ego of its wholly owned subsidiary, Four Winds.
1. Personal Jurisdiction Over Thor Based On Its Own Activities Causing Injury Within the Forum
In support of its argument that the Court lacks personal jurisdiction, Thor provides the affidavit of Walter Bennett, chief financial officer of Thor. Mr. Bennett avows, among other things, that Thor has no physical presence in Wyoming, owns no assets in Wyoming, and transacts no business in Wyoming. While these statements are uncontroverted, Plaintiffs counter that Thor is liable, and therefore subject to personal jurisdiction, based on its actual control of Four Winds. It has been recognized that tortious conduct perpetrated outside the forum state causing injury within the forum can serve as a basis for personal jurisdiction. See Jenner & Block v. District Court, 590 P.2d 964, 965-66 (Colo.1979). Under Wyoming law, a parent company can be held liable for the acts of *1167 its subsidiary where it "assume[d] some independent legal duty by retaining or exercising control over some aspect of the operation of a subsidiary corporation which was involved in the incident resulting in the plaintiff's injuries." Fiscus v. Atlantic Richfield, 773 P.2d 158, 160 (Wyo. 1989).
In this case, Plaintiffs allege essentially that Defendants were negligent in hiring and retaining Gail Baker, and in failing to properly train and supervise him. (Pls.' Compl. ¶ 25.) Further, Plaintiffs seek recovery from Defendants under an agency theory based on the negligent driving of Mr. Baker, though it is undisputed that Mr. Baker was an employee of Four Winds, and not of Thor. (Id.) Thus, Thor could be held liable for Four Winds' negligent hiring and supervision only if Thor retained control over Four Winds' hiring practices or day-to-day operations with respect to transportation of recreational vehicles. See Wessel v. Mapco, Inc., 752 P.2d 1363, 1368 (Wyo.1988) (grandparent company not liable for injuries of employee of subsidiary where there was no evidence that grandparent corporation retained or assumed responsibility for site safety). Plaintiffs appear to be arguing that negligent acts attributable to Thor based on its control of Four Winds' hiring and retention of Mr. Baker serve as the basis for personal jurisdiction over Thor.
Mr. Bennett avers in his affidavit that Thor does not retain control over Four Winds' day-to-day operations, that Thor and Four Winds do not share operating management personnel, and that Thor exercises no control over Four Winds' labor relations or personnel hiring and termination decisions. (Bennett Aff. ¶¶ 5-7.) Further, Mary K. Dodson, controller for Four Winds, clearly described in her affidavit how Mr. Baker was hired in the parts department by a Four Winds supervisor and was later transferred to the employee driving program, all with no input by Thor. (Dodson Dep. at 20-22.) Likewise, Amy Anglemyer, the dispatcher for Four Winds' transportation operations, identified those involved in driver hiring decisions as herself, Ms. Dodson, and Jeff Kime, president, all Four Winds employees. (Anglemyer Dep. at 18.) Ms. Anglemyer was considered the supervisor of the drivers and was responsible for day-to-day operation of the employee transportation program. (Id. at 6-7, 22.) Transportation safety issues were likewise handled exclusively by Four Winds employees, principally Larry White, facilities manager, and Dan Piennette, safety manager. (Dodson Dep. at 10; White Dep. at 12.) Mr. White described his contact with Thor personnel as "Fvery minimal," limited to answering questions for insurance inspections and the like, and stated that he does not take direct orders from Mr. Bennett. (White Dep. at 25-26.) This evidence of a lack of control by Thor over the aspect of Four Winds' business involved in the lawsuit trumps the generalized allegations made in Plaintiffs' complaints, requiring Plaintiffs to come forward with evidence in order to establish a prima facie case of personal jurisdiction. Kennedy v. Freeman, 919 F.2d 126, 128 (10th Cir.1990).
In seeking to make out a prima facie case that Thor controlled Four Winds' day-to-day transportation operations, Plaintiffs point first to the fact that the invoice for the RV involved in the accident indicated that payment should be sent to Four Winds in care of Thor at a Chicago, Illinois address. (Pls.' Combined Resp.Ex. 20.) This piece of evidence, at most, supports the inference that Thor handled at least some accounting functions for Four Winds. The law is clear, however, that the parent becomes liable only where it exercises control over the aspect of the subsidiary's operation that caused the plaintiff's injury, Fiscus, 773 P.2d at 160, which in this case was obviously not the accounting function. Plaintiffs next rely on a letter written by Ms. Dodson to Four Winds drivers which states that the company driver program in which Mr. Baker worked was being terminated at the behest of the parent company, Thor. (Pls.' Combined Resp.Ex. *1168 21.) Ms. Dodson explained in her deposition that the decision to end the employee driver program was actually made solely for Four Winds, but that Ms. Dodson blamed "corporate" for the decision in order to deflect responsibility for the fact that several employees would lose their jobs. (Dodson Dep. at 28.) Nevertheless, resolving all factual disputes in favor of Plaintiffs, the Court accepts as true that Thor made the decision to terminate the employee driver program. Even if Thor did end the employee driver program, that fact does not bring into dispute the substantial evidence in the record that Thor exercised no control over Four Winds' hiring and termination decisions, and took no part in the decision to hire Mr. Baker. In light of the uncontroverted evidence that Thor was not involved in Four Winds' day-to-day operations, Plaintiffs have failed to establish a prima facie case that Thor independently had minimum contacts with Wyoming based on its control of the aspect of Four Winds' operations causing Plaintiffs' injuries. To conclude otherwise would go well beyond resolving factual disputes in favor of Plaintiffs, and would instead allow idle speculation to triumph over concrete evidence.
2. Personal Jurisdiction Over Thor as the Alter Ego of Four Winds
Even where a parent corporation does not, by itself, have minimum contacts with the forum state, it can nevertheless be subject to personal jurisdiction if it is the alter ego of a subsidiary that does have such contacts. See PanAmerican Mineral Servs., Inc. v. KLS Enviro Resources, Inc., 916 P.2d 986, 990 (Wyo.1996). In determining whether a parent corporation is subject to personal jurisdiction as the alter ego of its subsidiary, Wyoming courts apply the same standards for piercing the corporate veil as are applied under that doctrine outside the personal jurisdiction context. See PanAmerican, 916 P.2d at 990 (citing Amfac Mechanical Supply Co. v. Federer, 645 P.2d 73 (Wyo.1982) (outlining standards for piercing the corporate veil under Wyoming law)). Thus, Thor can be subjected to personal jurisdiction for the acts of Four Winds within the forum provided that Plaintiffs can make a prima facie showing that the corporate veil could be pierced under Wyoming law. A court applying the doctrine of piercing the corporate veil must begin with the general rule that a corporation is a separate legal entity from its owners. See Atlas Constr. Co. v. Slater, 746 P.2d 352, 355 (Wyo.1987). This general rule holds true for a parent company, which "is entitled to the same legal separation from its subsidiary, as well as resulting protection from liability, that any individual shareholder enjoys with respect to a corporation in which stock is held." Fiscus, 773 P.2d at 160. On the other hand, in certain limited circumstances, "furtherance of public policy or the ends of justice" warrant disregard of corporate separateness, Opal Mercantile v. Tamblyn, 616 P.2d 776, 778 (Wyo.1980), which disregard is known as "piercing the corporate veil." "For a corporation to be accorded treatment as a separate entity, it must exist and function as such and not be the alter ego of the person owning and controlling it and cannot be used or ignored just to fit the convenience of the individual." Amfac, 645 P.2d 73, 79 (Wyo.1982). However,
[b]efore the corporate veil can be pierced, the evidence must demonstrate that "the corporation is not only influenced and governed by `a particular' person, but that there is such a unity of interest and ownership that the individuality, or separateness, of `such' person and corporation has ceased; `and' that the facts are such that an adherence to the fiction of the separate existence of the corporation would, under the particular circumstances, sanction a fraud or promote injustice."
Jackson Hole Traders, Inc. v. Joseph, 931 P.2d 244, 251 (Wyo.1997) (quoting Minifie v. Rowley, 187 Cal. 481, 202 P. 673, 676 (1921)). In the context of a parent corporation and its subsidiary, unity of ownership and interlocking directorates, standing alone, are not a sufficient basis upon which *1169 to pierce the corporate veil. Rather, a parent corporation and its subsidiary "are treated as separate and distinct legal persons even though the parent owns all the shares in the subsidiary and the two enterprises have identical directors and officers. Such control, after all, is no more than a normal consequence of controlling share ownership." Atlas, 746 P.2d at 355-56 (quoting H. Henn and J. Alexander, Laws of Corporations, § 148 (1983)). Beyond mere unity of ownership, Wyoming law requires "a higher showing of unfairness and disregard the separate identities only where doing so will `prevent fraud, injustice, or wrong.'" McCulloch Gas Transmission Co. v. Kansas-Nebraska Natural Gas Co., 768 F.2d 1199, 1201 (quoting Wyoming Constr. Co. v. Western Cas. & Sur. Co., 275 F.2d 97, 103 (10th Cir.1960)); see also Langdon v. Lutheran Brotherhood, 625 P.2d 209, 213 (Wyo.1981) (corporate veil is pierced only where the failure to do so will "`defeat public convenience, justify wrong, protect fraud, or defend crime.'") (quoting 1 W. Fletcher, Cyclopedia of the Law of Private Corporations § 41, at 166 (Rev.Vol.1974)).
Examples justifying piercing the corporate veil include a controlling shareholder's diversion of corporate assets for his own benefit, and to the detriment of creditors. See Yost v. Harpel Oil Co., 674 P.2d 712, 717-19. Likewise, "[a]n obvious inadequacy of capital, measured by the nature and magnitude of the corporate undertaking" militates strongly in favor of piercing the corporate veil. Amfac, 645 P.2d at 79. On the other hand, "the general proposition that it would be unfair and unjust to allow `the parent corporation' to control its subsidiaries and not stand accountable" is not a sufficient basis upon which to pierce the corporate veil. See McCulloch, 768 F.2d at 1201.
In the present case, there is no dispute that Four Winds has adequate insurance coverage and assets to cover any judgment likely to be rendered against it. Plaintiffs present no allegations or evidence that injustice or unfairness would result unless corporate separateness is disregarded. Under such circumstances, the corporate veil cannot be pierced and Thor cannot be subjected to personal jurisdiction based on the activities of its subsidiary.
Conclusion
Plaintiffs have failed to make a prima facie showing that Thor has sufficient minimum contacts with Wyoming to establish personal jurisdiction, either through its control of Four Winds or as Four Winds' alter ego. Therefore, the Court lacks personal jurisdiction over Thor and all of Plaintiffs' claims against Thor are DISMISSED WITHOUT PREJUDICE.
NOTES
[1] While Thor's motion is styled as one for summary judgment rather than as a motion to dismiss, the Court shall apply the same standard here. The Court further notes that Thor raised lack of in personam jurisdiction as an affirmative defense in its First Amended Answer, and therefore has not waived this defense. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539688/ | 720 F. Supp. 2d 738 (2010)
Sufernia MONTGOMERY
v.
SEARS ROEBUCK & CO., et al.
Civil Action No. 09-0584.
United States District Court, W.D. Louisiana, Monroe Division.
June 17, 2010.
*741 Charles D. Jones, Rosalind Denise Jones, Jones Law Group, Monroe, LA, for Sufernia Montgomery.
Cheryl D. Comer, Renee C. Culotta, Frilot, New Orleans, LA, for Sears Roebuck & Co. et al.
RULING
ROBERT G. JAMES, District Judge.
Pending before the Court is a Motion for Summary Judgment [Doc. No. 21] filed by Defendants Sears Roebuck & Co. ("Sears") and Anthony Gewin ("Gewin") against Plaintiff Sufernia Montgomery ("Montgomery"). For the following reasons, the Motion for Summary Judgment is GRANTED. However, Montgomery is granted leave to amend her Complaint to include a retaliation claim, which remains pending for trial.
I. FACTUAL AND PROCEDURAL BACKGROUND
Montgomery, a black female, was employed with Sears in Monroe, Louisiana, from July 22, 1975, to December 1, 2009, when she retired. [Doc. No. 21-3, pp. 10-11]. From September 1, 2006, through August 1, 2008, Gewin, a white male, was the Store Coach (i.e., Store Manager) at the Sears in Monroe. [Doc. No. 21-3, p. 12].
When Gewin became Store Coach, Montgomery was a Receiving Associate in the Receiving Department. [Doc. No. 21-3, pp. 14-15]. Shortly after Gewin began, he promoted Billy Clem ("Clem"), Montgomery's supervisor, from the Receiving Lead position to Operations Coach. [Doc. No. 21-3, pp. 16-17]. On February 25, 2007, Gewin and Clem promoted Montgomery to the Receiving Lead position. Id. In connection with this promotion, Montgomery's pay rose from $12.26 per hour to $13.00 per hour. Id.
In the Receiving Lead position, Montgomery was responsible for supervising and scheduling Receiving and Return-to-Vendor (RTV) Associates, and ensuring mat these departments ran smoothly. [Doc. No. 21-7]. The Receiving Lead at Sears is also responsible for merchandise pick-up, unloading merchandise from delivery trucks, merchandise staging, outbound shipments, and daily backroom activities. Id. As Receiving Lead, Montgomery reported directly to the Operations Coach. Id.
Clem was Operations Coach through July 2007. [Doc. No. 21-4, p. 34]. In August 2007, Clem left, and Mark Blann ("Blann"), who is white, became Operations Coach. [Doc. No. 21-4, p. 35]. The Operations Coach reports to the Store Coach (Gewin), and the Store Coach reports to the District Coach. [Doc. No. 21-8]. During the relevant time period, the *742 District Coach for Monroe was Karen Wheat ("Wheat"). [Doc. No. 21-3, p. 24].
The first reported problems between Montgomery and Gewin occurred in November of 2007. [Doc. No. 21-3, pp. 30-31]. On November 6, 2007, Montgomery called 88SEARS, a hotline for Sears employees, to complain about Gewin's treatment of her. [Doc. No. 21-3, p. 31]. Montgomery alleges she had never been given negative evaluations of her job performance before, but, beginning in November 2007, she received multiple written disciplinary actions and was encouraged to relinquish her supervisory role.
On November 21, 2007, Gewin issued Montgomery a written Policy Violation for insubordination that allegedly took place during a confrontation they had the previous day about her job performance. [Doc. No. 21-9]. Montgomery disputes that she said the statements attributed to her in this Policy Violation. [Doc. No. 21-3, p. 53].
From January 10, 2008, to February 10, 2008, Montgomery took vacation and personal leave, informing only the Human Resources Manager and 88SEARS. [Doc. No. 21-3, pp. 60-68]. On January 24, 2008, Gewin sent Montgomery a letter threatening to terminate her for job abandonment if she did not file a leave request form. [Doc. No. 21-15]. Montgomery filed the form and was allowed to return to work. Id.
On February 19, 2008, Montgomery and five other employees met with Wheat to discuss various problems with Gewin. [Doc. No. 21-3, p. 69; Doc. No. 22].
In mid-April, Gewin approached Montgomery, explained that he did not think she was doing her job as Receiving Lead properly, and offered her a non-leadership position at the same rate of pay. [Doc. No. 21-3, pp. 104-06]. Montgomery declined the position. [Doc. No. 21-3, pp. 106-07].
On April 21, 2008, Blann placed Montgomery on a written Performance Plan for Improvement (PPI). [Doc. No. 21-10]. The PPI gives performance-related reasons for its implementation, but Montgomery disputes all of them. [Doc. No. 21-3, p. 109].
On April 30, 2008, Montgomery filed a charge of discrimination against Sears with the Equal Employment Opportunity Commission ("EEOC"), alleging race discrimination and harassment and retaliation as a result of her complaints to Wheat at the February 19, 2008 meeting. [Doc. No. 25-2, p. 78].
On May 19, 2008, Montgomery called 88SEARS to report that she felt Gewin was retaliating against her because of her EEOC claim because he threatened to refuse to allow her to go on vacation (although he did allow her to go), reduced her work hours, and had her records moved to another location. [Doc. No. 25-2, Montgomery dep., pp. 122-27; Doc. No. 21-3, pp. 21-3, p. 130-33].
On June 4, 2008, Blann issued Montgomery a PPI Written Follow-Up stating that she had not corrected the problems noted in the original PPL [Doc. No. 23-1]. Montgomery disputes the accuracy of the contents of this document. [Doc. No. 21-3, pp. 134-36].
On July 31, Montgomery was issued an unsigned PPI Final Written Follow-Up, which listed further performance failures and noted that there was still no improvement on the problems addressed in the original PPI. [Doc. No. 21-12]. Montgomery disputes the accuracy of the contents of this document, as well. [Doc. No. 21-3, pp. 137-38].
Gewin left Sears in Monroe on August 1, 2008, and Blann left shortly afterward. [Doc. No. 21-3, p. 12]. At that time, Montgomery remained in the position of *743 Receiving Lead at the same rate of pay. [Doc. No. 138-40].
Gewin was replaced by Barbara Kelly Bryant, who told Montgomery that she would disregard all of her PPIs and start afresh with her. [Doc. No. 21-3, pp. 12-13]. Montgomery does not allege actionable harassment or retaliation after Gewin and Blann's departures. [Doc. No. 21-3, p. 11]. Montgomery retired voluntarily on December 1, 2009. [Doc. No. 21-3, pp. 10-11].
On January 9, 2009, the EEOC sent Montgomery a right-to-sue letter. [Doc. No. 21-14]. On April 7, 2009, Montgomery filed a Complaint [Doc. No. 1] against Gewin, Blann,[1] and Sears alleging that, during the time Gewin was her supervisor, he and Blann engaged in discriminatory employment practices against her and created a hostile work environment, in violation of Title VII of the Civil Rights Act of 1964. 42 U.S.C. §§ 2000e, et seq.
On April 9, 2010, Gewin and Sears filed a Motion for Summary Judgment. [Doc. No. 21]. On May 4, 2010, Montgomery filed a Memorandum in Opposition to Summary Judgment. [Doc. No. 25]. On May 13, 2010, Gewin and Sears filed a Reply to Montgomery's Opposition. [Doc. No. 28].
II. LAW AND ANALYSIS
A. Summary Judgment Standard
Summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The moving party bears the initial burden of informing the Court of the basis for its motion by identifying portions of the record which highlight the absence of genuine issues of material fact. Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir.2007). A dispute about a material fact is "genuine" if the evidence is such that a reasonable fact finder could render a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A fact is "material" if proof of its existence or nonexistence would affect the outcome of the lawsuit under applicable law in the case. Id. "[O]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Id.
If the moving party can meet the initial burden, the burden then shifts to the nonmoving party to establish the existence of a genuine issue of material fact for trial. Norman v. Apache Corp., 19 F.3d 1017, 1023 (5th Cir.1994). The nonmoving party must show more than "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). In evaluating the evidence tendered by the parties, the court must accept the evidence of the nonmovant as credible and draw all justifiable inferences in its favor. Anderson, 477 U.S. at 255, 106 S. Ct. 2505.
B. Analysis
Title VII of the Civil Rights Act of 1964 makes it "an unlawful employment practice for an employer ... to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(1). *744 This provision encompasses discriminatory behavior that creates a "hostile or abusive working environment." Harris v. Forklift Sys., Inc., 510 U.S. 17, 21, 114 S. Ct. 367, 126 L. Ed. 2d 295 (1993). It is also unlawful under Title VII for an employer to retaliate against an employee "because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter." 42 U.S.C. § 2000e-3(a).
In their Motion for Summary Judgment, Gewin and Sears argue that the Court should dismiss Montgomery's race-based harassment and discrimination claims because she has failed to establish a prima facie case. Gewin and Sears also argue that Gewin should be dismissed from this action because only employers, not individuals, can be held liable under Title VII. Finally Gewin and Sears argue in their Reply that Montgomery has improperly asserted retaliation and constructive discharge claims in her Opposition to Summary Judgment.
1. Discrimination
"To establish a prima facie case of employment discrimination [Montgomery] must establish that [s]he (1) is a member of a protected class; (2) was qualified for the position; (3) was subject to an adverse employment action; and (4) was replaced by someone outside the protected class, or, in the case of disparate treatment, ... that other similarly situated employees were treated more favorably." Bryan v. McKinsey & Co., Inc., 375 F.3d 358, 360 (5th Cir.2004).
The Fifth Circuit has held that an adverse employment action "includes only ultimate employment decisions such as hiring, granting leave, discharging, promoting, or compensating." Bouvier v. Northrup Grumman Ship Sys., Inc., 350 Fed. Appx. 917, 922 (5th Cir.2009) (internal quotation marks omitted) (citing McCoy v. City of Shreveport, 492 F.3d 551, 559 (5th Cir.2007)). Where an employee resigns, she may satisfy this requirement by proving constructive discharge. Faruki v. Parsons S.I.P., Inc., 123 F.3d 315, 319 (5th Cir.1997). Constructive discharge occurs when the employer makes the employee's working conditions "so intolerable that a reasonable employee would feel compelled to resign." Id. (citing Barrow v. New Orleans S.S. Ass'n, 10 F.3d 292, 297 (5th Cir.1994)). This is an objective test, and courts consider a variety of factors, including demotion; reduction in salary; reduction in job responsibilities; reassignment to menial or degrading work; badgering, harassment, or humiliation by the employer calculated to encourage resignation; or offers of early retirement that would make the employee worse off. Barrow, 10 F.3d at 297.
In their Motion for Summary Judgment, Gewin and Sears do not dispute that Montgomery is part of a protected class or that she was qualified for the position. They argue only that Montgomery cannot establish a prima facie case of employment discrimination because 1) she cannot show she was subjected to an adverse employment action, and 2) she cannot show she was replaced by someone outside her protected class or that other similarly situated employees were treated more favorably.
The Court agrees with Gewin and Sears that Montgomery has not shown an adverse employment action taken against her. In fact, Gewin initially promoted Montgomery, Although he later offered her a demotion at the same rate of pay, she refused the demotion, and no action was taken. Even after Gewin and Montgomery began having problems, Gewin and Blann's actions against her were the issuance *745 of a written Policy Violation, a PPI, and two PPI Written Follow-Ups. None of these actions constitute an adverse employment action. At the time Gewin and Blann left Monroe, Montgomery held a higher position and rate of pay than she had held when Gewin arrived.
Montgomery contends that her retirement from Sears on December 1, 2009, sixteen months after Gewin left the store, constitutes constructive discharge. Although she admits that Gewin's and Blann's alleged discrimination and harassment ended when they left, Montgomery argues that it influenced her decision to retire earlier than she would have otherwise. Even assuming that the alleged discrimination and harassment in fact influenced Montgomery's decision to retire, these circumstances do not meet the standard for constructive discharge. At the time Montgomery retired, no reasonable person would have found her working conditions, which had returned to normal, so intolerable they would have felt compelled to resign.
The Court finds that Montgomery has presented no genuine issue of material fact regarding whether she suffered an adverse employment action, and, therefore, she has failed to present a prima facie case for employment discrimination under Title VII.[2] Therefore, the Court GRANTS Gewin and Sears' Motion for Summary Judgment on this claim.
2. Hostile Work Environment
"To establish a prima facie case of hostile work environment, a plaintiff must show: (1) that [s]he belongs to a protected group; (2) [s]he was subjected to unwelcome harassment; (3) the harassment complained of was based on race; (4) the harassment affected a term, condition, or privilege of employment; and (5) the defendant knew or should have known of the harassment, yet failed to take prompt remedial action." Watkins v. Texas Dept. of Criminal Justice, 269 Fed.Appx. 457, 463 (5th Cir.2008). Where, as here, the harassment is allegedly committed by a supervisor with immediate or successive authority over the victim, the plaintiff need only satisfy the first four elements. Celestine v. Petroleos de Venezuella SA, 266 F.3d 343, 353 (5th Cir.2001) (citing Faragher v. City of Boca Raton, 524 U.S. 775, 807, 118 S. Ct. 2275, 141 L. Ed. 2d 662 (1998)).
Fifth Circuit precedent makes it clear that subjective belief of racial motivation cannot import racial animus into an individual's conduct, and, without objective evidence, is insufficient to create a prima facie claim for a hostile work environment under Title VII. See, e.g., Lyles v. Texas Alcohol Beverage Com'n, No. 09-20714, 379 Fed.Appx. 380, 384-85, 2010 WL 2103006, at *4 (5th Cir. May 24, 2010); Cavalier v. Clearlake Rehab. Hosp., Inc., 306 Fed.Appx. 104, 107 (5th Cir.2009); Johnson v. TCB Const. Co., Inc., 334 Fed. Appx. 666, 671 (5th Cir.2009); Garza v. Laredo Indep. Sch. Dist., 309 Fed.Appx. 806, 809 (5th Cir.2009); Baker v. FedEx Ground Package Sys., Inc., 278 Fed.Appx. 322, 329 (5th Cir.2008); Watkins, 269 Fed. Appx. at 464; Ellis v. Principi, 246 Fed.Appx. 867, 871 (5th Cir.2007); Harris-Childs v. Medco Health Solutions, Inc., 169 Fed.Appx. 913, 917 (5th Cir.2006).
Additionally, "[f]or harassment to be actionable, it must be sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment." Watkins, 269 Fed.Appx. at 464 (internal quotation *746 marks and citation omitted). In determining whether a workplace constitutes a hostile work environment, courts must consider "the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with the employee's work performance," Harris, 510 U.S. at 23, 114 S. Ct. 367,
In their Motion for Summary Judgment, Gewin and Sears argue that Montgomery has not established a prima facie case for a hostile work environment claim because 1) she has not established the alleged harassment was based on her race, and 2) she has not shown the alleged harassment was severe or pervasive.
Montgomery alleges that, during the time Gewin was her supervisor, he constantly harassed her about her job performance. She alleges Gewin had a "personal vendetta" against her and wanted to fire her, and, for this reason, he "nitpicked," worked against her, and tried to make her department "look bad" by doing tilings such as failing to hire enough assistants for her during the Christmas season and failing to require other employees to assist her. [Doc. No. 21-3, pp. 37, 48-49, 50-52, 73, 77-78 80-81]. Montgomery alleges that Gewin lied about her statements when he issued her a Policy Violation for insubordination and that he and Blann unfairly and untruthfully represented her job performance as unsatisfactory in her PPI and its two Written Follow-Ups. Montgomery also alleges that Gewin attempted to terminate her for job abandonment because she did not contact him or Blann when she took emergency leave in January of 2008, even though Gewin knew Montgomery had spoken with the Human Resources Manager and contacted 88SEARS. Montgomery further alleges that Gewin asked other employees to watch her without giving a reason. [Doc. No. 21-3, pp. 92-93].
Montgomery attempts to connect Gewin's behavior toward her to her race by alleging that she overheard Gewin tell Blann on Blann's first day that he needed to watch the Receiving Associates (who were black) because they were "lazy" and had to be made to work. [Doc. No. 21-3, pp. 42, 46-47, 74-75]. Montgomery alleges Gewin targeted her department when he watched Sears' Loss Prevention video feed and once asked a black employee to clean up after Gewin's child either spilled something or vomited in the store. [Doc. No. 21-3, p. 86-87, 92-93]. Gewin allegedly scheduled her to work every weekend, instead of rotating weekends as other employees were scheduled [Doc. No. 21-3, p. 78], and prohibited her from making her own schedule, as other Leads were allowed to do. [Doc. No. 21-3, p. 210]. Finally, Montgomery alleges that Gewin disciplined her when Blann, her white supervisor, improperly added hours to her schedule, but did not discipline Blann. [Doc. No, 25, p. 11].
Even if the Court accepts Montgomery's allegations as true, she has failed to establish racial animus. She has presented no evidence other than her own subjective belief that the actions allegedly taken against her were based on race, Montgomery has not alleged that Gewin or Blann ever used racial epithets or slurs toward her or anyone else, and nothing in the content of Gewin's statements or the written disciplinary actions suggests they were based on race. At the time Gewin and Blann worked at Sears in Monroe, its employee population was roughly 70%-90% black. [Doc. No. 21-3, p. 30, Doc. No. 21-4, p. 27]. During the time he was there, Gewin promoted Montgomery[3] and numerous *747 other black employees, and several of the leadership positions in the store were held by black employees. [Doc. No. 21-3, pp. 28-30, Doc. No. 21-4, p. 26-28], Montgomery has not alleged that Gewin did not allow the other black managers or Leads to make their own schedules, or that he did not schedule other black employees for rotating weekends off. Even if Gewin was motivated by racial animus when he allegedly watched the Receiving Department more closely on the Loss Prevention video feed and had a black employee clean up after his child, this conduct would not be severe or pervasive enough to constitute a hostile work environment.
In her Opposition to Summary Judgment, the only evidence Montgomery puts forth in response to Gewin and Sears' argument that she cannot show Gewin's treatment of her was based on her race is an incident in which she was disciplined because she went over her hours when Blann had added them to her schedule, but Blann was not. [Doc. No. 25, p. 11]. Montgomery argues that Blann, a white supervisor, was treated differently for this violation than she, a black supervisor. However, Blann was Montgomery's direct supervisor and had more responsibilities than she did. Further, the written disciplinary action to which Montgomery refers was issued the day before Gewin left Sears in Monroe, at a time when Gewin and Montgomery already had a long history of strife, and included other performance issues, as well. Montgomery and Blann were not similarly situated, therefore the fact that she was disciplined for this violation, while Blann was not, does not imply racial animus on Gewin's part.[4]
The Court finds that Montgomery has presented no genuine issue of material fact regarding whether Gewin's alleged harassment of her was based on her race, and therefore she has failed to present a prima facie case for a hostile work environment under Title VII. Therefore, the Court GRANTS Gewin and Sears' Motion for Summary Judgment on this claim.
3. Retaliation
In her Opposition to Gewin and Sears' Motion for Summary Judgment, Montgomery raises a retaliation claim under 42 U.S.C. § 2000e-3(a) that is not included in her Complaint.[5] The Fifth Circuit has recently stated that the Court must construe the inclusion of new theories of liability in oppositions to motions for summary judgment as a motion to amend the Complaint. Riley v. Sch. Bd. Union Parish, No. 09-30625, 379 Fed.Appx. 335, 341, 2010 WL 2008150, at *5 (5th Cir.2010).
*748 Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend shall be freely given "when justice so requires." A district court has discretion to consider numerous factors in determining whether to allow amendment, including undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the opposing party, and futility of amendment. Clark v. Douglas, No. 06-40364, ___ Fed.Appx. ___, ___, 2008 WL 58774, at *3 (5th Cir.2008).
In its Reply to Montgomery's Opposition to Summary Judgment, Gewin and Sears argue that the Court should not allow Montgomery to assert her retaliation claim because it is untimely, will require resetting the trial date and other deadlines, and because the claim is futile. Gewin and Sears argue that the claim is futile because Montgomery cannot establish a prima facie case of retaliation when she has not alleged an adverse employment action taken against her.
To establish a prima facie case for retaliation under Title VII, a plaintiff must establish that: "(1) [s]he participated in an activity protected by Title VII; (2) [her] employer took an adverse employment action against [her]; and (3) a causal connection exists between the protected activity and the adverse employment action." McCoy v. City of Shreveport, 492 F.3d 551, 556-57 (5th Cir.2007). The Supreme Court has held that, in the context of retaliation claims, an "adverse employment action" is any action that might have "dissuaded a reasonable worker from making or supporting a charge of discrimination." Burlington Northern & Santa Fe Ry. Co. v. White, 548 U.S. 53, 67-68, 126 S. Ct. 2405, 165 L. Ed. 2d 345 (2006) (internal quotation marks and citations omitted). The Court noted, however, that trivial harms, such as "petty slights, minor annoyances, and simple lack of good manners," do not deter reasonable victims of discrimination from complaining. Id. at 68, 126 S. Ct. 2405. The Court further noted that "the significance of any given act of retaliation will often depend upon the particular circumstances." Id. at 69, 126 S. Ct. 2405.
Much of the conduct Montgomery describes falls under the category of "petty slights, minor annoyances, and simple lack of good manners" which do not support a retaliation claim, such as threatening to take away vacation time and changing her schedule. However, some of Gewin's alleged conduct might well dissuade a reasonable person from pursuing an EEOC claim. Although Gewin and Montgomery had some history of confrontations and written disciplinary action prior to Montgomery's February 19, 2008 meeting with Wheat, Gewin had never placed Montgomery on a PPI until April 21, 2008. Montgomery alleges that the performance issues documented in the PPI and its June 4, 2008 and July 31, 2008 Written Follow-Ups are false or unfairly blame her for poor performance that Gewin and Blann knew was caused by failures of other people or departments. If her allegations are true, such conduct would constitute adverse employment action for the purposes of a retaliation claim.
The Court finds that Montgomery may be able to establish the other elements of a prima facie Title VII retaliation claim, as well. Montgomery argues that the February 18, 2008 meeting in which she complained about Gewin's alleged discriminatory harassment was a protected activity, and Gewin and Sears admit this is arguable. [Doc. No. 26-1, p. 8]. With regard to the causal connection between the adverse employment action and the protected activity, Montgomery has established that Gewin knew of the February 19, 2008 meeting, and that the start of the PPI process took place soon after. See Swanson *749 v. Gen. Servs. Admin., 110 F.3d 1180, 1181 (5th Cir. 1997). Additionally, Montgomery alleges Gewin told another employee he intended to "get rid of Montgomery and the other five employees who participated in the February 19, 2008 meeting with Wheat. [Doc. No. 25-2, Montgomery Dep., pp. 112-13].
The Court finds that amendment of Montgomery's Complaint to include a retaliation claim would not be futile. Although allowing Montgomery to amend her Complaint to assert a prima facie claim of retaliation will delay trial, Montgomery does not appear to be at fault for her attorneys' failure to include this claim in her original Complaint.[6] Therefore, the Court GRANTS Montgomery's implied motion to amend her Complaint. Montgomery must amend her Complaint to include a claim for retaliation within fourteen (14) days of the date of this Ruling.
4. Gewin's Liability
Finally, Gewin and Sears argue that the Court should grant summary judgment on Montgomery's Title VII claims against Gewin because Gewin is not an "employer" under Title VII.
Title VII imposes liability upon "employers" who discriminate. 42 U.S.C. § 2000e-2. "Employer" is defined in Title VII as "a person engaged in an industry affecting commerce who has fifteen or more employees for each working day ... and any agent of such a person...." 42 U.S.C. § 2000e(b). The Fifth Circuit has held that individuals who do not otherwise qualify as "employers" under Title VII cannot be held liable for its violation. Grant v. Lone Star Co., 21 F.3d 649, 651-53 (5th Cir.1994). Congress included agents in the definition of an employer "simply to incorporate respondeat superior liability into Title VII." Indest v. Freeman Decorating, Inc., 164 F.3d 258, 262 (5th Cir.1999) (citing Grant, 21 F.3d at 652).
Montgomery disagrees with Grant, arguing that other circuits allow individual liability under Title VII. However, this Court is bound by Fifth Circuit precedent.[7] Montgomery further asserts that her Complaint does not attempt to hold Gewin individually liable, but included him in the suit to invoke the principle of respondeat superior. However, a suit against an employer's agent is actually a suit against the employer under Title VII, and "a party may not maintain a suit against both an employer and its agent under Title VII." Id.
The Court has granted summary judgment to Gewin on Montgomery's discrimination and harassment claims, and he is also entitled to summary judgment on her retaliation claim. Gewin and Sears' Motion for Summary Judgment on Montgomery's remaining claims against Gewin is GRANTED.
III. CONCLUSION
For the foregoing reasons, Gewin and Sears' Motion for Summary Judgment is GRANTED, and Montgomery's claims for employment discrimination and hostile work environment under Title VII are dismissed, as are Montgomery's claims against Gewin.
Montgomery's implied motion to amend her Complaint is granted, and she has fourteen (14) days from the date of this *750 Ruling to amend her Complaint to include a claim for retaliation under Title VII against Sears. The September 23, 2009 Scheduling Order [Doc. No. 10] is hereby VACATED, and the Clerk of Court is instructed to issue a new Scheduling Order once Montgomery timely amends her Complaint.
NOTES
[1] Blann was later dismissed from this suit for Montgomery's failure to effect service within 120 days. [Doc. No. 15].
[2] Having found Montgomery did not suffer an adverse employment action, the Court does not consider here whether she presented a genuine issue of fact regarding whether a similarly situated employee was treated more favorably.
[3] Gewin and Sears argue that the Court should apply the "same actor inference" found in Brown v. CSC Logic, Inc., 82 F.3d 651, 658 (5th Cir.1996) to infer that, because Gewin promoted Montgomery, discrimination was not his motive in trying to fire her or get her to step down. As legal precedent, the use of this case is doubtful. See, e.g., Spears v. Patterson UTI Drilling Co., 337 Fed.Appx. 416, 420-21 (5th Cir.2009); Russell v. McKinney Hosp. Venture, 235 F.3d 219, 225-27 (5th Cir.2000). However, the fact that Gewin promoted Montgomery has been considered in the Court's analysis.
[4] The same result is reached with regard to the fact that no other Leads were placed on a PPI for not holding their Associates accountable or for going over their hours, as Montgomery was, because Montgomery offers no evidence that other Leads did these tilings. See Stone v. Parish of East Baton Rouge, 329 Fed.Appx. 542, 547 (5th Cir.2009) (In disparate treatment cases, "for employees to be similarly situated those employees' circumstances, including their misconduct, must have been nearly identical." (internal citations omitted)).
[5] Montgomery also raised a constructive discharge claim for the first time in her Opposition to Summary Judgment, but this claim is futile for the reasons the Court explained in Section II.B.1, above.
[6] Additionally, Montgomery alleged retaliation in her EEOC claim [Doc. No. 25-2, p. 78], and the principal facts relating to this claim were alleged in the Complaint. [Doc. No. 1, ¶¶ 14, 15].
[7] The Fifth Circuit has affirmed the holding in Grant in at least one recent decision. See Evans v. Greuschow, 314 Fed.Appx. 716, 718 (5th Cir.2009). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2539560/ | 706 F. Supp. 2d 1291 (2010)
CERTEX USA, INC., an Arizona corporation, Plaintiff,
v.
Jose VIDAL, Defendant.
Case No. 09-61818-CIV.
United States District Court, S.D. Florida.
April 8, 2010.
*1292 Brant Collin Hadaway, Chad Scott Purdie, Gary Edward Davidson, Diaz Reus Rolff & Targ LLP, Miami, FL, for Plaintiff.
Thomas F. Luken, Fort Lauderdale, FL, for Defendant.
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
K. MICHAEL MOORE, District Judge.
THIS CAUSE came before the Court upon Defendant's Motion for Summary Judgment (dkt. # 26).
UPON CONSIDERATION of the Motion, the Responses, the pertinent portions of the record, and being otherwise fully advised in the premises, the Court enters the following Order.
I. BACKGROUND
This case involves a lawsuit filed by an employer against its former employee for civil theft and misappropriation of trade secrets. The facts are set forth in this Court's Order Denying Defendant's Motion to Dismiss, dated February 8, 2010 (dkt. # 20).[1]
II. STANDARD OF REVIEW
The applicable standard for reviewing a summary judgment motion is unambiguously stated in Rule 56(c) of the Federal Rules of Civil Procedure:
The judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). Summary judgment may be entered only where there is no genuine issue of material fact. Twiss v. Kury, 25 F.3d 1551, 1554 (11th Cir.1994). The moving party has the burden of meeting this exacting standard. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). An issue of fact is "material" if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997). An issue of fact is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party. Id.
In applying this standard, the district court must view the evidence and all factual inferences therefrom in the light most favorable to the party opposing the motion. Id. However, the nonmoving party "may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a *1293 genuine issue for trial." Fed.R.Civ.P. 56(e). "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmovant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
III. ANALYSIS
Defendant Jose Vidal ("Vidal") argues that Plaintiff Certex USA, Inc.'s ("Certex") claims are barred by the doctrine of res judicata. Res judicata precludes relitigation of claims that were raised and determined in the original litigation or that could have been properly raised and determined in the original litigation. Dadeland Depot, Inc. v. St. Paul Fire and Marine Ins. Co., 945 So. 2d 1216, 1235 (Fla.2006). Under Florida law, res judicata applies where there is a judgment on the merits in a prior suit and bars subsequent litigation where there is: "(1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of the persons and parties to the action; and (4) identity of the quality [or capacity] of the persons for or against whom the claim is made." The Fla. Bar v. St. Louis, 967 So. 2d 108, 119 (Fla.2007); Petillo v. World Savings Bank, FSB, No. 6:08-cv-1255-Orl-19GJK, 2009 WL 2178953, at *4 (M.D.Fla. July 21, 2009). In a case brought under diversity jurisdiction, "we apply the law of the state in which the district court sits to determine whether the doctrine of res judicata applies." Matthews, Wilson & Matthews, Inc. v. Capital City Bank, 312 Fed.Appx. 174, 175 (11th Cir.2008). "Res judicata is not an absolute doctrine, and Florida courts have held that the doctrine should not be adhered to where its application would work an injustice." Shell v. Schwartz, 357 Fed.Appx. 250, 252 (11th Cir.2009) (citing deCancino v. Eastern Airlines. Inc., 283 So. 2d 97, 98 (Fla.1973)); State v. McBride, 848 So. 2d 287, 291 (Fla.2003) (stating that Florida has long recognized that res judicata "will not be invoked where it would defeat the ends of justice").
Florida Rule of Civil Procedure 1.420(b) establishes when an involuntary dismissal constitutes an adjudication on the merits, and provides, in relevant part:
(b) Involuntary Dismissal ... Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable part, operates as an adjudication on the merits.
Fla. R. Civ. P. 1.420(b). Despite the clear language of Rule 1.420(b), it is nevertheless true that courts making res judicata determinations under Florida law have sometimes found that res judicata does not apply when a case is dismissed on procedural grounds, and not on the merits. In re Commitment of Goode, 22 So. 3d 750, 751 (Fla. 2d DCA 2009) (holding that Rule 1.420(b) and doctrine of res judicata did not apply to a procedural dismissal because it was not an adjudication on the merits); Shuck v. Bank of America, N.A., 862 So. 2d 20, 24 (Fla. 2d DCA 2003) (holding that res judicata did not apply to dismissal with prejudice of premature claim because it was not an adjudication on the merits); Malunney v. Pearlstein, 539 So. 2d 493, 495 (Fla. 2d DCA 1989) (concluding that res judicata did not apply to state court claim dismissed on procedural grounds because it was not an adjudication on the merits).
The fact that courts sometimes decline to apply res judicata to procedural dismissals is further complicated by the fact that there are dismissals on procedural grounds to which the doctrine of res judicata clearly applies. For example, it is *1294 well settled that a statute of limitations is procedural but that a dismissal on statute of limitations grounds constitutes an adjudication on the merits for purposes of res judicata. Am. Bankers Life Assur. Co. of Fla. v. 2275 West Corp., 905 So. 2d 189, 191 (Fla. 3d DCA 2005) (stating that a statute of limitations is a procedural rule); WRH Mortgage, Inc. v. Butler, 684 So. 2d 325, 327 (Fla. 5th DCA 1996) (same); Carnival Corp. v. Middleton, 941 So. 2d 421, 424 (Fla. 3d DCA 2006) (holding that a dismissal on statute of limitations grounds constitutes an adjudication on the merits for purposes of res judicata). In Florida, Rule 1.420(b) is relied upon as the rationale for applying res judicata where a claim was dismissed on statute of limitations grounds, even though such a dismissal is procedural.[2]Allie v. Ionata, 503 So. 2d 1237, 1241 (Fla.1987) (citing IB J. Moore, Moore's Federal Practice ¶ 0.409[6] (2d ed.1984)). Vidal contends that Certex's claims are barred by the doctrine of res judicata based on a previous state court action brought by Certex against Vidal. On June 18, 2009, Certex filed a Complaint against Vidal in the Seventeenth Judicial Circuit in and for Broward County, Florida, alleging violations of the Florida Uniform Trade Secrets Act ("FUTSA") and for misappropriation of corporate funds. Certex USA, Inc. v. Vidal, Case No. 09033941 (Fla. Cir. Ct. 17th Judicial Dist.) (dkt. # 28-1). Vidal moved to dismiss the claim based on Certex's failure to post a bond pursuant to § 57.011, Florida Statutes, and sought to dismiss the FUTSA count for failure to state a claim. Motion to Dismiss Amended Complaint, Case No. 09033941 (dkt. # 28-6). The state court dismissed the claim in an Order dated August 14, 2009. Final Order, Case No. 09033941 (dkt. # 28-7). The Order stated:
Final Order on D[efendant's] Motion to Dismiss Amended Complaint
THIS CAUSE having come on to be heard on the 14 day of Aug. 2009, on Defendant's Motion to Dismiss Amended Complaint, and the Court having considered the record, having heard counsel, and being otherwise advised in the Premises, it is hereupon, ORDERED AND ADJUDGED that said Motion be, and the same is hereby Granted.
Id. It is unclear from the face of the Order whether the dismissal was based on Certex's failure to post a bond as required by § 57.011 or for failure to state a claim. It is, however, clear from the transcript of the hearing that the dismissal was based on Certex's failure to post a bond. See Hearing Transcript at 8 (dkt. # 28-8). Moreover, Vidal only challenged the FUTSA claim for failure to state a claim but did not challenge the misappropriation of funds claim. Therefore, the state court's dismissal of the entire action could only have resulted from Certex's failure to post a bond.
Thus, the question here is whether res judicata bars the claims in this action given that the state court dismissed the prior action for failure to post a bond pursuant to § 57.011. Section 57.011 reads:
When a nonresident plaintiff begins an action ... he or she shall file a bond with surety to be approved by the clerk of $100, conditioned to pay all costs which may be adjudged against him or her in said action in the court in which *1295 the action is brought. On failure to file such bond within 30 days after such commencement or such removal, the defendant may, after 20 days' notice to plaintiff (during which the plaintiff may file such bond), move to dismiss the action or may hold the attorney bringing or prosecuting the action liable for said costs and if they are adjudged against plaintiff, an execution shall issue against said attorney.
§ 57.011, Fla. Stat. "The obvious purpose of this statute is to protect prevailing defendants against suits brought by nonresident plaintiffs, so that such defendants are guaranteed up to $100 of their costs in the action." Lady Cyana Divers, Inc. v. Carvalho, 561 So. 2d 612, 613 (Fla. 3d DCA 1990). "The statute was originally enacted in 1828 by the Florida territorial legislature when a $100 cost bond was more than sufficient to cover all of the defendant's costs in a typical lawsuit." Id. "The Florida legislature, however, has not seen fit to increase the amount of this bondable protection notwithstanding the ravages of inflation since 1828." Id.
Florida's courts have never held a dismissal pursuant to § 57.011 to be an adjudication on the merits. See Wagner v. Uthoff, 868 So. 2d 617, 618 (Fla. 2d DCA 2004) (holding that erroneous dismissal for failure to post a bond under § 57.011 was not an adjudication on the merits);[3]Diaz v. Bravo, 603 So. 2d 106, 107 (Fla. 3d DCA 1992) (finding that where the basis of state court's dismissal was unclear, if dismissal with prejudice was for failure to post a bond pursuant to § 57.011, it was in error because plaintiffs "failure to post a bond could have been easily remedied"); see Waxman v. Schwarz, 458 So. 2d 72, 73 (Fla. 3d DCA 1984) (concluding that dismissal pursuant to § 57.011 was improper, where plaintiff tardily offered to post a bond and the complaint demonstrated sufficient assets to satisfy any resulting obligations).
In determining and applying the law of Florida, this Court "`must follow the decisions of the state's highest court, and in the absence of such decisions on an issue, must adhere to the decisions of the state's intermediate appellate courts unless there is some persuasive indication that the state's highest court would decide the issue otherwise.'" Prestige Restaurants and Entm't, Inc. v. Bayside Seafood Rest., Inc., No. 09-23128-CIV, 2010 WL 680905, at *5 n. 3 (S.D.Fla. Feb. 23, 2010) (quoting Flintkote Co. v. Dravo Corp., 678 F.2d 942, 945 (11th Cir.1982)). The Florida Supreme Court has never decided whether res judicata bars a subsequent claim where the first action was dismissed pursuant to § 57.011. Only two of Florida's five appellate courts have ruled on whether a dismissal under § 57.011 is an adjudication on the merits, a dispositive factor in determining whether res judicata applies, and have determined that such a dismissal is not an adjudication on the merits. Thus, it is evident that some tension exists between the requirements of Rule 1.420(b) and judicial decisions concluding that a dismissal under § 57.011 is not an adjudication on the merits.
The above-referenced decisions holding that a dismissal based on a party's failure to comply with § 57.011 is not an adjudication on the merits could be reconciled with Rule 1.420(b) by concluding that § 57.011's bond requirement is procedural and thus a dismissal is not an adjudication on the merits. This would be consistent with the inclination of some Florida courts to hold *1296 that procedural dismissals are not adjudications on the merits, which results in carving out judicial exceptions to the application of Rule 1.420(b) on a case-by-case basis.
This Court need not decide whether a dismissal pursuant to § 57.011 is an adjudication on the merits, although the relevant Florida cases suggest that it is not. Rather, assuming, without deciding, that the state court's dismissal of Certex's action was an adjudication on the merits, the doctrine of res judicata does not apply to Certex's cause of action because of the injustice to Certex that would result. Shell v. Schwartz, 357 Fed.Appx. at 252-53 (stating that the doctrine of res judicata does not apply where its application would work an injustice). This proves particularly true here upon weighing the right afforded to Vidal under § 57.011 against Certex's interest in having its claims decided on the merits. To find otherwise would deprive Certex of its ability to seek to protect its trade secrets and attempt to recover over $15,000.00 that Defendant allegedly misappropriated, plus the potential recovery of treble damages. Applying the doctrine of res judicata based on a prior action dismissed solely because of Certex's failure to ensure the payment of $100 in costs would result in severe unfairness to Plaintiff. Accordingly, this Court concludes that the doctrine of res judicata does not bar Certex's claims.
IV. CONCLUSION
Based on the foregoing, it is
ORDERED AND ADJUDGED that Defendant's Motion for Summary Judgment (dkt. # 26) is DENIED.
NOTES
[1] Although the facts set out in this Court's Order Denying Defendant's Motion to Dismiss (dkt. # 20) are taken from the Complaint, there are no facts pertinent to Defendant's Motion for Summary Judgment that are in dispute. The facts as stated in the Order Denying Defendant's Motion to Dismiss are referenced for narrative purposes only.
[2] A dismissal based on a statute of limitations was not considered an adjudication on the merits under early common law. Allie v. Ionata, 503 So.2d, 1237, 1241 (Fla.1987) (citing IB J. Moore, Moore's Federal Practice ¶ 0.409[6] (2d ed.1984)). A dismissal on statute of limitation grounds became an adjudication on the merits in the federal system with the adoption of Federal Rule of Civil Procedure 41(b), and in Florida with the adoption of Florida Rule of Civil Procedure 1.420(b).
[3] Although the appellate court reversed the trial court's Order dismissing the claim pursuant to § 57.011 because the required bond had actually been posted, the appellate court concluded that even though erroneous, the trial court's holding was not an adjudication on the merits. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562549/ | 255 F.Supp.2d 1005 (2003)
Brian POAGE, Plaintiff,
v.
CENEX/LAND O' LAKES AGRONOMY COMPANY Defendant.
No. 3:02-CV-90013.
United States District Court, S.D. Iowa, Davenport Division.
April 8, 2003.
*1006 Nicholas G. Pothitakis, Esq., Burlington, IA, for Plaintiff.
William C. Davidson, Esq., Davenport, Eric W. Smith, Esq., and Kevin Mason, Esq., Kansas City, MO, for Defendant.
MEMORANDUM OPINION AND ORDER
PRATT, District Judge.
Before the Court is a motion from Defendant Cenex/Land 0' Lakes Agronomy Company, now Argiliance LLC (Agriliance), seeking summary judgment on Plaintiff, Brian Poage's claim for retaliatory discharge. The Court has received and reviewed both parties' filings in support and resistance of the motion, and the matter is fully submitted. As detailed below, Defendant's motion is denied.
1. BACKGROUND
Brian Poage began working for Agriliance in September 1999 as location manager of Defendant's Denmark, Iowa plant. On Thursday, April 13, 2000, Poage injured his back while climbing out of one of Defendant's farm vehicles. Plaintiff filled out an accident report the same day, and reported the injury to his supervisor, Jim Gerst. Under Defendant's ordinary procedure, the injured employee and/or the employee's supervisor are responsible for reporting the work injury to the workers compensation insurance carrier. Plaintiffs supervisor was also responsible for completing the necessary payroll paperwork to put Poage on a leave of absence for the work related injury. In this case, however, Randy Nelson, a facility supervisor, told Poage and Gerst that he would handle the necessary paperwork for both the insurance carrier and payroll. Agriliance's payroll department did not receive the leave of absence paperwork until June 2, 2000. The workers compensation claim was never filed with the insurance carrier.
*1007 Pursuant to his doctor's orders, Plaintiff was off work because of the injury from April 17, 2000 until June 12, 2000. While on injury leave, Plaintiff received his regular bi-weekly paycheck for the weeks ending April 22, 2000 through June 2, 2000. He did not receive workers compensation benefits. On June 12, Plaintiff was released to return to work half days with a light duty restriction. Plaintiff did return to work on June 12, 2000, and worked the entire week, four hours per day. On June 16, Plaintiffs next scheduled pay day, Poage received no paycheck. Upon inquiry, Plaintiff was told that he would not be receiving a paycheck for the week ending June 9, 2000 while he was completely off work per his doctor's orders, nor would he receive a paycheck for the previous week during which he had worked half days. Plaintiff was further informed that he would receive neither workers compensation benefits for his time off from work, nor payment for the hours worked during the week ending June 16, 2000.
Poage contacted Jim Gerst on June 20, 2000 regarding the fact that he had not been paid for the past two weeks of work. Gerst suggested that the only way for Plaintiff to receive a paycheck would be for him to return to work full time, and that workers compensation would not provide benefits for part time or half time work. Gerst's comments were affirmed by Larry Roiger, the region manager for Defendant's retail operations. Roiger explained that Poage would not receive any more checks until the company could determine how much Poage had been overpaid, due to the fact that Plaintiff had been receiving his regular salary instead of workers compensation benefits. As well, Roiger reiterated Gerst's earlier statement that the fastest way for Plaintiff to receive a paycheck would be for him to obtain a full work release and return to work full time.
Based on his conversations with the two Agriliance supervisors, Plaintiff contacted his doctor on June 20, 2000 and demanded a full work release. Later that day, Plaintiffs physician's office faxed a new work restriction slip to Defendant indicating that Poage could return to work full time. Although Plaintiff was never provided with a paycheck for the weeks ending June 9th and June 16th, he was released to work full time and was promised a check for the two week period ending June 30th. During the next few weeks, Plaintiff missed time from work because of his physical condition. On June 29, 2000, Plaintiffs physician renewed his full work restriction, but Plaintiff never submitted the slip to his supervisor out of concern that he would receive neither a paycheck nor workers compensation benefits.
Between June 20 and July 14, 2000, Plaintiff missed work or left work early on several occasions due to his injury. In the process, Plaintiff exhausted his vacation days and available personal time off. Gerst spoke with Plaintiff on several occasions, but Plaintiff was physically unable to work full time. In mid July, Gerst and Richard Parkhurst, an individual who would be assuming Gerst's responsibilities at the end of July, met with Plaintiff to discuss his job performance. During the course of the meeting, Poage was terminated. Plaintiffs last day of work with Agriliance was July 14, 2000.
II. SUMMARY JUDGMENT STNADARD
Rule 1 of the Federal Rules of Civil Procedure mandates that all Rules, including Rule 56, "be construed and administered to secure the just, speedy, and inexpensive determination of every action." Accordingly, summary judgment is not a paper trial. "The district court's role in deciding the motion is not to sift through *1008 the evidence, pondering the nuances and inconsistencies, and decide whom to believe." Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). In a motion for summary judgment this Court has but one task, to decide, based on the evidence of record as identified in the parties' moving and resistance papers, whether there is any material dispute of fact that requires a trial. Anderson v. Liberty Lobby, Inc., All U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); 10 Wright, Miller & Kane § 2712, at 574-78. The parties then share the burden of identifying the evidence that will facilitate this assessment. Waldridge, 24 F.3d at 921.
Summary judgment is properly granted when the record, viewed in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences, shows that there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Walsh v. United States, 31 F.3d 696, 698 (8th Cir.1994); United States v. City of Columbia, 914 F.2d 151, 153 (8th Cir.1990); Woodsmith Publ'g v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir.1990). The moving party must establish its right to judgment with such clarity that there is no room for controversy. Jewson v. Mayo Clinic, 691 F.2d 405, 408 (8th Cir.1982).
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact based on the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., All U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Once the moving party has carried its burden, the nonmoving party must go beyond the pleadings and, by affidavits or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is genuine issue for trial. See Fed.R.Civ.P. 56(c),(e); Celotex Corp., 411 U.S. at 322-23, 106 S.Ct. 2548; Anderson, All U.S. at 257, 106 S.Ct. 2505. "[T]he mere existence of some alleged factual dispute between the parties will not defeat a motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, All U.S. at 247-48, 106 S.Ct. 2505. An issue is "genuine," if the evidence is sufficient to persuade a reasonable jury to return a verdict for the nonmoving party. Id. at 248, 106 S.Ct. 2505. "As to materiality, the substantive law will identify which facts are material.... Factual disputes that are irrelevant or unnecessary will not be counted." Id
III. DISCUSSION
Under Iowa law, absent a valid employment contract, employment is presumed to be at will. Fitzgerald v. Salsbury Chemical, Inc., 613 N.W.2d 275, 280 (Iowa 2000). Accordingly, either party may terminate the employment relationship at any time and for any reason, without incurring liability. Id. at 280-281. In the past thirty years, Iowa courts have adopted two exceptions to the at will employment doctrine. One exception, "discharges in violation of employee handbooks which constitute a unilateral contract," see Id. at 281 (citing French v. Foods, Inc., 495 N.W.2d 768, 769-71 (Iowa 1993)), is not applicable in this case. Plaintiffs complaint, however, is an embodiment of the other exception, "discharges in violation of public policy." See Fitzgerald 613 N.W.2d at 281 (citing Springer v. Weeks & Leo Co., Inc., 429 N.W.2d 558, 560 (Iowa 1988)). If, as Plaintiff alleges, Agriliance terminated his employment because he sought to recover workers compensation benefits, Defendant's actions were clearly in violation of *1009 the "well-recognized and defined public policy of [Iowa]." See Barrera v. Con Agra, Inc., 244 F.3d 663, 665 (8th Cir. 2001) (citing Springer, 429 N.W.2d at 559).
To recover for the tort of wrongful discharge in violation of public policy, a Plaintiff must establish three elements: "(1) engagement in a protected activity; (2) discharge; and (3) a causal connection between the conduct and the discharge." Fitzgerald, 613 N.W.2d at 281, (citing Teachout v. Forest City Community Sch. Dint, 584 N.W.2d 296, 299 (Iowa 1998)). Iowa courts have not specifically addressed the question of whether a burdenshifting analysis applies if Plaintiff overcomes his burden of establishing the prima facie case, but Iowa case law indicates that such an analysis applies. See Knutson v. AG Processing, Inc., 2002 WL 31422858 (N.D.Iowa 2002) (reviewing Iowa case law and concluding that burden-shifting analysis applies to common law wrongful discharge case). Under the burdenshifting analysis, Plaintiff bears the initial burden of establishing the prima facie case. See Brown v. Farmland Foods, Inc., 178 F.Supp.2d 961, 980 (N.D.Iowa 2001). Having done so, a presumption of retaliation arises, and the burden shifts to Defendant to set forth a legitimate nonretaliatory reason for its action. Id. If Defendant accomplishes this task, the burden shifts again to Plaintiff to show that Defendant's proffered reason is merely a pretext for an otherwise illegal action.
As this is Defendant's motion for summary judgment, the Court conducts the requisite analysis while considering the record in a light most favorable to Plaintiff. In this light, Plaintiff has certainly established a prima facie case of wrongful discharge. The first two elements, that Plaintiff participated in a protected activity and that he was discharged, are uncontested. Defendant argues, however, that the necessary causal connection is lacking from Plaintiffs claim. The Court disagrees. Here, Plaintiffs workers compensation claim was never filed with the insurance carrier, and Agriliance failed to follow its usual procedures to ensure that Poage was not denied an income during the time he was unable to work because of his employment related injury. Immediately after this failure was discovered, Plaintiff stopped receiving any compensation whatsoever. When Mr. Poage brought this to the attention of his superiors, he was told that the only way that he would receive a paycheck would be to go back to work full time. Although he attempted to return to work in spite of contrary instructions from his doctor, Agriliance refused to provide Plaintiff any leeway or support. Shortly thereafter, Agriliance terminated his employment. A reasonable jury could certainly find a connection between Plaintiffs workers compensation claim and his discharge. Additionally, a jury could reasonably find that Agriliance's proffered justification, absenteeism, is merely a pretext for an unlawful discharge in violation of Iowa public policy. Thus, Defendant's motion for summary judgment must be overruled.
IV. ORDER
Defendant's motion for summary judgment is denied.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567903/ | 148 F. Supp. 2d 1368 (2001)
PORTMAN OVERSEAS MANAGEMENT CORPORATION and PORTMAN OVERSEAS MARKETING LTD., Plaintiffs,
v.
SEACLIFF LIMITED, Defendant.
No. CIVA101CV473TWT.
United States District Court, N.D. Georgia, Atlanta Division.
July 16, 2001.
*1369 John J. Dalton, Herbert Dale Shellhouse, Troutman Sanders, Atlanta, GA, for Plaintiffs.
Robert B. Remar, Daniel D. Zegura, Daniel Adam Cohen, Rogers & Hardin, Atlanta, GA, Hyman L. Schaffer, phv, Arkin Kaplan & Cohen, New York City, for Defendant.
ORDER
THRASH, District Judge.
This is an action in which Plaintiffs sought to prevent their removal and replacement as managers of Shanghai Center in Shanghai, China. Plaintiffs sought to have the Court restrain the Defendant from replacing Portman as manager of the property pending the commencement of arbitration proceedings. It is before the Court on the Suggestion of Mootness and Motion to Dismiss [Doc. 17 & 19]. The action was filed on February 20, 2001. On February 21, 2001, the Court granted the Plaintiffs' Motion for a Temporary Restraining Order [Doc. 2]. On March 1, 2001, the Court held a hearing and vacated the Temporary Restraining Order and denied the Plaintiffs' Motion for a Preliminary Injunction [Doc. 5]. It is undisputed that Portman has been removed and replaced as manager of the property and that the arbitration proceeding is ongoing. The Defendant contends that the action is now moot and should be dismissed. Plaintiffs contend that the Court may retain jurisdiction in aid of the arbitration proceeding. They oppose dismissal and suggest that the Court close the file administratively, leaving open the possibility of reopening it if necessary to aid in the arbitration proceedings.
It is well-settled that the exercise of federal court jurisdiction depends on the existence of a "case or controversy" and a federal court has no authority to *1370 give opinions on moot questions or abstract propositions. John Roe, Inc. v. United States, 142 F.3d 1416, 1420-21 (11th Cir.1998) (citing North Carolina v. Rice, 404 U.S. 244, 246, 92 S. Ct. 402, 30 L. Ed. 2d 413 (1971), and Church of Scientology v. United States, 506 U.S. 9, 12, 113 S. Ct. 447, 121 L. Ed. 2d 313 (1992)). The Constitution's "case or controversy" requirement "mandates that the case be viable at all stages of the litigation; it is not sufficient that the controversy was live only at its inception." Brooks v. Georgia State Bd. Of Elections, 59 F.3d 1114, 1119 (11th Cir.1995) (citation and quotations omitted). A case is rendered moot when events occurring after the commencement of a lawsuit "create a situation in which the court can no longer give the plaintiff meaningful relief." Jews For Jesus, Inc. v. Hillsborough County Aviation Auth., 162 F.3d 627, 629 (11th Cir.1998). In other words, a case becomes moot when the issues presented are no longer "live" or when the parties lack a legally cognizable interest in the outcome. Atlanta Gas Light Co. v. FERC, 140 F.3d 1392, 1401 (11th Cir.1998) (citing Powell v. McCormack, 395 U.S. 486, 89 S. Ct. 1944, 23 L. Ed. 2d 491 (1969)). Rule 12(h)(3) of the Federal Rules of Civil Procedure provides that "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action."
In the Management Agreement, the parties agreed to submit any disputes to arbitration. In their Complaint, the Plaintiffs sought temporary relief staying their termination until the arbitration panel was fully constituted. After hearing from the parties, the Court denied that relief. Defendant contends that this action is now moot. It relies upon cases such as Cole v. National Collegiate Athletic Ass'n., 120 F. Supp. 2d 1060 (N.D.Ga.2000) (student's ADA suit seeking declaratory and injunctive relief requiring college athletic association to allow him to participate in intercollegiate athletics and to receive athletics-related financial aid was rendered moot, where association declared student partial-qualifier after he resubmitted his application, student was allowed to practice with his team during his freshman year, student's freshman season had ended, and student was allowed to compete with team for remainder of his college eligibility without restrictions). Plaintiffs distinguish the cases relied upon by Defendant on the grounds that they are not arbitration cases. They rely upon cases such as Wright-Bernet, Inc. v. Amalgamated Local Union No. 41, 501 F. Supp. 72 (S.D.Ohio 1980) in which the court granted a motion to compel arbitration and then retained jurisdiction indefinitely to aid in the proceeding. Plaintiffs contend that maintaining this case in an inactive status will have a "salutary effect" on the arbitration process. They also point out that it would be inefficient and time consuming to have to refile this action and effectuate service in Hong Kong if the need should arise for Portman to seek judicial intervention in connection with any aspect of the arbitration proceeding.
In this case, the Court has denied the only relief sought by the Plaintiffs. There is nothing left to adjudicate. This is not a case where judicial intervention was required to compel arbitration. The Court is sympathetic to the Plaintiffs' argument that it would be inefficient and time consuming to have to refile this action and effectuate service again in Hong Kong. Nevertheless, the case law is clear that the Court cannot exercise jurisdiction for the convenience of the parties. "A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all." Atlanta Gas Light Co. v. FERC, 140 F.3d 1392, 1404 (11th Cir.1998) (quoting *1371 Texas v. United States, 523 U.S. 296, 300, 118 S. Ct. 1257, 1259, 140 L. Ed. 2d 406 (1998)). This action is moot and the Court, therefore, has no jurisdiction to continue it in an inactive status. The Defendant's Motions to Dismiss [Doc. 17 & 19] are GRANTED. The Clerk is directed to enter judgment in favor of the Defendant, all parties to bear their own costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567923/ | 148 F. Supp. 2d 249 (2001)
Ronald DAVIDSON, Plaintiff,
v.
Charles SCULLY, et al., Defendant.
Ronald Davidson, Plaintiff,
v.
Thomas Coughlin, III, et al., Defendant.
Nos. 81 CIV. 0390(PKL), 83 CIV. 2405(PKL).
United States District Court, S.D. New York.
May 18, 2001.
*250 Kevin J. Curnin, Stroock & Stroock & Lavan LLP, New York City, for the Plaintiff.
Michael B. Siller, Assistant Attorney General, State of New York, New York City, for the Defendants.
OPINION AND ORDER
LEISURE, District Judge.
Plaintiff Ronald Davidson brings this action pursuant to 42 U.S.C. § 1983, alleging violations of his Eighth Amendment right to adequate medical care while incarcerated by the New York State Department of Correctional Services ("DOCS"). The named defendants are: Thomas Coughlin, former Commissioner of DOCS; Charles Scully, Superintendent of Green Haven Correctional Facility ("Green Haven"); Dean Riley, Deputy Superintendent of Security at Green Haven; E. Michael Kalonick, Health Services Administrator at *251 Green Haven; Dr. Marc Freedman, Facilities Health Services Director at Green Haven; Wayne Strack, Lieutenant at Green Haven; Dennis Thomson, Sergeant at Green Haven; Angelo Senisi, Senior Counselor at Green Haven; and Gerald Gallagher, Assistant Superintendent of Industries at Green Haven.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, defendants moved for summary judgment, and that motion is pending. Subsequent to defendants' motion for summary judgment being fully submitted, plaintiff moved for leave to submit additional evidence in further opposition to defendants' motion for summary judgment. The Court herein grants plaintiff's motion in part and denies the motion in part.
BACKGROUND
Plaintiff originally brought these actions pro se, pursuant to 42 U.S.C. § 1983, in the early 1980's, alleging violations of his Eighth Amendment right to adequate medical treatment during his incarceration at Green Haven Correctional Facility. Plaintiff amended his 81 Civ. 0390 complaint in 1990 to add Thomas Coughlin, the DOCS Commissioner at the time, as a defendant. After retaining pro bono counsel in 1996, plaintiff filed a Supplemental Amended Complaint in that action to update his claims to include events that took place after his transfer to Auburn Correctional Facility.
Plaintiff's actions allege a continuous and ongoing failure by defendants to provide him with adequate medical care for four distinct medical conditions. Plaintiff alleges that defendants have: i) failed to treat his foot problems by failing to provide him with access to a podiatrist and orthopedic footwear; ii) refused to treat his allergies by denying him appropriate allergy shots, denying him access to an allergist, ceasing to provide his allergy medication, and denying him housing in a smoke-free environment; iii) failed to treat his tinnitus by denying him ear plugs, specified medication, a masking device, participation in a sleep study, and housing in quieter sections of the correctional facilities; and iv) denied him treatment of his vision problems by denying him, at times, contact lenses, the use of proper eye lubricants, and access to proper monitoring of his contact lens use.
DISCUSSION
A. Rule 6(b)(2) Considerations
Plaintiff moves the Court for leave to submit additional evidence in opposition to defendants' motion for summary judgment. Plaintiff's new evidence consists of events that have occurred since his transfer to Elmira Correctional Facility ("Elmira"), where he is currently housed, on June 8, 1999, which took place one month after he submitted his memorandum of law in opposition to defendants' motion for summary judgment. Under Fed.R.Civ.P. 6(b)(2), the Court has discretion to allow plaintiff to submit new evidence if the Court determines that plaintiff's failure to submit such evidence in a timely fashion "was the result of excusable neglect." Davidson v. Keenan, 740 F.2d 129, 132 (2d Cir.1984). "[E]xcusable neglect under Rule 6(b) is a somewhat elastic concept and is not limited strictly to omissions caused by circumstances beyond the control of the movant." Pioneer Inv. Servs. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 392, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993) (internal quotations omitted). The "determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Id. at 395, 113 S. Ct. 1489. Relevant circumstances include "the danger of prejudice" to the non-moving party, *252 "the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Id.
Tersely stated, these equitable factors militate in favor of the Court accepting plaintiff's relevant new evidence for limited purposes. First, plaintiff could not have submitted the new evidence prior to the close of discovery, because the events the new evidence is being proffered to prove had not yet occurred. Second, it is not plaintiff's fault that he has continued to experience events relevant to the instant litigation while awaiting the Court's decision on the underlying summary judgment motion. The Court assumes for the present purposes that plaintiff is acting in good faith, and the Court appreciates the work of plaintiff's pro bono counsel in bringing all relevant facts to the Court's attention. The Court is mindful that accepting new evidence will cause a brief delay in the proceedings as the defendant's motion for summary judgment cannot be considered until defendants have the opportunity for limited discovery relating to the new evidence. In disposing of the instant motion, the Court does assume that this evidence will be the last new evidence proffered by plaintiff in this case. However, in the interest of justice, the Court will accept plaintiff's relevant new evidence for the limited purposes to which it is relevant. At the same time, it should be abundantly clear that the Court will not accept the new evidence that is not relevant to the instant actions. Below, the Court will identify the new evidence that is relevant to the instant actions and the purposes for which it is accepted.
B. Relevant New Evidence and Purposes for Which it Will be Accepted
Plaintiff seeks to submit new evidence in order to oppose defendants' motion for summary judgment on plaintiff's Eighth Amendment claims. The Eight Amendment prohibits the infliction of "cruel and unusual punishments." U.S. Const. amend VII. To "establish an Eight Amendment claim arising out of inadequate medical care, a prisoner must prove `deliberate indifference to his serious medical needs.'" Chance v. Armstrong, 143 F.3d 698, 702 (2d Cir.1998) (quoting Estelle v. Gamble, 429 U.S. 97, 104, 97 S. Ct. 285, 50 L. Ed. 2d 251 (1976)). This standard includes both an objective and a subjective element. First, plaintiff must prove objectively that his medical condition is "serious." Id. Second, plaintiff must show that defendants acted with the subjective "sufficiently culpable state of mind." Id. The prison official acts with the requisite deliberate indifference when he "knows of and disregards an excessive risk to inmate health and safety; the official must both be aware of facts from which the inference could be drawn that a substantial risk of serious harm exists, and he must also draw that inference." Farmer v. Brennan, 511 U.S. 825, 838, 114 S. Ct. 1970, 128 L. Ed. 2d 811 (1994).
1. Evidence to Show Deliberate Indifference only Admissible on Claim for Injunctive Relief against DOCS Commissioner
Plaintiff seeks to submit new evidence, which purportedly shows that DOCS employees at Elmira have been deliberately indifferent to his medical needs, to "demonstrate[ ] a continuing conspiracy of deliberate indifference to his medical needs" by defendants. Plaintiff's Memorandum of Law in Support of Plaintiff's Motion for Leave to Submit Additional Evidence (hereinafter, "Pl's Memo") at 1. Although the new evidence is not admissible for the purpose plaintiff asserts, it is *253 relevant to plaintiff's claim for injunctive relief against the DOCS Commissioner in his official capacity.[1]
The new evidence is not admissible to show deliberate indifference by any of the defendants in their individual capacities. The evidence consists of grievances filed by plaintiff regarding three of the four medical conditions complained of in these actionshis tinnitus, vision problems, and podiatric problemsas well as the prison's responses to those grievances. As the events complained of in the new evidence have taken place since plaintiff's transfer to a new prison, none of the persons complained of in or notified by the new evidence are personal defendants in the instant actions. "[P]ersonal involvement of defendants in alleged constitutional deprivations is a prerequisite to an award of damages under § 1983." Wright v. Smith, 21 F.3d 496, 501 (2d Cir.1994); see also Koehl v. Dalsheim, 85 F.3d 86, 89 (2d Cir.1996). Because none of the defendants had any personal involvement in the events discussed in the new evidence, such new evidence will not be admissible as proof against any of the defendants in their personal capacities.
Plaintiff claims that the new evidence should be "admissible notwithstanding" the fact that "it relates to persons other than the named defendants" because plaintiffs "claim sounds in conspiracy and evidence of a non-party co-conspirator's bad acts is admissible against a party co-conspirator." Pl's Memo at 8-9. Evidence regarding non-party co-conspirators is admissible against a party co-conspirator. See United States v. Nixon, 418 U.S. 683, 701, 94 S. Ct. 3090, 41 L. Ed. 2d 1039 (1974). However, such evidence is only admissible "upon a sufficient showing, by independent evidence, of a conspiracy among one or more other defendants and the declarant and [that] the declarations at issue were in furtherance of the conspiracy." Id. See also Clune v. United States, 159 U.S. 590, 593, 16 S. Ct. 125, 40 L. Ed. 269 (1895) (evidence of co-conspirators' acts and declarations admissible against defendants if first shown that they were engaged in a conspiracy and that their acts and declarations were in execution thereof); United States v. Flynn, 216 F.2d 354, 359-60 (2d Cir.1954) (discussing the "ordinary rule" that before the acts and declarations of third parties can be used against a defendant, a prima facie case of conspiracy must be made against the defendants, the defendants must be connected with it by competent evidence, and the acts or declarations of the third-parties must be shown to be in furtherance of and within the contemplation of the conspiracy).
Although plaintiff argues that his claim "sounds in conspiracy," his action does not contain a conspiracy claim. None of his complaints contains a § 1985 claim, nor, more importantly, any allegations upon which to base such a claim.[2] Because plaintiff has not alleged a conspiracy against defendants, he has not made out a *254 prima facie case of conspiracy against them, nor has he shown that the third parties' actions and declarations were in furtherance of a conspiracy. Therefore, the new evidence is not admissible against any of the individual defendants under a co-conspirator theory.
Although the new evidence is not relevant to plaintiff's actions against the defendants in their individual capacities due to their lack of personal involvement in the events complained of in the new evidence, lack of personal involvement is not a bar to consideration of the new evidence as it relates to plaintiffs claim for injunctive relief against the DOCS Commissioner in his official capacity. "[P]ersonal involvement of an official sued in his official capacity is not necessary where the plaintiff is seeking only injunctive or declaratory relief under 42 U.S.C. § 1983." Glass v. Coughlin, 1991 WL 102619, *2 (S.D.N.Y. 1991) (Leisure, J); see also Project Release v. Prevost, 463 F. Supp. 1033, 1036 (E.D.N.Y.1978) ("While it is true that in this Circuit personal involvement of defendants in alleged constitutional deprivations is a prerequisite to an award of damages under § 1983, the rule is limited to cases in which damages are sought and is plainly inapplicable where, as here, plaintiffs seek ... injunctive relief."(internal citations omitted)). Rather, "[a]ctions involving claims for prospective declaratory or injunctive relief are permissible provided the official against whom the action is brought has a direct connection to, or responsibility for, the alleged illegal action." Marshall v. Switzer, 900 F. Supp. 604, 615 (N.D.N.Y. 1995); see also Koehl, 85 F.3d at 89 (claim for injunctive relief in insufficient medical treatment action proper where official has "overall responsibility to ensure that prisoners' basic needs were met."); Schallop v. New York State Dept. of Law, 20 F. Supp. 2d 384, 391 (N.D.N.Y.1998) (claim for injunctive relief proper "where the state official has the authority to perform the required act.").
Here, plaintiff seeks an injunction directing the DOCS Commissioner in his official capacity "to provide proper medical treatment" to plaintiff. Supplemental Amended Complaint at ¶ 43. The DOCS Commissioner has the overall responsibility to ensure that prisoners' basic needs are met and the authority to perform the required act. The new evidence is proffered to show that plaintiff has continued to complain about his medical conditions since his transfer to Elmira, that the prison system has continued to be deliberately indifferent to plaintiffs medical needs, and that an injunction directing that proper medical treatment be provided to plaintiff is necessary. Therefore, the new evidence contained in plaintiff's affidavit, paragraphs 1-29 and 33-57, plaintiff's exhibits 1-9 and 12-22, and Dr. Kobak's Supplemental Declaration are relevant to Davidson's claim for injunctive relief against the DOCS Commissioner to show continued deliberate indifference to his tinnitus, vision problems, and podiatric problems, and the Court will allow plaintiff to submit such new evidence for that purpose.
2. Evidence to Show Sufficient Seriousness of Plaintiff's Medical Conditions
Plaintiff seeks to submit new evidence in order to "undermine[ ] defendants' expert's opinion that Mr. Davidson does not possess the serious medical needs that he claims to possess." Pl's Memo at 7.
To establish an Eighth Amendment violation, plaintiff must show that his medical condition was sufficiently serious, which has been interpreted as a condition that is one of "urgency that may result in degeneration or extreme pain." Chance, 143 F.3d at 702 (citations omitted). Plaintiff *255 claims that he suffers from allergies, tinnitus, vision problems, and podiatric problems, and that defendants have failed to provide him with medical treatment for these conditions. Plaintiff seeks to submit new evidence that is relevant to rebut defendants' claims that plaintiff does not suffer from podiatric problems and that his tinnitus is untreatable.
First, defendants contend that plaintiff "has not suffered and does not suffer from any specific foot problems or extreme foot pain." Defendants' Memorandum of Law in Support of Their Motion for Summary Judgment ("Defs' SJ Memo") at 16. Despite defendants' contention that plaintiff does not suffer from any podiatric problems, plaintiff claims that his new evidence shows that his foot pain and need for orthopedic footwear has recently been recognized by Drs. Haftel and Kaempffe, physicians at Elmira prison. See Plaintiff's Affidavit at ¶ 4.
Second, defendants contend that plaintiff's tinnitus is "chronic and untreatable." Defs' SJ Memo at 10. Despite defendants' claim that plaintiff's tinnitus is untreatable, plaintiff claims that his new evidence shows that Dr. Desai prescribed Xanax for plaintiff to treat the anxiety caused by his tinnitus, but then cancelled the prescription. See Plaintiff's Affidavit at ¶ 49-50.
Since filing his memorandum in opposition to defendants' motion for summary judgment, plaintiff has sought additional medical treatment for his conditions and two of his medical conditions may have been recognized by prison doctors. This new evidence will be helpful to the Court in deciding whether a genuine issue of fact exists as to whether plaintiff has one or more sufficiently serious medical conditions. Therefore, in the interest of justice, the Court will allow plaintiff to use the relevant portions of the new evidence accepted in section one above to rebut defendants' claims that his tinnitus is untreatable and that he has no foot problems.
3. Evidence Not Relevant and Not Accepted
Plaintiff attempted to include evidence that is not related to any of his four medical conditions complained of in the current actions. First, plaintiff complained that he has been denied the use of Theraband in conjunction with exercise. These allegations, contained in paragraphs 30-32 of plaintiff's affidavit, and accompanying exhibits 10-11 are not accepted by the Court. Second, plaintiff complained in his affidavit and submitted supporting exhibits of deliberate indifference to his shoulder problems. These allegations, contained in paragraphs 58-61 of plaintiff's affidavit, and accompanying exhibits 23-27 are likewise not accepted by the Court.
C. Defendants' Request for Oral Argument Denied
Although the Southern District of New York Judges' Part Rules require that defendants request oral argument upon filing the opposing papers, defendants made a belated request for oral argument on plaintiff's motion to submit additional evidence. Satisfied that oral argument would not be helpful to the Court, the Court exercised its discretion to decide the motion on the papers submitted by the parties and herein denies defendants' request for oral argument. See Doctor's Assoc., Inc. v. Distajo, 66 F.3d 438, 448 (2d Cir. 1995) ("Courts have broad discretion to determine how much, if any, oral argument is appropriate in a given case."); see also Greene v. WCI Holdings Corp., 136 F.3d 313, 316 (2d Cir.1998) ("the `hearing' requirements of Rule 12 and Rule 56 do not mean that an oral hearing is necessary").
*256 D. Additional Discovery
Plaintiff argued the merits of the new evidence to the extent he found necessary in his memorandum in support of his motion to submit the new evidence, and pointed out that the new evidence is "wholly reflected in the administrative records of DOCS itself." Plaintiff's Reply Memorandum in Further Support of Plaintiff's Motion for Leave to Submit Additional Evidence at 4. Defendants may conduct additional discovery and may respond to plaintiff's evidence by filing a memorandum on the merits by June 18, 2001. Plaintiff may file a reply memorandum by July 2, 2001.
CONCLUSION
For the foregoing reasons, plaintiff's motion for leave to submit additional evidence in opposition to defendants' motion for summary judgment is GRANTED in part and DENIED in part.
SO ORDERED.
NOTES
[1] Although Thomas Coughlin, the former Commissioner of DOCS, is a named defendant, both in his individual and his official capacity, the current Commissioner, Glen S. Goord, was automatically substituted as a party to this action in his official capacity when he took over the office. See Fed. R.Civ.P. 25(d)(1); see also Kentucky v. Graham, 473 U.S. 159, 166 n. 11, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985); Townsend v. State of New York Div. of State Police, 1997 WL 116790, *6 (N.D.N.Y.1997). Goord is a defendant in his official capacity, against whom plaintiff seeks injunctive relief, while Coughlin remains a defendant in his individual capacity, against whom plaintiff seeks damages.
[2] Although plaintiff originally filed these actions pro se, plaintiff filed his Supplemental Amended Complaint in 1996 through counsel. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2576925/ | 283 F. Supp. 2d 328 (2003)
Samantha J. COMFORT, on behalf of her minor child and friend, Elizabeth NEUMYER, et al., Plaintiffs,
v.
LYNN SCHOOL COMMITTEE, et al., Defendants, and
Commonwealth of Massachusetts, Defendant-Intervenor.
Todd Bollen, et al., Plaintiffs,
v.
Lynn School Committee, et al., Defendants.
No. CIV.A.99-11811-NG, CIV.A.01-10365-NG.
United States District Court, D. Massachusetts.
September 5, 2003.
*329 *330 Ranjana C. Burke, Attorney General's Office, Boston, MA, for Abigail Thernstrom, Charles D. Baker, James Peyser, Roberta Schaefer, William K. Irwin, Jr.
Norman J. Chachkin, NAACP Legal Defense & Educational Fund, Inc., New York, NY, Nadine M. Cohen, Lawyers Committee for Civil Rights, Under Law of the Boston Bar Association, Boston, MA, Dennis D. Parker, NAACP Legal Defense and Educational Fund, Inc., New York, NY, for Northshore Chapter of the National Association for the advancement of colored people, Anthony Murkison, Barbara Murkison, Pamela Freeman.
Richard W. Cole, Attorney General's Office, Boston, MA, for Commonwealth of Massachusetts.
Chester Darling, Boston, MA, for Jean O'Neil, Samantha J. On behalf of her minor child and next friend Elizabeth Neumyer, William O'Neil.
Ross Wiener, U.S. Dept. of Justice, Educational Opportunities Section, Washington, DC, for U.S.
*331 AMENDED[1]MEMORANDUM AND ORDER
GERTNER, District Judge.
TABLE OF CONTENTS
I. INTRODUCTION .............................................................333
II. PROCEDURAL HISTORY .......................................................335
A. The Comfort Litigation .................................................335
1. Parties .............................................................335
2. Preliminary Injunction ..............................................336
3. Motions to Dismiss ..................................................336
B. The Bollen Litigation ..................................................337
III. TRIAL ....................................................................338
A. Plaintiffs' Case ......................................................338
B. Defendants' Case ......................................................339
1. The Administrators: ................................................339
2. The Parents and Students: ..........................................340
3. Defendants' Experts: ...............................................340
C. Plaintiffs' Rebuttal ..................................................341
IV. FINDINGS OF FACT .........................................................342
A. The Racial Imbalance Act ..............................................342
B. Racial Imbalance in Lynn's Public Schools .............................344
1. 1977: The First Warning ............................................344
2. 1979: Washington, the First Magnet School ..........................345
3. 1980s: Profound Changes in Lynn ....................................345
4. 1986: A Series of Failed Voluntary Plans ...........................346
5. 1987-1988: Greater Imbalance; More Accusations .....................346
6. 1988-1990: Drafting the Current Plan ...............................347
C. The Current Plan ......................................................347
D. Continuous Monitoring .................................................349
E. A Current Snapshot of the Lynn School District ........................350
1. Residential Segregation and Geographical Separation ................350
2. "White Flight" and Its Decline after Implementation of the Lynn
Plan .............................................................350
3. Racial Balance or Imbalance ........................................351
4. The Special Problem of Poverty .....................................351
5. School Construction and Renovation .................................352
6. "Magnet" Schools ...................................................352
F. The Lynn Schools at Present ...........................................352
1. Observations by Participants .......................................353
2. Expert Testimony ...................................................353
a. Dr. Orfield: Desegregation Expert ...............................354
b. Drs. Dovidio and Killen: Social and Developmental Psychologist,
Respectively ..................................................356
(1) Intergroup Contact Theory ...................................356
(2) "Critical Mass" .............................................357
(3) Impact of Resegregation .....................................358
c. Nancy McArdle: Limitations Imposed by the Demographics in
Lynn ...........................................................358
*332
d. Plaintiffs' Rebuttal ...............................................358
V. LEGAL ANALYSIS ...........................................................360
A. Jurisdictional Issues .................................................360
1. Amendments to Prior Decisions (Comfort Plaintiffs) .................360
2. Partial Motion to Dismiss (Bollen Plaintiffs) ......................361
a. Claims for Injunctive and Declaratory Relief ....................361
b. Nominal Damages .................................................363
B. Equal Protection ......................................................363
1. Strict or Intermediate Scrutiny? ...................................364
2. Facial Challenge to the Racial Imbalance Act .......................366
3. The Strict Scrutiny Standard .......................................368
a. Compelling State Interest .......................................369
b. Narrow Tailoring ................................................371
(1) Are the means necessary; are there adequate race-neutral
alternatives? .............................................371
(2) Is the policy proportional to the compelling interest .......372
(3) What Is the Impact on Third Parties? ........................373
(4) Miscellaneous Concerns; Deference to School Boards' "Narrow
Tailoring ..................................................373
4. The Goals of the Plan ..............................................375
a. Curricular Goals: "Promoting Racial and Ethnic Diversity,"
"Increasing Educational Opportunities for All Students and
Improving the Quality of Education," "Ensuring Safety" .............375
(1) Are These Curricular Goals Compelling State Interests? ......375
(2) Is the Plan Narrowly Tailored to These Compelling Interests?.376
(a) Are the Plan's Means Necessary to Achieve its Ends? .....376
(b) Proportionality of the Means ............................377
(c) Minimal Burden on Third Parties; the Issue of Stigma ....377
(3) Plaintiffs' Arguments Do Not Apply in Lynn ..................378
(a) A White/Nonwhite Distinction Is Appropriate .............379
(b) Additional Resources Would Not Have Been Adequate
to Accomplish the Curricular Goals; the Significance
of "Critical Mass" ......................................380
b. Remedying the Effects of De Facto Segregation; "Reducing
Minority Isolation" .............................................384
(1) Is this Remedial Interest Compelling? ......................384
(2) Is the Lynn Plan Narrowly Tailored to this Compelling
Interest? ..................................................386
(3) Race-Neutral Alternatives are not Feasible ..................387
c. Interest (5): "Providing an Education to All Students that
Satisfies Federal and State Constitutional Requirements" .......389
(1) The Command and Promise of Brown v. Board of Education ......389
(2) State Constitutional Requirements ...........................391
C. Other Federal Claims ..................................................392
1. Title VI ...........................................................392
2. 42 U.S.C. § 1981 ..............................................392
3. 42 U.S.C. §§ 1985, 1986 ..................................393
D. Article 111 of the Massachusetts Declaration of Rights ................393
1. Applicable Principles of Constitutional Interpretation .............394
2. The Lynn Plan and the Purpose of Article 111 .......................394
3. SJC Interpretation of Similar Language .............................396
4. State Constitutional Harmony and Federal Constitutional Doubt ......397
VI. CONCLUSION ...............................................................400
*333 I. INTRODUCTION
The issues raised in this litigation are critically important, not just for the parties, but for the nation. This case and others like it around the country require courts to grapple with whether and how public school officials may implement race-conscious programs in order to fulfill the Constitution's promise of the Equal Protection of the laws, a promise articulated with special force fifty years ago in Brown v. Board of Education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873 (1954).
Plaintiffs, parents of elementary school children in Lynn, Massachusetts, challenge their city's school assignment plan (the "Lynn Plan")[2] because it takes race into account in permitting children to transfer from their neighborhood schools to other schools within the district.[3] Since the implementation of the Lynn Plan entitles the Lynn Public Schools to certain additional aid from the Commonwealth of Massachusetts under the state's Racial Imbalance Act ("RIA"),[4] the plaintiffs also challenge the state law on its face and as applied in this case. Both the Lynn Plan and the state laws under which it was enacted, they say, violate the Constitutions of the United States and Massachusetts, as well as various federal civil rights statutes. They petition the Court to invalidate the Lynn Plan and to enjoin the defendants from employing racial classifications in student assignments and in the distribution of state aid. For the reasons set forth below, I DISMISS plaintiffs' claims and enter JUDGMENT in favor of the defendants.
To the plaintiffs, the issues could not be simpler: Taking race into account in school transfers violates the Equal Protection Clause. They contend that it sends the wrong message to the children of Lynn, namely, that their race matters when, in fact, the Constitution requires color blindness. Plaintiffs concede that reducing racial isolation and educating students to be citizens in a multiracial nation are important goals. They also concede that Lynn has accomplished those goals and has vastly improved its schools since the Plan's implementation. But they claim that neither these goals nor this record are sufficiently compelling under the Constitution to justify Lynn's race-conscious school transfer policy.
To the defendants, the Lynn Plan not only complies with the Equal Protection Clause but is critical to maintaining that compliance. The Plan seeks to encourage learning and good citizenship in a racially diverse environment. The message it conveys to the students is that our society is heterogeneous, that racial harmony matters a message that cannot be conveyed meaningfully in segregated schools. In order to teach that the "content of [one's] character"[5] does not depend on color, a child must interact with children of other *334 races, an interaction that necessarily challenges nascent stereotypes. Without meaningful social contact, talk of tolerance and cooperation is nothing but an abstraction. If the Lynn school transfer plan were eliminated, the elementary schools of Lynn would become more and more racially segregated, with a host of pernicious consequences.
While there has been a rising tide of litigation challenging the government's use of racial preferences, both in and outside of the educational context, and while courts increasingly treat such programs with suspicion, it is not establishedas the plaintiffs, not to mention many in the media, contendthat any government use of race for the purpose of promoting diversity is unconstitutional. The answer to the question "Can schools constitutionally use race in furtherance of education in a multiracial society?" is and has always been "It depends." It depends upon the setting for example, K-12 education,[6] in contrast to higher education or employment, raises very different issues requiring distinct legal analysis. And it depends upon the nature of the planits purposes, its flexibility, the level of coercion involved, its history, its administration.
On both axesthe setting and the nature of the planthe Lynn Plan is different from race-conscious plans that have been successfully challenged. In constitutional parlance, the Lynn Plan passes muster even under the most stringent "strict scrutiny" test: It serves "compelling" state interests and is "narrowly tailored" to achieve them.
On the setting: Unlike cases involving law schools, undergraduate degree programs, or even elite "magnet" high schools, Lynn's school transfer policies are not about admissions or rejections in a competitive environment where merit supposedly determines "winners" and "losers" in a zero-sum game. The fact that one child may transfer to a particular elementary school while another may not does not affect the quality of the educational experience for either. The parties agree that, under the Plan, all Lynn schools are not only comparable, but by 2003, equally successful.
Indeed, K-12 education involves a setting in which diversity has a different resonance than in any other. The goal of elementary education is, as the Supreme Court noted nearly fifty years ago, to foster good citizenship[7] not, for example, to train skilled professionals or to engage in a commercial enterprise. And in the twenty-first century, good citizenship necessarily entails the ability to function in an ever more heterogeneous democracy.
On the Plan: The Plan that Lynn officials created, and that the state authorities approved, is minimally intrusive. It uses public funds for two critical public goals to enable parents to choose integrated schools over segregated ones and to minimize racial imbalance across the school system. Since a racially diverse learning environment is essential for citizens-to-be, the Plan is a critical part of a comprehensive, districtwide plan to improve the quality of education for all Lynn's children.
Unlike many of the school desegregation efforts that have roiled courts and legislatures in the years since Brown, the Lynn Plan does not entail coercive assignments *335 or forced busing; nor does it prefer one race over another. It allows every child to attend his or her neighborhood school. It also allowsand indeed encourages elective transfers to schools outside the neighborhood, not to offer "choice" for its own sake, but to promote as much integration as possible while maintaining a neighborhood school system. Space permitting, transfers are approved unless they thwart the goal of reducing segregation in the city.
The history and track record of the Plan also set it apart. Before the Plan, Lynn's neighborhood schools were troubled, over-crowded, and racially segregated. City officials were accused of exacerbating these problems by allowing white students to transfer out of minority schools, but not vice versa. And even when official discrimination ended, racial divisions persisted, with documented results: Schools that were largely populated by minority students received less funding, had high teacher turnover, and had lower test scores. Throughout the system, even in the largely white schools, racial tensions and divisions persisted. White enrollment was declining at an alarming ratethe phenomenon known as "white flight."
After experimenting with race-neutral alternatives without success, Lynn officials sought the advice of experts, including social psychologists, educators, and even demographers. They concluded that the only way to improve the schools was to implement a comprehensive program that employed not only the race-conscious transfer policy at issue here, but a host of other innovations and resource infusions. Their goal was not simply to create a diverse learning environment, but also to support it and to ensure its success through curricular changes and materials, teacher and staff training, as well as improved facilities. They created a flexible plan, based on sophisticated data collection and analysis, that changes with the conditions in Lynn. Anyone denied the placement of his or her choice can appeal, as many of the plaintiffs in this case have done.
By 2002, when the trial of this case began, it was clear that the Lynn Plan played an important part in creating a thriving, diverse, and integrated urban school system, successful on all fronts and by all measureswhere race relations are positive and racial and ethnic tensions are absent; where students from diverse backgrounds maintain friendships and are well represented in student government and extracurricular activities; where student attendance rates are uniformly high and test results reflect substantial gains, particularly in the schools located in Lynn's urban center; and where there are extraordinarily low levels of student conflict, crime, and violence.
Nothing about the plaintiffs' challenge or the government's constitutional and statutory obligations obliges the Court to dismantle this Plan.
II. PROCEDURAL HISTORY
Before me presently are two civil actions, Comfort v. Lynn School Committee, Civ. No. 99-11811, and Bollen v. Lynn School Committee, Civ. No. 01-10365.
A. The Comfort Litigation
1. Parties
Samantha J. Comfort, Rhonda Campbell, Karen Agnew, Andrew and Cattibell DiGaetano, and Jean and William O'Neil, all parents of school children enrolled in the Lynn district, brought the Comfort action in 1999. The Comfort plaintiffs sued the Lynn School Committee, its individual *336 members,[8] the Superintendent of Lynn Schools,[9] the City of Lynn and its Mayor. In December 1999 the Commonwealth of Massachusetts intervened as a party defendant for limited purposes.[10]
The Comfort plaintiffs challenged the RIA and the Lynn Plan under the Equal Protection Clause of the United States Constitution, Article 111 of the Massachusetts Declaration of Rights, and several federal civil rights statutes, including 42 U.S.C. §§ 1981, 1983, and 2000d. The RIA obliges the state Board of Education to address de facto segregation in Massachusetts' public schools, either by funding voluntary efforts of individual school districts to integrate or, if necessary, by compelling them to adopt plans to improve racial balance in school populations. Comfort v. Lynn School Comm., 100 F. Supp. 2d 57, 62 (D.Mass.2000). The Lynn Plan, as I describe more fully below, entails a neighborhood school system that permits transfers to out-of-neighborhood schools, unless such transfers would result in increased "racial isolation (too low a minority percentage) or racial imbalance (too high a minority percentage)" in a particular school. Id. at 61.
2. Preliminary Injunction
The Comfort plaintiffs sought a preliminary injunction to enjoin the district's use of race in the Plan. I denied the motion, finding that the plaintiffs showed neither a likelihood of success on the merits nor irreparable harm. Id. at 59-60. The First Circuit in Wessmann v. Gittens, 160 F.3d 790 (1st Cir.1998), held that diversity "might be sufficiently compelling, in specific circumstances, to justify race-conscious actions." Id. at 796. The intensely fact-bound question of what educational circumstances would permit race-conscious actions was hardly amenable to resolution on the truncated record of a preliminary injunction. Comfort, 100 F.Supp.2d at 66. Nor could the Comfort plaintiffs demonstrate irreparable harm from the continuation of the Plan since, as described below, most were content with the schools their children were in and did not intend to seek further transfers. Id. at 63-64.
The plaintiffs did not appeal the denial of their Motion for a Preliminary Injunction.
3. Motions to Dismiss
The defendants moved to dismiss a number of the Comfort plaintiffs' claims on the *337 grounds that (1) the Constitution does not allow a state to be sued for damages, and (2) the plaintiffs lacked standing to sue because their children had been placed in the schools of their choice and no longer wished to transfer. With certain exceptions, I granted these motions.
I dismissed the federal statutory civil rights claims for damages against the Commonwealth on Eleventh Amendment grounds, since there was no question that the state may not be sued for damages. Comfort ex rel. Neumyer v. Lynn School Comm., 131 F. Supp. 2d 253, 254 (D.Mass. 2001).[11] I also held that the Eleventh Amendment barred declaratory relief against the Commonwealth. Id. at 256. See infra Section V.A.1.
In a subsequent opinion, Comfort v. Lynn School Comm., 150 F. Supp. 2d 285 (D.Mass.2001), I held that the plaintiffs lacked standing to seek injunctive relief against any of the defendants. Id. at 288. The plaintiffs had children who were contentedly enrolled in schools of their choosing and could not "demonstrate either actual present harm or a likely danger of direct injury in the future." Id. at 295-98.
I held that the Comfort plaintiffs could pursue limited declaratory relief, as well as nominal damages. Id. at 298-99, 302. Specifically, I found that "prospective" declaratory relief was unavailable to the plaintiffs, id. at 302, but that they were nonetheless entitled to sue for a "retrospective" declaration that the Lynn Plan violated their legal rights. I now conclude that this finding was erroneous: a declaration, prospective or retrospective, is available only to plaintiffs that have standing because of a present case or controversy. See also infra Section V.A.1. In any event, the Comfort plaintiffs were free to litigate the substance of their claims for nominal damages. Comfort, 150 F.Supp.2d at 298-99.
Of the original Comfort plaintiffs, only Samantha Comfort remains in this case.[12]
B. The Bollen Litigation
Rather than amend the existing action, plaintiffs' counsel added new parent plaintiffs in a separately filed lawsuit.[13] The Bollen plaintiffs, Todd and Laurie Bollen, Janeen Goodwin, Gina Leone, LeAnne Manuel, Michael and Meta Stinson, and Karen Tsaltas[14] sued the same defendants but added claims under 42 U.S.C. §§ 1985 and 1986 and listed members of the Massachusetts State Board of Education as defendants in their official capacities. Defendants move to dismiss a number of the Bollen plaintiffs' claims on standing grounds. That motion [document # 174] is *338 GRANTED IN PART AND DENIED IN PART.[15]See infra Section V.A.2.a.
III. TRIAL
The parties filed multiple summary judgment motions, all of which I denied. In June 2002, the parties presented evidence in an eleven-day bench trial.
A. Plaintiffs' Case
Consistent with their view that the case was a simple one, plaintiffs offered one live witness, Meta Stinson, a Lynn parent and plaintiff; the deposition testimony of state Board of Education member Abigail Thernstrom; and several exhibits.
Ms. Stinson, who has three daughters currently attending Lynn schools, sought to have her daughter, Angelica Jackson, transferred from Breed Middle School to Pickering Middle School. That transfer was initially denied because Stinson had listed her daughter as "white" when she first registered her for school. Although Angelica's father is white, Stinson herself is of mixed racial and ethnic background French Canadian, Irish, Jewish, Barbadian, and African American. Upon learning of the denial, Stinson went to the Parent Information Center ("PIC") and added an additional racial designation of "black," but to no avail. Stinson conceded that although she was advised of her right to appeal, and indeed, even though that appeal would have been successful,[16] she elected not to do so. In the interim, the district announced that at the Sewell-Anderson school fifth graders could remain for the sixth grade, and Stinson was satisfied with that placement.[17]
Significantly, Stinson testified that Angelica maintains a number of interracial friendships with her classmates, has a positive attitude about race, and gets along well with students of other races, even though Stinson has not personally discussed matters of race with her daughter. Stinson conceded that it is an important component of Lynn's educational mission to ensure that its students overcome racial stereotypes and acquire a better understanding of students with different racial backgrounds.
The plaintiffs also introduced the deposition testimony of Abigail Thernstrom, a member of the Massachusetts Board of Education. Thernstrom, though not offered as an expert, took issue with the views of certain school desegregation expertsincluding Dr. Gary Orfield, a nationally renowned expert who testified in the defendants' case. She challenged Orfield's view that America's schools are growing increasingly racially segregated principally because she did not believe that "[t]he *339 dividing line in America" is "between whites and nonwhites."[18] Deposition of Abigail Thernstrom ("Thernstrom Deposition"), Oct. 9, 2001, at 22.
Although a member of the Board of Education and charged with enforcing the RIA, Thernstrom opposed the Act in principle. She conceded that she could not speak with authority on the law since she lacked day-to-day familiarity with its terms.[19] Moreover, she acknowledged that she had no personal knowledge or experience of specific conditions in Lynn.
Finally, plaintiffs offered exhibits that pertained to the operation of the Lynn Plan and RIA and the extent to which racial categories are used in making transfer decisions.
B. Defendants' Case
Defendants countered with ten witnesses, five of whom were district administrators and educators with twenty to thirty years' experience in the Lynn system variously as students, teachers, and administrators. Significantly, these witnesses were in a position to describe the troubled state of Lynn schools before the Lynn Plan was implemented, and to attest to its impact afterward. They described pre-Plan efforts to improve the schools, all to no avail. And they lauded the current state of the school system under the Lynn Plan and the substantial improvements it has effected. Defendants also offered the testimony of a Lynn parent and a student, who described the actual workings of the system in the schools with which they were familiar.
Finally, defendants offered the testimony of a number of nationally known experts. The experts based their testimony on their personal observations of Lynn schools, a survey of Lynn students, interviews with teachers and administrators and other Lynn-specific data. The experts affirmed the importance of Lynn's race-conscious transfer policy to the district's educational objectives.
1. The Administrators:
Janet Birchenough has been Director of Equity and Program Support for the Lynn public schools since January 1992. Birchenough managed and supervised Lynn's Parent Information Center, the school district's central registration office, which oversees the day-to-day implementation of the Lynn Plan. In addition, the PIC gathers the data that Lynn officials use to certify that the Plan remains precisely tailored to accomplish the Plan's goalsdata about the school system, its schools, its students, simulations about demographic patterns in Lynn, and the likely composition of the schools if the Plan were to be eliminated.[20] Moreover, Birchenough testified *340 from the perspective of nearly forty years' experience in the Lynn schoolsas an elementary school teacher, as an art teacher working in eleven of the district's eighteen elementary schools and ultimately as an administrator. I found her testimony credible and relevant, and her knowledge of the systemof individual schools and the history of the Planencyclopedic.
Patricia Barton, currently the principal of the Fecteau-Leary Middle School, also has 30 years of professional experience in the Lynn system. She testified credibly about her experience as a student attending racially isolated schools, as a teacher in a segregated system, and as an administrator who presided over that system's transformation under the Lynn Plan.
Nicholas Kostan, the current Superintendent of the Lynn School Department, also testified with considerable authority about the changes he has seen. He has been a teacher and a professional administrator in the Lynn school system for 31 years, first as a principal of the Breed Middle School. He serves as liaison between the Lynn School Committee and the Lynn School Department and at the same time oversees the PIC and works with teachers, parents, students, and the community.
Patricia Mallett is currently a teacher in the media center at the Brickett school, having taught in Lynn schools for twenty-six years. During the transition to magnet school programming, she was the system's Magnet School Facilitator. Mallett testified from that unique perspective on the race-neutral alternatives that were tried and considered, as well as the success of the current Plan.
2. The Parents and Students:
Karen Horner is an African American parent of two current Lynn public school students. She is active in and serves as the Acting Secretary for the Lynn branch of the NAACP. She moved from Boston to avoid living in a segregated neighborhood and to provide her children with an integrated education. Horner's children, Kyle, age 17, and Erroll, age 14, have attended neighborhood and out-of-neighborhood schools in Lynn, and she spoke movingly about the quality of her children's experiences.
Nicole Oak is a white student who had just graduated from the Lynn school system in June 2002 and described her educational experience there.
3. Defendants' Experts:
Dr. Gary Orfield is a nationally recognized political scientist and one of the leading national experts in the field of education and equal educational opportunity, which encompasses issues such as racial segregation, racial isolation, desegregation, housing and racial change, and their effects on students in primary, secondary, and higher education.[21] He is a professor of education and social policy at Harvard University, where he is co-director of the Harvard Project in School Desegregation. The Project in school desegregation is an interdisciplinary research center that commissions *341 research across the nation on issues of civil rights policy, racial change, and racial inequality. Significantly, Dr. Orfield based his testimony not only on his own research, experience, and studies from other jurisdictions but also on an extensive amount of data and information about Lynn and its public schools in particular. Orfield put the full resources of the Harvard Civil Rights Project ("Harvard Project") (a separate entity from the Project in school desegregation with a broader research focus) into his study of Lynn and gathered information firsthand during a site visit as well.
Nancy McArdle testified as an expert on the demographic and housing trends in Lynn. She was a researcher with the Joint Center for Housing Studies at Harvard for fourteen years. McArdle has researched, consulted, and published in the field of housing policy, with specific attention to demographic, population, and immigration trends. Like Dr. Orfield, McArdle relied on a wide variety of data sources specific to Lynn.
Dr. Melanie Killen, a developmental and education psychologist, testified on how racial segregation and racial diversity impact the social and moral development of children and adolescents. She is a Professor of Human Development in the College of Education at the University of Maryland, and she presently serves as Associate Director for the Center for Children, Relationships and Culture, a research department with faculty from developmental psychology and education psychology. Dr. Killen has focused specifically on how children and adolescents evaluate exclusion based on race and ethnicity, as well as on intergroup relationships and conflict resolution across lines of ethnicity. She, too, based her expert testimony on a series of direct observations and interviews on site in the Lynn Public Schools, as well as her review of the Harvard data.[22]
Finally, Dr. John Francis Dovidio testified as a nationally renowned social psychologist with a particular interest in the subdiscipline of intergroup relations and the development of racist attitudes. Dr. Dovidio is presently the Charles A. Dana Professor of Psychology and Dean of Faculty and Provost at Colgate University. His research has focused on social psychology and race relations among elementary school children, secondary school students, adolescents, and college students. He testified about how and when stereotypes are formed and what strategies can be deployed to prevent their formation. He offered his expert opinion based on personal visits and the Harvard data.
C. Plaintiffs' Rebuttal
Plaintiffs offered one witness in rebuttal, Dr. Christine Rossell, a professor of political science at Boston University. Dr. Rossell's field of interest is the comparative efficacy of different approaches to school integration.
While Dr. Rossell had been a paid consultant to Lynn in the development of its original school desegregation plan in 1987 (when she supported an earlier, and more intrusive iteration of the Plan), at the time of her testimony, she had no current knowledge of the Plan. She based her conclusions on her research involving other school systems and what she had remembered of that early draft of the Lynn Plan from fifteen years earlier.
*342 IV. FINDINGS OF FACT
A. The Racial Imbalance Act
In 1965, Massachusetts became the first state in the nation to enact a law addressing racial imbalance in the public schools.[23] The Racial Imbalance Act ("RIA"), Mass. St.1965, c. 641, §§ 1 et seq. (codified at Mass. Gen. Laws c. 71 §§ 37C, 37D, and c. 15 §§ 1I, 1J, 1K), had its origin in a legislative finding that racial imbalance in Massachusetts public schools was so dramatic as to reach a crisis level, with damaging effects on the students. The Massachusetts Board of Education's "Kiernan Report" not only concluded that "[r]acial imbalance represents a serious conflict with the American creed of equal opportunity," School Comm. v. Bd. of Education, 366 Mass. 315, 318 n. 5, 319 N.E.2d 427 (1974) (quoting the Kiernan Report) (internal quotation marks omitted), it also underscored the extraordinary impact of racial imbalance throughout the school system. Racial imbalance was found to encourage prejudice among students of all races, inadequately prepare students for life in multiracial communities, and produce inferior educational facilities for African Americans.[24]Id.
As a result, the legislature found that racial imbalance in state public schools posed an "emergency" situation, see School Comm. v. Bd. of Education, 352 Mass. 693, 698, 227 N.E.2d 729 (1967), and enacted the RIA to correct it. Section 1 of the RIA provides:
It is hereby declared the policy of the commonwealth to encourage all school committees to adopt as educational objectives the promotion of racial balance and the correction of existing racial imbalance in the public schools.
Mass. St.1965, c. 641, § 1 (codified with amendments at Mass. Gen. Laws c. 71 § 37C). Toward this end, the RIA encourages but does not requireall schools to devise "plans" to promote racial balance. The only instance in which the law imposes a duty upon a school committee to prepare such a plan is when the school committee has proven unable to satisfy requests from nonwhite students attending racially isolated (predominantly minority) schools to transfer to racially imbalanced (predominantly white) schools.[25] Mass. Gen. Laws. *343 c. 71, § 37D; see also School Comm., 366 Mass. at 322-23, 319 N.E.2d 427.
The state Board of Education[26] is to assist in the development of any plan, voluntary or mandatory, and must approve it prior to implementation. Mass. Gen. Laws c. 76, § 12A. The plan must set forth in detail the district's proposed changes in school attendance zones; any possible alteration to or expansion of existing facilities, as well as any planned addition of new school buildings; and any "other measures" that the district anticipates implementing to ensure space for students seeking "desegregative transfers," i.e., transfers that will reduce racial imbalance. Mass. Gen. Laws c. 71, § 37D.[27]
Under the RIA, the Commissioner of Education has the power to withhold school construction funds and other state aid if a school district does not act within a reasonable time to reduce an identified racial imbalance in its system. Mass. Gen. Laws c. 15, § 1I, ¶ 2; see also School Comm., 366 Mass. at 323, 319 N.E.2d 427. A 1974 amendment provided affirmative financial rewards to school districts that undertake voluntary plans. Mass. St.1974, c. 636, § 1. Such incentives included 100% state reimbursement of certain student transportation costs, substantial funding of the costs of establishing magnet schools, and payments of $500 to the district for each student transfer that reduces racial imbalance or isolation. Mass. Gen. Laws c. 15, § 1I, ¶¶ 3, 4.[28] The city of Lynn submits yearly "entitlement reports" certifying the number of desegregative student transfers that occurred in its school system *344 in the prior school year; the state responds with aid monies based on the numbers Lynn provides.
From 1974 until 1984, the Act authorized state reimbursement for up to 75% of the cost of approved school renovation or construction directed at reducing racial imbalance in school populations. By 1984, the rate of reimbursement was increased to 90%, Mass. St.1984, c. 394, § 5, where it remained until 2001, when the legislature eliminated the reimbursement, Mass. St.2000, c. 159, § 36.[29] In Lynn's case, state assistance provided under the RIA supplied 90% of the funding for school renovations and construction that the city outlined in its 1990 voluntary plan.
B. Racial Imbalance in Lynn's Public Schools
In the nearly ten years preceding the adoption of the Lynn Plan, Lynn faced two serious problemssubstantial overcrowding of its neighborhood schools and significant levels of racial imbalance. Significantly, the state attributed the latter not only to growing residential segregation within the community, but also to the school district's own policies and practices. Indeed, correspondence during this period suggests that state officials felt Lynn's actions and inactions made the city vulnerable to state and/or federal lawsuits alleging de jure segregation.
The emergence of increasingly racially identifiable schools in Lynn created a crisis. A number of witnesses told of conditions not unlike those targeted in the Kiernan Report. Janet Birchenough observed racial polarization and severe resource inequalities between the predominantly minority and identifiably white schools where she taught. These inequalities were apparent on all fronts, including building facilities, learning materials, and teacher commitment. The predominantly white schools were well-maintained and well-managed; parents were deeply involved in their children's education. The minority schools, in contrast, limped along with crowded classes and outdated materials. There were discipline problems: parents and administrators alike were apathetic; students were angry, felt abandoned, and often lashed out. Attendance rates were low; achievement at all levels suffered. Class sizes were larger in identifiably minority schools than in identifiably white schools.
Wherever possible, teachers with seniority who had priority in choosing new openingstransferred out of minority schools into the identifiably white, wealthier schools, where the school climate was more conducive to learning and teaching. There was no professional training for teachers to prepare them for teaching a diverse student population, and little or no curricular support.
Birchenough observed that the racially charged and intolerant atmosphere in the schools led to cross-racial conflict, the students' frequent resort to racial slurs, as well as tendencies to self-segregate by race at recess and in cafeterias and classrooms. This was so in all of Lynn's schools, in the better-off, predominantly white schools that harbored small minority populations as well as in the more racially mixed schools. Birchenough's observations were confirmed by other participants, including Principal Barton, Superintendent Kostan, and Ms. Mallett.
1. 1977: The First Warning
In 1977, the Board of Education first confronted Lynn about the racial imbalance *345 in its schools. Specifically, the Washington Community School ("Washington"), one of Lynn's elementary schools, was found to have a 57.2% minority student population, when the overall district was only 9% minority. The Board of Education attributed the concentration of minority students at Washington in part to residential patterns, but more significantly to the district's school assignments, which the state roundly condemned. Administrators regularly allowed minority transfers into the already racially isolated Washington Community School and assigned all bilingual classes to that school's annex.
Over the next decade the Board of Education regularly warned Lynn that its action and inaction exposed it to charges of de jure segregation. In contrast to other cities across the nation, however, by implementing its voluntary Plan, Lynn officials ultimately headed off court involvement and dramatically changed its schools for the better.
2. 1979: Washington, the First Magnet School
In 1979 a magnet school program was established at the Washington school. The state offered supplemental funding to the Washington magnet school program, conditioned on the district's adoption of a voluntary transfer policy that would attract white students. Lynn accepted this invitation and adopted a voluntary transfer policy.
In April 1980 the district announced a more comprehensive plan. Neighborhood schools remained the centerpiece of the plan with these exceptions: White students from schools that were 70% or more white had the right to transfer to the Washington school, whereas white students already enrolled in that school would not be permitted to transfer out of it. Nonwhite students in the Washington district and elsewhere had the right to transfer to any school that was more than 70% white, but white students were not permitted to make such transfers.
Again, there was official manipulation of the policy. Officials were accused of bending the rules for white parents. Administrators regularly approved the requests of white parents to transfer their children out of predominantly minority neighborhood schools. For example, in the 1987-1988 school year 107 out-of-neighborhood white students were attending the 93% white Aborn high school as a result of transfers. Of these 107 students, more than half of them resided in the attendance zone that fed into the Ingalls high school, which was located in a minority neighborhood. Lynn officials conceded that these transfers were in blatant violation of the school assignment policy in place at the time.[30]
3. 1980s: Profound Changes in Lynn
Between 1980 and 2000 racial and ethnic minorities moved into Lynn in considerable numbers, transforming a city that was 93% white to 63% white. Defense expert Nancy McArdle, citing census data, noted that the child population of Lynn went from 90% white to more than half minority during this period. More and more, Lynn's residents began to self-sort into neighborhoods by race.
The 1980 Census found that the northern and western areas of Lynn were 90% white, while a belt of moderately integrated *346 neighborhoods surrounded a minority enclave in south central Lynn. By the end of the decade, these trends intensified.
The schools, like Lynn's neighborhoods, likewise grew more and more racially polarized. While the magnet program at Washingtonthe only such program in Lynn in the early 1980ssaw minor changes in minority concentration, dropping from well above 50% to 44% during this period, the minority share in other minority-identifiable elementary schools in Lynn dramatically increased.
The school system was troubled, with high absentee rates, racial tension and conflict, and chronically low test scores. Racial polarization in Lynn's neighborhoods and schools continued into the mid-1980s. By 1984, notwithstanding the city's demographics, then roughly 83% white and 17% minority, four of Lynn's seventeen elementary schools had minority populations of between 35% and 50%. The remaining schools were overwhelmingly white and remained so until 1987, even as the minority student population in Lynn climbed to 26% over the intervening three years.[31]
4. 1986: A Series of Failed Voluntary Plans
The state Department of Education urged Lynn to adopt a long-term, comprehensive plan to defeat racial isolation and imbalance. Lynn formulated such a plan in April 1986 but elected not to seek state approval (as the RIA requires). As a result, grant monies offered by the state for Lynn's "desegregation coordinator" were suspended mid-year, due to Lynn's stalled progress. The district ultimately drafted a second voluntary plan, which the state approved in September 1986 but Lynn never implemented.
5. 1987-1988: Greater Imbalance; More Accusations
By 1987 four elementary schools had become minority dominated, four other elementary schools were at least 95% white, and three more were hovering at around 90% white student enrollment.
In April 1987, the Lynn School Committee developed a third voluntary plan, which the Board of Education approved. Lynn would launch and develop five schools, designated "magnet" schools, in the first year of implementation, with five more to follow in the next year. With the state's approval would come additional funds to support the necessary construction and renovation of facilities to improve these schools. The plan also approved a redrawing of elementary and junior high school attendance zones to assist with the desegregative effort.
However, certain aspects of the plan, slated for implementation in September of 1987, were delayed. The district did not implement its proposed class-size maximums, and the school year began with the elementary and middle school attendance zones unchanged.
Significantly, school officials continued to approve improper segregative transfers. By January 1988, state officials made their accusations more pointed than ever before. In a letter to Lynn's Superintendent they noted:
*347 It appears that the condition of minority identifiable schools in Lynn is directly [at]tributable to past actions and inactions by Lynn School officials. The most significant finding is that the School Committee failed to enforce its own controlled transfer policy and has admitted to that fact.
Again, the message was clear: Lynn's "actions and inactions," its failure to enforce its own plan in an evenhanded way, and its own admissions of these facts made the district vulnerable to charges of de jure segregation. The state withdrew its approval of Lynn's Plan.
6. 1988-1990: Drafting the Current Plan
In its February 1988 Plan, Lynn officials admitted that official actions had exacerbated racial isolation and imbalance. They redoubled their efforts, this time soliciting feedback from the community, whichno doubt because of Lynn's historyeyed Lynn's proposed actions warily. A letter from Christine Rossellwho consulted for Lynn during this period but now serves as the plaintiffs' expert in this casewas more sanguine, observing that Lynn stood "an excellent chance of desegregating its six minority schools and minority isolated schools."
A key point of contention was student assignment. The state Department of Education was concerned that Lynn's use of voluntary transfers and magnet programs would not be sufficient to reverse the decades-long trends toward racial imbalance, a trend exacerbated by official action.[32] Lynn, however, remained committed to a voluntary transfer plan and refused to assent to "restricted choice" or "controlled choice" regimes that the Department was recommending.
Finally, in September 1989, Lynn devised yet another amended plan, which the state accepted. This new Plan, the terms of which I will set forth in detail below, guaranteed that every student could attend his or her neighborhood school. In addition, a student could transfer from the neighborhood school to another school as long as the transfer improved the racial balance in either the neighborhood or the destination school. The Plan gave assurances that there would be space for such transfers in new and renovated schools.
In February 1990 the Plan was amended to allow for "neutral transfers," that is, transfers that would neither improve nor adversely affect racial balance in the schools that were party to the transfer. The state approved this amendment.
A 1999 amendment to the Plan added more flexibility to the transfer system, instituting an appeals process for transfer denials and certain exemptions for bi- and multiracial students[33] and cases of extreme hardship.[34] This Plan is the one that the plaintiffs challenge.
C. The Current Plan
It is important to note at the outset that under the Lynn Plan every student in Lynn is entitled to attend the school in his *348 or her neighborhood.[35] Students have options beyond their neighborhood schools if their proposed transfers are "desegregative" i.e., when they contribute to the districtwide integration effort. Additional "neutral transfers" are allowable as well, provided that they are approved by the school district's PIC and the sending and receiving principals.[36]
Whether or not a transfer is desegregative or neutral turns on the interplay of three factors: the racial composition of the sending and receiving schools and the student's race. Schools are classified as either "racially balanced," "racially isolated," or "racially imbalanced." An elementary school is considered "racially balanced" if its minority[37] population falls within +/15% of the overall percentage of minority students in the Lynn district.[38] For the middle and high schools racial balance is +/10% of the district population. When the proportion of minority students in a school exceeds the range of racial balance, that school is classified as "racially imbalanced." Likewise, a school in which the number of white students surpasses the outer bounds of racial balance is "racially isolated."
For example, Lynn's student population for the 2001-2002 school year was 42% white and 58% nonwhite. By the Lynn Plan's definitions, then, an elementary school that enrolled between 43% and 73% minority students would qualify as racially balanced. Middle and high schools required a tighter fit of between 48% and 68% minority students. Elementary schools with more than 73% minority students in the 2001-2002 school yearand middle or high schools with more than 68% minority studentswere designated as racially imbalanced. Conversely, an elementary school that was fewer than 43% minority or a middle or high school that was fewer than 48% minority would be considered "racially isolated."
A proposed transfer is desegregative always allowed, space permitting[39]when it would improve the racial balance of the sending or the receiving school. For example, a minority student may always transfer out of a racially imbalanced school ("School A") or into a racially isolated school ("School B"). Conversely, a white student may always transfer out of the racially isolated School B and into the racially imbalanced School A. A transfer is segregative, and never allowed, when it would exacerbate an already existing condition of racial imbalance in the sending or receiving school. A requested transfer that is neither desegregative nor segregative is "neutral" and conditionally allowable, as I explained above.
*349 At a district level, white and nonwhite students are equally subject to the Plan; sometimes a white student may be denied a transfer, sometimes a nonwhite student. But at the individual level, there are times when, all else being equal, a student's ability to transfer turns on his or her race. To continue the above example, with School A as a racially imbalanced school and School B as a racially isolated school: A student who seeks a transfer from School A to School B may do so (again, space permitting) if he or she is a minority student. A white student requesting the same transfer, however, would not be eligible, unless she or he qualified for certain exceptions.
Such a student, denied a transfer because it would exacerbate racial imbalance in the system, may appeal the decision to the PIC's Director, who may occasionally refer the matter to or consult with the district Superintendent. The appeals process is not an empty formality. The district will override transfer denials on appeal when the denial would result in siblings attending different schools or when parents can make a showing of medical, safety, or other extreme hardship.
Moreover, the PIC goes out of its way to make the appeals process accessible to everyone. It assists parents in preparing documentation required to establish hardship. It then arranges a meeting with the parents to discuss the student's options. If conditions at the destination school preclude the transfer, the PIC will present the student with alternative destination schools. Finally, the unique considerations posed by bi- and multiracial students have led Lynn to amend its Plan to permit parents to appeal the district's race designations directly to the Superintendent. Significantly, a number of the plaintiffs in this case have successfully invoked the appeals process.
The Plan's drafters also recognized that integration involves more than race-conscious school assignment policies, more than simply the mixing of students of different racial backgrounds. Thus, the Plan included substantial curricular innovations designed to ensure positive racial interaction; training and development of staff to address the challenges of teaching children of diverse backgrounds; programs that would create opportunities for positive interaction among students, school personnel and parents from different racial and ethnic groups, which are not normally found within regular school programming; integrated leadership opportunities and training to give students the skills necessary to deal effectively with racial tension and conflict, etc.
In addition, the Plan's drafters acknowledged that the improvements it sought could not be sustained in the long term unless all the schools were made attractive to all Lynn parents, whatever their race. Thus, the Plan included an ambitious construction program, largely funded by the state, to ensure sufficient space for out-of-neighborhood transfers. It involved the development and standardization of curriculum so that there would be equal instructional opportunities across Lynn; development of indicators of performance and achievement for individual schools, programs and students; development of measures designed to improve school attendance; and creation of business/college partnerships with the schools to improve the quality of instruction.
D. Continuous Monitoring
The district's PIC oversees the ongoing implementation of the Lynn Plan. In effect, it is the vehicle through which the Plan administrators certify that the Plan is narrowly tailored to meet its goals.
Chief among the PIC's responsibilities is the processing of all admissions and readmissions *350 to the district and all transfers within the school system. It assesses students for special needs and maintains an ongoing database of each student's transfer history. That database, which features thirty-five data fields per student, enables Birchenough to monitor class size and enrollment by school, as well as the racial composition of individual schools and the district more generally.
The PIC prepares monthly reports tracking movements of students into and out of the district, as well as between the schools, to ascertain how many of these transfers qualify as desegregative. It provides regular reports to the state Department of Education on the progress and status of the district's magnet school programs, as well as the number of desegregative transfers.[40]
Significantly, the data that the PIC gathers enable it to continuously monitor the need for the Plan. The PIC tracks the patterns of Lynn residential segregation. It attempts to predict the choices of white or minority parents if there were no restrictions on transfers. Based on that data, Birchenough (and the defendants' experts) predicted that in a pure choice model, white parents would seek transfers to predominately white schools, and minority parents to minority schools.[41]
E. A Current Snapshot of the Lynn School District
1. Residential Segregation and Geographical Separation
According to McArdle's expert testimony, recent censuses and the data kept by the Lynn PIC reveal that Lynn remains geographically segregated by race. In the 1990s white populations continued to move to the northernand particularly north-eastern areas of Lynn, while the concentration of racial minorities in south central Lynn expanded to consume all of southern Lynn and more of central Lynn, with a transition zone of racially mixed neighborhoods between these two enclaves. In addition, the elementary schools located in the predominantly white sections of Lynn and the elementary schools in the predominantly minority sections are separated by significant distances. The travel time between the two areas, whether by private car or public transportation, is not insubstantial.
2. "White Flight" and Its Decline after Implementation of the Lynn Plan
In 1979, before the Lynn Plan's implementation, when the city's schools were the most polarized, statistics show that the overall number of students in the Lynn public schools began to declinea direct result of the decline in white enrollment, what has been described as "white flight."
Significantly, after the Plan's implementation, this trend began to reverse. The number of students now enrolled in Lynn schools is similar to enrollment in the 1970s, just before the most significant increase in the number of minority students enrolled in the school system. While the *351 percentage of Lynn students attending private and parochial schools rose as high as 17.4% in 1987, it has since declined dramatically to a low of 10% in 2001. Of the 15,444 students attending Lynn public schools in the 2001-2002 school year, 42% were white and 58% were nonwhite (15% African American, 29% Hispanic, and 14% Asian).
3. Racial Balance or Imbalance
There are presently twenty-five schools in the Lynn systemeighteen elementary schools, four middle schools, and three high schools.[42] Under the Lynn Plan, "racially balanced" elementary schools in 2001-2002 had minority populations of between 43% and 73%; nine schools qualified.[43] Six schools were racially isolated.[44] Four elementary schools were "racially imbalanced."[45]
Under the Plan's stricter requirements for the middle and high schools, namely, a racial makeup falling within +/10% of the districtwide breakdowns, which in 2001-2002 translated into 48% and 68% minority enrollment to qualify as racially balanced, only one middle school of the four was racially balanced, while all three high schools met the test. The Breed middle school (49%) was racially balanced, while the Marshall (72%) and Fecteau-Leary (81%) middle schools were racially imbalanced, and Pickering (33%) was racially isolated. Lynn's high schools were all racially balanced with the following percentages: Lynn Classical (51%), English (51%) and Lynn Vocational Technical (63%).
4. The Special Problem of Poverty
Many of the city's resident families live at or near the poverty level, a situation that greatly complicates any school's educational mission. In the 2001-2002 school year, 65% of all Lynn students received free or reduced-cost lunch (eligibility for which is based on family income), including 40.7% of white students, 72% of the African *352 American students, and 79.8% of the Asian American students.[46] Fourteen of Lynn's eighteen elementary schools enroll a sufficient number of impoverished students to qualify for federal Title I assistance. Significantly, the four that do not receive assistance are the four most identifiably white schools.
5. School Construction and Renovation
Since the Plan was implemented, Lynn has been able to renovate and expand six of its elementary schools, for which the state provided 90% of the funding. Lynn is currently planning another phase of construction that would include renovations to existing facilities and the construction of two new middle schools and two or three elementary schools. Elimination of Lynn's restrictions on segregative transfers would render this project ineligible for 90% funding under the RIA.
6. "Magnet" Schools
Of the ten magnet programs envisioned in early iterations of the Plan, only seven were ultimately developed. The district added two more programs in September 1999. However, the term "magnet school" in this setting needs to be clarified. It does not connote a competitive admissions process or the provision of a more elite education. See infra note 72.
Lynn's "magnets" differ from its other schools only insofar as they have adopted certain "educational themes." The magnet themes currently include "Brickett by the Sea," "Reading and Writing Literary and Whole Language," "Technology and Language/Citizenship Skills for the Future," "Life Science," "Rainbow Connection Society," "User Friendly Society," "Pickering After School Support," and "Healthy Schools Make Healthy Communities."
While the schools offer and provide varying academic programs, which are designed to draw students from other neighborhoods elsewhere in Lynn in order to further the integration effort, the parties stipulate that "the education provided ... in each of the elementary, middle, and high schools in Lynn is comparable in quality, resources, and curriculum."
F. The Lynn Schools at Present
By all accounts, and by all measures, since the implementation of the Plan the Lynn schools have become a success story. That success was recounted in the moving testimony of the participants, in expert testimony, and in the data.
The defendants have identified certain compelling interests to justify the Plan: First, to prevent racial isolation; second, to promote racial and ethnic diversity; third, to increase educational opportunities for all students and to improve the quality of education[47]; fourth, to provide a sufficient *353 education by state constitutional standards; fifth, to ensure the safety of Lynn's public school students; and sixth, to implement the clear command of the Supreme Court's decision in Brown v. Board of Education.
1. Observations by Participants
Since the Plan has been in place, Lynn school superintendent Nicholas Kostan has observed a "steady progression" of improvement in the schools. Racial tensions have subsided, attendance and test scores have increased, and suspensions of students have declined. Indeed, according to Kostan, Lynn's school attendance rates are remarkable for an urban school district. He attributed this attendance record to the Lynn Plan, which he believes has cultivated feelings of comfort and safety among Lynn students that make them want to go to school. He has also noticed that students no longer self-segregate by race in their social interactions, which he believes is also a result of the Lynn Plan.[48]
Patricia Mallett, a teacher at the Brickett elementary school, testified that since the Lynn Plan's implementation, she has witnessed a stunning improvement in student race relations at Brickett. Prior to the Plan, she observed self-segregation and racial tension in Brickett, a predominantly white school. Now, students of different races seek out one another and form friendships, a result she attributes to the Plan's fostering of cross-racial interaction in the crucial formative years.[49]
2. Expert Testimony
The expert testimony in this case corroborated the moving observations of the teachers, students, and administrators who testified on behalf of the district. McArdle and Drs. Orfield, Dovidio, and Killen together gave an internally consistent, multi-disciplinary presentation that convincingly explained how essential the Lynn Plan's use of race in school assignment was to the school district's renaissance.
*354 Broadly speaking, the expert presentation was compelling for three reasons:
First, Lynn's experts based their opinions on their considerable expertise and a tremendous amount of datathe lion's share of it personally obtainedspecific to the conditions in Lynn. Nancy McArdle, the defendants' demographics expert, performed a comprehensive study of demographic trends in Lynn. School desegregation expert Dr. Gary Orfield put the resources of the prestigious Harvard Civil Rights Project into his study of Lynn. Dr. Orfield oversaw the administration of the Harvard Project's standard data-gathering questionnaire ("Diversity Assessment Questionnaire") to eleventh grade students from all three of Lynn's high schools. The 72-question survey, jointly designed by leading experts on school desegregation,[50] is used to compare the success of desegregation efforts nationwide. Dr. Orfield followed up his survey with a visit to Lynn Classical High School in January 2002, where he met and spoke extensively with a number of leaders of student organizations.
In January and February 2002 Dr. Dovidio visited the Lynn school system, conducted formal and informal interviews with teachers and administrators, reviewed what he called "archival evidence" newspapers, yearbooks, student-made decorations, school mission statements and observed the students in the classrooms, between classes, at lunch, and before and after school. Dr. Killen also visited the Lynn system independently of Dr. Dovidio. Dr. Killen sought out schools with a range of racial homogeneity and heterogeneity. With the students she deployed observational and interview methodologies standard in her field of developmental psychology. Dr. Killen then supplemented her findings with more formal interviews with teachers and administrators. Drs. Dovidio and Killen also reviewed Lynn student responses to the Harvard questionnaires.
Second, the experts looked at the data that they gathered from the distinct methodological perspectives of their fields of expertise. Dr. Orfield, a desegregation expert, considered the whole picturethe survey data and his own observations as well as those of the other expertsand situated Lynn's experience in his broader experience with the many school systems he had studied. Drs. Killen and Dovidio, a developmental and social psychologist, respectively, viewed the data through the lens of their expertise: social and cognitive development, intergroup contact and attitudes, and racial stereotyping. McArdle, the demographer, analyzed data about residential and school segregation.
Third, the defense experts were nationally renowned experts who could cite with authority the studies in their field and who used accepted methodologies and based them on opinions published findings in peer-reviewed journals. I found each of them to be credible and extremely persuasive.
a. Dr. Orfield: Desegregation Expert
Under Dr. Orfield's supervision, the Harvard Project analyzed the survey returns and concluded that Lynn is
a school district where all groups of students have experienced ability to work together, to share issues, to discuss across racial and ethnic lines, feel comfortfeel that they are prepared to live and work in interracial communities, feel prepared to work under the supervision of somebody of another racial *355 group, have worked on projects across racial lines in their classes, feel comfortable in discussing issues across racial lines.[51]
Dr. Orfield testified that the survey's conclusions about the Lynn experience neatly align with the underlying theory of a new area of desegregation research: that benefits accrue to all children, not just minority children, as a result of school integration. Dr. Orfield cited several peer-reviewed studiesand referred to a number of other studies on their way to publicationfinding that parents and students in areas where integration has been achieved (as it has in Lynn) acknowledge that side-by-side learning with students of other races confers substantial citizenship benefits on all students. If schools implement desegregation programs with supportive elements, such as training of teachers, and the schools are committed to creating a positive supportive atmosphere, all students obtain "benefits to the way of thinking, understanding of the society, [and] ability to function in society," as well as gains in academic achievement across the board.[52]
Relying in part on McArdle's demographic data, Dr. Orfield also testified that the Lynn Plan used race no more than was necessary to allow Lynn to meet its educational goal of preparing students to live in a multiracial society. He observed that the Plan's specified range of racial balance for elementary schools, within 15% of the overall proportions of white and nonwhite students in the district, and for middle and high schools, within 10%was typical of desegregation planning. In fact, Dr. Orfield found the range perhaps more flexible and accommodating to the interests of parents than he might have chosen: he said he "probably would have chosen 10%."
Finally, Dr. Orfield testified about the likely impact of the resegregation of Lynn's schools. He cited research on African American and Latino children concluding that educating students in racially isolated or segregated school environments has an adverse impact on school attendance and performance, with long-term consequences. Poverty exacerbates racial isolation and segregation for minority students. When schools that are already in areas with an overwhelming minority residential population and extreme poverty resegregate, racial polarization is accelerated, with all of its deleterious effects.
Significantly, resegregation would have a substantial impact on white students in Lynn as well. Based not only on his research, but on the studies and research of other nationally known experts, Orfield opined that, as a result of racial isolation *356 and segregation, these students forfeit the opportunity to learn from other groups and are less prepared to handle interracial settings as an adult, conclusions underscored by the testimony of Drs. Killen and Dovidio.
b. Drs. Dovidio and Killen: Social and Developmental Psychologist, Respectively
Drs. John Dovidio and Melanie Killen, a social and developmental psychologist, respectively, gave psychological content to Dr. Orfield's conclusions. Dr. Killen testified that because racial (and certain ethnic) differences are observable, children key on them early in their social development. Differences that are visibly apparent to young children have deeper resonance with them. As a consequence of this early attendance to observable difference, stereotypes about race and (visible) ethnicity set in early and are extremely difficult to correct in adolescence and adulthood. Dr. Dovidio agreed that children attend more readily to racial distinctions than other differences.
Furthermore, Dr. Killen testified that the setting of stereotypes is harmful to all children. Students on the receiving end of stereotypical assumptions feel stigmatized in ways that compromise their academic prospects. Students who harbor stereotypes suffer as well: their reliance on stereotypes inhibits their ability to make individualized judgments when they interact with students of other races. As a result, even students who are not themselves the objects of negative stereotypes are nonetheless impaired in their ability to live in an interracial society.
Stereotypes do not as easily take hold of children who interact early and often with children of other racial and ethnic groups. The personal connections forged between students of disparate racial backgrounds challenge race-based assumptions they might otherwise develop about one another. It is Dr. Killen's experience that children in heterogeneous environments understand better why it is wrong to judge or exclude others based on their race.
Both Drs. Killen and Dovidio testified that meaningful interracial exposure must occur early. Dr. Dovidio described racial stereotyping as a "habit of mind" that is difficult to break once it forms. It is more difficult to teach racial tolerance to college-age students; the time to do it is when the students are still young, before they are locked into racialized thinking. For her part, Dr. Killen cited studies showing that students begin to form rigid social cliques around the sixth and seventh grades, and that race can be a dominant factor that governs who joins what clique. Once students have found their cliques, the opportunity to defeat racial stereotypes with cross-racial interaction is lost.
(1) Intergroup Contact Theory
Drs. Killen and Dovidio both attributed the turnaround in race relations in Lynn and the overall preparedness of Lynn's students to live in a multiracial societyto the district's successful implementation, through the Lynn Plan, of "intergroup contact." Intergroup contact theory is a 50-year-old prescriptive theory of race relations with volumes of support in the literature on social science, including social and developmental psychology. The theory holds that under certain conditions, interaction between students of different races promotes empathy, understanding, positive racial attitudes and the disarming of stereotypes. The four necessary conditions are (1) equal status between or among different racial groups; (2) authority support for interactions between members of the groups (that is, teachers and staff who advocate and facilitate the contact); (3) *357 common goals and cooperative activities; and (4) opportunities for personalized contact to disrupt stereotypes.
Drs. Dovidio and Killen testified, based on their personal, independent observations, that Lynn schools amply satisfied all four of these conditions and that the positive racial climate in Lynn was directly attributable to intergroup contact. Both expressed amazement at how ideal the conditions in Lynn's schools were for learning racial tolerance and concord. Dr. Killen found that this was true of all the schools she visited in Lynn: racial environments were "uniformly positive," and she noted that "it wasn't the case that one school really stood out as being ... seriously troubled, tough, problematic."[53]
(2) "Critical Mass"
Drs. Killen and Dovidio alike testified that racial balance within the schools is necessary and crucial to obtain the benefits of intergroup contact that they observed in such abundance at Lynn. Simply put, unless there is a "critical mass" of white and nonwhite students in a given school, the efforts of schools to promote racial harmony lose much of their force. Such efforts are still desirable, Dr. Killen explained, but they lack significance and relevance in a school that is racially isolated or imbalanced. There is no "magical number," in Dr. Killen's experience, that indicates a critical mass, but she cited studies describing a 20% figure below which members of a racial minority in a given setting feel isolated or stigmatized. Dr. Dovidio underscored a critical mass estimate of 20%a number well-established in the literature and affirmed in his own research as a prerequisite to making a meaningful amount of intergroup contact possible.[54]
Dr. Killen took pains to emphasize that 20% is not a magical shut-off point for gains from intergroup contact. The gains occur along a continuum: as the racial composition of school populations creeps closer to balanced, racial stereotyping and tension is reduced and racial harmony and understanding increases. For example, the Fecteau-Leary middle school that Dr. Killen visited had a white population of just below 20% at the time. Dr. Killen explained that Fecteau-Leary had very recently exceeded a 20% white share and that many of the elementary schools feeding into it were racially balanced in their *358 own right.[55]
(3) Impact of Resegregation
Both Drs. Killen and Dovidio were convinced that reversion to a de facto segregated system would forfeit the gains that Lynn has made. In fact, Dr. Dovidio noted, even when students in racially imbalanced schools receive the same instruction, skills, and training, they are "likely actually to have more racial incidents and racial problems" absent that critical mass of white or nonwhite students.
c. Nancy McArdle: Limitations Imposed by the Demographics in Lynn
Just as critical mass is a precondition to achieving the benefits of intergroup contact, the defense experts agree that the Lynn Plan's race-conscious student assignment policies are necessary to ensure that white and nonwhite populations in its schools reach that critical mass. Demographics expert Nancy McArdle projected that Lynn's predominantly white residential areas will remain so in the coming five to ten years. Predominantly minority tracts in south central Lynn will become still more racially identifiable. The minority share of the population will increase in the mixed area between south central Lynn and the white dominated northeast portion of the city. Return to a strict no-transfer neighborhood school system would bring a number of schools below critical mass. For example, a neighborhood system would take the Lynn Woods school from 24% to 8% minority, Shoemaker from 30% to 6% minority, Aborn from 35% to 12% minority, Cobbet from 83% to 86% minority, and Connery from 80% to 87%. In McArdle's assessment, if Lynn were to abandon its existing student assignment plan and return to a system of strict neighborhood school enrollmentno transfers allowedthe city's schools would immediately assume a high level of de facto racial segregation.
Birchenough added that the district has considered and even tried to implement a variety of race-neutral methods to achieve the same measure of integration but rejected them all as not feasible. She testified that the present condition of residential segregation in Lynn is such that a redrawing of school attendance zones could not meaningfully alleviate the de facto segregation that a neighborhood school system would bring. The areas that would need the most attention, the racial enclaves in northeast and south central Lynn, are simply too far removed from one another. Because statistics show that white parents tend to request transfers to identifiably white schools and minority parents tend to prefer transfers to predominantly minority schoolsthe district in fact denies 500 to 800 requested segregative transfers per yeara system that allowed unfettered school choice would exacerbate segregation. See also infra Section V.B.4.b(3).
d. Plaintiffs' Rebuttal
The plaintiffs stipulate to the improvements in the Lynn school system since *359 implementation of the Plan. Likewise, they do not dispute that Lynn meets the four conditions of intergroup contact. What the plaintiffs dispute, through their expert, Dr. Rossell, is (1) the extent to which a race-neutral plan would have accomplished the same result and (2) the extent to which a certain percentage of white or minority students is required in a school before the benefits of intergroup contact can obtain.
Dr. Rossell's testimony was not credible. As noted above, unlike defendants' experts, she did no independent investigation of the conditions in Lynn. She made sweeping conclusions without reviewing demographic or socioeconomic data and without having an accurate understanding of the Plan itself.
Her testimony was based on her experience with other systems and her memory of the Plan from her work fifteen years earlier. Significantly, her report was based on a fundamental misunderstanding of the Plan, which she characterized as a "controlled choice" plan. Lynn's Plan in fact differs considerably from controlled choice. Controlled choice authorizes the mandatory reassignment of students from one school to another in the event that parents' exercise of choice does not generate enough racial balance; likewise, controlled choice does not guarantee that students can attend their neighborhood schools.
Dr. Rossell treated Lynn's student assignment policy as a controlled choice plan based on her experience in Lynn as a paid desegregation consultant to the City in 1987. She admitted that she believed until just prior to her testimony that the Lynn Plan incorporated provisions for mandatory reassignments from neighborhood schools.
This was never the case. A draft of the Plan subsequent to the one Dr. Rossell saw in 1987 excised the provisions for mandatory reassignments, and before the Plan's implementation in 1989 the Plan guaranteed Lynn students without exception the right to attend their neighborhood schools.
In addition, Dr. Rossell's about-face on crucial issues is troubling here. She was a supporter of the Plan when she was the city's paid expert, and when the draft Plan involved provisions far more intrusive than are at issue here. In the instant litigation, retained by a different party, she testified to precisely the opposite conclusions. Specifically, in this case, she challenged the concept of a critical mass, although in her earlier work, she was on record as having embraced it.[56] While Dr. Rossell concedes that some measure of racial heterogeneity in the schools is a precondition to intergroup contact, she now takes the position that the schools in Lynn would meet that minimum, even under a neighborhood systema conclusion that every one of defendants' experts rejects. Indeed, she testified that there is research to suggest that racial isolation can somehow facilitate the equal status contact that is a crucial element of intergroup contact, as racial groups of equal size might be more competitive with one another.
*360 Her testimony is unpersuasive on a number of fronts. First, Dr. Rossell does not work in the fields in which the studies cited by Dovidio and Killen were generated. She is not a social psychologist; she has no background in developmental psychology, the study of adolescent behavior, or the cognitive and social development of children.
Second, Dr. Rossell's position that there is "no research" supporting the critical mass concept is flatly contradicted by the testimony of the nationally known defense experts equipped with years of expertise in their fields, an armful of social science literature, including in social and developmental psychology, on both critical mass and intergroup contact, and their extensive firsthand observations of the conditions in the Lynn schools.
Third, it appears that Dr. Rossell's characterization of the field is skewed. Her insistence that there is "no research" whatsoever supporting the concept of critical mass conveyed, in essence, that she does not accept the validity of the studies cited in bulk by Drs. Dovidio and Killen namely, studies in social and developmental psychology. It is Dr. Rossell's position that unless the defense experts' conclusions are buttressed by statistical studies of the kind she conducts (in particular, multiple regression analyses), they are unacceptable. I am not willing to jettison the considered judgments of the entire fields of social and developmental psychology and the nationally known experts within them.
Finally, taking a position diametrically opposed to Dr. Dovidio's, she stated that the experts could, for example, have surveyed schools with differing degrees of racial balance and determined the extent to which students at more balanced schools evinced healthier attitudes about race than their peers at less balanced schools. Dr. Dovidio suggested that such a study was impossible in Lynn because of the small numbers of schools that are racially imbalanced and the marginal differences among them. Moreover, Dr. Rossell testified that this "multiple regression analysis" could realistically control for race-neutral variables in the schools, including the schools' different extracurricular programs, the relative poverty level of students, the extent to which different teachers have different levels of experience in cooperative learning. But Dr. Rossell did not conduct this analysis herself. No other expert in this case believed that such a study could be done, or that it had to be done, given the weight of the scholarly literature.
Finally, Dr. Rossell catalogued race-neutral alternatives that are available to Lynne.g., a transfer program that would permit any requested transfer (to a school with space) with continued use of magnet schools remaining an option. Dr. Rossell explained that Connecticut schools have created racial diversity by providing race-neutral magnet school programs. But whether the race-neutral alternatives she cited would work in Lynn was an opinion which Dr. Rossell was in no position to giveshe had not reviewed the demographics of Lynn or studied the school system in recent years, and she fundamentally misunderstood the nature of the Plan.
V. LEGAL ANALYSIS
A. Jurisdictional Issues
1. Amendments to Prior Decisions (Comfort Plaintiffs)
Federal Rule of Civil Procedure 12(h)(3) authorizes, and in fact requires, a court to raise (or, as in this case, to revisit) a jurisdictional issue sua sponte. Comfort, 150 F.Supp.2d at 294 n. 23 (citing Rule *361 12(h)(3)).[57] Although it does not affect the substance of the matters litigated, for clarity's sake I take this opportunity to amend certain jurisdictional findings.
This Court earlier dismissed the Comfort plaintiffs' actions for declaratory relief against the Commonwealth of Massachusetts as barred by the Eleventh Amendment. Comfort, 131 F.Supp.2d at 256. The decision to dismiss these claims was correct, but a clarification should be made. The Eleventh Amendment precludes suit for damages only; a suit for prospective relief, including declaratory relief, is permissible when brought against state officials (but not against the state itself).[58]Mills v. Maine, 118 F.3d 37, 54 (1st Cir.1997); see also Ameritech Corp. v. McCann, 297 F.3d 582, 587 (7th Cir.2002) (finding that a declaratory judgment claim is "prospective" and therefore, under Ex Parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908), not subject to the Eleventh Amendment).
In a subsequent decision, I concluded that the Comfort plaintiffs lacked standing to sue the Lynn defendants for prospective relief, but I did allow them to sue for a declaration that the initial application of the Plan violated their rights. Comfort, 150 F.Supp.2d at 302. I now find that holding was incorrect. In Berner v. Delahanty, 129 F.3d 20 (1st Cir.1997), the court held that a claim under the Declaratory Judgment Act is not sustainable absent a showing of "actual or imminent, not conjectural or hypothetical" harm. Id. at 24 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992) (internal quotation marks omitted)). If a plaintiff lacks standing for injunctive relief, he or she lacks standing to bring declaratory relief claims as well. Thus, the Comfort plaintiffs' declaratory claims against the Lynn defendants and the state defendants are dismissed in their entirety.
Ultimately these clarifications do not affect the substance of the lawsuit. With nominal damages at stake, the parties amply litigated all of the constitutional questions brought before the Court in the complaint.[59]
2. Partial Motion to Dismiss (Bollen Plaintiffs)
After the trial, defendants filed a partial motion to dismiss certain of the Bollen plaintiffs' claims on standing grounds. This motion is granted in part and denied in part.[60]
a. Claims for Injunctive and Declaratory Relief
Four of the Bollen plaintiffs, Todd and Laura Bollen,[61] Leanne Manuel,[62] and *362 Karen Tsaltas,[63] have stipulated that they are satisfied with their existing school placements. Since it is at best speculative, and at worst unlikely, that these plaintiffs will request segregative transfers for their children in the future, they lack standing to seek an injunction.[64]
I make a similar finding with respect to plaintiff Meta Stinson.[65] Although Stinson's daughter is presently registered with the district as white, she is in fact biracial, and therefore eligible under the Plan for essentially any transfer her mother might seek.[66]
Just as the Comfort plaintiffs did, the Bollen plaintiffs attempt to characterize their harm not as the race-based denial of a transfer, but as the denial of the ability to compete on equal terms for school transfers. See Comfort, 150 F.Supp.2d at 296. The right to compete on equal terms is well-recognized as a passable, cognizable interest for standing purposes in cases involving a race-conscious government action. Donahue v. City of Boston, 304 F.3d 110, 119 (1st Cir.2002) (citing Texas v. Lesage, 528 U.S. 18, 21, 120 S. Ct. 467, 145 L. Ed. 2d 347 (1999)); Comfort, 150 F.Supp.2d at 296 (citing Lesage and Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265, 280-81 n. 14, 98 S. Ct. 2733, 57 L. Ed. 2d 750 (1978)).
The flaw in the plaintiffs' argument is that they can show no imminent "competition." Such disadvantage, if it even exists,[67] is speculative where it is not clear *363 that the plaintiffs will again expose themselves to the race-conscious elements of the Plan by seeking transfers in the future. See id. Accordingly, the claims of these plaintiffs for declaratory and injunctive relief are dismissed for lack of subject-matter jurisdiction.
However, the defendants concede that one plaintiff, Gina Leone, who sues on behalf of her son Troy LaMothe, has standing to pursue prospective relief. On March 24, 2000, Leone requested to transfer her son from Ingalls, his neighborhood elementary school, to Aborn. The district denied the transfer. Leone received no relief on appeal, which confirmed that the proposed transfer was segregative and concluded that she did not merit a hardship exception. Pursuant to the agreement of counsel in the Bollen case, Leone was informed that her son could attend any school of her choice for the school year of 2001-2002. Leone chose the Aborn school, to which he otherwise would have been unable to transfer under the Lynn Plan.
b. Nominal Damages
Nominal damages are another matter. The defendants argue that Stinson and Karen Tsaltas have no standing to sue even for nominal damages.[68] Tsaltas's son was denied a transfer, but that denial was reversed on appeal. Stinson, pleased with the alternative assignment that the district offered, never appealed the denial of her daughter's transfer.
I find that all of the Bollen plaintiffs, including Stinson and Tsaltas, can seek nominal damages, where the threshold for relief is lower.[69] Stinson and Tsaltas's transfer requests were both at least initially denied pursuant to the race-conscious elements of the Lynn Plan. Since I held that Samantha Comfort could pursue nominal damages notwithstanding her successful appeal, the same must be true for Tsaltas despite her appeal, and certainly for Stinson, who did not appeal. The Motion to Dismiss on the issue of nominal damages is denied.
B. Equal Protection
The plaintiffs challenge the RIA on its face and as applied in the Lynn Plan under the Equal Protection Clause of the Fourteenth Amendment. They urge the Court to evaluate the Act and the Plan by the standard of "strict scrutiny." Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227, 115 S. Ct. 2097, 132 L. Ed. 2d 158 (1995) ("[W]e hold today that all racial classifications, imposed by whatever federal, state, or local governmental actor, must be analyzed by a reviewing court under strict scrutiny."); Wessmann, 160 F.3d at 794. Under strict scrutiny, a racial classification is unconstitutional unless its proponent can establish, first, that the policy furthers a compelling state interest, and second, that it is narrowly tailored to achieve that interest. Adarand, 515 U.S. at 227, 115 S. Ct. 2097. The burden of proving a compelling interest and narrow tailoring rests on the defendant. Keyes v. School Dist. No. 1, Denver, Colorado, 413 U.S. 189, 209, 93 S. Ct. 2686, 37 L. Ed. 2d 548 (1973).
As I discuss below, courts have used a different level of scrutiny, namely "intermediate scrutiny," for policies that are race-conscious but do not classify, i.e., prefer, members of one race over another. See, e.g., Jacobson v. Cincinnati Bd. of *364 Education, 961 F.2d 100, 102 (6th Cir. 1992); Kromnick v. School Dist., 739 F.2d 894, 902-03 (3d Cir.1984). This test requires the government to show that the policy serves "important government objectives" to which the means chosen are "substantially related." United States v. Virginia, 518 U.S. 515, 533, 116 S. Ct. 2264, 135 L. Ed. 2d 735 (1996) (citations omitted). Amicus filings in this case argue that I should apply intermediate scrutiny to the Lynn Plan, whereas the parties prepared and argued their cases on the assumption that the Plan is subject to strict scrutiny.
1. Strict or Intermediate Scrutiny?
Amici propose that I apply intermediate scrutiny to the Lynn Plan and the RIA because neither makes a racial classification in the sense of preferring the interests of one race over another. That is, while in Adarand the Court subjected a racial classification to strict scrutiny, the mere consideration of race, where no preference is given to members of one race over another, is distinguishable.
The Adarand Court confronted a federal policy that gave financial incentives to contractors on government projects to subcontract their work to small businesses certified as controlled by "social or economically disadvantaged" individuals. The policy presumptively designated racial minorities as "socially disadvantaged." Adarand, 515 U.S. at 205-07, 115 S. Ct. 2097. Adarand Constructors, Inc., which was not so certified, did not get a subcontract despite its low bid.[70]
The Court held similarly in other cases involving the use of race to prefer minorities for other benefits of limited availability, i.e., statutory incentives to government contractors to favor minorities, City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493-94, 109 S. Ct. 706, 102 L. Ed. 2d 854 (1989); racial preferences in the hiring and promotion of government workers, United States v. Paradise, 480 U.S. 149, 153, 107 S. Ct. 1053, 94 L. Ed. 2d 203 (1987); and redistricting efforts directed at carving out enclaves of minority voters, e.g., Bush v. Vera, 517 U.S. 952, 965-67, 116 S. Ct. 1941, 135 L. Ed. 2d 248 (1996); Miller v. Johnson, 515 U.S. 900, 904, 115 S. Ct. 2475, 132 L. Ed. 2d 762 (1995).
In contrast, courts including the First Circuit have held that where differential treatment does not favor members of one race over another, there is no racial classification, Adarand is inapposite, and strict scrutiny does not apply. See, e.g., Raso v. Lago, 135 F.3d 11, 16 (1st Cir.1998) ("The term [racial classification] normally refers to a governmental standard, preferentially favorable to one race or another, for the distribution of benefits.");[71]cf. Wessmann, *365 160 F.3d at 794 (quoting Adarand's requirement that "a government `must justify any racial classification subjecting [a] person to unequal treatment under the strictest judicial scrutiny'" (emphasis added) (alteration in original)).
Amici point out that in the present case, the evidence shows that each Lynn school provides equal educational opportunities to students. Indeed, the parties even stipulate, "the education provided to Lynn's regular education students in each of the elementary, middle, and high schools in Lynn is comparable in quality, resources, and curriculum, even though schools do offer and provide varying academic programs."[72] Thus, this is not a case, as in Adarand (government contracting), Bakke (medical school admissions), or Grutter v. Bollinger, 288 F.3d 732 (6th Cir.), cert. granted, ___ U.S. ___, 123 S. Ct. 617, 154 L. Ed. 2d 514 (2002) (law school admissions), in which the defendant, in the distribution of limited resources, gives preference to some persons on the basis of race. Students like the plaintiffs may not be able to attend the specific school they want, but no student is advantaged over another on the basis of race. Cf. Hampton v. Jefferson Cty. Bd. of Education, 102 F. Supp. 2d 358, 380 (W.D.Ky.2000) (observing that race-based assignment in elementary and secondary school education is distinguishable from other contexts in which strict scrutiny is applied, where assignment to one school over another does not confer a preference based on race).[73]
*366 Indeed, in an earlier decision, I analogized the Lynn Plan to a situation in which a school administrator sought to assign students to classrooms within a given building in order to maximize diversity and to prevent minority children from choosing one classroom and white children another. Comfort, 100 F.Supp.2d at 67 n. 17.[74] Clearly this kind of decision would not warrant strict scrutiny.
I recognize, however, the need to proceed with caution. The parties may agree that all of Lynn's schools provide equal educational opportunities, but the voluntary transfer system is rooted in the principle that parents will find one school preferable to another for personal reasons e.g., the convenience of its location or attractiveness of its "theme" program. As a result, although I am convinced by amici that intermediate scrutiny is the correct test to apply here, my analysis below will apply the more rigorous standard which the parties have briefed, strict scrutiny.
2. Facial Challenge to the Racial Imbalance Act
The plaintiffs argue that the RIA violates the Equal Protection Clause of the Fourteenth Amendment and is therefore facially invalid. The standard for facial invalidation of a statute is rigorous: "[T]he challenger must establish that no set of circumstances exists under which the Act would be valid." United States v. Salerno, 481 U.S. 739, 745, 107 S. Ct. 2095, 95 L. Ed. 2d 697 (1987).[75] It is clear to me *367 that the plaintiffs cannot make out a facial claim against the statute.
As I have noted above, the RIA includes both hortatory and mandatory components. The statute urges school districts to adopt voluntary plans to alleviate racial imbalance. Mass. Gen. Laws c. 71, § 37C. The state is also empowered to induce compliance by offering grants and/or by withdrawing existing financial assistance. Id., § 37I; Mass. Gen. Laws c. 15, § 1I, ¶¶ 2, 3, 4. However, if space limitations preclude a school district from accommodating a desegregative transfer out of a neighborhood school, the mandatory provisions of the Act are triggered. The school district is then required either to devise its own plan to accommodate such a transfer (subject to the approval of the state Board of Education) or to implement a plan drafted by the state. Mass. Gen. Laws c. 71, § 37D; Mass. Gen. Laws c. 15 § 1I, ¶ 1.
Although the plaintiffs challenge it, the mandatory provision of Section 37D is not at issue here;[76] Lynn adopted its plan voluntarily. The state never found that space constraints in Lynn schools precluded requested desegregative transfers. The compulsory provisions of the RIA were never triggered. As such, the plaintiffs can claim no injury from the mandatory provisions of the Act. See Daggett v. Comm'n on Governmental Ethics and Election Practices, 205 F.3d 445, 463 (1st Cir.2000) (citing Lujan, 504 U.S. at 560, 112 S. Ct. 2130).
Plaintiffs claim that the distinction between the mandatory and hortatory elements of the law is a distinction without a difference. The statute, they say, not only encourages school districts to adopt racial balancing plans and rewards compliant school districts with funds, Mass. Gen. Laws c. 15, § 1I, ¶¶ 3, 4, it effectively coerces this practice by making state assistance to school districts contingent on the implementation of these "voluntary" plans, id., § 1I, ¶ 2.
But even if I were to find that the RIA's use of funds to encourage voluntary plans were in fact coercive, and therefore the functional equivalent of its mandatory provisions, I would not find it unconstitutional. A school district may theoretically adopt a plan that improves racial imbalance without explicitly introducing racebased *368 criteria at all.[77] In fact, the City of Boston satisfied the Board of Education's RIA review with a student assignment policy that this Court recently found to be completely race-neutral. Boston's Children First v. Boston School Comm., 260 F. Supp. 2d 318, 327-28 (D.Mass.2003) (observing that the state Board of Education accepted Boston's school assignment plan even though it did not incorporate racial enrollment targets or racial guidelines and likewise finding it immune to equal protection challenge).[78]
Moreover, the fact that the goal of the RIA's funding is race-consciousto improve racial balance in the Massachusetts schoolsdoes not necessarily invalidate it. See Raso, 135 F.3d at 16. Were that the case, Congress could never validly exercise its § 5 enforcement powers. See U.S. Const., amend. XIV, § 5 (noting that Congress "shall have power to enforce, by appropriate legislation, the provisions of this article," including the Equal Protection Clause of § 1). All nondiscrimination statutes take notice of race in some way.
3. The Strict Scrutiny Standard
As noted above, proponents of a racial classification ordinarily must demonstrate *369 that it advances "a compelling state interest," an interest above and beyond ordinary government goals, and further, they must demonstrate that the classification is "narrowly tailored" to that end.
While these questions are ultimately questions of law, Cotter v. City of Boston, 193 F. Supp. 2d 323, 341 n. 8 (citing Wygant v. Jackson Bd. of Education, 476 U.S. 267, 274-76, 106 S. Ct. 1842, 90 L. Ed. 2d 260 (1986)), and legal precedent can give guidance to courts, each case turns on the peculiarities of its own facts. See, e.g., Wessmann, 160 F.3d at 797-98, 802 (finding the necessity of a race-based policy to be a "fact-sensitive inquiry" and cautioning that the "devil is in the details").
An important part of this "fact-sensitive inquiry" is the settingthat is, the kind of policy at issue and the context in which it operates. Significantly, the Supreme Court has not yet heard a case dealing with the issues raised herethe use of race in a voluntary transfer program to maximize integrated learning in the K-12 grades. It is not easy to apply to public elementary school education the same legal frameworks established for employment, as, for example, in Adarand or Croson,[79] or even higher education, as in Bakke. Nor is it easy to apply legal standards designed to analyze when race may be used retrospectively, to remedy past intentional discrimination, in settings where race is used prospectively, as part of a curriculum that encourages students to learn to interact in a multiracial environment.
a. Compelling State Interest
"Diversity" may well be a compelling state interest in an educational setting, depending on the nature of the setting and the reasons why diversity is sought. In Regents of the University of California v. Bakke, 438 U.S. 265, 98 S. Ct. 2733, 57 L. Ed. 2d 750 (1978), the Supreme Court evaluated an affirmative action program for medical school admissions. The University of California argued that it had a compelling interest in cultivating a "diversity" of viewpoints in its student body, and that an applicant's racial background was relevant to the views that he or she would bring to the class. Id. at 311-15, 98 S. Ct. 2733. A plurality of the Court held that "genuine diversity" was a valuable contributor to a "robust exchange of ideas" at the university and so passable as a compelling interest. Id. at 312-14, 98 S. Ct. 2733. The Court explained, however, that the university's use of race and ethnicity alone in its cultivation of genuine diversity would "hinder rather than further [its] attainment." Id. at 315, 98 S. Ct. 2733. In other words, the university could not establish that its policy furthered its announced compelling interest of fostering "viewpoint diversity," because that interest "encompasses a far broader array of qualifications and characteristics of which racial or ethnic origin is but a single though important element." Id.
Considerable debate has followed Bakke about the extent to which racial diversity can ever be a compelling interest. What the Bakke Court did make clear was that sounding the inherent value of "diversity" is not enough; the analysis is incomplete unless one looks to the specific, tangible benefits that diversity actually confers in a given situation.[80]
*370 The First Circuit spoke to this issue in Wessmann. There, the court confronted the Boston school district's racial preference to African American and Hispanic applicants in its admissions process to the Boston Latin School, a competitive and prestigious public high school to which students applied for limited slots and were selected for admission primarily on the basis of academic merit. Wessmann, 160 F.3d at 791, 793. Following Bakke's cue, the Wessmann court observed that Boston Latin's exclusively racial preference could not foster the "genuine diversity" approved in Bakke. Nevertheless, in Wessmann, the court (following the Second, Fourth and Ninth Circuits) refused to hold that race-based classifications are constitutional only when they are directed at redressing prior unlawful discrimination. Id. at 795-96. In that regard, the court expressly parted company with the Fifth Circuit's holding in Hopwood v. Texas, 78 F.3d 932 (5th Cir.1996).
And further, like the Second, Fourth, and Ninth Circuits, the Wessmann court acknowledged that diversity could well be a compelling state interest in an educational setting, depending on the circumstances. Wessmann, 160 F.3d at 796; see also Brewer v. West Irondequoit Cent. School Dist., 212 F.3d 738, 748-49 (2d Cir.2000) (citing Eisenberg v. Montgomery Cty. Pub. Schools, 197 F.3d 123, 130 (4th Cir.1999) (assuming that diversity can be a compelling interest)), and Hunter v. Regents of the Univ. of Cal., 190 F.3d 1061, 1067 (9th Cir.1999) (affirming the constitutionality of race-based admissions processes to an experimental elementary school based on the need for researchers to work with racially diverse classes of students).[81] The court rejected an all-or-nothing approach: Fostering diversity is not always a compelling interest, nor is it true that diversity is *371 never a compelling interest. Id. at 796 ("[W]e assume arguendo ... that some iterations of `diversity' might be sufficiently compelling, in specific circumstances, to justify race-conscious actions.").
Although Wessmann and Bakke address race-conscious policies in public education, their holdings are of limited import here. First, both involve race-based preferences in the allocation of a limited government resourcea slot in a medical school or in an elite and selective high school. This is not an issue in Lynn. Second, in each case the defendant sought to justify its preference on the ground that, in the abstract, racial diversity is necessary to ensure viewpoint diversity. In contrast, Lynn's appeal to diversity as described below is directed at altogether different and more specific goals, namely, preparing students to be citizens in a multiracial society and eliminating the concrete harmful consequences that de facto segregation inflicts on a public school system.
b. Narrow Tailoring
The goal of the "narrow tailoring" requirement is to ferret out illicit uses of race by governments, to make certain that a racial classification is neither pretextual nor overbroad. Croson, 488 U.S. at 493, 109 S. Ct. 706; Boston Police Super. Officers Fed'n v. City of Boston ("Boston Police"), 147 F.3d 13, 23 (1st Cir.1998). Three concerns are evident in the case law: (1) the extent to which the challenged policy is necessary to pursue a compelling interest (and whether there are adequate race-neutral alternatives), (2) the extent to which the policy is proportional to that interest, and (3) the proportionality between the benefits the policy provides and the harm caused to "innocent persons" as a result of its implementation.
(1) Are the means necessary; are there adequate race-neutral alternatives?
The question of necessity logically breaks down into two components(1) does the race-based policy actually further the compelling interest? and (2) might race-neutral alternatives to the policy be as effective in pursuing the interest?
It goes without saying that a race-conscious policy is not narrowly tailored to a compelling interest if it does not, in practice, effectuate the ends contemplated by that interest. A classification that does not further the legitimate ends of government obviously would not even survive the less exacting rational basis review reserved for nonracial classifications. E.g., Bd. of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 367, 121 S. Ct. 955, 148 L. Ed. 2d 866 (2001). Strict scrutiny incorporates this bare-minimum requirement, but reaches still further for a showing of necessity.
Since "narrow tailoring" is all about the "fit" between compelling ends and race-conscious means, a review of the goals of the enterprise and its settings is critical. The mission of the schools in Wygant, 476 U.S. at 270-71, 106 S. Ct. 1842 (reviewing preferential protection from layoffs for minority teachers), was to educate students. The mission of the City of Richmond in Croson, 488 U.S. at 481, 109 S. Ct. 706 (reviewing preferences for minority contractors), was to install plumbing fixtures in a city jail. The mission of the Alabama Department of Public Safety in Paradise, 480 U.S. at 153, 107 S. Ct. 1053 (reviewing racial preferences in state trooper promotions), was to provide public safety. The reason for being, respectively, of these institutions was not to provide work for teachers, contracts for minority-owned businesses, or promotions for African American troopers. In those settings, the *372 Court's analysis started with proposed compelling interests and institutional ends askew. While that does not mean that such programs necessarily fail to pass constitutional muster, it does mean that the program's proponents face an especially complex task of justification.
In contrast, an important mission of K-12 schools, in addition to fostering academic achievement, is the cultivation of social skills that enable students to function as citizens in a complex and diverse world. If "narrow tailoring" is about "fit," the creation of an integrated school environment is surely likely to be a better "fit" relative to this goal than an integrated workplace is to a commercial setting.
Moreover, where educational policy is concerned, in contrast to a commercial enterprise, school officials possess a special expertise acknowledged in the case law. That expertise must play an important role in evaluating whether race-neutral alternatives will be effective in creating a multiracial learning environment and whether they are adequate to the task. See infra Section V.B.3.b. (4).
(2) Is the policy proportional to the compelling interest?
Courts must also ascertain the extent to which the imposition of the challenged policy is proportional to the urgency of the stated government interests. A race-based government practice must not over-shoot its articulated purpose by using race too often, too heavy-handedly, or for too long.
Again, the examples come from employment. In order to determine whether the use of race went beyond what was remedial, the Paradise Court, for example, scrutinized the quantum of racial preferment given to minorities and its relationship to the defendant's interest in remedying the effects of discriminatory hiring practices. Paradise, 480 U.S. at 179, 107 S. Ct. 1053. The Court focused on the proportionality between the "numerical relief ordered and the percentage of nonwhites in the relevant work force." Id.
Where the means are modest, and in fact undershoot the remedial goal, a court will affirm the policy, as in the Cotter case. The City of Boston departed from strict rank order to promote African American police officers in three of thirty-six promotions. Since the police department would have had to promote twenty African American officers to equalize the percentage of African American officers and African American sergeants, the Court concluded that the modest means chosen signified narrow tailoring. Cotter, 323 F.3d at 171.[82]
A policy that is flexible and changes with changing conditions is also more likely to meet the proportionality test. Id. at 177-78. In addition, the duration of the state actor's use of race figures into the analysis. Id. at 172; see also, e.g., Paradise, 480 U.S. at 178, 107 S. Ct. 1053 (touting the limited duration of a race-based remedial promotions policy as a sign that the policy was not a tool for the implementation of racial balancing in government employment); Boston Police, 147 F.3d at 23 (inquiring into whether the challenged policy "contains (or fails to contain) built-in mechanisms which will, if time and events warrant, shrink its scope and limit its duration").
*373 Duration is an especially critical factor when the compelling interest involves remedying past discrimination. Once the problem is "cured," the need for race-based standards arguably disappears. Mackin v. City of Boston, 969 F.2d 1273, 1278 (1st Cir.1992) ("Finally, the decree's life is limited, remaining in force only until its requirements have been met. Limitations of this sort are crucial factors in deflecting overbreadth challenges." (citation omitted)). In contrast, where the targeted problem is ongoing and persistent, the analysis is more complex. Narrow tailoring does not necessarily require a predetermined shut-off point. The parties can offer a more fluid approach so long as the race-conscious policy dovetails with the conditions that made it necessary in the first place.
(3) What Is the Impact on Third Parties?
A court will also assess the promised and proven benefits of the racial criterion against the depth and breadth of its impositions upon innocent third parties. Bakke, 438 U.S. at 308-09, 98 S. Ct. 2733. Innocent third parties are more at risk in decisions about hiring and firing in a commercial setting, the awarding of public contracts, or admission into a school of higher education. Each case represents the classic zero-sum game, where one party wins and another necessarily loses.
Moreover, where the benefit requires specialized skills, the impact on a qualified applicant with settled expectations, or even with an entitlement to the job or to a slot in a school, is more significant. See Paradise, 480 U.S. at 182, 107 S. Ct. 1053 (finding significant the fact that a racial classification prefers only qualified applicants of one race for hiring or promotion, and that the impact on qualified applicants of another race is minimal); Boston Police, 147 F.3d at 24 (listing "the extent to which ... legitimate expectancies are frustrated or encumbered" as a factor in the narrow tailoring analysis).
Again, in a K-12 school system, educational and curricular policies intended to benefit all students may have an impact on "innocent third parties," but not to the same degree as in competitive commercial or higher-education settings. The question in a school setting, to which I have already alluded, is not whether a given plaintiff will receive a given limited benefit (like a job or access to a unique institution of higher learning) to which he or she is entitled. Rather it is whether any student is entitled to a particular school assignment at all and, in any event, whether the education the plaintiff will get at his or her second choice is comparable to that which he or she would receive at his or her first choice.
(4) Miscellaneous Concerns: Deference to School Boards' "Narrow Tailoring"
A school setting necessarily raises other questions relevant to the "narrow tailoring" analysis: To what extent do school boards deserve deference in making school assignment decisions that are intertwined with curricular decisions? Or, to rephrase the question, how far must a federal court go to micromanage the school board's choices, after the court has assured itself that the basic constitutional standards are met? How perfect must be the "fit" once the broad legal standards have been met?
Clearly, in the school cases involving remedial race-conscious plans imposed to eliminate the vestiges of prior de jure segregation, courts have carefully supervised local school boards to make certain that they were dismantling the dual school systems for which the school boards were found responsible. But when the records *374 have suggested that those boards were finally operating in good faith to create an integrated system, the courts have done an about-face, giving deference to their determinations that unitary status has been achieved and that remedial plans should be discontinued. See Freeman v. Pitts, 503 U.S. 467, 489-90, 112 S. Ct. 1430, 118 L. Ed. 2d 108 (1992). As the First Circuit has observed:
Unitary status is not simply a mathematical construction. One non-quantitative factor of particular significance is whether the school defendants have a sufficiently well-established history of good faith in both the operation of the educational system in general and the implementation of the court's student assignment orders in particular to indicate that further oversight of assignments is not needed to forestall an imminent return to the unconstitutional conditions that led to the court's intervention. See Morgan v. McDonough, 689 F.2d 265, 280 (1st Cir.1982) ("the ending of obstructionism plainly signals a return to greater local control") . . . . The relevance of good faith underscores the notion that unitariness is less a quantifiable "moment" in the history of a remedial plan than it is the general state of successful desegregation.
Morgan v. Nucci, 831 F.2d 313, 331 (1st Cir.1987). It is only logical to afford at least as much deference to a school board that voluntarily undertakes desegregation efforts.
In Swann v. Charlotte-Mecklenburg Bd. of Education, 402 U.S. 1, 91 S. Ct. 1267, 28 L. Ed. 2d 554 (1971), one of the first remedial cases, the Court described the deference due to school districts in dicta:
School authorities are traditionally charged with broad power to formulate and implement education policy and might well conclude, for example, that in order to prepare to live in a pluralistic society each school should have a prescribed ratio of Negro to white students reflecting the proportion for the district as a whole. To do this as an educational policy is within the broad discretionary powers of school authorities; absent a finding of constitutional violation, however, that would not be within the authority of the federal court.
Id. at 16, 91 S. Ct. 1267. Swann was cited by the Second Circuit in Brewer, 212 F.3d at 749, a nonremedial case affirming a race-conscious school transfer program to ameliorate the impact of de facto segregation.
There are good reasons to give deference to school boards' attendance to the details of their student assignments and determinations of whether race-neutral alternatives are adequate. They are the experts in what will or will not work because they are uniquely attuned to the needs of a diverse urban community. Over and over again, courts have given school boards discretion to weigh the constitutional rights of students against the unique demands of a public education setting and curricular needs. See, e.g., Regents of the Univ. of Mich. v. Ewing, 474 U.S. 214, 226, 106 S. Ct. 507, 88 L. Ed. 2d 523 (1985) (emphasizing courts' "reluctance to trench on the prerogatives of state and local educational institutions," as federal courts are ill-suited to "evaluate the substance of a multitude of academic decisions that are made daily" by experts in the field).[83] To be sure, strict scrutiny requires *375 a rigorous analysis of the plan and its ramifications. Nevertheless, these cases should, at the very least, inform the weight I give to the conclusions of the administrators of the Lynn Plan.
4. The Goals of the Plan
The Lynn Defendants claim that the race-conscious element of its school assignment plan is narrowly tailored to achieve several compelling state interests. Some interests are proactive, that is, affirmatively related to meeting the curricular goals and the educational mission of a diverse urban public school: promoting racial and ethnic diversity, increasing educational opportunities for all students and improving the quality of education and ensuring student safety. Several interests are more reactive, that is, related to the goal of eliminating the negative effects of de facto residential segregation on public education: reducing minority isolation and ensuring the safety of its public school students. Finally, some goals are related to the federal constitutional requirements spelled out in Brown v. Board of Education and the state constitution.
I have divided these goals into three categories, although they are analytically interwoven.
a. Curricular Goals: "Promoting Racial and Ethnic Diversity," "Increasing Educational Opportunities for All Students and Improving the Quality of Education," "Ensuring Safety"
(1) Are These Curricular Goals Compelling State Interests?
The defendants claim that their goals promoting racial and ethnic diversity, increasing educational opportunities for all students, improving the quality of education, and ensuring school safetyare compelling state interests inextricably tied to the mission of a public K-12 school system. As I have noted, the purpose of the public school system is as much to teach citizenship to its students as it is to teach academic subjects. Indeed, at the elementary school level, to which this challenge is principally directed,[84] teaching citizenshipthe *376 proverbial effort to ensure that students "work and play well with others"is one of a school's highest educational priorities.
And this is especially the case in a multiracial, urban community like Lynn. The years predating the Lynn Plan saw a district riven by racial tension, with the promise of still-greater tension due to deepening residential segregation. Lynn school officials had to confront a decline in day-to-day school attendance, a decrease in white enrollment, a sharp increase in incidents of conflict and confrontation between white and nonwhite students, and a specific failure in the district's educational mission: Lynn's students were not prepared to live and work in an increasingly racially diverse society.
The Plan was essential to reverse these trends. Its approach was comprehensive, going well beyond a race-conscious transfer policy to include specific curricular offerings on race relations, specialized training for teachers and students on diversity, standardization of curriculum and resource distribution between schools in white and minority neighborhoods, and the establishment of the Parent Information Center to foster parent involvement in the schools.
And the Plan was successful. The defendants point to evidence of significant improvements in Lynn schools occasioned by the district's adoption of the Plan improvements that have increased educational opportunities for all students: the amelioration of racial and ethnic tension in Lynn schools, the emergence of a prevalent racial and ethnic tolerance in the schools, increased attendance, a growing feeling of comfort among students in engaging and confronting issues of race, an emerging sense of community that crosses racial barriers, improved student discipline, a stable enrollment of white students, and safer schools.
The plaintiffs concede the importance of these goals. Indeed, they agree that Lynn schools are considerably better and safer than they were before the Plan was instituted. What they dispute is whether the race-conscious elements of the Plan are crucial to achieving these benefits, that is, whether the Plan's use of race is narrowly tailored within the meaning of the law.
(2) Is the Plan Narrowly Tailored to These Compelling Interests?
(a) Are the Plan's Means Necessary to Achieve its Ends?
As a general matter, the Lynn Plan necessarily meets the requirement of narrow tailoring: When a government's ends are fundamentally concerned with race and those ends are recognized as compelling it is natural that race-conscious means provide the "snuggest fit" to those ends. Brewer, 212 F.3d at 752 (finding that "there is no more effective means" of reducing racial isolation "than to base decisions on race").[85]
The evidence from defendants' impressive array of experts established the essential relationship between the race-conscious aspects of the Plan and the curricular ends outlined above. The evidence establishes the following: If the compelling goal of the Plan is to train citizens to function in a multiracial world, actual intergroup racial contact is *377 essential. No amount of race-neutral resource apportionment would accomplish this result. Second, intergroup contact cannot be achieved with only token numbers of minorities in a overwhelmingly white school (or vice versa). Third, there is a tipping point of 20% white or nonwhite students, well-recognized by experts in this field and dubbed the "critical mass," that is crucial to catalyzing positive intergroup contact.[86]
(b) Proportionality of the Means
The Plan's use of race is measured and proportional to these compelling goals. The policies that have been implemented are less intrusive than other potential means at the district's disposal. Every parent can choose a neighborhood school for his or her child. A parent has the further option of participating in the district's integration effort. Should the parent choose to do so, his or her child is entitled to any transfer that does not exacerbate racial segregation in the schools.
There are no rigid quotas, no unchanging formulaeven with respect to the 20% figure advocated by the experts. While the Plan aims for that number because of its acknowledged effect of improved race relations, only the demographics of Lynn at this time (42% white and 58% nonwhite) make it possible to achieve that number systemwide. In effect, the Plan has a hybrid goal that befits the complexity of the situation and evinces a sensitivity to all of Lynn's constituenciesto maximize integration and aim for a minimum 20% minority representation, consistent with a neighborhood school system and Lynn's demographics.
The Plan's use of race is flexible, and of limited duration. An automatic shut-off mechanism is built in: If the racial composition of a school falls in line with the districtwide white/nonwhite ratio, the limits on transfers evaporate. In fact, because all of Lynn's high schools meet the district's racial balance standard, students may transfer freely among them, space permitting.
As the demographics of the city of Lynn change, so do the parameters of the Plan. It foists no more or no less "diversity" on the schools of the city than the demographics of the city and a neighborhood system allow.
(c) Minimal Burden on Third Parties; the Issue of Stigma
Finally, Lynn's chosen means place a minimal burden on innocent third parties. Nothing compels a school district to allow parents to choose their child's school. There is no entitlement to attendance at a given school, and no special qualifications or prerequisites for admission to any school.
*378 Nor does any stigma attach to the failure to get one's first choice of transfer school, or to the government's recognition of an individual's race. Part of the thrust of Brown was that de jure segregation sent a clear message to minority students that school officials believed they did not belong in classrooms with their white counterparts. Brown, 347 U.S. at 493-94, 74 S. Ct. 686 ("To separate [minority students] from others of similar age and qualifications solely because of their race generates a feeling of inferiority as to their status in the community that may affect their hearts and minds in a way unlikely ever to be undone.").
The Lynn Plan sends quite the contrary messageit conveys to all students that notwithstanding residential segregation, students of different races can and should coexist in integrated, cooperative learning environments, and that the school district is committed to encouraging that. Lynn uses race in school admissions not because an individual student's race matters, but because the district recognizes that race relations matter. Dr. Dovidio testified that racial identity is a social construct: although racial differences are perceived and not real, that perception of difference has enough historical momentum that one must acknowledge it in order to defeat it. Race is the elephant in the room that does not go away until it is confronted.
It has been suggested that when a school district inquires into a child's race at registration for school assignment purposes, that gesture, whatever the underlying motives, leaves an indelible scar on the child's psyche. See Tuttle v. Arlington Cty. School Bd., 195 F.3d 698, 707 & n. 12 (4th Cir.1999). Putting aside the fact that this view, as a general matter, would impugn remedial desegregation orders even in de jure cases, the Lynn school district's commitment to promoting racial harmony and celebrating the city's diversity deprives this argument of any specific force in this case.
Even if it were reasonable to conclude (and I find it highly doubtful) that students in Lynn come away from school registration with the mistaken belief that the district means to remind them of racial difference, everything about the Lynn experience is directed at clarifying and correcting this misapprehension. As Drs. Killen and Dovidio testified in their discussion of the "authority sanction" component of intergroup contact, Lynn's teachers, administrators and staff are committed to the principle that students of all races are to enjoy equal status, that the city's multiracial character is something to celebrate, and that students have much to gain from cross-racial relationships. Indeed, that Lynn officials have tried to accomplish their integrative purpose through a voluntary transfer systemwith neighborhood schools absolutely available should parents so desirespeaks volumes about their sensitivity to third-party interests.
Unlike programs in colleges and universities, the Lynn Plan does not control access to any limited benefit. The parties agree that all students will get a comparable education. Curricula are standard and the differences between schools are largely variations on a theme. Competency levels are evaluated on a systemwide basis; if any given school falters, remedial action will be taken to ensure that it meets the standards set by its counterparts in the district.
Finally, there are no race-neutral adequate alternatives for integrating the school populations. See infra Section V.B.4.b(3).
(3) Plaintiffs' Arguments Do Not Apply in Lynn
The plaintiffs make several "narrow tailoring" challenges. First, they suggest *379 that the Plan's focus on racial minorities is inconsistent with the end of "genuine diversity." Second, plaintiffs argue that the improvements in Lynn schools could have been accomplished through additional resources.
(a) A White/Nonwhite Distinction Is Appropriate
There are sixty-five racial and ethnic groups within Lynn's student population, the plaintiffs argue, and far from targeting classrooms that reflect the range of ethnic diversity in Lynn, the Plan's notions of racial balance seek only to ensure extensive contacts between whites and nonwhites. Relying on Wessmann, the plaintiffs claim that a policy that targets racial diversity, rather than "genuine diversity," can never be narrowly tailored.
Plaintiffs' critique is off the mark. The Plan does not target the "genuine diversity" that the First Circuit found absent in Wessmann. In Wessmann, as I have noted, the court held that the Boston Latin School's commitment to "racial and ethnic diversity" did not comport with the "genuine diversity" that a plurality of the Supreme Court approved in Bakke as a means to foster a robust exchange of ideas. Wessmann, 160 F.3d at 798. Bakke-type diversity is an expressive "diversity of viewpoints" and is predicated on the notion that people of different backgrounds will make unique contributions to academic discourse. As such, it "encompasses a far broader array of qualifications ... of which racial or ethnic origin is but a single though important element." Id. (quoting Bakke, 438 U.S. at 315, 98 S. Ct. 2733) (internal quotation marks omitted). In any case, race classifications directed at viewpoint diversity, the Wessmann court held, are nothing more than mechanisms for "racial balancing" based on broad generalizations about the contributions different races and ethnic groups will make to the classroom. Wessmann, 160 F.3d at 799.
The Lynn Plan does not pursue "racial balancing" toward the end of filling stereotyped "viewpoint" niches. As I stated earlier:
The diversity interest defendants argue here makes no assumptions about any groups' unique contribution. Rather, it reflects a concern that elementary school children simply get used to being in classrooms with people different from themselves. In fact, it assumes that the more diverse a classroom is, the more likely students will learn that all people are different no matter what their color or ethnic background. It is not a form of stereotyping, but a method to prevent the formation of stereotypes.
Comfort, 100 F.Supp.2d at 65, n. 12. If the goal is to block the formation of stereotypes and racist attitudes, the most effective route, bar none, is to promote multiracial interaction.
The Lynn Plan's white/nonwhite distinction does indeed, as the plaintiffs suggest, "paint with a broad brush," but one that precisely reflects the facts on the ground in Lynn. Lynn school officials and teachers observed that in the years predating the Plan, racial divisions and ethnic conflict between students occurred predominantly along a white/nonwhite axis. The growing gap in understanding between these groups burdened the schools in ways that more precise shades of racial and ethnic difference did not.
Defense experts cited evidence in developmental psychology to support the view that tolerance of difference begins with acceptance of visible difference. A white elementary school student is more likely to differentiate himself from an English-speaking student in a racial minority than *380 for a white European immigrant student who does not speak his language.[87]
In fact, were Lynn to set its eye on a "true diversity" that reflected in each school the range of sixty-five ethnicities represented in its student body, the Plan's use of race (and now ethnicity as well, which is also subject to strict scrutiny, see Bakke, 438 U.S. at 290, 98 S. Ct. 2733) would be substantially more intrusive than is currently the case. The Plan is crafted to use race only as frequently as is necessary to produce a measure of racial diversity that is meaningful enough to enable the schools to teach their students citizenship in a multicultural society. See Jacobson, 961 F.2d at 102 (citing Swann, 402 U.S. at 16, 91 S. Ct. 1267).[88]
(b) Additional Resources Would Not Have Been Adequate to Accomplish the Curricular Goals; the Significance of "Critical Mass"
Plaintiffs' second argument is that Lynn could have accomplished the stunning turnaround in the fortunes of its schools since the 1980s with race-neutral policies. They contend that other components of the Plannew facilities, increased funding from the state, teachers' commitment to and cultivation of equal status and diversity amply account for the strides that Lynn's schools have taken.
Implicit in the plaintiffs' critique are two others: (1) Integrated classrooms are not necessary to achieve the curricular benefits Lynn touts. Merely deluging the system with additional resources would surely do the trick. And (2) even if integrated classrooms are necessary, this race-conscious plan is not required to accomplish them. A free choice plan coupled with magnet school incentives would have been as effective. Because it bears on Lynn's compelling interests in reducing de facto segregation as well as the district's curricular goals, I will address (2) in a separate Section V.B.4.b(3), infra, on whether the Lynn Plan was necessary to effect system-wide integration.
Deluging the system with resources without the race-conscious transfer policy would not have been adequate. With respect to intergroup contact, the number of students in a classroom of a racial minority matters. Abstract instruction about racial tolerance is insufficient without meaningful contact with students of a different race. Social science literatureincluding social and developmental psychology literaturecited by the defendants' experts instructs that racial isolation adversely impacts both minority attitudes and the attitudes of those in the majority. This impact becomes more pronounced as a racial minority within a group dwindles in size.[89]
There is a point at which the presence of a racial minority becomes substantial enough to catalyze intergroup relations, a *381 tipping point" or "critical mass"[90]: Defendants' experts were unanimous on this issue. Dr. Killen analogized the accrual of intergroup contact benefits to a continuum: as a school's racial balance increases, racial tolerance accrues. Studies suggest, however, that the most significant increase in benefits occurs as the share of a school's racial minority students surpasses the 20% mark. The direct observations of the experts on the ground in the Lynn schools buttress this view,[91] as did the testimony of teachers, students and administrators.
Plaintiffs counter by suggesting first, that even a few minorities are enough to achieve the effects the Lynn Plan seeks, second, that even if "more" integration is needed, no research provides support for a specific percentage, and finally, whatever the legitimacy of the "critical mass" concept, it is not effected in Lynn. After all, the Plan, keyed to the demographics of the city, does not necessarily assure the critical mass. Several schools already have fallen out of line. Moreover, plaintiffs' expert, Dr. Rossell, testified that as long *382 as schools maintain some degree of heterogeneity (the amount, unclear) such that there is some percentage of both whites and nonwhites to interact cross-racially, it is possible to obtain benefits from intergroup contact.
Plaintiffs' position is totally inconsistent with the credible evidence, and the aspects of the Plan that they identify as the weaknesses of the plan are in fact its strengths. As I have noted earlier, I find Dr. Rossell's testimony to be less than credible and surely less reliable than the defense experts. Although Dr. Rossell based her opinions on twenty-six years of experience with other schools, she made no firsthand observation of Lynn's schools and conducted no surveys or interviews of Lynn's students, teachers, or parents. See Wessmann, 160 F.3d at 804 (discounting an expert's testimony because it "relies on evidence from one locality to establish the lingering effects of discrimination in another"). In fact, at the time she formulated her opinion in this case and for some time afterward, Dr. Rossell's understanding of Lynn's student assignment process was fundamentally wrong. She insisted that it was a "controlled choice plan" that did not guarantee students access to their neighborhood schools. Not only did Dr. Rossell's testimony reflect an unfamiliarity with the conditions in the Lynn district; it is not clear from the record that she ever understood exactly how the challenged practice in this lawsuitLynn's school assignment policyactually works.
And as to critical points in her testimony, Dr. Rossell has taken contradictory positions in the past. In this proceeding, she testified that there are no "concrete data" that show that a "critical mass" of minority students is a precondition for the success of intergroup contact techniques. Yet a 1983 publication to which Dr. Rossell was a major contributor advocated the very proposition she rejects here, namely, cultivation of critical mass of racial and ethnic minorities within schools.[92] In a striking admission for an expert, Dr. Rossell dismissed the earlier work as not based on "an ounce of research," but instead "on people's intuition." And she testifies as an expert in this case against the Lynn Plan, a position diametrically opposed to the position she took in 1988, when she was a consultant to the Lynn schools and noted that Lynn "stood an excellent chance" of desegregating its schools.
In any event, Dr. Rossell's current positions are without basis. It cannot be her position that there are no scientifically acceptable studies validating the concept of "critical mass." There plainly are, and the defense experts noted, summarized, and cited themin testimony that I credit. Rather, what she seems to be saying is that the studies and conclusions of social and developmental psychologists somehow do not count, no matter how esteemed the scholar or how peer-reviewed and accepted are his or her findings. To Dr. Rossell, the only satisfactory proof would be statistical, the result of a rigorous multiple regression analysis that quantified intergroup contact benefits and statistically isolated those that were directly attributable to classroom integration.
*383 Defense experts suggest that such a study cannot be done in Lynn, and indeed, need not be done. For example, Dr. Dovidio noted that the study Dr. Rossell suggested could not be done in Lynn because the range of racial balance (or imbalance) in Lynn's schools is not broad enough to conduct a meaningful study of this kind. Isolation of the importance of racial balance to intergroup contact efforts might be possible if the range were broaderthat is, if some schools enrolled as few at 6% white or nonwhite students. At best, Dr. Dovidio explained, the study that Dr. Rossell proposed "doesn't provide a critical test of [whether] the plan [is] working, it just says within the context of a plan that is working, is more [minority representation] better?"
Moreover, such a study need not be done. Desegregation experts and social and developmental psychologists nationwide, using methodologies established in their fields, have conducted studies, published their findings, presented papers, and even testified in court as experts, all concluding that a critical mass of 20% facilitates intergroup contact. Just because Dr. Rossell, a political scientist, rejects their approach does not mean that I should as well. Plainly, not everything admits of quantification.
This is not a case of scientific precision, where too much or too little of an active ingredient ruins a chemical reactionand scientific precision should not be required. See Parent Ass'n of Andrew Jackson High School v. Ambach (hereinafter "Andrew Jackson II"), 738 F.2d 574, 580-81 (2d Cir.1984) (requiring, for narrow tailoring purposes, that a race-conscious school assignment plan's articulate a "tipping point" for white flight that triggered not "the only significant drop in white enrollment," but that triggered "(on average) the most significant drop").
The dynamics in this caseinterpersonal relationsare far more complex than that.[93] Statistical analysis may suffice to establish narrow tailoring in remedial cases, where the state's compelling interest is to correct minority under-representation within an institution, that is, where the wrong to be righted is quantifiable. Where, as here, the compelling interest fundamentally relates to shaping human growth and relations, a Rossell-style multiple regression analysis cannot be necessary and arguably could not be sufficient on its ownto justify the use of race.
Finally, plaintiffs contend that "critical mass" is obviously not essential because some Lynn schools have achieved positive race relations without these numbers, pointing particularly to the Fecteau-Leary middle school.[94] The defendants' response to this is more convincing. First, as they have noted, the 20% mark is aspirational, not written in stone. The Plan seeks to achieve that level in a manner that is consistent with a neighborhood school model of a student assignment that is in turn keyed to the demographics of Lynn. In any case, all defense experts credibly suggest a continuum of effects leading to the point when intergroup contact is finally *384 significant. It would be absurd to suggest that when a school dips marginally below 20% critical mass, a climate of racial tolerance evaporates and racial infighting instantly follows.[95]
In any case, what the plaintiffs view as a fatal flaw, I understand to be a point in the Plan's favor. Plaintiffs claim that Lynn's student assignment policy is not narrowly tailored because it is not designed to guarantee a 20% critical mass in every school misses the mark. The Lynn Plan is not a "20% no matter what" plan; the use of race only triggers when the schools pertinent to a proposed transfer deviate too much from districtwide demographics. Were the Plan calibrated to yield, without fail, a 20% critical mass in every school, it would risk characterization as a quota, be needlessly rigid and neglectful of changing conditions in Lynn. Likewise, it would override the wishes of parents who want their children to attend their neighborhood schools and would entail a more intrusive use of race in school assignment than the Lynn Plan currently provides. As such, it would hardly be "narrowly tailored."
In fact, plaintiffs' position turns on its head the very purpose of the narrow tailoring requirement, to invalidate a program because it does not use race enough to establish a perfect "fit" between means and end. As I noted before, the Plan's goals are hybrid and flexible: It effectively generates integration in Lynn's schools in such quantity as to catalyze intergroup contact while still respecting the neighborhood school principle and Lynn's ever changing demographics. As such, it ensures all the corollary educational benefits to which the parties stipulate.
b. Remedying the Effects of De Facto Segregation: "Reducing Minority Isolation"
(1) Is this Remedial Interest Compelling?
An important goal of the Lynn Plan is to ameliorate the effects of de facto residential segregation. It cannot change demographic patterns. It chose not to trench on the ability of a parent to send his or her child to a neighborhood school. Rather, the Plan tries to shape educational environments that neutralize the effects of these patterns, to make certain that these patterns are not determinative of a child's opportunity. Comfort, 100 F.Supp.2d at 65 n. 12.
A number of adverse educational effects flow from racially segregated schools, as described generally in the Kiernan Report that led to the RIA's enactment, and, more importantly, in the record in this case. In the 1980s the increasing racial polarization of Lynn schools, created in part through official misconduct, led to documented inequalities within the system: minority schools had inferior materials and facilities and the more experienced teachers transferred to the better funded, managed, and maintained white schools.
It would make no sense if Lynn officials were obliged to take responsibility for addressing these adverse consequences but at the same time were constitutionally barred from taking voluntary action aimed at nipping some of these effects in the bud. In effect, what the Plan sought to do was to forestall the development of racially isolated schools before the separation and the inequities become so intense that even *385 more intrusive actionperhaps court-ordered was required.
Plainly the "reduction of racial isolation resulting from de facto segregation can be a compelling government interest justifying racial classifications." Brewer, 212 F.3d at 753. In Brewer the Second Circuit vacated a district court's preliminary injunction suspending the race-conscious elements of a student assignment plan very much like the one presently before this Court. The plan at issue in Brewer allowed students to transfer from their neighborhood schools under strict conditions:
[O]nly minority pupils are allowed to transfer from "predominantly minority city schools" to participating suburban schools, and non-minority students may transfer from suburban schools to city schools provided that their transfers "do not negatively affect the racial balance of the receiving school."
Id. at 742. The Second Circuit found that the plaintiff parents were not likely to succeed in their challenge to these race-based restrictions on transfers.
The Brewer court relied on the "Andrew Jackson cases," in which the Second Circuit held that a school district may take affirmative steps to combat de facto racial imbalance, even though such steps are not constitutionally required. See Parent Ass'n of Andrew Jackson High School v. Ambach (hereinafter "Andrew Jackson I"), 598 F.2d 705, 713-14 (2d Cir.1979); see also Andrew Jackson II, 738 F.2d at 581 n. 9. Like Brewer, the Andrew Jackson cases dealt with integration plans restricting the availability of student transfers that exacerbated conditions of racial imbalance. Specifically, the New York City school district implemented a "Controlled Rate of Change" scheme designed to reduce racial imbalance at the predominantly minority Andrew Jackson High School in Queens. Minority students in the school's attendance zones were given the opportunity to attend any high school in New York City whose student body was more than 50% white. Andrew Jackson I, 598 F.2d at 710-11.
There was a further restriction due to the district's concern that these transfers might trigger "white flight"; minority students could not transfer to schools in such numbers as to alter the racial balance by 4% or one fourth of the difference between the school's white enrollment and a 50% white enrollment (whichever was less). Id. at 711-12.
The Andrew Jackson court, applying strict scrutiny, id. at 718, affirmed the Plan. It agreed that integrationor "inhibiting the process of resegregation" was in itself an end sufficient to justify the racial classification. Id. at 718 (citing Otero v. New York City Housing Auth., 484 F.2d 1122, 1140 (2d Cir.1973) (affirming a housing authority's ability to limit the availability of units to would-be tenants based on their race, "where it can show that such action is essential to promote a racially balanced community")).[96]
*386 As I explained above, the defendants in the present case offered substantial expert testimony as to the educational benefits that obtain from reducing minority isolation and de facto segregation in public schools. In this respect I predicate my conclusion, that reducing minority isolation is indeed a compelling interest that can justify race-conscious student assignment, on a record far more developed than the district and appeals courts had before them in the Andrew Jackson cases, or in Brewer.
(2) Is the Lynn Plan Narrowly Tailored to this Compelling Interest?
There is no doubt that Lynn's race-conscious restrictions on voluntary transfers actually reduce minority isolation. The evidence is uncontroverted and the logic unquestionedthat Lynn's Plan, which forbids white students from transferring into and minority students from transferring out of schools regarded as "racially isolated." Arguably, since the Plan's attention to a student's race is strictly limited to contexts in which a proposed transfer would exacerbate an identified condition of racial isolation, it is by definition narrowly tailored to the Lynn Defendants' stated purpose of reducing racial isolation.
But that logic obviously cannot alone vindicate the Plan's use of race. Lynn has to justify the specific parameters it has settled upon, and whether there are race-neutral alternatives to their use. A broader view of racial isolation, for example, would justify the use of race more often. If, for example, Lynn narrowed the range of allowable deviation from districtwide percentages to 1%, a school would be "racially isolated" in the 2001-2002 school year if fewer than 57% of its students were minorities. More schools would fit the definition of racial isolation, and the race-conscious restrictions on transfers would trigger more often. If Lynn is to appeal to "reducing racial isolation" as a compelling government interest, it must answer, in the context of narrow tailoring, for its definition of what "racial isolation" is.
I conclude that Lynn's definition of racial isolation is appropriately calibrated. As the Second Circuit's review of the school district's 50% tipping point marker in Andrew Jackson II illustrates, this is an inexact science. A race-conscious recourse must be minimally intrusive, but it must also have enough force to effectuate its ends in a meaningful way, see Wessmann, 160 F.3d at 810 (Boudin, J., concurring). This is a difficult channel for a school district to navigate, and if a court gives too little leeway, strict scrutiny becomes what the Supreme Court never intended it to be"fatal in fact." See Adarand, 515 U.S. at 237, 115 S. Ct. 2097 (quoting Fullilove v. Klutznick, 448 U.S. 448, 519, 100 S. Ct. 2758, 65 L. Ed. 2d 902 (1980) (Marshall, J., concurring)).
In this case Lynn's definition of racial isolation is narrowly drawn. First, if the goal is to prepare students to live in a multiracial world, it makes sense to begin with an environment reflective of that world, namely, the demographics of the City of Lynn. The measure of balance that Lynn has selected, as Dr. Orfield, an expert on desegregation planning, noted, was tied to the overall breakdowns within the district, and so typical of desegregation efforts. Cf. Belk v. Charlotte-Mecklenburg Bd. of Education, 269 F.3d 305, 319 (4th Cir.2001) (observing that "the plus/minus fifteen percent variance is clearly within *387 accepted standards, and provides a reasonable starting point in the unitary status determination"). Second, the demographics of Lynn's school-age children (42% white and 58% nonwhite) ensure that the most racially isolated schools in the district, Lynn Woods (25%), Sisson (27%), and Shoemaker (30%), have at least a "critical mass" of minority students. Third, the plan attempts to minimize racial imbalance and isolation while preserving neighborhood schools and eschewing forced busing.
(3) Race-Neutral Alternatives are not Feasible
The plaintiffs maintain that, even if (as I have concluded) an improved racial balance in Lynn's schools is crucial to Lynn's educational goals, there were race-neutral methods of assignment that could have been adequate.
McArdle's analysis of residential patterns in Lynn suggests that residential segregation is deepening. She described a community with neighborhoods that are growing increasingly segregated by race in her expert opinion, that would not change in the next five to ten years. McArdle and Drs. Dovidio, Killen, and Orfield all predicted that Lynn's schools would become more and more racially identifiable if students were allowed to attend only their neighborhood schools. In fact, McArdle gave evidence that, if school attendance zones were to remain intact, a neighborhood-only plan would reduce the minority population of Lynn Woods from 24% to 8%, Shoemaker from 30% to 6%, and Aborn from 35% to 12%. Conversely, minority populations would increase at Cobbet, from 83% to 86%, and at Connery, from 80% to 87%.
Dr. Rossell's rebuttal was curious. She suggested that the school could redraw the neighborhood attendance zones to maximize integration. To be sure, Dr. Rossell did not bother to verify the feasibility of this alternative against the particulars of Lynn's geographical residential patterns.[97] Moreover, she conceded that, as McArdle described, there is a large "separate and physically distinct" portion of northeastern Lynn that is predominantly white, but she could not explain how attendance zones would be drawn to integrate neighborhood schools given this geographic dispersion.[98] Indeed, Superintendent Kostan, with far greater experience in Lynn, predicted that "even if we redistricted, you still would have predominantly ... minority schools and predominantly racially isolated white schools."
While I agree with Dr. Rossell that it may always be possible in theory to craft attendance zones so that they draw equally from geographically separate racial enclaves, at a certain point they would be "neighborhood schools" in name only. Students would be required to travel considerable *388 distances to attend schools that are suddenly, by the fiction of redistricting, announced to be in their "neighborhood." Students in the city's minority core would be obliged to go to school in the overwhelmingly white northeastern region of Lynn (and vice versa). In fact, it is hard to imagine how, given Lynn's existing pattern of residential segregation, the district could redraw its neighborhoods to desegregative effect without compromising the integrity of the neighborhood-school principle and, worse yet, initiating forced busing.[99]
In contrast, the Lynn Plan, which guarantees a student's admission to a "true" neighborhood school and affords additional options subject to overt racial restrictions, is more flexible and less restrictive than would be a race-motivated redrawing of neighborhoods.
Dr. Rossell also suggested that Lynn could create real magnet programs that would draw white students voluntarily from their predominantly white neighborhood schools into minority identifiable schools, and vice versa. Again, however, Superintendent Kostan, citing data culled by Lynn's PIC on trends in transfer requests, and Lynn's past experience, testified that a pure choice plan would result in resegregation: "trends would indicate that if you implemented a plan such as that, you probably would find that minority students would gravitate to racially isolated minority schools and white students would gravitate to racially isolated white schools." And in fact. Lynn tried, without success, in the 1980s to draw white students into a magnet school in a minority neighborhood.
Studies by the Lynn PIC of parent preferences in Lynn show that minority parents favor schools in minority-dominated areas and white parents prefer schools in white areas. Parents tend to seek transfers to neighborhood schools contiguous to their own, as opposed to schools across town, with the result thatregardless of whether they intend to self-segregate they choose schools in their own racial enclaves. Lynn school official and PIC director Janet Birchenough observed that white parents request 500 to 800 segregative transfers in a given year under the current Plan; all of these would have to be approved under a free-choice plan. Given the likelihood that free choice would result in still more requests for segregative transfers than are made presently (as the deterrent restrictions on such transfers would have been eliminated), it is difficult to see how a comparable measure of desegregation can be achieved this way.
Birchenough testified that Lynn has also considered school assignment by lottery. A lottery would randomly arrange students on a list; the school would make its assignments by proceeding down the list, accepting every parent's first school choice, unless the favored school was already *389 filled. In that case the student would be assigned to his second choice, and so on. This policy suffers from the same flawed underpinnings: the PIC has documented trends showing that white parents tend to choose schools that are predominantly white, and nonwhite parents favor predominantly nonwhite schools.
In fact, even to the extent that white and nonwhite students would seek transfers to the same school, resort to a lottery system would not result in an integrated population at that school. The PIC's data demonstrate that under the current Plan white parents tend to bid for transfers much earlier in the year than do minority parents. Minority parents move into and between locations in the city more often, due to their comparative socioeconomic disadvantage. They are often not in a position to consider their children's school options in March and April and May, when white parents typically register their children. Most minority registrations occur later in the year, particularly on the cusp of the school year in August and September.
According to Birchenough, the district could not feasibly hold a single end-of-summer lottery to determine school assignments for the entire district in order to accommodate minority parents. In order to make appropriate staff assignments and resource allocations, the district must have some measure of notice of what schools its students will be attending. Conversely, a monthly lottery system that slotted students beginning in March would be workable, but it would effectively result in white students obtaining their first choice placements before minority students even articulate their preferences. If there are schools that white and nonwhite students both want to attend, the monthly lottery system would ensure that these schools remained predominantly white.[100]
c. Interest (5): "Providing an Education to All Students that Satisfies Federal and State Constitutional Requirements"
(1) The Command and Promise of Brown v. Board of Education
The Lynn defendants argue that the Plan "serves the compelling state interest in voluntarily achieving the `clear command' of Brown v. Board of Education." While I conclude that the defendants are wrong to suggest that the Lynn Plan is compelled by Brown, since there is no evidence of ongoing de jure segregation, they surely have an interest in fulfilling the promise of Brown. For nearly fifty years, courts have recognized that eliminating school segregationwhatever its causeis a proper and compelling governmental *390 objective. While the courts in recent years have imposed more demanding requirements on the means to achieve integration, they have never repudiated the goal.
Clearly, there was a period in time during the 1970s and 1980swhen Lynn was vulnerable to a suit challenging the acts of school officials who knowingly exacerbated racial segregation within the district. But that moment passed, headed off by the very Plan in contention here. To be sure, it cannot be credibly suggested that this Plan in 2003 is narrowly focused on remedying the effects of 1980s discrimination.[101] The focus has to be in the present. And today, if Lynn eliminated the Plan, school segregation would follow directly on the heels of residential segregation. While Lynn contends that lifting the Plan's restrictions, with knowledge of what would follow, would expose them to a charge of discrimination, see, e.g., Diaz v. San Jose Unified School Dist., 733 F.2d 660, 670-71 (9th Cir.1984); NAACP v. Lansing Bd. of Education, 559 F.2d 1042, 1051 (6th Cir.1977), it overstates its exposure under current case law. Brown appeared to suggest that, whatever its cause, segregation in schools results in unequal educational opportunities that violate the Constitution. See Brown, 347 U.S. at 494, 74 S. Ct. 686 (noting that segregation is generally detrimental although the impact is "greater when it has the sanction of the law" (emphasis added)). However, in the years since Brown, it is clear that inequality born of residential segregationthe choices of citizens, and not governmentis unlikely to expose the Lynn defendants, as they contend, to legal attack under the Equal Protection Clause. In short, Brown does not command school systems to redress de facto segregation. See Freeman, 503 U.S. at 495, 112 S. Ct. 1430.
Nevertheless, in recognizing the consequences of de facto segregation, Brown and its progeny, quite apart from their mandatory elements, also have a powerful hortatory significance aimed at eventually uprooting school segregation "root and branch." Green v. Cty. School Bd., 391 U.S. 430, 437-38, 88 S. Ct. 1689, 20 L. Ed. 2d 716 (1968). In pursuit of the promise of integration, the Supreme Court has repeatedly affirmed in principle voluntary desegregation policies adopted by school districts to foster, preserve, and operate "unitary" school systems. See, e.g., Bustop, Inc. v. Bd. of Education of the City of Los Angeles, 439 U.S. 1380, 1383, 99 S. Ct. 40, 58 L. Ed. 2d 88 (1978) (Rehnquist, J.) (expressing "very little doubt" that states can order desegregation beyond what the Constitution requires); Swann, 402 U.S. at 45, 91 S. Ct. 1284. Even Justice Powell, author of the Bakke plurality opinion, endorsed a state's voluntary desegregation statute as "the sort of effort that should be considered by state and local officials and *391 elected bodies." Columbus Bd. of Education v. Penick, 443 U.S. 449, 488-89 n. 7, 99 S. Ct. 2941, 61 L. Ed. 2d 666 (1979) (Powell, J., dissenting).[102]
As Justice Marshall pointedly observed:
The real irony of the argument urging mandatory, formal findings of discrimination lies in its complete disregard for a longstanding goal of civil rights reform, that of integrating schools without taking every school system to court.... It would defy equity to penalize those who achieve harmony from discord, as it would defy wisdom to impose on society the needless cost of superfluous litigation.... [F]ormal findings of past discrimination are not a necessary predicate to the adoption of affirmative action policies, and the scope of such policies need not be limited to remedying specific instances of identifiable discrimination.
Wygant, 476 U.S. at 305, 106 S. Ct. 1842 (Marshall, J., dissenting).
To say that school officials in the K-12 grades, acting in good faith, cannot take steps to remedy the extraordinary problems of de facto segregation and promote multiracial learning, is to go further than ever before to disappoint the promise of Brown. It is to admit that in 2003, resegregation of the schools is a tolerable result, as if the only problems Brown addressed were bad people and not bad impacts. Nothing in the case law requires that result.
(2) State Constitutional Requirements
Defendants also argue that state law requirements justify the Plan. As a general matter, I do not agree that a state constitutional requirement is a per se compelling interest in the Equal Protection analysis. The Fourteenth Amendment specifically empowers the federal government to act against discriminatory government actions at the state and local level, particularly those made on the basis of race. See, e.g., Shelley v. Kraemer, 334 U.S. 1, 23, 68 S. Ct. 836, 92 L. Ed. 1161 (1948) ("The historical context in which the Fourteenth Amendment became a part of the Constitution should not be forgotten. Whatever else the framers sought to achieve, it is clear that the matter of primary concern was the establishment of equality in the enjoyment of basic civil and political rights and the preservation of those rights from discriminatory action on the part of the States based on considerations of race or color."). An interest therefore cannot rise to the level of "compelling" solely because it is enshrined in a state's constitution.[103] Something more is requiredsomething about the principle reflected in the state constitution that either comports with federal principles or offers greater protection than the federal law.
The principle articulated here is that under Part 2, Chapter 5, § 2 of the Massachusetts Constitution, every resident of the Commonwealth is to be guaranteed an "adequate" education. McDuffy v. Sec'y of Exec. Office of Education, 415 Mass. 545, 617, 615 N.E.2d 516 (1993) ("It is clear that [the Massachusetts Constitution] obligates the Commonwealth to educate all its children." (emphasis in original)). To the extent that the adequacy requirement *392 bears on the overall quality of education made available, this "compelling interest" folds into the analysis I have already done in Section V.B.4.a, supra: The Lynn Plan is narrowly tailored to the compelling interests of cultivating racial diversity and reducing minority isolation in amounts sufficient to create an atmosphere of racial tolerance in Lynn's schools and prepare Lynn's students to live in a multicultural society. To the extent that the Massachusetts Supreme Judicial Court ("SJC") has found the adequacy requirement to command that schools offer equal resources to students, id., the "compelling interest" of state constitutional compliance on that score folds into my analysis of Lynn's interest in reducing de facto segregation, with all its burdensome consequences on nonwhite children, in Section V.B.4.b, supra.[104]
C. Other Federal Claims
As I find that the Lynn Plan does not violate the Equal Protection Clause, I likewise conclude that the plaintiffs have not established their claims of unlawful racial discrimination under 42 U.S.C. §§ 1981 and 2000d or the derivative claims under 42 U.S.C. §§ 1985 and 1986.
1. Title VI
42 U.S.C. § 2000d (Title VI of the Civil Rights Act of 1964) forbids racial discrimination "under any program or activity receiving federal financial assistance." The plaintiffs' Title VI claims against the state defendants were earlier dismissed, Comfort, 131 F.Supp.2d at 254, but the claims against the Lynn defendants remain. The plaintiffs identify no act of racial discrimination under Title VI other than the Lynn defendants' use of race in student assignments, a practice that I found did not violate the Equal Protection Clause. Title VI "proscribe[s] only those racial classifications that would violate the Equal Protection Clause or the Fifth Amendment." Alexander v. Sandoval, 532 U.S. 275, 280-81, 121 S. Ct. 1511, 149 L. Ed. 2d 517 (2001) (quoting Bakke, 438 U.S. at 287, 98 S. Ct. 2733). The plaintiffs thus have not established a claim under Title VI.
2. 42 U.S.C. § 1981
Likewise unavailing are the plaintiffs' claims under § 1981, which, "like the Equal Protection Clause, can be violated only by purposeful discrimination." General Bldg. Contractors Ass'n, Inc. v. Pennsylvania, 458 U.S. 375, 391, 102 S. Ct. 3141, 73 L. Ed. 2d 835 (1982). Section 1981's ban on racial discrimination, when applied to state actors, is coextensive with the nondiscrimination principle in the Equal Protection Clause. Ohio Contractors Ass'n v. Keip, 713 F.2d 167, 175 (6th Cir.1983) (finding that a remedial program that did not violate the Equal Protection Clause of necessity did not violate § 1981); Mescall v. Burrus, 603 F.2d 1266, 1271 (7th Cir.1979) ("The relationships of §§ 1981 and 1983 to the Fourteenth Amendment are so close and they are each so strongly under its influence that we believe the use of each section must be guided by the principles announced by the Supreme Court for application of the Fourteenth Amendment to discrimination *393 cases."). Accordingly, because the Lynn Plan does not violate the Equal Protection Clause, the plaintiffs have likewise failed to make out their claims under § 1981.[105]
Moreover, the discrimination shown must specifically impair one or more of the following rights:
to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
42 U.S.C. § 1981. I already held, as to the Comfort plaintiffs, that Lynn's school assignment plan has no bearing upon any of the rights set forth in § 1981. Comfort, 131 F.Supp.2d at 255 n. 5.
3. 42 U.S.C. §§ 1985, 1986
42 U.S.C. § 1985(3) furnishes a cause of action against anyone who conspires to deprive citizens of their right to equal protection under the law. 42 U.S.C. § 1986 further authorizes suit against any person who fails to act to prevent a § 1985 violation. As the plaintiffs have not established any civil rights violation or any unrealized conspiracy on the part of the defendants to commit such a violation, judgment must enter for the defendants on these claims as well.
D. Article 111 of the Massachusetts Declaration of Rights
Plaintiffs advance a pendent state law claim that the Lynn Plan violates Article 111 of the Amendments to the Massachusetts Declaration of Rights, which provides that "[n]o student shall be assigned to or denied admittance to a public school on the basis of race, color, national origin or creed." Mass. Const. amend. art. 111. Plaintiffs contend that when a child's option to attend a school other than his or her neighborhood school is limited in order to avoid fostering racial imbalance, he or she is illegally "denied admittance to a public school on the basis of race."
While this position has certain surface appeal, the plaintiffs' reading of Article 111 cannot stand up to historical and legal scrutiny against the backdrop of SJC's canons of state constitutional interpretation and the requirements of the United States Constitution. First, the Lynn Plan's modest limitations on the range of transfer options beyond neighborhood schools do not "deny admittance to a public School on the basis of race" in the meaning of Article 111, which was designed chiefly to limit forced busing and preserve neighborhood schools. Second, while no court has ever expressly interpreted Article 111, the SJC has consistently construed similarly worded statutes narrowly, holding that they do not categorically ban suspect classifications but rather merely subject them to strict scrutiny. Third, the broad reading of Article 111 that the plaintiffs propose, which would flatly prohibit any race-conscious assignment policies in the public schools, must be rejected because its validity under the United States Constitution and consistency with other provisions of the Declaration of Rights is highly doubtful. In short, it is no accident that Article 111 has coexisted peacefully for decades with race-conscious integration efforts in the state's public schools. The amendment poses no obstacle to the Lynn Plan.
*394 1. Applicable Principles of Constitutional Interpretation
The SJC has outlined a series of considerations to guide judicial interpretation of the Massachusetts Constitution.
In determining the meaning of a constitutional provision, we look to the language and structure of the provision, so that it is "construed so as to accomplish a reasonable result and to achieve its dominating purpose." We do so bearing in mind the Constitution was "written to be understood by the voters to whom it was submitted for approval. It is to be interpreted in the sense most obvious to the common intelligence. Its phrases are to be read and construed according to the familiar and approved usage of the language." The words of a constitutional provision "are to be given their natural and obvious sense according to common and approved usage at the time of its adoption."
Moreover, the Constitution "is to be interpreted in the light of the conditions under which it and its several parts were framed, the ends which it was designed to accomplish, the benefits which it was expected to confer, and the evils which it was hoped to remedy." ...
Lastly, the Constitution "is a statement of general principles and not a specification of details ... It is to be interpreted as the Constitution of a State and not as a statute or ordinary piece of legislation. Its words must be given a construction adapted to carry into effect its purpose."
McDuffy v. Sec'y of the Executive Office of Education, 415 Mass. 545, 558-59, 615 N.E.2d 516 (1993) (citations omitted). In addition, "constitutional provisions must be construed together to make an harmonious frame of government." Opinion of the Justices, 303 Mass. 631, 640, 22 N.E.2d 49 (1939).
Finally, "[w]hen the validity of an act ... is drawn into question, and even if a serious doubt of constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided." School Comm., 366 Mass. at 338, 319 N.E.2d 427 (Quirico, J., concurring). This "rule is a venerable one and is often repeated in opinions by courts throughout the United States." Id. at 339-40, 319 N.E.2d 427 (Tauro, J., concurring). It "evolved because of a judicial desire to preserve amicable relations with coordinate branches of government and to assure the fullest possible consideration of constitutional questions before decision." Id. at 345, 319 N.E.2d 427. The same logic would apply when, as with a statute, a proposed construction of a state constitutional provision provokes federal constitutional doubt.
2. The Lynn Plan and the Purpose of Article 111
The Lynn Plan does not conflict with the "natural and obvious" meaning or the "dominating purpose" of Article 111 because it neither "assigns" students nor "denies admittance" to them "on the basis of race." The Plan plainly has no effect on school assignments in the first instance; typically, as a default matter, a child in Lynn attends his or her neighborhood school. The Plan never, under any circumstances, denies admittance to a child's neighborhood school or compels a child to attend a more distant school.
The Plan does not entail rigid racial classificationse.g., all white students must transfer from a certain school, all black students may not transfer to a certain school. Every student may attend his or her neighborhood school. The Plan simply operates to define the range of elective attendance options open to each *395 student in a way that avoids fostering racial imbalance and isolation. This governing principledesegregating the schools is in fact the only reason why transfers are permitted in the first place.
These are meaningful distinctionsnot mere sophistrythat fully comport with the underlying purposes of Article 111. The legislative history of Article 111 clearly demonstrates that the "benefit it was expected to confer" was preservation of neighborhood schools, and the "evil which it was hoped to remedy" was the politically divisive resort to forced busing. Article 111 was adopted by joint sessions of the Massachusetts General Court in 1975 and 1977 and was approved by ballot measure in 1978. The House and Senate bills that became Article 111 were introduced by a group of legislators on behalf of the Massachusetts Citizens Against Forced Busing. See Mass. Sen. Jour. 52 (1975); Mass. H. Jour. 510 (1975); Mass H. Jour. 257, 565 A (1977). The constitutionally-required description of the proposed article in the 1978 Massachusetts Information for Voters[106] stated:
A "YES VOTE" would guarantee the right of parents or guardians of school-age children to educate those children free from any arbitrary assignment by school authorities to schools outside the school district. Any public assignment to a school outside the school district, based on achieving any established racial quota-system or ethnic balance[,] would require the permission of the parent or guardian.
Massachusetts Information for Voters (1978).[107] Contemporaneous press accounts from each hurdle in the passage of Article 111 likewise emphasized its aims of preserving neighborhood schools and eliminating forced busing. See, e.g., Constitutional Convention Approves Antibusing Amendment as Filibuster Fails, Boston Globe, June 12, 1975, at 11 ("The joint House and Senate approved the anti-busing amendment to the Massachusetts Constitution ..."); Legislature Talks Little but Enacts a Great Deal, Boston Globe, Sept. 8, 1977, at 3 ("A joint session of the Legislature, after moderate debate, approved an amendment to the state Constitution that would prohibit the busing of public school children to achieve racial balance."); Six Referendums WinSeventh Close, Boston Globe, Nov. 8, 1978, at 14 ("The proposal, which fosters the neighborhood school concept and is regarded by many as being antibusing, was leading ... in latest returns . . . .").
The Lynn Plan expressly preserves neighborhood schools while at the same time managing to ameliorate racial imbalance and isolation, all without resort to coercive school assignments or forced busing. It neither assigns students to distant schools nor denies admittance to neighborhood *396 schools. At most, it sometimes may limit the range of available elective out-of-neighborhood transfers, not "on the basis of race," but in order to avoid creating racial isolation or imbalance. The Lynn Plan is thus consistent with both the letter and the spirit of Article 111, as broadly envisioned by the legislators who drafted it and the voters who ultimately enacted it.
3. SJC Interpretation of Similar Language
While the Lynn Plan is consistent even with the broad intentions of Article 111's proponents, SJC decisions interpreting similar statutory language suggest an even narrower construction under which suspect classifications in the schools are not prohibited categorically but rather are simply subject to strict scrutiny. The logical conclusion from this SJC reasoning is that Article 111 is simply an education-specific analog of more general constitutional provisions that guarantee equal rights and equal protection.
For example, in Attorney General v. Mass. Interscholastic Athletic Ass'n, Inc. ("MIAA"), 378 Mass. 342, 393 N.E.2d 284 (1979), the SJC held that an Association rule"No boy may play on a girls' team"ran afoul of both the Massachusetts Equal Rights Amendment and Chapter 76, § 5 of the Massachusetts General Laws, a statutory precursor of Article 111. Id. at 363, 393 N.E.2d 284. The Equal Rights Amendment, Mass. Const. pt. 1, art. 1 as amended by Mass. Const. amend. art. 106, provides broadly that "[e]quality under the law shall not be denied or abridged because of sex, race, color, creed, or national origin." At the time, Chapter 76, § 5 providedin language later mirrored in Article 111that "No person shall be excluded from or discriminated against in admission to a public school of any town, or in obtaining the advantages, privileges and courses of study of such public school on account of race, color, sex, religion, or national origin." Notably, the SJC held that the "absolute bar on male participation" imposed by the Association rule was not categorically invalid but rather "prima facie invalid under ERA or our cognate statute, [Mass. Gen. Laws c. 76, § 5], barring sex discrimination in the educational sphere." MIAA, 378 Mass. at 353, 393 N.E.2d 284 (emphasis added). "[S]uch classifications," the SJC explained, "are not permissible unless they meet two conditions: they must `further a demonstrably compelling interest and limit their impact as narrowly as possible consistent with their legitimate purpose.'" Id. at 354, 393 N.E.2d 284 (internal citation omitted); see also Opinion of the Justices; 374 Mass. 836, 842, 371 N.E.2d 426 (1977) (holding that a proposed amendment to Mass. Gen. Laws c. 76, § 5 that would prohibit women from participation with men in contact sports would fail a strict scrutiny test and violate the states Equal Rights Amendment); Opinion of the Justices, 373 Mass. 883, 888, 366 N.E.2d 733 (1977) (holding that a proposed statutory exclusion of Lowell's "Girl Officers Regiment" would fail constitutional scrutiny and violate the Equal Rights Amendment).
In other words, notwithstanding the apparent language of absolute prohibition in Chapter 76, § 5, the legality of suspect classifications in educational programs under the statute simply boils down to a strict scrutiny test. The SJC treated Chapter 76, § 5 as a specific statutory embodiment of constitutional equal protection principles for the education spherea "cognate statute"and nothing more. The obvious conclusion is that nearly identical language concerning school assignment in Article 111 likewise boils down to a strict scrutiny equal protection test, a cognate constitutional provision enshrining *397 the general principle of equality in the particular realm of public education.[108]
As I have explained in Section V.B.4, supra, the Lynn Plan is a narrowly tailored measure aimed at promoting compelling governmental interests. It therefore comports with the requirements of Article 111, as the SJC has construed similar language.
4. State Constitutional Harmony and Federal Constitutional Doubt
The SJC's consistent view that various anti-discrimination and equal protection laws boil down to a "strict scrutiny" test even where language might suggest absolute prohibition of suspect classifications is not surprising when viewed in historical context. Indeed, the plaintiff's proposed broader reading of Article 111 would conflict with other parts of the Massachusetts Constitution and would provoke serious doubt as to its validity under the United States Constitution. In contrast, a construction of Article 111 that applies strict scrutiny, rather than categorically prohibit the use of race, avoids these constitutional tensions.
While the SJC has never expressly construed Article 111 itself, the court's analysis of other proposed anti-busing measures is revealing. In 1973, for example, the SJC rendered an advisory opinion that a bill entitled "An Act prohibiting transportation of pupils without the written consent of their parents or guardians" would violate both the federal and state constitutions.[109]Opinion of the Justices, 363 Mass. 899, 908, 298 N.E.2d 840 (1973).
First, the SJC explained, the anti-busing legislation would be invalid because it would categorically prohibit measures that might be required to remedy unconstitutional discrimination.
*398 In North Carolina State Bd. of Educ. v. Swann, 402 U.S. 43, 91 S. Ct. 1284, 28 L. Ed. 2d 586 (1971), the [U.S.] Supreme Court struck down a statute prohibiting the involuntary busing of students to achieve racial balance in North Carolina Schools. In an unanimous opinion, Chief Justice Burger concluded that `an absolute prohibition against transportation of students assigned on the basis of races, or for the purpose of creating a balance or ratio, `will similarly hamper the ability of local authorities to effectively remedy constitutional violations.' ... [This bill] suffers from the same constitutional defect to the extent that its absolute prohibition against involuntary busing `would inescapably operate to obstruct' remedies granted by Federal or State courts that have found de jure segregation.'
Id. at 901-02, 298 N.E.2d 840 (citations omitted). Significantly, the court found that an absolute ban on busing in Massachusetts would be invalid under Swann even though, at the time, no Court had ordered desegregation measures within the Commonwealth.[110]See id. (acknowledging "full awareness that there has been no holding by any court that de jure segregation exists in Massachusetts, nor has any State court been called upon to decide that question").[111]
Second, the SJC held that the anti-busing bill would be unconstitutional under Reitman v. Mulkey, 387 U.S. 369, 87 S. Ct. 1627, 18 L. Ed. 2d 830 (1967), because it "serves to perpetuate existing segregation in some of the schools, regardless of its cause, and thus `significantly encourage[s] and involve[s] the State' in racial discrimination." Opinion of the Justices, 363 Mass. at 902-03, 298 N.E.2d 840 (quoting Reitman, 387 U.S. at 381, 87 S. Ct. 1627).
The facts of the Reitman case parallel the tortured history of our racial imbalance law. The California Legislature had enacted legislation which prohibited private racial discrimination in the sale or rental of private dwelling. In 1964, the California Constitution was amended by passage of Proposition 14, which gave every Californian the constitutional right to lease or sell his private dwelling to whomever he wanted. The California Supreme Court conceded that since there was no constitutional duty upon the State to end private housing discrimination the State could constitutionally repeal such legislation and retain a neutral stance toward such private discrimination. But the California Supreme Court held that Proposition 14 not only repealed pro tanto existing legislation prohibiting racial discrimination in housing, but also encouraged and significantly involved the State in private racial discrimination contrary to the Fourteenth Amendment by expressly sanctioning the private right to discriminate as a matter of State policy. In affirming the California Supreme Court's decision invalidating Proposition 14, the Supreme Court of the United States recognized that courts must assess the historical *399 context, immediate objective, and "potential impact of official action in determining whether the State" has merely adopted a position of neutrality or one of encouragement of and involvement with private racial discrimination.
* * * * * *
This language suggests that even in situations where there is only de facto segregation, if the State adopts a policy which freezes these de facto conditions by imposing severe limitations on local school officials' discretionary authority to take effective remedial action, then the State policy constitutes State action serving to continue segregation in the schools and thus "significantly encourage[s] and involve[s] the state in private racial discrimination.
* * * * * *
We conclude that this type of State-imposed limitation on a school authority's discretion not only "operates to inhibit or obstruct the operation of a unitary school system" but also uses State power to promote and entrench racial separation in all those schools whose communities have segregated residential patterns."
Id. at 903-06, 298 N.E.2d 840 (citations omitted); see also id. at 904-05, 298 N.E.2d 840 (citing Lee v. Nyquist, 318 F. Supp. 710, 712 (W.D.N.Y.1970) (invalidating a section of state education codes that "prohibit[ed] state education officials and appointed school boards from assigning students, or establishing, reorganizing, or maintaining school districts, school zones or attendance units for the purpose of achieving racial equality in attendance")).
Third, and finally, the SJC held that the anti-busing bill "also violates arts. 1 and 10 of the Declaration of Rights of the Massachusetts Constitution. The guaranties contained in these articles are at least as great as those guaranties provided in the equal protection clause of the federal constitution." Opinion of the Justices, 363 Mass. at 908, 298 N.E.2d 840; see also generally Herbert P. Wilkins, Judicial Treatment of the Massachusetts Declaration of Rights in Relation to Cognate Provisions of the United States Constitution, 16 Suffolk L.Rev. 887 (1980) (noting the independent significance of the state constitution).
The SJC retread this ground in 1974, when it rendered an opinion that proposed legislation to bar the Boston School Committee "from assigning children to schools on the basis of race, sex, or creed without parental consent" was unconstitutional. Opinion of the Justices, 365 Mass. 648, 649-50, 652-53, 310 N.E.2d 348 (1974) ("[A]s a constitutional matter, the bill now before us is virtually indistinguishable from the bill we found to be unconstitutional in our earlier opinion. Each is unconstitutional on its face because it serves to perpetuate existing segregation in some of the schools, regardless of its cause, and thus `significantly encourage[s] and involve[s] the State' in racial discrimination") (citations omitted). Later that year, the Court employed similar reasoning to find that amendments to the Racial Imbalance Act could not forestall the implementation of a desegregation plan in Springfield. See School Comm., 366 Mass. at 327-29, 319 N.E.2d 427 ("[A]ny action taken by the Legislature or by the school committee of Springfield which would tend to reverse or impede the progress toward the achievement of racial balance in Springfield's schools would constitute a violation of the Fourteenth Amendment to the United States Constitution and of arts. 1 and 10 of the Declaration of Rights of the Massachusetts Constitution.... [E]ven where steps toward desegregation are made voluntarily rather than pursuant to constitutional *400 mandate[,] any subsequent State action which would cause a return of the preexisting segregation would itself be an act of de jure segregation.").
The constitutional objections to the 1970s anti-busing legislation outlined above would apply with even greater force to the plaintiffs' reading of Article 111 in this case as a sweeping prohibition on race-conscious assignment policies in the schools. I do not hold definitively that this reading of Article 111 violates the federal constitutionthe issue is not fully joined and there is no need for me to reach it. The point is that the plaintiff's position provokes grave constitutional doubt, the SJC has recognized the basis for that doubt, and the narrower "strict scrutiny" construction that the SJC has bestowed on language similar to Article 111which poses no obstacle to the Lynn Planwould avoid those doubts.[112]
VI. CONCLUSION
This decision follows a very lengthy trial in which the defendants presented substantial evidence and data on the Lynn Plan and its ramifications. They did not seek to defend the Plan by referring to unsubstantiated generalizations about race relations, or the subjective perceptions of school officials. Nor did they rely on experts who knew everything about other systems in other parts of the country, but nothing about Lynn.
Rather, the defendants focused their attention, as they should, on this city, its school system, and the young children who attend it. They looked at it from the macro levelcensus data, surveys, statistics, and from the micro levelthe heartfelt observations of the participants, children, teachers, administrators, parents.
The picture they painted not merely justified the Lynn plan as a constitutional matter. It celebrated the Plan and all the changes it has brought about in Lynn.
Nothing in the constitutional or statutory law of the United States or the Commonwealth of Massachusetts obliges me to dismantle the Lynn Plan and, in so doing, undermine defendants' commendable efforts to run a thriving, multiracial, and successful school system.
SO ORDERED.
NOTES
[1] This decision amends factual and typographical errors in the Court's decision of June 6, 2003.
[2] The Plan, which incorporates other reforms not at issue in this case, is known officially as "A Voluntary Plan for School Improvement and the Elimination of Racial Isolation."
[3] The Lynn Public Schools comprise a single school district. That district is further divided into attendance zones also referred to as districts. Students are assigned to their "district" schools but may also request transfers to "out-of-district" schools. The term "out-of-district" school is misleading as these schools are still within the same school district. For the sake of clarity, I will refer to "district" schools as "neighborhood schools" and "out-of-district" schools as "non-neighborhood schools."
[4] Mass. Gen. Laws c. 71 §§ 37C, 37D and c. 15 §§ 1I, 1J, 1K.
[5] Martin Luther King, Jr., "I Have a Dream," in A Call to Conscience: Landmark Speeches of Dr. Martin Luther King Jr. 75 (2002).
[6] "K-12" means kindergarten through twelfth grade.
[7] Brown, 347 U.S. at 493, 74 S. Ct. 686 (explaining that public education provides "the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values in preparing him for later professional training, and in helping him to adjust normally to his environment").
[8] The board members, sued in their official capacities, currently include Edward J. Clancy (Mayor and Chairperson), Patricia Capano, Donna M. Coppola, Arthur Fiste, John Ford, Jeffrey Newhall, and Loretta Cuffe O'Donnell.
[9] The current Lynn Superintendent, also sued in his official capacity only, is Nicholas Kostan.
[10] The Commonwealth intervened under 28 U.S.C. § 2403(b) to defend the constitutionality of the RIA. The Commonwealth expressly preserved its Eleventh Amendment defenses in its Motion to Intervene as a Party Defendant and its Answer to the Plaintiffs' First Amended Complaint.
The NAACP Legal Defense and Education Fund also moved to intervene in this proceeding. That motion was denied but the organization was permitted to participate as an amicus. The submissions of amici advance the joint interests of the NAACP Legal Defense and Educational Fund, Inc.; the Lawyers' Committee for Civil Rights Under the Law for the Boston Bar Association; Pamela Freeman on behalf of her minor child, James Freeman, a student in the Lynn public school system; Barbara and Anthony Murkison on behalf of their minor children, Tia, Cassandra, and Jason Murkison, also students in Lynn schools; and the Northshore Branch of the NAACP, on behalf of its membership.
The United States submitted an amicus brief in support of the defendants at the preliminary injunction stage of the case.
[11] The Eleventh Amendment precluded plaintiffs' claims against the Commonwealth under 42 U.S.C. §§ 1981 and 1983, as Congress did not expressly abrogate the sovereign immunity of the states in enacting them. Comfort, 131 F.Supp.2d at 255. I also dismissed the plaintiffs' claims under Title VI of the Civil Rights Act, 42 U.S.C. § 2000d, which forbids discrimination "under any program or activity receiving Federal financial assistance," since a state itself is not a "program or activity" for Title VI purposes. Id. at 254-55.
[12] The Comfort plaintiffs amended their complaint on December 9, 1999, to eliminate Jean and William O'Neil as plaintiffs. On January 19, 2001, I allowed the motion of plaintiffs Rhonda Campbell and Andrew and Cattibell DiGaetano to voluntarily dismiss their claims. Plaintiff Karen Agnew dropped her case as well on October 30, 2001.
[13] The lawsuits were then consolidated.
[14] Sued in their official capacities, the current Board members are James A. Peyser (Chairman), Roberta R. Schaefer (Vice-Chairperson), Charles D. Baker, Patricia A. Crutchfield, William K. Irwin, Jr., and Abigail Thernstrom.
[15] The Bollen plaintiffs originally sought a preliminary injunction as well. That motion was withdrawn on April 11, 2001, after the defendants agreed to allow all of the children to attend their school of choice for the 2001-2002 school year, pending trial on the merits of their claims. Remarkably, only one of the plaintiffs, Gina Leone, took full advantage of the agreement to place her child, Troy LaMothe, into a school that was not otherwise available to her under Lynn's transfer policy.
On June 5, 2001, I granted the plaintiffs' voluntary motion to dismiss the claims of Janeen Goodwin on behalf of her child Sean. Plaintiff Michael Stinson, who sued on behalf of Angelica Jackson, noticed his voluntary dismissal on October 11, 2001.
[16] It is undisputed that Angelica's multiracial status would have established her right to transfer to any school in the system.
[17] After Angelica transferred to Sewell-Anderson Elementary School, her sister Gabrielle was able to transfer there as well under Lynn's "sibling unification" provision.
Indeed, Stinson acknowledged that she has sought three transfers for her daughters, only one of whichAngelica's to Pickeringmet with resistance from the PIC.
[18] Thernstrom would later state: "I don't believe in any of these classifications, I believe in giving parents maximum choice as to where their children should go to school, and ... none of these classifications are appropriate in my view. This kind of social engineering is not appropriate..." Thernstrom Deposition at 26.
[19] The RIA, she agreed, is "low on [her] personal list of priorities." Id. at 37. Indeed, when asked if the Board had conducted studies to determine whether or not the conditions that existed at the time the RIA persist today, Thernstrom replied, "My view of that would be we don't need a study, [those conditions] don't exist." Id. at 35.
[20] Birchenough's responsibilities also include direct oversight of the district's "magnet" schools (see infra Section IV.E.6 for a description of these schools), including program design, budget, management, and other systemwide programs designed to increase the integration of the Lynn schools. In addition, she is responsible for Lynn's language support programs, including its Transitional Bilingual Education Programs; the district's assistance to homeless families; and its Title IX policies, which involve, among other things, the coordination of the district's anti-harassment policies. She co-chaired Lynn's technology plans to make certain that all schools receive the same level of technological support and equipment. She also worked with the Superintendent to develop the John Collins Writing Program, which addresses writing deficiencies identified through MCAS testing.
[21] Dr. Orfield has been a court-appointed expert in federal desegregation cases in St. Louis, San Francisco, and Little Rock, and a state expert in a case in Los Angeles.
[22] The methodologies Dr. Killen used to evaluate the students and the school environment are the same methodologies she is using in a study funded by the National Institutes of Health.
[23] Dennis Ford Eagan, The Past, Present, and Future of Desegregation Law in Massachusetts, 34 Suffolk U.L.Rev. 541, 556-57 (2001).
[24] A federal district court came to a similar conclusion in Barksdale v. Springfield School Comm., 237 F. Supp. 543 (D.Mass.1965), which held that a racially imbalanced school denied black students equal opportunity for education. Id. at 546. The court ordered the Springfield School Committee to devise a plan to "eliminate to the fullest extent possible racial concentration in its elementary and junior high schools." Id. The First Circuit, 348 F.2d 261 (1st Cir.1965), ultimately reversed the trial court because the School Committee had voluntarily undertaken substantially the same steps that the district court required before the case was filed, id. at 265; the First Circuit nonetheless observed that there was ample evidence to support the district court's findings:
[R]acially imbalanced schools are not conducive to learning, that is to retention, performance, and the development of creativity. Racial concentration in his school communicates to the [African American] child that he is different and is expected to be different from white children. Therefore, even if all schools are equal in physical plant, facilities, and ability and number of teachers, and even if academic achievement were at the same level at all schools, the opportunity of [African American] children in racially concentrated schools to obtain equal educational opportunities is impaired.
Id. at 263 (quoting the district court's findings).
[25] The RIA defines the terms "racial imbalance," "racial balance," and "racial isolation" as follows:
"Racial imbalance," the condition of a public school in which more than fifty percent of the pupils attending such school are nonwhite.
"Racial balance," the condition of a public school in which more than thirty percent but not more than fifty percent of the pupils attending such school are non-white.
"Racial isolation," the condition of a public school in which not more than thirty percent of the pupils attending such school are non-white.
Mass. Gen. Laws c. 71, § 37D. It is important to note that the Lynn student assignment plan at issue in this case has drafted its own definitions of these terms, as I explain below. See infra Section IV.C.
[26] The Massachusetts Board of Education supervises the larger Department of Education, of which it is a part. Mass. Gen. Laws, c. 15, § 1. The remainder of the Department is comprised of advisory councils to the Board. Id., § 1G.
[27] A "desegregative transfer" is defined by the Board of Education to describe any one of the following conditions:
Students transferred from a school in which racial imbalance exists to a school in which racial isolation or racial balance exists.
Students transferred from a school in which racial isolation exists to a school in which racial imbalance or racial balance exists.
Students attending a school other than their neighbourhood school (neighbourhood or attendance area) and are effecting racial balance.
Students attending a school different from the one they would have been assigned if there were no desegregation plan, and such attendances are effecting racial balance or reducing racial isolation.
Students who are assigned to a school different from the one they would have been assigned to prior to controlled choice. Such attendance contributes to racial balance.
Students who are not attending their walkzone schools and are effecting desegregative choice.
Commonwealth of Massachusetts Department of Education, "Desegregative Transfers."
[28] The state deposits these payments into local "Equal Education Improvement Funds," from which the local school committees may draw monies to support the quality of education within their districts. Id. § 1I, ¶¶ 4, 5.
[29] This amendment applies prospectively and does not affect the state's existing 90% funding contributions to renovation or construction efforts in voluntary plans predating the amendment.
[30] The Department of Education was also concerned about the closing of seven schools without taking racial balance into consideration, the loss of seven teachers trained with state funds in facilitating integration, and the increase in class size at the Washington school, well beyond the city's average, which reduced its attractiveness to transfers.
[31] In May 1984, the Department of Education confronted Lynn a second time, this time to complain of the district's failures to meet various state and federal bilingual and special education requirements. Hispanic students brought a federal civil rights suit in 1985 claiming that the district denied them appropriate language programming and educational services. Lynn ultimately submitted to the terms of a consent judgment that required it to take steps to improve its bilingual education program.
[32] At one point, Lynn proposed a plan that would gerrymander the Ingalls and Aborn neighborhoods to make them even more imbalanced. Lynn proposed to redistrict the Ingalls school zone by annexing the white section of the Ingalls school zone, which was 53% minority, into the Aborn zone, which was overwhelmingly white.
[33] As noted above, this requirement means that Angelica Jackson, daughter of plaintiff Stinson, would have been able to transfer freely out of her neighborhood school to any other school in Lynn.
[34] See infra Section V.A.2.
[35] The Lynn Plan does not apply to school assignments for students participating in bilingual or special education programs.
[36] Neutral transfers at the middle and high school level are available until August 1. Elementary school students may participate in neutral transfers until December 1or later, if the principals of the sending and receiving schools give their assent.
[37] The Lynn Plan's definition of minority includes African Americans, Asian Americans, Hispanics, and Native Americans.
[38] The Plan originally called for a 10% range of deviation for elementary schools, but the district altered this range to 15%, as Birchenough explained, "to allow for the window to be open a little more" and thereby permit more choice to Lynn parents with elementary school children. A 20% range was considered in 1994, but the district ultimately concluded that this "would open the window too wide," with the result that schools would lapse into greater racial identifiability.
[39] Factors such as limits on class size and space availability can result in denial of a transfer, but none of these are at issue in this case.
[40] Finally, beyond the issue of desegregation, the PIC in effect maintains a living archive of the Lynn school district. Miscellaneous data that the PIC compiles and tracks include students' post-graduation plans, reasons for discipline, enrollment diversion to private and parochial schools, and indicators of student homelessness.
[41] Segregative transfers are sought between 500 and 800 times per year. White parents disproportionately seek transfers that the Plan forbids: although only about 40% of the student population is white, 70% of the segregative transfers proposed involve white students.
[42] There are eighteen elementary schools in total: Aborn, Brickett, Callahan, Cobbet, Connery, Drewicz, Fallon, Ford, Harrington, Hood, Ingalls, Lynn Woods, Sewell-Anderson, Shoemaker, Sisson, Lincoln-Thomson, Tracy and Washington Community Magnet. Of these schools, fiveAborn, Lynn Woods, Sewell-Anderson, Shoemaker and Sissonare located in predominately white residential areas of Lynn, whereas Cobbet, Connery, Harrington, Ingalls, and Washington are located in predominately minority areas.
Lynn maintains four middle schools, which provide sixth, seventh, and eighth grade instruction. Barring a student's voluntary exercise of a transfer, the middle schools act as neighborhood schools in their own right, drawing students from nearby elementary schools. The Brickett, Harrington, and Ingalls elementary schools, along with portions of the Aborn, Ford, and Hood schools, feed graduating students into the Marshall middle school. The Cobbet, Connery, and Washington elementary schools feed into the Fecteau-Leary middle school. The Breed middle school draws students from the Callahan, Drewicz, Fallon, Sewell-Anderson, Lincoln-Thomson and Tracy elementary schools. Finally, the Pickering middle school receives students from Lynn Woods, Shoemaker, Sisson and portions of the Aborn, Ford, and Hood schools.
The four middle schools in turn feed into three high schools: Breed and Fecteau-Leary feed into the Lynn Classical high school, and Marshall and Pickering serve as feeder schools for the English high school. The third high school, Lynn Vocational Technical, draws from all parts of Lynn.
[43] Those schools included Lincoln-Thomson (43%), Sewell-Anderson (44%), Fallon (48%), Callahan (56%), Brickett (57%), Tracy (66%), Drewicz (68%), Washington (70%), and Ford (71%).
[44] Lynn Woods (25%), Sisson (27%), Shoemaker (30%), Aborn (35%), and Hood (just barely at 42%).
[45] Connery (80%), Ingalls (81%), Cobbet (83%), and Harrington (84%).
[46] Birchenough testified that at the high school level, students are often ashamed to fill out the paperwork necessary to obtain school lunch assistance, so that the numbers may under-represent the numbers of families who could qualify.
[47] There is no question that educational achievement has increased throughout the system by all measures. For example, to the extent that the state-administered MCAS test is a barometer of academic achievement, Lynn students are performing at high levels relative to other students in the Commonwealth under similar socioeconomic conditions. Likewise, Lynn's high school students scored above average among MCAS test-takers in urban areas. In addition to the improvement reflected in MCAS test results, data collected in the first three years after the Lynn Plan was implemented show improved reading and test scores. The Massachusetts Department of Revenue, as part of its financial audit of Lynn schools, collected school achievement data from 1988 to 1996 that reflected sustained improvement in reading, language expression, and overall academic achievement.
Nevertheless, defendants do not claim that this improvement derives solely from the race-conscious aspects of the Lynn Plan. As described above, from the outset the student assignment plan has been seen as an integral part of a larger, more comprehensive educational overhaul that involves improving school facilities, increasing resources, improving curricular offerings, as well as providing a wide variety of multicultural and multiracial educational opportunities.
What the defendants do allege, and what the record establishes, is that the race-conscious and race-neutral components of the Plan are inextricably intertwined and each independently necessary. The school assignment policy, without the support of the other elements, would not have resulted in these improvements. Conversely, race-neutral strategies would not have been effective in creating a healthy multiracial learning environment without the Plan's use of race.
[48] Nicole Oak, a seventeen-year-old white student and recent graduate of Lynn Classical High School, started her Lynn career in a "very diverse" elementary school, with the result that multiracial environments seemed "just natural" to her by the time she graduated from high school. In her experience, students from other school districts do not have the same healthy attitude toward racial difference; she suspects that hers is a result of her early exposure to students of other races.
[49] Karen Horner, an African American parent of two children in the Lynn system, testified that she did not begrudge the district's denial of two transfers she sought on behalf of her son Errol. Although the denied transfers would have made her life as a single parent substantially easiershe preferred one school because the YMCA maintained an after-school program across the street and the other because she had recently moved into that school's neighborhoodHorner respected the district's decisions.
[50] The survey instrument was designed by nationally recognized experts and peer-reviewed. It has been administered at locations across the country.
[51] The students that Dr. Orfield consulted about race relations and the nature and degree of cross-racial interaction among the students affirmed the survey results. Student responses were unequivocally positive, to such an extent that they pitied students in adjoining communities who did not have the benefit of integrated schools and regarded them as "completely clueless" about race relations.
[52] For example, data from the survey of Lynn's eleventh grade students suggest the following: students across racial lines felt that they had received information about college admissions and have been encouraged by teachers and counselors to attend college and to take honors or Advanced Placement courses, and that they have at least one teacher who takes a special interest in them. Consistently, students across racial groups reported their convictions that teachers administer discipline fairly and that if they "try hard they can do well in school."
Students felt that integration was a fundamental characteristic of their schools. It was part of the schools' mission statement and was reflected in the conduct of authority figures.
[53] Dr. Killen's testimony was especially telling:
I was very struck. I was very surprised, because I went there really with no expectation.... And I went there just wanting to find out what it was going to be like. And I've been in numerous, numerous schools in ... different places in the United States. And I was really surprised by the high level of positive interaction among children, among teachers and children in these schools. I mean, I was really struck by this. It was kind of astounding, especially in the informal settings, but also in the classrooms, as well. But in the informal settings, of seeing children sitting next to one another from different races, interacting together in positive ways, seeing the teachers in the hallways in terms of their warmth expressed to children and the nurturing behavior to all children, different races.
* * * * * *
[O]ne of the well-documented findings is that children in cafeteria settings often self-segregate. They sit next to others who are of the same race and ethnicity, ungendered. And I did not see that .... It was very surprising. They elected to sit next to others from different races, different ethnic backgrounds, positive interactions, positive discourse style, positive emotional display, affect display.
[54] Drs. Dovidio and Killen both summarized the research and cited specific authoritative studies on critical mass.
[55] Dr. Dovidio explained further that even though schools may occasionally dip under the 20% mark, as Fecteau-Leary did, the range of racial balance in Lynn's schools does not permit a statistically meaningful study of the relative ability of the schools to teach racial tolerance. Such a study, which the plaintiffs proposed to Dr. Dovidio on cross examination, might in theory provide a measure of the contribution that student-body integration (as opposed to the other "inputs" provided for in the Plan) has made to the improvement in student attitudes about race. But because the Lynn Plan has ensured that all its schools at least hover around the 20% mark, the range of racial balance available for study is too narrow to admit of a manageable analysis.
[56] A 1983 publication entitled Strategies for Effective Desegregation, to which Dr. Rossell made substantial contributions, declared that "A critical mass of between 15 to 20% of any particular racial group should be maintained in a school" and that "A critical mass of students seems to encourage intergroup contact, discourage self-isolation, facilitate the responsiveness of teachers and administrators to the special needs of minorities, . . . and promote more parental involvement in the school." When confronted with this work at trial, Dr. Rossell claimed that these conclusions were based on no studies whatsoever, but were pulled in effect, out of thin air.
[57] Because standing is an element of the constitutional requirement of "case or controversy," U.S. Const. art. III, lack of standing deprives a court of subject-matter jurisdiction. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-02, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998).
[58] Thus, the Eleventh Amendment does not bar the Bollen plaintiffs' declaratory claims against state Board of Education members.
[59] In addition, as described below, at least one plaintiff has standing to bring all claims.
[60] The plaintiffs argue that the defendants' motion makes improper reference to trial testimony and stipulations. A jurisdictional motion, however, unlike a Rule 12(b)(6) motion to dismiss, may incorporate evidentiary materials outside the pleadings, and the court may consider arguments beyond the scope of the parties' memoranda and resolve factual disputes. Jones-Booker v. United States, 16 F. Supp. 2d 52, 58 (D.Mass.1998).
[61] The Bollens brought suit on behalf of their son Michael, a white student, for whom they sought a transfer from his neighborhood middle school, the Marshall middle school, to the Pickering middle school. Lynn denied his request but approved Bollen's alternative request for a desegregative transfer to the Fecteau-Leary middle school. Indeed, when in the spring of 2001, consistent with an agreement in the Bollen case, the district offered Bollen an assignment to any school of his choice, Bollen elected to remain at Fecteau-Leary, where he enrolled for the 2001-2002 school year.
[62] LeAnne Manuel's daughter Shanice left her neighborhood school to attend Connery Elementary through the third grade. In September 1999, Manuel sought a second transfer, this time to the Sewell-Anderson school. Lynn denied this transfer and Manuel did not present a compelling reason for the re-assignment. When the Bollen agreement allowed Manuel her choice of schools within the school district, she initially favored Sewell-Anderson but then changed her request to the Callahan elementary school. Significantly, Shanice's ultimate transfer to Callahan was race-neutral and would have been passable under the Plan, quite apart from the Bollen agreement.
[63] Karen Tsaltas sues on behalf of her son Michael, who attended his neighborhood school, the Harrington elementary school, through the fifth grade. At the beginning of Michael's fourth grade year, Tsaltas requested a transfer to the Washington elementary school. Lynn initially denied Tsaltas' request but reversed its position on appeal. Tsaltas, however, ultimately did not transfer her son to that school, choosing instead to keep her son at Harrington.
[64] For a more extensive description of the principles of standing, see Comfort, 150 F.Supp.2d at 285, 296-297 (citing Lujan, 504 U.S. at 564, 112 S. Ct. 2130 (finding that standing cannot be predicated on a plaintiff's "one day intentions")).
[65] See supra Section III.A (setting forth the particulars of Stinson's transfer denial). Although Stinson was advised of her right to appeal this decision, she did not do so, giving her assent instead to her daughter's continued placement at Sewell-Anderson, which, though an elementary school, had recently decided to continue sixth grade instruction for another year. Pursuant to the Bollen agreement, Stinson placed her daughter at Pickering for the 2001-2002 school year.
[66] The Plan's safeguards for biracial students ensure that Lynn will not deny a transfer to Stinson's daughter, if she follows the appeals procedures in place.
[67] Indeed, as I discuss below, whether the denial of a transfer ever can be said to work a "competitive disadvantage" injury is another question altogether, when the parties have stipulated that all of Lynn's public schools are equal in quality.
[68] I earlier held provisionally that the Comfort plaintiffs could seek nominal damages. Comfort, 150 F.Supp.2d at 301-02.
[69] For an extended discussion of the availability of nominal damages, see Comfort, 150 F.Supp.2d at 298-300.
[70] The Court remanded the case to determine if the federal policy satisfied strict scrutiny. After numerous further appeals and remands, the then-current program was found to meet "strict scrutiny." Adarand Constructors, Inc. v. Slater, 228 F.3d 1147, 1187 (10th Cir.2000) (holding that "the relevant programs now meet the requirements of narrow tailoring").
[71] Raso involved the redevelopment of portions of the predominantly white Old West End in Boston. The Boston Redevelopment Authority ("BRA") required the developer to give preference to displaced prior residents (mostly white) in leasing the redeveloped premises. The developer, in turn, sought funding from the federal Department of Housing and Urban Development ("HUD"), which was operating at the time under a consent decree that required it to press for "the achievement of a racial composition, in HUD-assisted housing located in neighborhoods which are predominantly white, which reflects the racial composition of the City [of Boston] as a whole." Raso, 135 F.3d at 14 (alteration in original). HUD, the BRA, and the developer drafted a plan that reduced the number of units subject to the displaced resident preference. A class of Old West End residents challenged the result under the Equal Protection Clause, citing the plan's racial motive of integrated housing.
The First Circuit affirmed the district court's dismissal of the case, rejecting the strict scrutiny test. The court held that a mere "racial motive" does not raise equal protection concerns; every anti-discrimination statute has an underlying racial motive, and none of them are regarded as constitutionally suspect. Id. at 16. In addition, unlike the situation in Adarand, there was no racial classification to scrutinize because no preference was given to one race over another. See id.
The parallels between Raso and this case are substantial. In Raso, a government preference for displaced tenants would result in segregation. The government therefore decided to modify (but not eliminate) the prior tenant preference in order to foster more integrated housing. Similarly, in this case, a government policy of neighborhood school assignment would result in segregation. The government therefore decided to allow transfers that promote integration. In both cases, the government is taking race-conscious action aimed at integration. In both cases, the policy is race-neutral on its face, in that it does not favor one race over another, although individuals may be deprived of a benefit they otherwise might have received. The one difference here is that the Lynn Plan is race-conscious on its face and the plan at issue in Raso was not. Accordingly, where Raso did not undertake any equal protection scrutiny, amici propose intermediate scrutiny in this case, in keeping with the practice of other courts that have examined similar issues.
[72] Although Lynn officials refer to some of the city's schools as "magnet schools," this is something of a misnomer. Ordinarily, the term "magnet school" refers to schools that confer unique educational benefits and draw from a districtwide geographic base through a lottery system. See, e.g., Hampton v. Jefferson Cty. Bd. of Education, 102 F. Supp. 2d 358, 377 (W.D.Ky.2000); see also, e.g., Tuttle v. Arlington Cty. School Bd., 195 F.3d 698, 701 (4th Cir.1999). In contrast, as described in section IV.E.6, supra, Lynn's so-called "magnet" schools are really just neighborhood schools with a "theme" designed to attract some transfer applications and thereby promote integration. While parents may prefer a particular school for any number of subjective personal reasonsthe school's "theme," geographic proximity to a parent's workplace, etc.the parties agree that Lynn's schools, and the educational benefits they provide, are essentially fungible.
[73] As the Hampton court aptly observed:
The workplace, marketplace, and higher education cases are poor models for most elementary and secondary public school education [cases] because they always involve vertical choicesone person is hired, promoted, receives a valuable contract, or gains admission. Ordinarily, when [the Jefferson County school system] assigns students to a particular elementary, middle, or high school, the assignment has no qualitative or "vertical" effects. This is because the Court concludes that as between two regular elementary schools, assignment to one or another imposes no burden and confers no benefit. The same education is offered at each school, so assignment to one or another is basically fungible. As a logical consequence, most courts have concluded that there is no individual right to attend a specific school in a district or to attend a neighborhood school.... Under this analysis, [the Jefferson County school district] would not be prohibited from using race in its general student assignments to maintain its desegregated school system ....
Hampton, 102 F.Supp.2d at 380 (footnote and citations omitted).
[74] Likewise, courts in the Sixth and Third Circuits have refused to apply strict scrutiny to school district policies that assigned teachers to certain schools based, in part, on their race. Jacobson, 961 F.2d at 102-03; Kromnick, 739 F.2d at 903. The Jacobson court found that intermediate scrutiny was warranted because, as the Jacobson court observed, the teacher assignment plan at issue "is applied equally to both black and white teachers. In some instances, it will benefit or harm white teachers; in others, it will benefit or harm black teachers." Id.
An even stronger case for intermediate scrutiny can be made here, where the parties have stipulated that no one school is superior to anothera concession that was not apparent in Jacobson or Kromnick.
[75] The Salerno Court observed that where First Amendment claims are raised, there is another basis for invalidation, namely, over-breadth, which plainly does not apply here. Salerno, 481 U.S. at 745, 107 S. Ct. 2095.
Other courts also have suggested that the broad language of Salerno may no longer be valid. As the Seventh Circuit observed, the Supreme Court in both Stenberg v. Carhart, 530 U.S. 914, 120 S. Ct. 2597, 147 L. Ed. 2d 743 (2000), and Planned Parenthood of South-eastern Pennsylvania v. Casey, 505 U.S. 833, 112 S. Ct. 2791, 120 L. Ed. 2d 674 (1992), invalidated abortion restrictions that "might have been construed by the state courts to have at least some proper applications," without even mentioning Salerno. A Woman's ChoiceEast Side Women's Clinic v. Newman, 305 F.3d 684, 687 (7th Cir.2002). Thus, the Eighth Circuit has concluded that "an abortion law is unconstitutional on its face if, `in a large fraction of the cases in which [the law] is relevant, it will operate as a substantial obstacle to a woman's choice to undergo an abortion.'" Planned Parenthood, Sioux Falls Clinic v. Miller, 63 F.3d 1452, 1457 (8th Cir. 1995) (quoting Casey, 505 U.S. at 895, 112 S. Ct. 2791). A more general standard could be applied outside the abortion context that would "hold a law to be facially unconstitutional when it would operate as a substantial obstacle to an otherwise lawful course of action in a large fraction of relevant cases." S.D. Myers, Inc. v. City & Cty. of San Francisco, 253 F.3d 461, 467 (9th Cir.2001) (ultimately concluding, "we will not reject Salerno in other [non-abortion] contexts until a majority of the Supreme Court clearly directs us to do so").
This debate is of little import here. First, the First Circuit has not yet joined this fray and continues to use the Salerno standard for facial challenges. See Pharmaceutical Research and Mfrs. of Am. v. Concannon, 249 F.3d 66, 77 (1st Cir.2001). Second, this Court is not aware of any decision repudiating Salerno outside the context of abortion restrictions. Third, even if the narrower Casey standard applied, there is no suggestion in this case that the RIA in any way restricts, impedes or deters lawful action "in a large fraction of relevant cases." Fourth, in contrast to the constitutional right to abortion, there is no constitutional right to school choice.
[76] Were I to reach the challenge to the mandatory provision, the same principles that govern the constitutionality of the Lynn Plan would apply here, as the trigger for the provision namely, the denial of a student's request for a desegregative transferuses race in much the same way as the Lynn Plan does.
[77] The plaintiffs admitted as much at trial, when I raised the following hypothetical: Assume two contiguous school attendance zones, one of which is predominantly minority and the other predominantly white. Plaintiffs' counsel conceded that a school district would satisfy the RIA and the Equal Protection Clause if it closed the two schools and opened a new, larger school between the neighborhoods that consolidated the student populations. Similarly, if a small district with racially identifiable school attendance zones built a single central elementary, middle, and high school to absorb its entire enrolled student populations, this strategy would qualify as a racial balancing plan under the RIA, and it would not trigger any equal protection scrutiny.
[78] The plaintiffs in this case also facially challenge the provision of the RIA that reimburses the transportation costs of desegregative transfers. Mass. Gen. Laws c. 15, § 1I, ¶ 3 provides, in pertinent part:
The commonwealth shall ... pay to a city, town, or regional district school committee one hundred percent of the cost of transportation of non-white pupils and minority pupils ... transferred from schools in which racial imbalance exists and one hundred per cent of the cost of transportation of white pupils transferred from schools in which racial isolation exists to schools in which racial imbalance or racial balance exists for the purpose of reducing or eliminating racial imbalance as provided by said section thirty-seven D.
Unlike the RIA provisions that fund and encourage racial balancing plans, which admit of race-neutral possibilities (e.g., locating schools on the borders of segregated enclaves), the Commonwealth's decision to reimburse transportation costs necessarily takes account of a student's race in each transfer. Although reimbursements may be made available to all students, white or nonwhite, who choose desegregative transfers, whether or not a transfer is desegregative, and therefore eligible for state funding of its transportation costs, must turn in part on the student's race (as well as the racial makeup of the student's current and destination schools).
This fact would trigger the same form of equal protection scrutiny that I apply to the Lynn Plan, which approves desegregative and neutral transfers, but not those that would exacerbate racial imbalance.
However, the reimbursement provision bears only on the question of which government entitythe state or the school district pays the transportation costs of a transfer. There is no evidence in the record to suggest that any student's transfer went unfunded by Lynn or the Commonwealth. As such, it is difficult to see what possible injury students could suffer as a result of one government entity's funding their school transportation costs, as opposed to another. Absent any injury, the plaintiffs' facial challenge to the RIA on this basis must fail. See Casey v. City of Newport, R.I., 308 F.3d 106, 119 (1st Cir. 2002) (reciting the standing requirement that the plaintiff's claimed injury be causally related to the action it challenges).
[79] See Wessmann, 160 F.3d at 829 (Lipez, J. dissenting) (observing on the subject of numerical goals that elements of the "narrow tailoring" analysis may not make the transition from the employment to the educational context gracefully; education, after all, is directed at shaping individuals in a prospective manner").
[80] This Court recognized that axiom in McLaughlin v. Boston School Comm., 938 F. Supp. 1001 (D.Mass.1996), in which it observed that "the phrase `educational diversity' is less than fully explanatory .... It is, rather, the many educational benefits to which racial [and] ethnic diversity might be thought a conduit that, when taken together, constitute the compelling diversity interest defendants here assert." Id. at 1014.
[81] The Wessmann court also cited Lutheran Church-Missouri Synod v. Fed. Communications Comm'n ("Lutheran Church"), 141 F.3d 344 (D.C.Cir.1998), which rejected FCC equal employment opportunity regulations that used a racial classification directed at "fostering [radio] programming that reflects minority viewpoints or appeals to minority tastes." Id. at 354.
In so doing, the D.C. Circuit addressed whether the goal of promoting "diverse" programming satisfied the compelling state interest standard and concluded that it did not. The setting, however, was very different from the instant case. Since the FCC never defined what "diverse programming" meant, and any content-based definition would raise First Amendment concerns, the Court suggested that the "government's formulation of the interest seems too abstract to be meaningful." Id. While it acknowledged that an earlier Supreme Court decision (in Metro Broadcasting v. Fed. Communications Comm'n, 497 U.S. 547, 110 S. Ct. 2997, 111 L. Ed. 2d 445 (1990)) recognized such an abstract diversity interest as "important," the court suggested that this characterization was bound up in the Court's use of intermediate scrutiny in Metro Broadcasting, a standard that Adarand had overruled in the interim. Id. In any event, the diversity interest at issue in Lutheran Church was an interest in viewpoint diversity that is not at issue here, and which the First Circuit found absent in the Boston Latin policy. Wessmann, 160 F.3d at 798.
In the Wessmann decision the First Circuit found Lutheran Church to have limited import. Wessmann, 160 F.3d at 795 ("We think that any ... consensus [among the circuit courts that diversity may never be a compelling interest] is more apparent than real. In the education context, Hopwood is the only appellate court to have rejected diversity as a compelling interest, and it did so only in the face of vigorous dissent from a substantial minority of the active judges in the Fifth Circuit." (emphasis added)).
[82] The Court cited McNamara v. City of Chicago, 138 F.3d 1219 (7th Cir.1998), for the proposition that the narrow tailoring test is "whether the increase is a plausible lower-bound estimate of a shortfall in minority representation among [sergeants] that is due to the [Department's] intentional discrimination in the past." Id. at 1224.
[83] See also Vernonia School Dist. 47J v. Acton, 515 U.S. 646, 664-65, 115 S. Ct. 2386, 132 L. Ed. 2d 564 (1995) (holding that random drug testing of student athletes in public schools does not violate the Fourth and Fourteenth Amendment protections against unreasonable searches and seizures); Hazelwood School Dist. v. Kuhlmeier, 484 U.S. 260, 273, 108 S. Ct. 562, 98 L. Ed. 2d 592 (1988) (holding that the contents of a school newspaper were a curricular matter within the school's discretion such that the principal's significant edits did not implicate the First Amendment); Bethel School Dist. No. 403 v. Fraser, 478 U.S. 675, 685, 106 S. Ct. 3159, 92 L. Ed. 2d 549 (1986) (holding that a sexually suggestive student government speech was not protected by First Amendment free speech and expression rights); New Jersey v. T.L.O., 469 U.S. 325, 339-41, 105 S. Ct. 733, 83 L. Ed. 2d 720 (1985) (holding that to require probable cause before school administrators might conduct a search or seizure would constrain the school's control and articulating a "reasonable suspicion" test for Fourth Amendment cases in the public primary school context); Ingraham v. Wright, 430 U.S. 651, 664, 97 S. Ct. 1401, 51 L. Ed. 2d 711 (1977) (holding that "the Eighth Amendment does not apply to the paddling of children as a means of maintaining discipline in public schools"); Goss v. Lopez, 419 U.S. 565, 581-84, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975) (finding a student's due process rights under the Fourteenth Amendment to be limited in cases of short-term school suspension); Tinker v. Des Moines Indep. Community School Dist., 393 U.S. 503, 510-11, 89 S. Ct. 733, 21 L. Ed. 2d 731 (1969) (allowing school officials to regulate student political speech when it threatens "material and substantial interference with schoolwork or discipline").
[84] Lynn's high schools all meet the standard for racial balance. Any Lynn student may apply to, or transfer to, any of them. While a high school's mission is surely more academic-oriented than that of the elementary schools, citizenship training is still part and parcel of the enterprise. The testimony of Lynn high school student Nicole Oak, as well as the responses that juniors attending all three of Lynn's high schools gave to Dr. Orfield's Diversity Assessment Questionnaire, speak to the value of continuing to teach racial issues through high school.
[85] See also Elizabeth S. Anderson, Integration, Affirmative Action, and Strict Scrutiny, 77 N.Y.U. Law Rev. 1195, 1243-44 (2002) ("[W]hen the state's purpose is explicitly race-conscious . . . its use of racial means is not only clearly relevant to its purpose, but more narrowly tailored to that purpose than race-neutral means could be.").
[86] As Dr. Dovidioas well as each and every one of the other experts noted, the use of race in Lynn's school assignments and its achievement of critical mass was the cause of the improved race relations:
I focused on trying to distinguish what the effects of the plan were, the effects of achieving 20 percent or more of split within the schools to see if that had effects that seemed to be over and above any other effects, effects that could be explained primarily due to the plan and not due to these other factors.
I didn't come up withthere was no parsimonious explanation for the improvements that I saw. There was no reasonable explanation. There was no valid explanation that consistently explained the data, except for the plan, in my judgment.
Q. And that is all aspects of the plan?
A. That has to do with the fact that the plan produces the critical mass of 20 percent . . . .
[87] Dr. Dovidio testified as well that race plays "a fundamental part of the socialization of students in America today." Dr. Killen, too, affirmed that race is a "predominant group identity" in American culture.
[88] The categories on which this diversity is basedwhite and nonwhitehave been accepted by other courts, see, e.g., Jacobson, 961 F.2d at 102 (affirming the use of these categories in teacher assignments within a district); Brewer, 212 F.3d at 752-53, (finding, at the preliminary injunction stage, that the use of white/nonwhite categories in deciding student transfer requests at public schools is narrowly tailored to a different kind of compelling interest than "true diversity," such that Bakke's holding is inapplicable).
[89] The experts noted that in other settings, such as employment, this stigmatization is demonstrated to result in poor job performance.
[90] It must be noted that the Sixth Circuit, sitting en banc, confronted the question of "critical mass" in an altogether different context in Grutter v. Bollinger, 288 F.3d 732 (6th Cir.2002). Grutter dealt with an equal protection challenge to the use of race as a factor in deciding admissions to the University of Michigan Law School. The university's use of race, as is true of Lynn's, was "aspirationally" gauged to generate a "critical mass" of under-represented minority students in an incoming law school class; that is, it did not guarantee any number of slots to minorities. Id. at 747-48.
However, the compelling interest that the university recited was not the interest at stake here. Grutter argued for the "viewpoint diversity" interest that the Supreme Court recognized as compelling in Bakke. Specifically, a diverse student population in higher education "enrich[es] students' education with a variety of perspectives, experiences, and ideas." Id. at 738 (quoting Bakke, 438 U.S. at 313, 98 S. Ct. 2733). The Sixth Circuit upheld the university's admissions practices, id. at 752, and the case is presently before the Supreme Court, Grutter v. Bollinger, ___ U.S. ___, 123 S. Ct. 617, 154 L. Ed. 2d 514 (granting certiorari).
Experts and administrators testified in Grutter that a "critical mass" of minority students is necessary to achieve the true benefits of the viewpoint diversity that the university was after. Under-represented minorities must populate a class in sufficient number that they may comfortably contribute their unique viewpoints in classroom discussions without feeling as though they are "spokes-persons for their race." Grutter, 288 F.3d at 736.
In contrast, as described above, the "critical mass" sought by the Lynn Plan is different, because Lynn's goal is not viewpoint diversity. As I have said, at the elementary, middle, and high school level, the goal of teaching socialization is at least as important as the subject matter of instruction. The value of a diverse classroom setting at these ages does not inhere in the range of perspectives and experience that students can offer in discussions; rather, diversity is valuable because it enables students to learn racial tolerance by building cross-racial relationships. In this context a meaningful presence of racial minorities and of whites at minority-dominated schoolsis crucial not only to reducing feelings of tokenism, but also to disarming stereotypes that students in the classroom majority might harbor about students of other races.
[91] Dr. Killen also attributed districtwide racial harmony, improved discipline and attendance, etc. to the Lynn Plan's fostering of integration through school assignment. In her expert opinion, a critical mass of white or nonwhite students is essential to achieving the benefits of intergroup contact. Dr. Killen emphasized that race-neutral factors like diversity training for teachers are desirable, but if "your school is made up of kids who are 90% of one race, whether it's white or black, you're not going to achieve the goals set out that these techniques were designed to accomplish."
Likewise, Dr. Orfield testified that increased de facto segregation that would necessary follow from suspension of the Lynn Plan, see infra Section V.B.4.b, would curtail the citizenship benefits that flow to all students in an integrated environment.
[92] This 1983 publication stated:
A critical mass of students seems to encourage intergroup contact, discourage self-isolation, facilitate the responsiveness of teachers and administrators to the special needs of the minorities, especially when remedial or bilingual programs are needed, and promote more parental involvement in the school.
These are exactly the effects that defendants and their battery of experts have attributed to the Lynn Plan.
[93] Indeed, the dynamics of human interaction are so complexwith so many possible internal and external dynamics shaping the course of relationships between white and nonwhite students in Lynn schoolsthat I found it difficult to believe Dr. Rossell's claim that her multiple regression analysis could control for all other differences between schools except their measure of racial balance, difficult to believe.
[94] The Ingalls (81% minority), Cobbet (83%), and Harrington (84%) elementary schools, and the Fecteau-Leary (81%) middle school were all perched below critical mass in the 2001-2002 school year, and Dr. Killen did some of her observations at Fecteau-Leary.
[95] Dr. Killen explained that in Fecteau-Leary, though its white population was at 19% during the 2001-2002 school year, the school had recently reached critical mass, and a number of the elementary schools feeding students into Fecteau-Leary were at or above critical mass.
[96] The Andrew Jackson court remanded for further development of the issue of narrow tailoring; the court was particularly interested in how the Board hit upon its 50% figure. Id. at 720. The school district justified that percentage to the trial court as a "tipping point" of a different kind than the defendants' proposed "critical mass" here. Their data suggested that fifty percent was the point beyond which a minority presence in the school triggered white flight to suburban school districts. The district court rejected this theory, on the ground that the data showed that in some schools white flight occurred at similar or even greater rates when minority enrollment reached the 60% or 70% level. Andrew Jackson II, 738 F.2d at 579-80.
The Second Circuit vacated and remanded the case once again. Its review of the 50% tipping point was not as exacting as the district court's. The Court of Appeals found it sufficient that the 50% tipping point produced the "most significant drop" in white enrollment and did not require the school district to show that 50% hosted the "only significant drop." Id. at 580.
[97] Q. Did you perform any evaluation or study of the geographic locations of schools and each of their attendance zones to come to the conclusion that, in fact, they could move attendance zones and would be able to integrate their schools similar to what they currently have in their schools?
A. I haven't done that particular analysis of Lynn, but I have designed many desegregation plans, and I know it can be done.
[98] Dr. Rossell's conclusion seemed to be predicated in part on a different standard of what was an acceptable amount of integration that is, her view that there is no "critical mass" that marks a significant upturn in the benefits obtained from intergroup contact:
Q. So, it's your testimony that the Aborn school ... which is currently at 34% minority, and would become 12% minority, would continue to be a racially integrated school under your definition?
A. Twelve percent is racially diverse, yes.
Emphasis added.
[99] The present location of Lynn's schools would make a redrawing of neighborhoods even so minimally as to achieve the limited integration that the Lynn Plan effectuatesa race-neutral cover for forced busing. Earlier in this decision I raised hypothetically the prospect of a district locating schools between or on the borders of racially identifiable neighborhoods. This approach would be less intrusive than would be a redrawing of neighborhoods to shape the populations of schools where they are presently placed. It might well be the most desirable means to achieve racial balance, but the Constitution takes note of practicality. The alternative must be economically feasible, see Wygant, 476 U.S. at 280 n. 6, 106 S. Ct. 1842 (finding race-neutral alternatives relevant if they achieve the stated end "about as well and at tolerable administrative expense"). The periodic demolition, relocation, and reconstruction of schools in response to changes in residential patterns is a far from viable alternative.
[100] There is a rough correlation between socioeconomic status and race in Lynn: the wealthier areas of the city are predominantly white, and the poorer areas tend to be minority dominated. Lynn's PIC has studied the possibility of using this correlation to foster racial integration in a race-neutral way. Birchenough testified on the feasibility of a school assignment plan, facially race-neutral, that would make the ability to transfer contingent on one's socioeconomic status. This use of socioeconomic status as a "cover" for race, the PIC concluded, would not ameliorate de facto segregation in Lynn. The white students who live in poor, largely nonwhite neighborhoods typically have the same socioeconomic status as their nonwhite neighbors. These white students would be eligible to transfer out of their predominantly minority schools into white schools, thereby exacerbating racial imbalance.
If the only result of a socioeconomic approach is socioeconomic desegregation, the approach is not helpful in addressing issues of race. Dr. Orfield testified that "you can't really learn about racial differences just by socioeconomic desegregation if it does not produce racial desegregation."
[101] Indeed, to conclude that Lynn must continue to maintain a race-conscious school assignment plan in order to eradicate the segregative effect of transfer practices abandoned fifteen years agowhen Lynn was a predominantly white communitywould require me to ignore the testimony of the defendants' own demographics expert, Nancy McArdle. As I explain above, McArdle ably demonstrated that residential segregation in Lynn is severe enough that the Lynn Plan is necessary to forestall de facto segregation that would necessarily follow from a strict neighborhood attendance zone plan. It is inferable from parents' tendencies to self-sort into neighborhoods by race that, given an open transfer program that accommodated segregative and desegregative transfers alike, the lion's share of transfers sought would be segregative. The evidence clearly establishes a risk of reversion to segregation, but of a de facto nature. Conversely, I have no factual or expert testimony before me to suggest that there are still lingering effects of Lynn's de jure practices to redress.
[102] Notably, the Supreme Court has never even suggested that a voluntarily-adopted forced busing plan would be illegal.
[103] Federal courts have stricken state constitutional provisions under the Equal Protection Clausefinding at least one not even to pass rational basis review. See, e.g., Romer v. Evans, 517 U.S. 620, 631-32, 116 S. Ct. 1620, 134 L. Ed. 2d 855 (1996) (invalidating a state constitutional provision that refused protected status to homosexuals).
[104] The compelling nature of Lynn's articulated educational interests, as well as the extent to which the Lynn Plan is narrowly tailored to them, are established above on the strength of evidence submitted regarding the city of Lynn and the state of its school system before and after the Plan's implementation. I am reluctant to leverage these very specific facts to conclude that the state's "adequacy" mandate is necessarily compelling in the abstract. As to Lynn, it is nonetheless clear on the record before me that the race-conscious elements of the Plan are crucial to its educational mission.
[105] This reading of § 1981 does not render it superfluous. The value added of the statute, over and above the Equal Protection Clause, is that it is binding on private as well as public actors.
[106] The Massachusetts Constitution requires that the Secretary of State publish and distribute to voters certain information regarding ballot questions, which includes:
The full text of every measure to be submitted to the people, together with ... a fair, concise summary of the measure as such summary will appear on the ballot [and] other information and arguments for and against the measure.
Mass Const. art. 48, General Provisions pt. IV, as amended by arts. 74 and 108. The SJC commonly uses the contents of Information for Voters to discern legislative intent. See e.g., Bates v. Director of Office of Campaign and Political Finance, 436 Mass. 144, 166, 763 N.E.2d 6 (2002); Commonwealth v. Colon-Cruz, 393 Mass. 150, 161, 470 N.E.2d 116 (1984).
[107] Significantly, this text both confirms the amendment's intended focus on neighborhood schools/busing and, with the "parental consent" exception language, further suggests that it was not intended as a blanket prohibition on race-conscious assignment policies.
[108] The long-term historical coexistence of anti-discrimination provisions of the state constitution and various statutes with race-conscious school assignment programs further reflects the lack of inherent conflict between the two.
As yet another example, the 1972 Fair Educational Practices statute, Mass. Gen. Laws ch. 151C, § 2which provides, "it shall be an unfair educational practice for an educational institution ... [t]o exclude or limit or otherwise discriminate against any United States citizen or citizens seeking admission as students to such institution because of race, religion, creed, color, or national origin" has never been held to prohibit any public or private institution's affirmative action program.
The Massachusetts Department of Education's current Equal Opportunity regulations expressly recognize the compatibility of nondiscrimination principles and racial balancing. They provide, consistently with Article 111, that "[a]ll public schools in the Commonwealth shall admit students without regard to race, color, sex, religion, national origin, or sexual orientation." Mass. Regs. Code tit. 603, § 26.02(1) (cited locally as 603 CMR 26.02(1)). At the same time, they emphasize that "[n]othing in 603 CMR 26.00 shall control the interpretation of or interfere with the implementation of M.G.L. c. 71, § 37C [the Racial Imbalance Act] and related statutes, providing for the elimination of racial imbalance in the public schools." Id. § 26.02(6).
To accept the plaintiffs' argument that the Lynn Plan violates Article 111 would, without any directly applicable state precedent or judicial sanction, potentially upend a host of long-accepted state statutory and constitutional law and practice.
[109] The bill provided, inter alia, that "[n]otwithstanding any law to the contrary, no child attending public school shall be transported to or from any public school without the prior written consent of his parent or legal guardian. Each of such children shall be permitted to attend the school nearest his residence within his city or town, which has a seat available in his grade, unless his attendance at another school has been requested by his parent or legal guardian." Opinion of the Justices, 363 Mass. 899, 298 N.E.2d 840, 842 (1973).
[110] Morgan v. Hennigan, 379 F. Supp. 410 (D.Mass.1974), which did find de jure segregation in Boston, was still pending at the time.
[111] Swann also recognized the importance and value of race-conscious assignment policies in operating an integrated, or "unitary" school system. "[S]chool authorities have wide discretion in formulating school policy, and ... as a matter of educational policy school authorities may well conclude that some kind of racial balance in the schools is desirable quite apart from any constitutional requirements.... [I]f a state-imposed limitation on a school authority's discretion operates to inhibit or obstruct the operation of a unitary school system or impede the disestablishing of a dual school system, it must fall...." 402 U.S. at 45, 91 S. Ct. 1284.
[112] With regard to the State Constitution, the SJC's determination that the anti-busing legislation violated Articles 1 and 10 of the Declaration of Rights would not necessarily preclude plaintiffs' reading of Article 111 because a subsequent amendment can repeal or curtail existing constitutional law. However, the canon of construing constitutional provisions "together to make a harmonious frame of government" supports a reading of Article 111 as an educational "cognate" of Articles 1 and 10 that simply subjects racial classifications in education to strict scrutiny. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2576989/ | 188 F. Supp. 2d 612 (2001)
Carol A. FARMER, Plaintiff,
v.
LOWE'S COMPANIES, INC.; and Robert L. Tillman, Defendants.
No. CIV. 5:00CV81.
United States District Court, W.D. North Carolina, Statesville Division.
December 12, 2001.
*613 J. Griffin Morgan, Elliott, Pishko, Gelbin & Morgan, Winston-Salem, NC, Judith P. Vladeck, Vladeck, Waldman, Elias & Engelhard, P.C., New York City, for plaintiff.
Norwood Robinson, Michael L. Robinson, John N. Taylor, Jr., Robinson & Lawing, L.L.P., Winston-Salem, NC, for defendants.
MEMORANDUM AND ORDER
THORNBURG, District Judge.
THIS MATTER is before the Court on Plaintiff's timely objections to the to the Memorandum and Recommendation of United States Magistrate Judge H. Brent McKnight. Pursuant to standing orders of designation and 28 U.S.C. § 636, this Court referred the parties' motions to the Magistrate Judge for a recommendation as to the disposition of Plaintiff's motion to amend and Defendants' motion to dismiss for failure to state a claim. The Magistrate Judge entered a detailed recommendation that the Defendants' motion should be granted in part and denied in part and that the Plaintiff's motion should be denied.
For the reasons stated below, the Court overrules the Plaintiff's objections in part and sustains them in part, orders the Defendants' motion granted in part and denied *614 in part, and orders the Plaintiff's motion to amend granted.
I. STANDARD OF REVIEW
The district court conducts a de novo review of those portions of a Magistrate Judge's Memorandum and Recommendation to which specific objections are filed. See 28 U.S.C. § 636(b). The Plaintiff has filed specific objections to the Recommendations that her claim for libel per se should be dismissed for failure to state a claim, that the claim for libel per quod be dismissed without prejudice for lack of subject matter jurisdiction, and her motion for leave to amend the complaint should be denied.
Defendants moved for dismissal of all of Plaintiff's claims pursuant to Rule 12(b)(6) for failure to state a claim. In ruling on a motion to dismiss for failure to state a claim, the Court must "accept the factual allegations in the plaintiff['s] complaint and must construe those facts in the light most favorable to the plaintiff[].... [Dismissal may occur] only if it appears beyond doubt that the plaintiff[] can prove no set of facts in support of [her] claim that would entitle [her] to relief." Flood v. New Hanover County, 125 F.3d 249, 251 (4th Cir. 1997); Shepard's, Motions in Federal Court, § 5.124, at 367 (2d ed.1991). "To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint need only outline a recognized legal or equitable claim which sufficiently pinpoints the time, place, and circumstances of the alleged occurrence and which, if proven, will justify some form of relief." Id., § 5.123, at 366. If "relief could be granted under any set of facts that could be proved consistent with the allegations," the motion must be denied. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984).
II. FACTUAL BACKGROUND
At the time this suit was filed, Plaintiff Carol Farmer was a Director on the Board of Defendant Lowe's Companies, Inc. (Lowe's), a position she had held since 1994. Defendant Robert Tillman (Tillman) is President, Chief Executive Officer (CEO), and Chairman of the Board of Directors of Defendant Lowe's. Plaintiff received remuneration of approximately $50,000 per annum for her services as a Director. In addition to her work on the Board of Lowe's, Plaintiff serves on several other corporate Boards of Directors and operates her own business as a consultant to various companies. Throughout her service as a Director, Plaintiff complained about what she perceived as the under representation of women and minorities in the employment of Lowe's. She specifically alleges that in 1997 the Board began to study the issue of the under representation of minorities in the company and that she worked to increase the participation of minorities in the company, including through service on the Board. As the March 2000 shareholder's meeting approached, Tillman informed Plaintiff that it was the unanimous decision of the remaining Board members that she not be re-nominated to the Board on the slate proposed by the current Board. At the March 2000 meeting of the Governance Committee of the Board, on which Plaintiff served, she opposed the proposed slate of Directors, which did not include herself, on the grounds that it did not include a woman or racial minority. The proposed slate passed. In several communications from Lowe's regarding the April Shareholder's meeting,[1] the company reported that it was reducing the size of the Board to "reflect the retirement of Carol A. Farmer ... as [a] Class II Director[]." The *615 Board's slate of proposed Directors was elected by the shareholders at their meeting on May 26, 2000. Plaintiff alleges that Tillman was responsible for the publication of these documents in his positions as President, CEO, and Chairman. Plaintiff alleges that publication of these statements has injured her reputation and has affected, or will affect, her business.
Furthermore, Plaintiff asserts that in 1994 and in 1997 the Board of Lowe's adopted a "sense of the Board" guideline for corporate governance which set out a retirement age for members of the Board. The guideline set the age for all future Board members at 70, no later joining director would be allowed to begin a new term on the Board after his 70th birthday. Anyone on the Board at the time the guideline was passed could remain and begin a new term after their 70th birthday, but these Director were expected to voluntarily resign on or before December 31 of the year in which they reached their 72nd birthday, regardless of completion of their term. No Director, other than Plaintiff, has been removed from the Board or asked not to seek another term except for those who reached the retirement ages set out in the "sense of the Board" guideline. Plaintiff alleges that she was not re-nominated to the Board as a result of her complaints about the numbers of minorities employed by Lowe's.
III. ANALYSIS
A. Motion to Amend
In response to Defendants' motion to dismiss the complaint, Plaintiff filed a motion to amend in the hopes of curing some of the pleading defects asserted in Defendants' motion. Once a responsive pleading has been filed, as is the case here, a party may only amend his pleading by leave of court, or with the consent of the other parties. Fed.R.Civ.P. 15(a). Such leave, however, "shall be freely given when justice so requires." Id. The Magistrate Judge recommended denial of the motion to amend the complaint on the grounds that even the amended complaint would not overcome the strictures of Rule 12(b)(6). Since futility is the only reason this Court can see to deny Plaintiff's motion to amend, the undersigned will consider the proposed amended complaint for disposition of this motion. Rather than edit the proposed amended complaint based on the Court's partial granting of the Defendants motion to dismiss, the Court will grant the motion to amend in full while dismissing the first and second causes of action for libel as discussed below.
B. Libel Per Se
The first cause of action in Plaintiff's complaint alleges libel per se. The Plaintiff asserts that the statement that she, "retire[d] ... as [a] Class II Director[]," is libelous. To qualify as libelous per se under North Carolina law, an allegedly defamatory statement must meet certain well established criteria. The North Carolina courts have "defined libel per se as a publication which, when considered alone without explanatory circumstances: (1) charges that a person has committed an infamous crime; (2) charges a person with having an infectious disease; (3) tends to impeach a person in that person's trade or profession; or (4) otherwise tends to subject one to ridicule, contempt or disgrace." Aycock v. Padgett, 134 N.C.App. 164, 166, 516 S.E.2d 907, 909 (1999); Gaunt v. Pittaway, 135 N.C.App. 442, 448, 520 S.E.2d 603, 607-08 (1999), cert. denied, 353 N.C. 371, 547 S.E.2d 810 (2001). Whether a publication is one of the type that properly may be deemed libelous per se is a question of law to be decided initially by the trial court. See, Renwick v. News & Observer, 310 N.C. 312, 317-18, 312 S.E.2d 405, 409 (1984) *616 (quoting Flake v. Greensboro News Co., 212 N.C. 780, 786, 195 S.E. 55, 60 (1938)); Sasser v. Rouse, 35 N.C. 142, 143 (1851). Plaintiff asserts that the statement tends to impeach her in her trade or profession. Statements alleged to impeach a person in their trade or profession must meet two additional criteria. They "(1) must touch the plaintiff in [her] special trade or occupation, and (2) must contain an imputation necessarily hurtful in its effect on [her] business." Market America, Inc. v. Christman-Orth, 135 N.C.App. 143, 151, 520 S.E.2d 570, 577 (1999) (citations omitted) (emphasis added); Badame v. Lampke, 242 N.C. 755, 757, 89 S.E.2d 466, 468 (1955). Furthermore, the allegedly defamatory document must "be defamatory on its face within the four corners thereof." Flake, 212 N.C. at 786, 195 S.E. at 60. In other words, "defamatory words to be libelous per se must be susceptible of but one meaning and of such nature that the court can presume as a matter of law that they tend to disgrace and degrade the party or hold [her] up to public hatred, contempt, or ridicule, or cause [her] to be shunned and avoided." Id. The statement that Plaintiff had retired from the Board of Directors does not fit those requirements. This statement, without explanation, is not defamatory. It does not hold Plaintiff up to public hatred, contempt or ridicule or cause her to be shunned or avoided. The Court finds, therefore, as a matter of law, that the statement that Plaintiff had retired from her position on the board of directors is not libelous per se.
Plaintiff contends that, despite the neutrality of the statement on its face, it must be considered libelous per se because the injury she claims to have suffered as a result involved her professional life. This distinction misinterprets the importance of the four categories of libel per se. Those four categories describe the types of statements which naturally qualify as the type which "disgrace and degrade the party or hold [her] up to public hatred, contempt, or ridicule, or cause [her] to be shunned and avoided." Flake, supra. Plaintiff argues that a statement that a person has retired (as Plaintiff puts it, "is no longer willing to do business") is analogous to a statement that a merchant is insolvent. Disregarding the fact that the allegedly defamatory statement included the restriction "as a Class II Director" for the sake of argument, this analogy is inaccurate. A statement that a merchant is insolvent signifies that the merchant is no longer able to do business as a result of the financial instability of her business. Furthermore, the statement necessarily implies that the merchant has reached this situation as a result of her own profligate ways. It includes both denotative and connotative meanings that are disgraceful and degrading. The statement that a person has retired has no such meanings or necessary implications. While it concerns her profession, it does not impeach her in that profession. Because the statement that Plaintiff has "retire[d] ... as [a] Class II Director[]" is not defamatory on its face, Plaintiff's first cause of action fails to state a claim for which relief can be granted and will be dismissed.
Having determined that Defendants' publication is not libelous per se, the Court considers whether the publication is "susceptible of two reasonable interpretations, one of which is defamatory and the other is not" or one "which [is] not obviously defamatory, but which become[s] so when considered in connection with innuendo, colloquium, and explanatory circumstances. This type of libel is libel per quod." Flake, 212 N.C. at 785, 195 S.E. at 59.
As with the "libel per se" test, Plaintiff's pleadings fall far short of satisfying the requirements of "libel per quod."
*617 In the publication sub judice, Defendants make no attempt to define the word "retirement" by assigning a special or unusual meaning. Thus it will be assigned its ordinary and everyday meaning considering the context in which it appears: retirement, "withdrawal from occupation, office of business activity;" retire, "withdraw from one's position or occupation." Oxford English Dictionary (2d. ed.1989); Merriman Webster's Collegiate Dictionary (10th ed.1995). While both dictionaries give additional meanings in other contexts, none is susceptible to an interpretation which is defamatory. Nor could it reasonably become so susceptible "in connection with innuendo, colloquium, and explanatory circumstances." Assuming that Plaintiff was in fact forced out by the Board's action taken in violation of the United States Constitution or federal statute, Plaintiff's action based on libel would fail. If indeed Plaintiff has stated an enforceable claim for relief, it must reside in the provisions of 42 U.S.C. § 1981.
C. Section 1981 claim
Plaintiff's third cause of action is for a violation of 42 U.S.C. § 1981,[2] alleging she was not re-nominated to the slate of elector's proposed to the shareholders by the Board because she had complained about the number of women and minorities who were employed by Lowe's at all levels of the company and sought to increase the number of women and minorities at all levels. Congress added sub-section (b) to § 1981 specifically in response to the Supreme Court's decision in Patterson v. McLean Credit Union, 491 U.S. 164, 109 S. Ct. 2363, 105 L. Ed. 2d 132.[3]Patterson restricted the scope of § 1981 to discrimination in the initial making of contracts and restricting access to the court system to enforce contractual rights. Every Circuit which has considered the amendment has held that § 1981(b) sets forth a statutory basis for a retaliatory discharge claim under this section. Andrews v. Lakeshore Rehabilitation Hosp., 140 F.3d 1405, 1410 (11th Cir.1998); Barge v. Anheuser-Busch, Inc., 87 F.3d 256 (8th Cir.1996); Hawkins v. 1115 Legal Serv. Care, 163 F.3d 684, 693 (2nd Cir.1998); Carney v. American University, 151 F.3d 1090, 1094 (D.C.Cir.1998) (assuming without deciding).[4] A retaliatory discharge claim under § 1981 falls under the familiar McDonnell Douglas burden shifting scheme of proof. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). To establish a prima facie case of retaliatory *618 discharge, Plaintiff must, at the 12(b)(6) stage, allege facts which show "(1) that [she] engaged in protected activity; (2) that Defendant took adverse employment action against [her]; and (3) that a causal connection existed between the protected activity and the adverse action." Derrickson v. Circuit City Stores, Inc., 84 F. Supp. 2d 679, 694 (D.Md.2000) (citing Williams v. Cerberonics, Inc., 871 F.2d 452, 457 (4th Cir.1989)). Defendants argue that Plaintiff has failed to allege facts sufficient to support either of the first two elements of a prima facie case but admits that Plaintiff has alleged a causal relationship.
1. Protected Activity.
Plaintiff alleges that she was not re-nominated to her position on the Board because of her complaints concerning the number of women and minorities employed by Lowe's. Defendants argue that none of the facts alleged in the complaint suggest any action on the part of Plaintiff that would rise to the level of "protected activity" for purposes of a § 1981 claim for retaliatory discharge. Because Plaintiff did not allege that Lowe's was engaged in discriminatory hiring and promotional practices, Plaintiff was not engaged in a "protected activity." To qualify for protection under § 1981, the alleged retaliation, "must have been in response to the claimant's assertion of rights that were protected by § 1981." Hawkins, 163 F.3d at 693. Plaintiff responds that she has in fact alleged that the under-representation of minorities in the employment of Lowe's was a result of discriminatory activity on the part of the Defendant in violation of § 1981.
The amended complaint does contain the allegation that the under-representation of minorities in the ranks of Lowe's employees is a result of illegal discrimination on the part of Defendant. While the bulk of the allegations of the amended complaint do not assert that any shortcomings in the number of minority employees of Lowe's are the result of any discriminatory practice, Plaintiff does allege in the amended complaint that she had "complained about discrimination against racial minorities." Proposed Amended Complaint, at ¶ 50. While this allegation is by no means specific, the amended complaint, read as a whole and in a light favorable to Plaintiff, does charge that she complained about discriminatory practices on the part of Defendant. In re MicroStrategy, Inc. Securities Litigation, 115 F. Supp. 2d 620, 627 (E.D.Va. 2000). At least at this stage of the case, Plaintiff has alleged that she engaged in a protected activity. Complaints concerning the level of employment of minorities in an organization have been found to be a protected activity. Johnson v. University of Cincinnati, 215 F.3d 561, 573 (6th Cir.), cert. denied, 531 U.S. 1052, 121 S. Ct. 657, 148 L. Ed. 2d 560 (2000). This type of activity, if proven, falls within the scope of harms Congress sought to remedy by passing § 1981(b). "Plaintiff[] alleged that [she] was sanctioned or punished for [her] advocacy on behalf of female and minority hires through [her] termination, or `expulsion' if you will, from employment by the [Defendant]." Id., at 576. The question remains, however, whether Plaintiff has suffered an adverse employment action in retaliation for her activity.
2. Adverse employment action.
The second element of a claim under the McDonnell Douglas proof scheme for a § 1981 claim is that Plaintiff must allege that she suffered some "adverse employment action." Derrickson, 84 F.Supp.2d at 694. Plaintiff has alleged that the adverse action she suffered was that she was not re-nominated to her position on the Board of Directors. This position appears to be a novel one. In order to determine whether Plaintiff has stated a *619 claim under § 1981 the Court must decide whether the relationship between an individual director and the corporation is a contractual relationship governed by the Section.
Considering the expansion of the terms of § 1981 under the Civil Rights Act of 1991, the case law that has developed in response to this amendment, and the broad remedial purposes Congress intended for the § 1981, the Court finds that, at least as alleged, the "agreement" between Plaintiff and Lowe's was a contractual one, deserving of protection under § 1981. The relationship between a corporation and a member of its board of directors is not an employer-employee relationship under Title VII. See, e.g. Reil v. Clinton County of New York, 75 F. Supp. 2d 37, 39 (N.D.N.Y.1999). However, the question for purposes of § 1981 is whether the Defendants' allegedly discriminatory actions "affect[ed] at least one of the contractual aspects listed in § 1981(b)." Spriggs v. Diamond Auto Glass, 165 F.3d 1015, 1018 (4th Cir.1999). Much of the disagreement between the parties centers on whether the "sense of the board" guideline which set a retirement age for Directors constituted a contract between Plaintiff (and the other Board members) and Defendants under which she would continue to be renominated as a Director until reaching retirement age. Plaintiff cites Spriggs in support of her contention that her relationship with Defendant is governed by § 1981. Defendants object that Spriggs is inapposite in that it dealt with an employment at-will relationship rather than the purported contractual terms of the guideline. This argument is focused in the wrong place. Regardless of whether the "sense of the board" guideline constitutes a contract for service on the Board until Plaintiff reached retirement age, the relationship between Plaintiff and Defendant was contractual.[5] This proposition is supported by Spriggs, even though the relationship between a director and the corporation is not "at-will" employment. The lesson in Spriggs teaches that even a contract terminable at-will creates enforceable contract rights. Id., at 1019. Whether or not the contract at issue there had specific terms which either party could seek to enforce, the parties had entered into a contract whereby one had promised to perform services and the other had promised to pay for those services. Id., at 1018.
The same type of relationship existed between Plaintiff and Lowe's. Plaintiff promised to provide her services as a director. Lowe's promised to compensate her for her services. This agreement is a contractual relationship, a promise to provide a service in return for compensation. Id. Under § 1981, Lowe's cannot terminate this agreement, or refuse to re-enter into it, on the basis of Plaintiff's participation in protected activity. Lowe's could have declined to re-nominate Plaintiff to the Board for "good cause, bad cause, or no cause at all." Id., at 1020. However, under § 1981, Lowe's cannot decline to reenter into this contractual relationship for an "illicit cause," such as Plaintiff's engaging in protected activity by opposing the allegedly discriminatory hiring practices of Lowe's. Id.
*620 IV. ORDER
IT IS, THEREFORE, ORDERED that the Plaintiff's motion to amend complaint is ALLOWED, and the Amended Complaint attached to Plaintiff's motion shall be filed upon entry of this Memorandum and Order.
IT IS FURTHER ORDERED that the Defendants' motion to dismiss is ALLOWED as to the Plaintiff's First and Second Causes of Action and such claims are hereby DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that the Defendants' motion to dismiss Plaintiff's remaining cause of action is hereby DENIED.
The Clerk of Court is requested to schedule an initial pretrial conference forthwith before the undersigned.
MEMORANDUM AND RECOMMENDATION
McKNIGHT, United States Magistrate Judge.
THIS MATTER IS BEFORE THE COURT for a memorandum and recommendation on Defendants' motion to dismiss and Plaintiff's motion to amend. [Docs. 6, 13.]
I. Factual and procedural background[1]
Defendant Lowe's ("Lowe's") is a North Carolina corporation engaged in the retail sale of home improvement products. On May 26, 2000, Plaintiff completed her second three-year term as a Director on Lowe's Board of Directors. Towards the end of her term, the Board chose not to nominate her for a third term.
Defendants filed the company's Definitive Proxy Statement with the Securities and Exchange Commission, which was in turn sent to all Lowe's shareholders. The filing contained the following statement:
As recommended by the Governance Committee (acting as the nominating committee) the Board of Directors has reduced the size of the Board to ten effective at the 2000 Annual Meeting to reflect the retirement of Carol A. Farmer and Robert L. Strickland as a Class II Directors.
[Complaint, Doc. 1, para. 26.]
Plaintiff filed this action alleging that this statement constitutes libel and libel per se. Further, Plaintiff alleges that the Committee's failure to re-nominate her constitutes racially discriminatory retaliatory termination in violation of 42 U.S.C. § 1981. For the reasons that follow, the undersigned recommends that the motion to dismiss be granted as to the libel per se and § 1981 causes of action. Further, because federal jurisdiction in this case was based on the § 1981 claim, the undersigned respectfully recommends that the remaining state law claim, libel, be dismissed, without prejudice, pursuant to 28 U.S.C. § 1367(3). See, e.g., Gibson v. Tanks, 70 Fair Emp. Prac. Cas. (BNA) 1380, 930 F. Supp. 1107 (M.D.N.C.1996)
II. Analysis
In deciding a motion to dismiss, the court accepts as true the facts alleged in the plaintiff's complaint. Loe v. Armistead, 582 F.2d 1291, 1292 (4th Cir.1978), cert. denied, 446 U.S. 928, 100 S. Ct. 1865, 64 L. Ed. 2d 281 (1980); see also Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991) (in testing the legal sufficiency of a complaint, the court "construe[s] the factual allegations in the light most favorable to plaintiff"). A complaint, no matter how *621 unartfully pleaded, must survive 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." Loe, 582 F.2d at 1295 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)).
1. Libel per se
North Carolina state law governs the determination of libel per se. Under North Carolina law, to evaluate alleged libel per se in the context of a motion to dismiss, the Court must assume that the statement was made in the time and manner alleged in the complaint and then determine whether the statement alleged constitutes libel per se as a matter of law.
To do so, the North Carolina Supreme Court held that the "initial question for the court reviewing a claim for libel per se is whether the publication is such as to be subject to only one interpretation." Oates v. Wachovia Bank & Trust Co., 205 N.C. 14, 169 S.E. 869, 871 (1933). If the court determines that the publication is subject to only one interpretation, it then "is for the court to say whether that signification is defamatory." Id. Only those statements which are capable of only one interpretation and are defamatory are to be submitted to the jury on a theory of libel per se. See id.; Renwick v. News and Observer Pub. Co., 310 N.C. 312, 312 S.E.2d 405 (1984); Ellis v. Northern Star Co., 326 N.C. 219, 388 S.E.2d 127, 130 (1990)("Whether a publication is one of the type that properly may be deemed libelous per se is a question of law to be decided initially by the trial court.")
Plaintiff concedes that the statement alleged is capable of more than one interpretation. Indeed, Plaintiff's entire argument as to libel rests on her assertion that "retirement" can be read either (1) as to her position as a Director or (2) as to her career or profession as a marketing consultant. Thus, as a matter of law, Plaintiff cannot meet the threshold test to show libel per se under North Carolina law. As Plaintiff can prove no set of facts in support of his claim which would entitle him to relief, Loe, 582 F.2d at 1295 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)), the motion to dismiss should be granted as to libel per se.
2. § 1981 claim
Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, Defendant moves to dismiss the § 1981 claim for failure to state a claim for which relief can be granted. Plaintiff alleges that she had a contract with Lowe's and argues that this allegation alone is sufficient to sustain an action under 42 U.S.C.1981. Plaintiff further alleges that, while serving as a Director, she "protested" and "sought to change the intentionally discriminatory employment practices of Lowe's," [doc. 12, p. 11], and that the Committee's decision not to re-nominate her constituted retaliation under 42 U.S.C.1981(a)[2]. Plaintiff's novel argument is unpersuasive for the following reasons.
Farmer alleges that a "contract" between herself and Lowe's arose out of the Board's guidelines setting a mandatory retirement age of seventy for its Directors. As Defendants correctly pointed out, this factually unsupported, conclusory, allegation was insufficient, standing alone, to *622 state a claim for a violation of § 1981. In response, instead of supporting her allegation with facts, Plaintiff argues that she merely has to allege that a contract exists to survive the motion to dismiss[3].
Such an argument emasculates Rule 12(b)(6). As Defendants note, the role of Rule 12(b)(6) is to test the legal sufficiency of the complaint and facts must be plead to support the allegations. Because Plaintiff has plead no facts to support the conclusory allegation, as a matter of law, she has failed to state a claim for which relief can be granted[4]. Accordingly, the motion to dismiss should be granted as to this claim.
III. CONCLUSION
For the reasons stated above, it is respectfully recommended that the motion to dismiss be granted as to the libel per se claim and the § 1981 claim. Because federal jurisdiction in this case was based on the § 1981 claim, the undersigned further respectfully recommends that the remaining state law claim, libel, be dismissed, without prejudice, pursuant to 28 U.S.C. § 1367(3)[5]. Lastly, after careful consideration, the undersigned concludes that Plaintiff's proposed amendments of the complaint do not affect the above conclusions, and as such, would be futile. It is therefore respectfully recommended that the motion to amend be denied.
Notice of Appeal Rights
The parties are hereby advised that, pursuant to 28 U.S.C. § 636(b)(1)(C), written objections to the proposed findings of fact and conclusions of law and the recommendation contained in this Memorandum must be filed within ten (10) days after service of same. Failure to file written objections to this Memorandum and Recommendation within ten days after being served with a copy will bar that party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Services Automobile Assoc., 79 F.3d 1415 (5th Cir.1996); Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985); United States v. Schronce, 727 F.2d 91 (4th Cir.), cert. denied, 467 U.S. 1208, 104 S. Ct. 2395, 81 L. Ed. 2d 352 (1984).
January 31, 2001.
NOTES
[1] These publications include the "Notice of Annual Meeting to Shareholders," and the "Definitive Proxy Statement" filed with the Securities and Exchange Commission.
[2] That section reads, in pertinent part:
§ 1981. Equal rights under the law
(a) Statement of equal rights
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
(b) "Make and enforce contracts" defined
For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.
42 U.S.C. § 1981.
[3] For a thorough analysis of the Patterson decision, the amendment of § 1981, and subsequent case law, see, e.g. Andrews v. Lakeshore Rehabilitation Hosp., 140 F.3d 1405, 1410-11 (11th Cir.1998).
[4] The Carney case, along with several district court cases, notes that the Seventh Circuit is in disagreement with the holding in Andrews, citing Von Zuckerstein v. Argonne Nat'l Lab., 984 F.2d 1467, 1472 (7th Cir.1993). However, the Von Zuckerstein case was decided on the basis of the law under the Patterson decision, not under the amendment to § 1981 of the Civil Rights Act of 1991.
[5] The Court is not deciding at this time whether the "sense of the Board" guideline was an agreement not to terminate any Board Members until they reached the retirement age. This determination is unnecessary for the Court's ruling on this motion. The Court need not determine what the terms of the contract were between Plaintiff and Lowe's. As the Fourth Circuit said in Spriggs, "[p]roving breach of the underlying contract is neither necessary to a successful § 1981 claim, nor, standing alone, sufficient to make out such a claim." Spriggs, 165 F.3d at 1020.
[1] Consistent with Rule 12(b)(6) of the Federal Rules of Civil Procedure, these facts are either undisputed or taken in the light most favorable to the Plaintiff.
[2] 42 U.S.C. § 1981(a) prohibits racial discrimination in the making and enforcing of contracts.
[3] The case cited for this proposition, Spriggs v. Diamond Auto Glass, 165 F.3d 1015 (1999), does not even address this issue, much less support Plaintiff's argument.
[4] Even if this allegation were factually supported, the undersigned questions whether, as a matter of law, any facts could support a § 1981 claim in this context. The undersigned has been unable to locate any case even alleging a violation of § 1981 arising out of a board member's term, much less one that allowed it to proceed.
[5] The undersigned carefully considered Defendants' well-reasoned motion on this issue, and acknowledges that under the cases cited, which set out what is deemed "defamatory" as a matter of law under North Carolina law, suggest that the statement at issue does not reach that level. However, none of those cases was decided in the context of a 12(b)(6) motion. Accordingly, in an abundance of caution, this Court does not recommend dismissal with prejudice on this issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2577032/ | 188 F. Supp. 2d 1148 (2002)
OTI KAGA, INC., Plaintiff,
v.
SOUTH DAKOTA HOUSING DEVELOPMENT AUTHORITY, William Earley, Daryls Baum, John Rothstein, Kevin Culhane, Lynn Hager, Thomas Schramm and Leland Kleinsasser, Defendants.
No. CIV 00-3009, 2002DSD 1.
United States District Court, D. South Dakota, Central Division.
February 8, 2002.
*1149 *1150 *1151 James G. Abourezk, Abourezk Law Offices, PC, Sioux Falls, Mark S. Berry, Litteton, CO, for Plaintiff.
Michael L. Luce, Mark F. Marshall, Davenport, Evans, Hurwitz & Smith, Sioux Falls, SD, for Defendants.
MEMORANDUM DECISION AND ORDER
KORNMANN, District Judge.
[¶ 1.] Plaintiff Oti Kaga, Inc. ("Oti Kaga") instituted this action against the South Dakota Housing Development Authority ("SDHDA") and its seven individual members (collectively "the defendants") due to an ongoing dispute concerning various federal housing programs. The dispute is twofold with a unifying theme, Oti Kaga alleges, of racial discrimination against Native Americans. The first dispute, which began in 1996, concerns the allocation of low income housing tax credits. The second dispute, which began in 1998, focuses on the awarding of grants under the HOME Investment Partnership Act, 42 U.S.C. §§ 12741 et seq. Oti Kaga claims that the decisions made by the defendants in the housing programs were motivated by invidious discrimination. The defendants, pursuant to Fed.R.Civ.P. 56, filed a motion for summary judgment, Doc. 46, on various grounds. After careful consideration of the briefs, the documents on file herein, the submitted depositions and affidavits, and the applicable law, the court concludes, for the reasons set forth below, that there is no genuine issue of material fact and that the defendants are entitled to judgment as a matter of law.
[¶ 2.] Before proceeding further, the court must voice its displeasure with this case. Oti Kaga makes claims that are patently frivolous and seeks relief that is in total disregard of the United States Constitution. When these severe shortcomings, early on in this case, were brought to the attention of Oti Kaga's counsel in writing by the court, non-resident counsel responded quite disingenuously; instead of addressing the court's concerns, counsel chose to deflect and circumvent them. Counsel for Oti Kaga continue to advance claims that are frivolous and totally without legal merit.
BACKGROUND
A. The Parties
[¶ 3.] Oti Kaga, Inc. is incorporated under South Dakota law. It is a non-profit entity established by the Cheyenne River Sioux Tribal government, as authorized by the United States Housing Act of 1937, 42 U.S.C. §§ 1437 et seq. Oti Kaga was established to develop and construct low-income housing and to manage and operate low-income housing programs on the Cheyenne River Sioux Reservation.
[¶ 4.] Beyond the above description, Oti Kaga fails to describe its membership and its relation, if any, with the government of the Cheyenne River Sioux Tribe. It does appear, however, that the members of Oti Kaga are all Native Americans from the Cheyenne River Sioux Tribe. This has some significance because of the relief Oti Kaga seeks in this action. Oti Kaga, as a corporation, is the sole plaintiff in this action. The Cheyenne River Sioux Tribe is not a plaintiff. No individual Native Americans, from the Cheyenne River Sioux Tribe or elsewhere, are plaintiffs. Oti Kaga, as a corporation, stands alone.
*1152 [¶ 5.] SDHDA is "an independent public instrumentality" that exercises "essential public functions." SDCL 11-11-10. SDHDA has various responsibilities, one of which is to adopt a "tax credit allocation plan" pursuant to § 42 of the Internal Revenue Code, and to receive, rank, and award federal low income housing tax credits. In addition, SDHDA is responsible for the administration of the HOME Incentive Partnership Program in South Dakota. For purposes of these programs, SDHDA is an "agency of the state." SDCL 11-11-47.
[¶ 6.] Defendants William Earley, John Rothstein, Kevin Culhane, Lynn Hager, Thomas Schramm and Leland Kleinsasser are members of the SDHDA Board of Commissioners. They have been sued in their individual and official capacities. Defendant Darlys Baum is the Executive Director of SDHDA and Secretary of the SDHDA Board of Commissioners. She is likewise sued in her individual and official capacities.
[¶ 7.] Before delving into the factual background of this dispute, the court will detail the two federal housing programs at issue in this case.
B. Tax Credit Allocation Program
[¶ 8.] The tax credit allocation program, as noted above, is authorized by Internal Revenue Code § 42. That section authorizes state housing credit agencies, like SDHDA, to allocate tax credits for the construction of low-income housing. In essence, the tax credits act as "carrots" to encourage various entities to construct low-income housing. Internal Revenue Code § 42(m) requires that all tax credits be allocated pursuant to a "qualified allocation plan," which must be adopted by the housing credit agency and which must be approved by the governmental unit of which such agency is a part. IRC § 42(m)(1)(A)(i).
[¶ 9.] In deciding which projects should receive tax credits, § 42(m) sets forth certain criteria which must be considered, including
(i) project location,
(ii) housing needs characteristics,
(iii) project characteristics, including whether the project includes the use of existing housing as part of a community revitalization plan,
(iv) sponsor characteristics,
(v) tenant populations with special housing needs,
(vi) public housing waiting lists,
(vii) tenant populations of individuals with children, and
(viii) projects intended for eventual tenant ownership.
IRC § 42(m)(1)(C)(i-viii).
[¶ 10.] In evaluating the above criteria, the housing credit agency is to consider
(i) the sources and uses of funds and the total financing planned for the project,
(ii) any proceeds or receipts expected to be generated by reason of tax benefits,
(iii) the percentage of the housing credit dollar amount used for project costs other than the cost of intermediaries, and
(iv) the reasonableness of the developmental and operational costs of the project.
IRC § 42(m)(2)(B)(i-iv). As noted above, SDCL 11-11-47 expressly denominates SDHDA as the housing credit agency for South Dakota.
C. HOME Program
[¶ 11.] The second federal housing program involved in this action is the HOME Investment Partnership Act ("HOME"), which is Title II of the Cranston-Gonzalez National Affordable Housing Act, codified at 42 U.S.C. §§ 12701 et seq. HOME funnels federal funds directly to participating *1153 jurisdictions. The jurisdictions then disburse the funds in the form of loans and grants "to provide incentives to develop and support affordable rental housing and home ownership affordability." 42 U.S.C. § 12742(a)(1). Prior to 1998, Indian tribes were participating jurisdictions in HOME. See 42 U.S.C. § 12747(a)(2) (1996). In fact, HOME created a HOME set-aside for Indian tribes which allocated to them 1% of the total allocated HOME funds. See id. In addition to the set-aside, Indian tribes could also compete for HOME funds with other entities for money allocated to the states for distribution.
[¶ 12.] While the Indian set-aside still existed, the Department of Housing and Urban Development ("HUD"), the governmental agency that oversees the implementation of HOME, published detailed regulations. See 24 C.F.R. Part 92. At issue in this case is 24 C.F.R. § 92.201(b)(5), which states that "[a] State may fund projects on Indian reservations located within the State provided that the State includes Indian reservations in its consolidated plan." The consolidated plan is the document that is submitted to HUD which serves as the planning document of the jurisdiction and as an application for federal funding under HOME. See 24 C.F.R. § 91.5.
[¶ 13.] The regulation giving the states the discretion to fund projects located on Indian reservations worked in a rather uncontroversial manner in the pre-1998 context. As HOME existed prior to 1998, Indian tribes received their own HOME funds via the Indian set-aside. Given that set-aside, it made sense that the states were afforded the option of funding projects on Indian reservations, provided, of course, that the Indian projects were included in the state's consolidated plan.
[¶ 14.] In 1996, Congress passed the Native American Housing Assistance and Self-Determination Act ("NAHASDA"), 25 U.S.C. §§ 4101 et. seq., which became effective October 31, 1997. NAHASDA dramatically changed HOME as it applied to Indian tribes. Specifically, NAHASDA repealed the Indian set-aside in HOME. See 42 U.S.C. § 12747. In repealing the HOME Indian set-aside and those like it in other federal housing programs, Congress intended to block-grant the money directly to Indian tribes so they would not have to come through the bureaucratic wranglings of Washington nor wait for money from state governments. See 142 Cong. Rec. H11603 (daily ed. Sept. 28, 1996) (remarks of Congressman Hayworth). In essence, with NAHASDA, Congress gave Indian tribes the right to decide how to best spend their federal housing dollars. See id.
[¶ 15.] Although the Indian set-aside in HOME was repealed, the HUD regulation giving states the discretion of whether to use state HOME funds on Indian projects remained unaltered. Thus, 24 C.F.R. § 92.201(b)(5) is still on the books. Its continued existence has spawned its own controversy, which this litigation exemplifies. In addition, the passage of NAHASDA has raised the question whether Indian tribes can participate in HOME for funds that are allocated to the states. Obviously Oti Kaga believes it can. Moreover, although it is rather unclear, there appears to be nothing that expressly precludes their involvement. As one commentator has noted, "[e]lgibility for American Indian tribes to participate in another housing block grant program was removed when NAHASDA became the exclusive formula grant for housing in lieu of the HOME program grant." Kenison, "Implementing NAHASDA: Brave New Word?," 8-SPG J. Affordable Housing & Community Dev. L. 253 (1999) (emphasis added). Some states, including South Dakota, seize this ambiguity and include the needs of Indian reservations in their HOME consolidated *1154 plans. Once they receive their federal allocation, some states refuse to fund any projects in Indian Country. This, understandably, angers Native American entities. Their collective anger has been heard in high places, as a joint conference of Congress has stated the following:
The conferees are concerned that there appears to be some ambiguity about whether Native American non-profit entities working on Indian lands are eligible to receive HOME funds. After reviewing the relevant statutes, the conferees see nothing that indicates Native American nonprofits are ineligible to compete for HOME funds at the state level. Furthermore, the conferees believe it is highly questionable for states to count low-income Native American residents in their funding calculations, but upon receipt of their allocation, be unwilling to share HOME funds with Native American nonprofits. Economic and housing conditions on Native American lands are among the most challenging in the United States. The HOME program was designed to assist in meeting these challenges for all Americans and not to discriminate based on where an individual chooses to live.
H.R. Conf. Rep. No. 988, 106th Cong., 2d Sess., 105 (2000). Thus, to some extent, these congressional conferees agree with Oti Kaga. Despite this statement, Congress has done nothing to close the "loophole" of 24 C.F.R. § 92.201(b)(5) which allows states to continue to act as criticized by the conferees. The court notes, however, that the conferees spoke of Native American non-profit entities being allowed "to compete" for funds. No mention is made of any entitlement.
[¶ 16.] Complicating matters even further is the position of HUD. Mr. Cardell Cooper, an Assistant Secretary of HUD, when questioned whether 24 C.F.R. § 92.201(b)(5) is permissive, thereby giving support to SDHDA's position, concluded that it does grant a state discretion to decide whether to disburse funds in Indian Country. While Assistant Secretary Cooper's letter says nothing about the inequity of including the needs of Native Americans in a state's consolidated plan and then refusing to disburse any funds in Indian Country, the Assistant Secretary is rather forceful in his conclusion that 24 C.F.R. § 92.201(b)(5) means what it says, namely, that states "may" fund projects on Indian reservations.
[¶ 17.] Thus, the dispute between the parties concerning the disbursement of HOME funds on Indian reservations, the effect of NAHASDA, and the continued viability of 24 C.F.R. § 92.201(b)(5), goes well beyond the instant case. The court is unaware of any further action by either Congress or HUD regarding this dispute. These, of course, are largely political questions, and their resolution lies not with the federal courts but with Congress and the executive branch.
D. Factual Background
[¶ 18.] This saga began in 1995 with Mr. David Bland, an individual who has a history of working to obtain tax credits. Mr. Bland incorporated a business in Minnesota called Housing and Community Development, Inc. Mr. Bland hoped to establish a relationship with Indian tribes to help them with housing shortages. Mr. Bland had correctly recognized that South Dakota's Indian reservations were grossly underserved. Specifically, Mr. Bland wanted to assist the tribes with the tax credit program.
[¶ 19.] In October of 1995, Mr. Bland attended a meeting of SDHDA where he met an employee of Oti Kaga. Following that meeting, Mr. Bland contacted Mr. William Picotte, a current board member of Oti Kaga who has been with the corporation since its inception in 1993. Following that *1155 initial conversation, Mr. Bland went to Eagle Butte, South Dakota, a community within the Cheyenne River Sioux Indian Reservation, to meet with Mr. Picotte. These contacts were fruitful, resulting in a business relationship between Mr. Bland and Oti Kaga for the purpose of assistance in the development of a tax credit financed housing project. Technically, Mr. Bland was a consultant to Oti Kaga. Mr. Bland played a similar role with three other Native American housing agencies in South Dakota.
[¶ 20.] In the spring of 1996, Mr. Bland and Oti Kaga prepared an application for tax credits to be submitted to SDHDA for what Oti Kaga called the Elk View I project. At the same time, Mr. Bland submitted three other applications on behalf of three other Native American entities, one of which served the Pine Ridge Indian Reservation in southwestern South Dakota.[1]
[¶ 21.] In the spring of 1996, SDHDA received 23 new applications for tax credits. Four of the applications came from Indian sponsors, including Oti Kaga, with the remainder having been submitted by non-Indian entities. It was the largest ever submission of applications to SDHDA for tax credits. Following their receipt, a subcommittee of SDHDA met and considered the applications in accordance with the provisions of Internal Revenue Code § 42, parts of which are set forth above. Pursuant to the then-existing "qualified tax credit allocation plan," the subcommittee ranked the various applications from 1-23, with one signifying the highest rated or most attractive application.
[¶ 22.] During the subcommittee's consideration of the applications in the spring of 1996, the qualified tax credit allocation plan contained "readiness to proceed" as a criterion to be considered. The court is unsure whether "readiness to proceed" was factored into the rankings or whether it was considered after the rankings were complete. In any event, it is the use of that criterion, Oti Kaga alleges, that permitted invidious racial discrimination to creep into the tax credit allocation award process.
[¶ 23.] On the rankings, Oti Kaga's application fared rather well, receiving a rank of six. The tax credit awards were not immediately awarded following the rankings. Thus, the court believes that the "readiness to proceed" criterion was applied following the completion of the rankings.[2] Oti Kaga did not receive an award of tax credits. Neither did some of the other highly ranked applications that had been submitted by non-Indian sponsors. When the final awards were announced, all tax credit awards but one went to non-Indian entities. The Pine Ridge reservation received an allocation of tax credits although its application was ranked less favorably than Oti Kaga's, receiving a score of eight.[3]
*1156 [¶ 24.] A few months after SDHDA decided to deny Oti Kaga's application for tax credits, another entity that was originally awarded tax credits declined them. SDHDA then awarded those recaptured tax credits to Oti Kaga.
[¶ 25.] Oti Kaga claims it was discriminated against in the spring of 1996 although it received the very thing it sought just a few months later and has received it every year since. The defendants, arguing in support of their motion for summary judgment, advance various theories targeted at this segment of this litigation. Instead of going into those concerns now, however, the court will first finish the story and confront the entire case once all of the relevant facts have been articulated.
[¶ 26.] The remainder of this dispute centers on the HOME program and the awarding of grants pursuant thereto. In 1997, Oti Kaga was planning Elk View II, a housing initiative similar to the 1996 project of Elk View I. Oti Kaga sent an application to SDHDA for tax credits and a separate application for state HOME funds. Oti Kaga received the tax credit allocation, but the request for state HOME funds was denied. It is that decision which resulted in the other claims in this lawsuit.
[¶ 27.] Oti Kaga, echoing its sentiments about the initial denial of tax credits in 1996, believes that the decision to deny it state HOME funds was due to invidious racial discrimination. Disagreeing, the defendants proffer divergent reasons for the denial. They claim the decision to deny Oti Kaga HOME funds stems from the discretion afforded the states by virtue of 24 C.F.R. § 92.201(b)(5). Vona Johnson, not a defendant in this action but an employee of SDHDA during the applicable time frame, stated in her deposition that the denial was due to the perceived inequality of available federal funding for housing in South Dakota, it being her belief that the volume of housing money going to the reservations was out of proportion to the rest of the state. She believes that approximately 35% of all federal housing funds allocated to South Dakota go to Indian Country, despite the fact that Native Americans comprised, by virtue of the last census, roughly 11% of South Dakota's population.[4] Other SDHDA employees gave deposition testimony or statements to the effect that Indian tribes could no longer participate in the state HOME program because of NAHASDA. These varying and what Oti Kaga labels as inconsistent justifications for SDHDA's decision signal, Oti Kaga contends, racial discrimination.
[¶ 28.] Oti Kaga filed an amended complaint which lists eleven separate claimed causes of action. They are: (1) disparate treatment under the Fair Housing Act of 1968, 42 U.S.C. §§ 3604, 3605; (2) disparate impact under the Fair Housing Act of 1968, 42 U.S.C. §§ 3604, 3605; (3) violation of the right to contract, 42 U.S.C. § 1981; (4) violation of the property rights of citizens, 42 U.S.C. § 1982; (5) Civil Rights Act disparate treatment impact (Oti Kaga's wording), 42 U.S.C. §§ 1981, 1982; (6) negligent performance of statutory obligations; (7) discrimination in the use of HOME funds, 42 U.S.C. § 12832; (8) discrimination in Title VI programs (disparate treatment), 42 U.S.C. § 2000d; (9) Internal Revenue Code invalidates allocations (Oti Kaga's terminology), IRC *1157 § 42(m); (10) state Fair Housing Act, SDCL Ch. 20-13; and (11) deprivation of rights under color of law, 42 U.S.C. § 1983.
[¶ 29.] In response to the amended complaint, the defendants filed a motion for summary judgment on the following grounds: standing, political question doctrine, mootness, qualified immunity, the inability of a corporation to recover damages for personal injury, statute of limitations, the inability to prove intentional discrimination, a failure to exhaust state administrative remedies, and failure to join indispensable parties. Because of the many different alleged causes of action, the various arguments for summary judgment, and the fact that this lawsuit alleges racial discrimination in two separate federal programs in two separate time frames, the court, to resolve the motion for summary judgment, must traverse through a cumbersome quagmire. To aid in that process, the court will first address the issue of standing. Next, the court will discuss Oti Kaga's requested damages for various claimed personal injuries. Following that, the court will address the remaining causes of action individually.[5]
LEGAL ANALYSIS
A. Summary Judgment Standard
[¶ 30.] The summary judgment standard is well known and has been set forth by this court in numerous opinions. See Hanson v. North Star Mutual Insurance Co., 1999 DSD 334 ¶ 8, 71 F. Supp. 2d 1007, 1009-1010 (D.S.D.1999), Gardner v. Tripp County, 1998 DSD 38 ¶ 8, 66 F. Supp. 2d 1094, 1098 (D.S.D.1998), Patterson Farm, Inc. v. City of Britton, 1998 DSD 34 ¶ 7, 22 F. Supp. 2d 1085, 1088-89 (D.S.D.1998), and Smith v. Horton Industries, 1998 DSD 26 ¶ 2, 17 F. Supp. 2d 1094, 1095 (D.S.D.1998). Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Donaho v. FMC Corp., 74 F.3d 894, 898 (8th Cir.1996). "Where the unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate." Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1326 (8th Cir.1995).
B. Standing
[¶ 31.] The issue of standing goes directly to this court's jurisdiction. See Bennett v. Spear, 520 U.S. 154, 162, 117 S. Ct. 1154, 137 L. Ed. 2d 281 (1997), and Central South Dakota Coop. Grazing District v. Secretary *1158 of Agriculture, 266 F.3d 889, 895 (8th Cir.2001). As the Eighth Circuit stated in Tarsney v. O'Keefe, 225 F.3d 929, 934 (2000):
Standing is "the threshold question in every federal case ... [.]" Warth v. Seldin, 422 U.S. 490, 498, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). Federal court jurisdiction is "defined and limited by Article III of the Constitution ... [and] is constitutionally restricted to `cases' and `controversies.'" Flast v. Cohen, 392 U.S. 83, 94, 88 S. Ct. 1942, 20 L. Ed. 2d 947 (1968). A case or controversy exists only if a plaintiff "personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant." Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S. Ct. 1601, 60 L. Ed. 2d 66 (1979). If a plaintiff has not suffered an injury, there is no standing and the court is without jurisdiction to consider the action. See Allen v. Wright, 468 U.S. 737, 750-66, 104 S. Ct. 3315, 82 L. Ed. 2d 556 (1984).
It is thus appropriate to resolve this issue first.
[¶ 32.] Before the court addresses the standing issue, however, it must first ascertain what interests Oti Kaga may advance and for what claimed causes of action. Oti Kaga believes it "is entitled to assert the constitutional rights of members of the Cheyenne River Sioux Tribe." Brief in support of plaintiff's response to defendants' motion for summary judgment, p. 2. Oti Kaga does not attempt to explain how a nonprofit corporation that focuses on low-income housing may even claim to represent the entire Cheyenne River Sioux Tribe or any of its members as such. As noted above, neither the Tribe nor any of its members are parties to this litigation. While the court might be more receptive to a claim that Oti Kaga represents those Native Americans who cannot obtain low-income housing, Oti Kaga shoots for the moon. Nothing has been submitted from the Cheyenne River Sioux Tribe denominating Oti Kaga as the chief litigator of tribal interests. To the contrary, the Tribe has apparently chosen to remain out of this lawsuit.
[¶ 33.] Moreover, Oti Kaga never discusses or reveals its composition. Is it an entity with officers, a board, and employees? Are all members of the Cheyenne River Sioux Tribe automatically members of Oti Kaga? Those unanswered questions are important because Oti Kaga cites and discusses various cases which it claims stand for the proposition that having a "constituency" is sufficient for the allowance of representational standing.[6]See, e.g., NAACP v. Alabama, 357 U.S. 449, 458-459, 78 S. Ct. 1163, 2 L. Ed. 2d 1488 (1958), and Church of Scientology of California v. Cazares, 638 F.2d 1272 (5th Cir.1981). Oti Kaga, however, never explains the composition of its alleged "constituency." The court is convinced that Oti Kaga believes its "constituency" is all Cheyenne River Sioux Tribal members. But that cannot be the case. Not all members of the Cheyenne River Sioux Tribe need low-income housing. Some have it now. Others have no need for it.
[¶ 34.] Moreover, using the factors enunciated in Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 343, 97 S. Ct. 2434, 53 L. Ed. 2d 383 (1977)[7], regarding *1159 representational standing, it is clear that Oti Kaga is not entitled to represent anyone other than itself. The Hunt factors are: (1) the members must otherwise have standing to sue in their own right; (2) the interests sought to be protected must be germane to the organizational purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Hunt, 432 U.S. at 343, 97 S. Ct. 2434. As the above discussion foreshadowed, Oti Kaga cannot meet the first Hunt factor. Who are the members of Oti Kaga? No answer is ever given to that important question. Instead, Oti Kaga simply assumes that all members of the Cheyenne River Sioux Tribe are also its members. As discussed above, however, that is not true. Moreover, Oti Kaga documents not one Native American on Cheyenne River who was deprived of low-income housing by the defendants. It is speculation as to who Oti Kaga's members are, if any, and who, if anyone, would have a right to sue in his or her own right. Without identifying someone who could sue in his or her own right, Oti Kaga will not be granted representational standing. Oti Kaga also fails the third Hunt factor as will later appear.
[¶ 35.] Having bypassed the representational standing detour from the overall standing inquiry, the court will now turn to the standing issue generally. To aid in this analysis, the court will adhere to its separation of Oti Kaga's basic claims into two parts, the 1996 tax credit allocation and the HOME program.[8]
[¶ 36.] The United States Supreme Court has made clear that standing under the Fair Housing Act is to be liberally construed to the full limits of Article III. See Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 109, 99 S. Ct. 1601, 60 L. Ed. 2d 66 (1979). In conducting an Article III standing inquiry, the Supreme Court's decision in Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992), controls. Under Lujan, a party has Article III standing if it can show (1) an injury in fact that is both (a) concrete and particularized, and (b) actual or imminent, rather than conjectural or hypothetical, (2) the existence of a causal connection between the alleged injury and the defendants' conduct, i.e., that the injury is fairly traceable to the challenged action, and (3) that it is likely that a favorable decision will redress the injury. Lujan, 504 U.S. at 560-561, 112 S. Ct. 2130.
[¶ 37.] In focusing on the 1996 tax credit allocation portion of this case, the court determines that Oti Kaga has not suffered "an injury in fact." Id. This dovetails with the defendants' argument regarding mootness. The alleged injury, if any, occurred in 1996. While Oti Kaga was initially denied tax credits, it eventually received them. Moreover, the criterion that Oti Kaga strenuously objects to, namely "readiness to proceed," has been removed from SDHDA's consideration since 1996. Thus, other than the few months that Oti Kaga had no tax credits in 1996, it has suffered no harm.
[¶ 38.] The conclusion reached above necessarily implicates the third Lujan factor. It is clear that there is no relief this court could fashion that would redress any alleged injury. Since SDHDA has not *1160 used the "readiness to proceed" criterion in nearly five years, it is a useless act to permanently enjoin them from using it. This court is simply not in the business of issuing permanent injunctions for highly speculative claims of feared future injury. While it is conceivable that Oti Kaga may have suffered some compensable injury in 1996 prior to being awarded the tax credits, Oti Kaga fails to articulate what that injury was. In fact, the primary relief requested by Oti Kaga to redress its claimed 1996 injuries is for this court to rescind and reallocate the tax credits awarded in 1996. This request is, very frankly, ridiculous. First, the entities that received those allocations are not parties to this lawsuit. Neither is the Internal Revenue Service. Oti Kaga, it seems, wants to deprive various unknown entities of property rights that they received five years ago without so much as giving them notice or an opportunity to be heard. Such a request completely ignores the fundamental constitutional principle of due process of law. It is a claim that no lawyer should even suggest.
[¶ 39.] Second, it strains all imagination why Oti Kaga would want to rescind and reallocate tax credit awards made in 1996 when it eventually received an award itself. It gained what it wanted and has similarly gained them every year since. What Oti Kaga would hope to gain by such a fanciful form of relief is beyond the comprehension of the court. It is a frivolous request and should be denied.
[¶ 40.] The court concludes (1) that Oti Kaga does have standing to assert its own interests, whatever they may be, and not those of anyone else, and (2) that Oti Kaga lacks standing to pursue any claim arising from the 1996 tax credit allocation process.[9] All that remains, therefore, is HOME.
[¶ 41.] The standing inquiry in regards to HOME, however, produces a different result. The injury, i.e. not receiving state HOME funds, is concrete, particularized and, most importantly, ongoing. It is traceable to the actions of defendants and could perhaps be redressed by a favorable decision. Thus, Oti Kaga does have standing regarding its allegations of racial discrimination in South Dakota's administration of the HOME Program. Before turning to those allegations, however, the court must first jettison other entirely frivolous appendages of this litigation.
C. Relief for Personal Injuries
[¶ 42.] Throughout the amended complaint, Oti Kaga requests compensatory *1161 damages for various personal injuries, including mortification, nervous tension, indignation, distress, humiliation, embarrassment, hurt feelings, and mental anguish. Such claimed damages are wholly without merit and warrant the imposition of Fed.R.Civ.P. 11 sanctions. It defies all common sense that a corporation could even claim to have hurt feelings, to suffer from nervous tension or to feel embarrassed. The court was so shocked that a corporation (and its lawyers) would request damages for such alleged injuries that the court sent a memorandum to the parties, Doc. 40, ordering Oti Kaga, under the penalty of Rule 11, to explain, with appropriate legal citation, the grounds for claiming relief for such injuries. Instead of addressing the court's concerns, Oti Kaga chose to discuss representational standing, arguing that if Oti Kaga is granted representational standing it will then be allowed to recover such damages. As authority, Oti Kaga cited and discussed cases dealing with organizational standing in cases where entities sought either injunctive and declaratory relief or nominal damages. Oti Kaga did not attempt to address the claimed rights of a corporation to recover damages for indignation, humiliation, or similar claimed injuries.
[¶ 43.] Since Oti Kaga did not see fit to retreat from these completely frivolous claims, the court is required to address them. Not surprisingly, there is very little law on the subject, as anyone knows that a corporation cannot shed tears, suffer panic attacks, or endure sleepless nights. As Chief Justice Marshall stated nearly two hundred years ago, "[a] corporation is an artificial being, invisible, intangible, and existing only in the contemplation of law." Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 17 U.S. 518, 636, 4 L. Ed. 629 (1819). Oti Kaga fails to explain how an artificial being that is invisible, intangible and existing only in the contemplation of the law can suffer the types of injuries described above. Its meritless argument of representational standing notwithstanding, there is no authority whatsoever for a corporation to recover compensatory damages for personal injuries.
[¶ 44.] In Lurzer v. AlliedSignal, Inc., the court summarily rejected the notion that a corporation can recover for personal injuries, succinctly stating that only individuals can recover for such damages. 1998 WL 102637 (N.D.Ill.). The United States Supreme Court, in an opinion from the nineteenth century, put it best: "[A]s a corporation cannot be said to have life or health or senses, the only ground on which it can obtain either damages or an injunction ... is injury to its property." Northern Pac. R. Co. v. Whalen, 149 U.S. 157, 163, 13 S. Ct. 822, 37 L. Ed. 686 (1893). Therefore, all requests for personal injury damages allegedly suffered by this corporation are completely without merit. There is no genuine issue of material fact concerning this issue and defendants, therefore, are entitled to judgment as a matter of law.
D. HOME Causes Of Action
Count I
[¶ 45.] Count I of Oti Kaga's amended complaint alleges intentional discrimination and disparate treatment on account of race in violation of the Fair Housing Act of 1968, 42 U.S.C. §§ 3604 and 3605 ("FHA"). Courts, in assessing disparate treatment claims brought under the FHA, use the mode of analysis that has been developed in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), and its progeny. See Ring v. First Interstate Mortgage, Inc., 984 F.2d 924, 926 (8th Cir.1993) (adopting the burden-shifting analysis of McDonnell Douglas to disparate treatment claims under the FHA). In order to recover, Oti Kaga must first establish the *1162 following prima facie case: (1) that it is a member of a protected class; (2) that it applied for and was qualified to receive funds from the defendants; (3) that the funds were rejected despite Oti Kaga's qualifications; and (4) that the defendants continued to disburse funds to others with qualifications similar to Oti Kaga's. Id. If Oti Kaga could successfully show a prima facie case, the burden then would shift to the defendants to articulate some legitimate, nondiscriminatory reason for their action. See United States v. Badgett, 976 F.2d 1176, 1178 (8th Cir.1992). If the defendants satisfy this burden, Oti Kaga then has the opportunity to prove by a preponderance of the evidence that the legitimate reasons asserted by the defendants are in fact mere pretext. See id. Oti Kaga fails at every step of the analysis. See, e.g., Evers v. Alliant Techsystems, Inc., 241 F.3d 948, 959 (8th Cir.2001) (affirming the district court's grant of summary judgment because there was no evidence of discrimination), and LaCroix v. Sears, Roebuck, and Co., 240 F.3d 688, 693 (8th Cir.2001) (stating that the record was devoid of any evidence of discrimination under McDonnell Douglas; the grant of summary judgment was affirmed).
[¶ 46.] Oti Kaga has failed to establish a prima facie case because it cannot establish that it is a member of a protected class. Just as a corporation cannot suffer personal injury, a corporation cannot be an entity of "color," for it makes no sense at all that an artificial entity that is invisible and existing only in the contemplation of law can have a "race." See, e.g., Village of Arlington Heights v. Metropolitan Housing Dev. Co., 429 U.S. 252, 263, 97 S. Ct. 555, 50 L. Ed. 2d 450 (1977) (stating that "a corporation ... has no racial identity and cannot be the direct target of the alleged discrimination").[10] While it is certainly true that a for-profit corporation's officers, stockholders, and directors and a nonprofit corporation's members can consist of people of minority races and exclusively serve a minority group, it does not follow that the legal fiction that is a corporation takes on that racial profile. Can the individual members who work for Oti Kaga be members of a protected class? Certainly. Can the individual members of the Cheyenne River Sioux Tribe be members of a protected class? Of course. They did not sue. The corporation did. Corporations, by and of themselves, do not have "races."
[¶ 47.] Even if Oti Kaga could establish the McDonnell Douglas prima facie case, they would still be precluded from any recovery because the defendants have met their burden of articulating a nondiscriminatory reason for their actions and Oti Kaga has failed to establish pretext. See Badgett, 976 F.2d at 1178. As discussed *1163 above, 24 C.F.R. § 92.201(b)(5) expressly states that a state may fund projects on Indian reservations (emphasis added). Certainly SDHDA's reliance on a valid federal rule is a legitimate, nondiscriminatory reason for its decision. While there is a dispute about the propriety of the rule after the HOME Indian set-aside was repealed, the rule is, nonetheless, still of full force and effect. The United States government, the source of the rule, is not a party in this action. Obviously, some members of Congress disapprove of the actions of SDHDA; that disapproval says nothing about the reasonableness of SDHDA's reliance on 24 C.F.R. § 92.201(b)(5). HUD's position supporting SDHDA's reliance on the rule buttresses the defendants' position and, most certainly, signals the confusion and tension surrounding this issue.
[¶ 48.] Oti Kaga argues, however, that proof of SDHDA's discrimination lies in what Oti Kaga believes are inconsistent statements or justifications for its decision. In addition to the reliance on 24 C.F.R. § 92.201(b)(5), other employees of SDHDA believed that Oti Kaga was denied state HOME funds because of a perceived imbalance in the amount of federal housing funds going to the reservations compared to the rest of the state and because individuals working for SDHDA believed that NAHASDA prohibited SDHDA from disbursing state HOME funds on Indian sponsored projects.[11] Both reasons are legitimate and nondiscriminatory. One legitimate, nondiscriminatory reason need not be unanimously adhered to, provided that the other proffered justifications are legitimate and nondiscriminatory as well. See, e.g., Thomas v. Runyon, 108 F.3d 957, 959 (8th Cir. 1997) (accepting three different reasons for the defendant's action as legitimate and nondiscriminatory). In this case, all of the rationales advanced by various individuals within SDHDA are legitimate and nondiscriminatory. Thus, defendants have successfully met their burden under the McDonnell Douglas analysis.
[¶ 49.] Oti Kaga, with the defendants having met their burden, was afforded the opportunity to show that the defendants' reasons for their actions are mere pretext. See Badgett, 976 F.2d at 1178. It has failed to do so. In fact, Oti Kaga has failed to show anything. Instead of coming forward with evidence, Oti Kaga chose to rely on mere allegations. It argues that nothing within 24 C.F.R. § 92.201(b)(5) mandates the exclusion of Indian projects from state HOME funding. That is true but it completely misses the point. The rule gives SDHDA discretion and SDHDA exercised it. Complaining that nothing within the statute that confers the discretion mandated SDHDA's decision says nothing, nothing at all, about the issue of possible racial discrimination. Obviously, if a statute or a rule confers discretion it will not mandate any particular outcome.
[¶ 50.] The only evidence that Oti Kaga points to that even possibly indicates racial discrimination is a statement allegedly made by an SDHDA employee who stated that SDHDA felt it needed to give one Indian sponsor an award of tax credits in 1996. This, however, relates to the tax credit issue which Oti Kaga does not have standing to assert. Even if it did relate *1164 to HOME, it still would not be evidence of anything. It simply means that SDHDA decided to give an Indian sponsor an award of tax credits. It is pure fiction that a statement evidencing a desire to award an Indian sponsor an award of tax credits signals a desire to discriminate against Native Americans. Oti Kaga's attempt to contort that statement into evidence of discrimination simply demonstrates that no good deed goes unpunished.
[¶ 51.] There is no genuine issue of material fact as to Count I. Oti Kaga has failed to establish a prima facie case of discrimination under the McDonnell Douglas framework. Even assuming that it could make such showing, Oti Kaga has failed to point to any evidence that SDHDA's legitimate, nondiscriminatory reasons for its decision are mere pretexts for racial discrimination. The defendants are entitled to judgment as a matter of law on Count I. See LaCroix, 240 F.3d at 693.
Count II
[¶ 52.] The second alleged cause of action in the amended complaint is a disparate impact claim under the Fair Housing Act. In essence, Oti Kaga alleges that the defendants have a facially neutral pattern or practice that produces a disparate impact on Native Americans. The Eighth Circuit has yet to squarely address the Fair Housing Act on a disparate impact theory. Cf. Badgett, 976 F.2d at 1179 (strongly indicating that disparate impact actions under the FHA are permissible). Other circuits do permit such claims. See, e.g., Hack v. President and Fellows of Yale College, 237 F.3d 81 (2nd Cir.2000), Buckeye Community Hope Foundation v. City of Cuyahoga Falls, 263 F.3d 627 (6th Cir.2001), Katz v. Regents of the University of California, 229 F.3d 831 (9th Cir.2000), and Keys Youth Services, Inc. v. City of Olathe, Kansas, 248 F.3d 1267 (10th Cir. 2001).
[¶ 53.] To recover under this theory, Oti Kaga must show that (1) the defendants employed a particular housing policy or practice that imposes a disproportionate burden on a protected group, and (2)(a) the defendants failed to demonstrate that the challenged practice is reasonably necessary to achieve a legitimate business objective, or (b) the defendants unreasonably refused to adopt an alternative housing practice that would provide a comparably effective means of meeting the defendants' objective without imposing significant additional costs. See Hack, 237 F.3d at 102 (Moran, J., dissenting in part) (surveying the history of the disparate impact cause of action generally and how it operates in the FHA arena specifically).
[¶ 54.] Greatly frustrating the analysis of this disparate impact claim is Oti Kaga's failure to identify any particular policy or practice employed by SDHDA that produces a disparate impact. Instead of identifying such a policy or practice, Oti Kaga blindly claims past and current discriminatory actions, without description. Thus, the court is left with the unenviable task of trying to decipher what the complaints of Oti Kaga might be.
[¶ 55.] At first glance, it would appear that SDHDA's use of "readiness to proceed" could potentially run afoul of the Fair Housing Act and produce a disparate impact. However, any analysis of that issue is foreclosed because Oti Kaga lacks standing to assert that issue. That issue is moot[12] and is barred by the applicable statute of limitations. In turning to HOME, the court, after carefully reviewing everything on file herein, fails to find any policy or practice that may be claimed to produce a disparate impact in this case. *1165 The dispute in the HOME context centers on the meaning of 24 C.F.R. § 92.201(b)(5) and the discretion it affords SDHDA. SDHDA has adopted a policy, it could be argued, of interpreting 24 C.F.R. § 92.201(b)(5) against the interests of Oti Kaga and those similarly situated, but that interpretation, as discussed above, is certainly not unreasonable. It would be axiomatic indeed to turn a reasonable or at least not an unreasonable interpretation of existing law into a racially discriminatory policy or practice. If anything, 24 C.F.R. § 92.201(b)(5) itself produces the disparate impact, if any. That is a political issue for Congress and HUD, not for this court, as the propriety or the "fairness" of that rule is not before the court. Oti Kaga's claim of disparate impact under the Fair Housing Act is without merit. The defendants' motion for summary judgment on Count II, therefore, should be granted.
Count III
[¶ 56.] The third count of the amended complaint alleges a violation of Oti Kaga's right to contract in violation of 42 U.S.C. § 1981. This allegation, however, focuses only on the 1996 tax credit allocation process. Thus, any meaningful consideration is barred as Oti Kaga has no standing to assert any issues arising from that program. Any such issues are moot and are time-barred.
[¶ 57.] Oti Kaga could still not recover. Claims brought under 42 U.S.C. § 1981 are analyzed under the same McDonnell Douglas burden-shifting analysis discussed above. See Roark v. City of Hazen, 189 F.3d 758, 761 (8th Cir.1999). For the same reasons discussed above, i.e. Oti Kaga's failure to establish a prima facie case and, even assuming the presence of a prima facie case, its failure to submit any evidence that the defendants' nondiscriminatory reasons are pretextual, defendants' motion for summary judgment should be granted as to this count.
Count IV
[¶ 58.] Oti Kaga alleges a violation of 42 U.S.C. § 1982, which protects the property rights of American citizens. The Eighth Circuit has apparently not dealt with this statute in the exact context urged by Oti Kaga. Other courts, in reviewing this statute, require the plaintiff to demonstrate (1) an interference with property rights, which interference was (2) motivated by racial prejudice. See Lac du Flambeau Band of Lake Superior Chippewa Indians v. Stop Treaty Abuse-Wisconsin, Inc., 991 F.2d 1249, 1257 (7th Cir.1993). Oti Kaga cannot make that showing.
[¶ 59.] Count IV, like Count III, focuses only on the 1996 tax credit allocation process, which Oti Kaga may not pursue for the reasons discussed above. Moreover, even if Oti Kaga might be permitted to continue, any recovery would be precluded because Oti Kaga has pointed to no evidence that SDHDA was motivated by racial prejudice. If anything, in the 1996 tax credit time frame, SDHDA evidenced an intent to work with and assist Indian sponsors. Defendants' motion for summary judgment on Count IV should be granted as well.
Count V
[¶ 60.] Oti Kaga captions the alleged cause of action as "Civil Rights Act Disparate Treatment Impact." The court has no idea what this means. In the civil rights context, the terms "disparate treatment" and "disparate impact" have very different, well-defined meanings. Oti Kaga cites 42 U.S.C. §§ 1981 and 1982 as the statutory roots for this count. Those sections, however, were covered in counts III and IV. It seems that this count is part of the "kitchen sink" that was thrown at this court. It seeks compensation for damaged feelings. It seeks compensation for the damaged feelings of other Indian persons. *1166 How can a corporation have damaged feelings? Exactly who are these other Indian persons? How many are there? This entire count makes no sense whatsoever. Sanctions under Rule 11 could once again be applicable. Defendants' motion for summary judgment should be granted as to Count V.
Count VI
[¶ 61.] In this count, Oti Kaga seeks recovery for the negligent performance of statutory duties. Oti Kaga claims that the defendants breached a duty of ordinary care that SDHDA owes to Oti Kaga in the tax credit allocation process. While trying to lay out this negligence cause of action, Oti Kaga alleges that the defendants acted intentionally and maliciously. How can one intentionally and maliciously act in a negligent manner? They are mutually exclusive concepts. But not in this lawsuit, where a corporation seeks recovery for emotional and mental distress, embarrassment, mortification, and humiliation. Just as the court will prohibit a corporation from receiving any compensation for such alleged damages, the court will likewise prohibit any recovery for alleged "intentional negligence." The court does not condone such imaginary and fanciful causes of action, raising once again the possibility of Rule 11 sanctions. Defendants' motion for summary judgment on this count should be granted.
Count VII
[¶ 62.] As its seventh cause of action, Oti Kaga alleges a violation of 42 U.S.C. § 12832 which prohibits discrimination in the use of HOME funds. That statute states, in relevant part:
No person in the United States shall on the grounds of race, color, national origin, religion, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with funds made available under this subchapter.
42 U.S.C. § 12832. Oti Kaga assumes, without discussion, that this section authorizes a private right of action. The court, however, believes otherwise.
[¶ 63.] The statute does not expressly authorize a private right of action. It does not list or discuss any potential relief. Compare 42 U.S.C. § 1981a. Moreover, the court could find no case where 42 U.S.C. § 12832 served as the basis for any recovery and Oti Kaga cites none.
[¶ 64.] Although 42 U.S.C. § 12832 does not expressly authorize a private right of action, it does not automatically follow that no such action is permissible. Courts have been implying such rights of action from ambiguous statutes for years. See, e.g., Cannon v. Univ. of Chicago, 441 U.S. 677, 99 S. Ct. 1946, 60 L. Ed. 2d 560 (1979) (finding an implied cause of action for the private enforcement of Title IX). In this case, however, Oti Kaga has not asked this court to imply such an action; the court declines to sua sponte do so. By simply assuming that 42 U.S.C. § 12832 afforded it a private right of action, Oti Kaga assumed too much.
[¶ 65.] Even if 42 U.S.C. § 12832 could be said to create a private right of action, Oti Kaga's hopes would fare no better. Oti Kaga has no race, color, national origin, religion or sex and has no standing as to this statute. Also, as has been stated several times above, Oti Kaga presents no evidence of any discrimination. Without pointing to any credible evidence, Oti Kaga cannot recover for racial discrimination, no matter what statute it points to as having been violated. At the summary judgment stage of the proceedings, simply rehashing one's accusations and allegations is not sufficient; evidence is required. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 91 L. Ed. 2d 202 *1167 (1986) and Thomas v. Hungerford, 23 F.3d 1450, 1454 (8th Cir.1994). The defendants' motion for summary judgment on this count should be granted.
Count VIII
[¶ 66.] In Count VIII, Oti Kaga alleges discrimination in a Title VI program in violation of the 1964 Civil Rights Act, 42 U.S.C. § 2000d, which prohibits the exclusion of anyone in a federally-assisted program on account of race, religion, national origin, and color. This count alleges disparate treatment and not disparate impact. The Supreme Court has recently forbidden disparate impact actions under 42 U.S.C. § 2000d. See Alexander v. Sandoval, 532 U.S. 275, 121 S. Ct. 1511, 149 L. Ed. 2d 517 (2001).
[¶ 67.] In evaluating disparate treatment actions under 42 U.S.C. § 2000d, this court is to utilize the same McDonnell Douglas burden-shifting analysis described above. See Fuller v. Rayburn, 161 F.3d 516, 518 (8th Cir.1998). As use of the McDonnell Douglas analysis has already doomed two of Oti Kaga's claims, it dooms this claim as well. Oti Kaga points to no evidence that the defendants' legitimate, nondiscriminatory reasons for its actions in this case are mere pretexts for racial discrimination. In trying to refute this argument, Oti Kaga simply advances the same argument, namely, that SDHDA's interpretation of 24 C.F.R. § 92.201(b)(5) is unreasonable. The court has already determined that SDHDA's interpretation of the regulation is not unreasonable and is within the bounds of the law. It is the duty of Congress, and not this court, to decide if 24 C.F.R. § 92.201(b)(5) needs retooling. Defendants' motion for summary judgment should be granted as to this count.
Count IX
[¶ 68.] In Count IX, Oti Kaga has once again ventured into the realm of ignoring basic constitutional principles, advancing a wholly frivolous cause of action. Oti Kaga argues that SDHDA adopted tax credit allocation procedures that were in violation of South Dakota's open-records laws and the Internal Revenue Code § 42(m). For relief, Oti Kaga asks this court to rescind SDHDA's tax credit allocation awards for various years and reallocate them. Oti Kaga makes this request knowing that none of the entities that received such awards are named in this lawsuit. Obviously the concept of due process, with its guarantees of notice and an opportunity to be heard, have not been considered by Oti Kaga.
[¶ 69.] As noted above, the court, when it initially read this claimed cause of action (and others), was greatly alarmed. In its memorandum to Oti Kaga requesting that it explain, with appropriate legal citations, the legal justification for this imaginary cause of action, Oti Kaga responded by admitting that there was no justification for it. It labeled this theory as "novel" and discussed one case, without citation, from Iowa, where, it alleges, a finance agency was required to rescind its tax credit allocations. Oti Kaga simply ignored the court's clear warning and questions. Whether the case in Iowa took place or not, the court does not know. If it did, the court is extremely confident that those who received the erroneous tax credit allocations were named as parties in the lawsuit. It shocks this court that an attorney would maintain an action that seeks to strip important benefits from a non-party when the court has already informed counsel that serious constitutional deficiencies exist. Instead of correcting them, Oti Kaga has clung to them in earnest. Needless to say, the specter of Rule 11 sanctions is raised once more. Defendants' motion for summary judgment on this count should be granted.
*1168 Count X
[¶ 70.] In this count, Oti Kaga invokes this court's claimed supplemental jurisdiction, alleging a violation of South Dakota's Fair Housing Act, SDCL 20-13-20, arguing that the defendants are "owners of rights to housing or real property" and discriminated against Oti Kaga on account of race.
[¶ 71.] In response, defendants argue that this claim is barred due to Oti Kaga's failure to submit its claims of racial discrimination to the State Division of Human Rights. Upon review of South Dakota law, the defendants are correct. See Montgomery v. Big Thunder Gold Mine, Inc., 531 N.W.2d 577, 579 (S.D.1995) (stating that the plaintiff's failure to exhaust administrative remedies precluded her sexual discrimination lawsuit), and Weller v. Spring Creek Resort, Inc., 477 N.W.2d 839, 840 (S.D.1991) (holding that a failure to file a complaint with the Division of Human Rights is a failure to exhaust one's administrative remedies that is fatal to the discrimination claim).
[¶ 72.] Oti Kaga argues, however, that this is a housing discrimination lawsuit, thereby making it distinguishable from the above-cited cases. While the facts may be different, the rationale for the rule certainly applies to this case. As the South Dakota Supreme Court has stated, "[f]or the Division to achieve its human rights objectives, it must receive all sexual harassment complaints before such claims enter the judicial process." Montgomery, 531 N.W.3d at 579. Whether the complaint is sexual harassment or racial discrimination, the objectives of the Division of Human Rights remain the same. Chapter 20-13 of the South Dakota Codified Laws imposes on the Division the same obligations regarding racial discrimination as it does as to sexual discrimination. See SDCL 20-13-1 et seq. (prohibiting virtually all forms of discrimination, including discrimination based on race, sex, and physical disabilities). Thus, Oti Kaga simply argues a distinction that matters not.
[¶ 73.] Oti Kaga also argues that because it pursued an administrative remedy with HUD, it would have been redundant and futile to also file with the State Division of Human Rights. Nothing in SDCL Chapter 20-13, however, substitutes a complaint with a federal agency for that required to be submitted to the Division of Human Rights. The South Dakota Supreme Court has not dispensed with the exhaustion requirement in that manner. South Dakota law required Oti Kaga to file a complaint with the Division of Human Rights if it hoped to recover on any causes of action arising from South Dakota law. It did not do so in this case. Oti Kaga failed to exhaust its state administrative remedies, therefore entitling the defendants to summary judgment on this issue.
Count XI
[¶ 74.] Oti Kaga's final cause of action is based on 42 U.S.C. § 1983, which prohibits the deprivation of rights by one acting under color of state law. However, Oti Kaga, in specifying which rights it believes have been violated, points to the statutory provisions discussed and rejected above. Having found no violation of the statutes cited in this count, it necessarily follows that there is no violation of 42 U.S.C. § 1983. The defendants' motion for summary judgment should be granted as to Count XI.
E. Rule 11 Sanctions
[¶ 75.] The court is convinced that this case, particularly Oti Kaga's request for personal injury type damages, its request to rescind and reallocate tax credit awards from non-parties, its claim of negligent performance of statutory obligations, and its failure to candidly and forthrightly respond to the court's memorandum regarding *1169 these issues, very likely warrants the imposition of sanctions. The court believes that counsel for Oti Kaga in all probability knowingly violated Rule 11 in several respects, including the prohibition of filing a lawsuit for improper purposes and by advancing legal theories that are totally unsupported in the law. The defendants have not sought sanctions. Rule 11 authorizes the court, on its own initiative, to impose sanctions. See Fed.R.Civ.P. 11(c)(1)(B). To do that, however, the court would be required to conduct a hearing to give Oti Kaga, specifically its counsel, the opportunity to demonstrate that sanctions should not be imposed. Oti Kaga's lead out-of-state attorney appears to be responsible for what has transpired in this case. Local counsel has apparently not been personally involved. If and when sanctions are sought by defendants pursuant to Rule 11, the court will consider them.
CONCLUSION
[¶ 76.] Oti Kaga, prior to the defendants' motion for summary judgment, filed a motion, Doc. 37, seeking the court's permission to add certain indispensable parties. Oti Kaga seeks to significantly broaden the scope of this litigation, desiring to name various HUD personnel as defendants in this lawsuit. Nothing can be gained from that exercise. In light of the court's disposition of the motion for summary judgment, Oti Kaga's request for leave to add indispensable parties will be denied as moot.
[¶ 77.] There is no genuine issue of any material fact and defendants are entitled to judgment as a matter of law.
ORDER
[¶ 78.] Now, therefore, based on the foregoing,
[¶ 79.] IT IS ORDERED
(1) Defendants' motion for summary judgment, Doc. 46, is granted.
(2) Oti Kaga's motion for leave to add indispensable parties, Doc. 37, is denied as moot.
(3) Costs shall be taxed by the clerk.
NOTES
[1] It is noted that these other Indian sponsors who worked with Mr. Bland are not a part of this lawsuit. Even though two of the other Indian sponsors were treated like Oti Kaga, Oti Kaga was the only one to file suit.
[2] Whether Oti Kaga was "ready to proceed" with the Elk View I project, as compared to the other applications, is a hotly disputed issue in this case. Given the court's disposition of all the issues arising out of the 1996 tax credit allocation plan, however, this issue need not be resolved.
[3] Darlys Baum, in her deposition, indicated that it was the "readiness to proceed" factor that weighed heavily against Oti Kaga and the other three Indian-sponsored applications. However, she indicated that SDHDA wanted to encourage Mr. Bland and the Indian tribes to continue their quest for tax credits, believing that they would be well used in Indian Country. She indicated that the Pine Ridge project received an award for two reasons: first, to reward Mr. Bland and the tribes for their hard work and to hopefully encourage them to try again once they had improved themselves from a "readiness to proceed" standpoint, and, second, because the Pine Ridge project was located in a qualified census tract, an approved criterion from IRC § 42(m)(1)(B)(ii)(lll). Due to an error in reading a map, SDHDA failed to realize that the Oti Kaga project was also located in a qualified census tract. This, SDHDA admits, would have made a difference in their decision on the front end.
[4] The court is unsure whether the deponent is referencing the 1990 or 2000 census.
[5] Before turning to that endeavor, however, the court feels compelled to state that it, because of its unique geographical jurisdiction over the Northern and Central Divisions of the District of South Dakota, is acutely aware of the myriad of problems that Native Americans on the reservations face daily. This court, by virtue of its criminal jurisdiction, knows the reservations well. The court has heard voluminous testimony in other cases explaining the dire shortage of housing in Indian Country. It is commonplace for generations of a family to live together under one roof. Moreover, that one roof is likely in a sad state of disrepair, not because of its inhabitants, but because of the general poverty and the lack of any meaningful economic opportunities on the reservation.
In addition, this court, because of its large criminal caseload that is almost entirely comprised of Native Americans, enjoys a unique perspective into Indian Country not shared by many others, specifically those in Congress. Because of the closeness between this court and Indian Country, this court, upon an allegation of racial discrimination against Native Americans, reviews the case with the utmost scrutiny. The court is all too familiar with the deleterious effects of past and present racial discrimination in the United States, including South Dakota, as to Native Americans, and is dedicated to ensuring that the Constitution and the many other civil rights statutes are fully viable on South Dakota's Indian reservations. It is with that zeal that the court considers this case.
[6] The court expresses no opinion on Oti Kaga's statement that constituency plays any role in a representational standing analysis. The court merely uses it here for simplicity.
[7] Oti Kaga cites Hunt as 432 U.S. 333, 334, 97 S. Ct. 2434, 53 L. Ed. 2d 383. Page 334, 97 S. Ct. 2434, however, is merely the syllabus of the Court. Counsel should certainly know that the syllabus comprises no part of the Supreme Court's decision and should not be cited. The Hunt factors found in the syllabus are actually listed in the opinion.
[8] The court, in separating these events into two categories, is very mindful of Oti Kaga's contention that the racial discrimination it claims it has endured, (although, of course, a corporation cannot be the subject of racial discrimination), spans rather seamlessly these two time periods. Separating the events, however, is necessary for simplicity. In doing so, the court remains aware of Oti Kaga's allegation of ongoing, continuous discrimination.
[9] It must be noted that even if this court were to believe that Oti Kaga did have standing to pursue the 1996 claims, they would be foreclosed by both mootness and the statute of limitations. As discussed above, SDHDA has not used "readiness to proceed" since 1996 and Oti Kaga has received tax credits each time it has applied for them. Those two facts effectively moot that dispute. In addition, the court believes that the statute of limitations precludes any discussion of the 1996 tax credit allocations. Where a federal statute does not specify a statute of limitations, a court is to utilize the most analogous state statute of limitations. See Wilson v. Garcia, 471 U.S. 261, 266, 105 S. Ct. 1938, 85 L. Ed. 2d 254 (1985). In this case, defendants are correct in pointing to South Dakota's personal injury statute of limitations, SDCL 15-2-14, and South Dakota's statute of limitations regarding civil rights actions, SDCL 15-2-15.2. Both employ a three year statute of limitations. Thus, Oti Kaga's time period expired in 1999, well before this case was instituted. Oti Kaga, in trying to refute the statute of limitations argument, contends that ongoing racial discrimination tolls any applicable statute of limitations. Whatever the merits of that argument may be, there is simply no evidence of any discrimination in this case. The statute of limitations, whichever one is selected, would have expired prior to this case being commenced.
[10] Although some lower courts dismiss this pronouncement as mere dicta, see Triad Assoc., Inc. v. Robinson, 10 F.3d 492, 499 n. 5 (7th Cir.1993), Gersman v. Group Health Ass'n, Inc., 931 F.2d 1565 (D.C.Cir.1991), vacated on other grounds, 502 U.S. 1068, 112 S. Ct. 960, 117 L. Ed. 2d 127, reinstated 975 F.2d 886 (1992), and Rosales v. AT & T Information Systems, Inc., 702 F. Supp. 1489, 1494 (D.Colo.1988), the Supreme Court has never disowned it. Because the Supreme Court has yet to speak again on the issue and because there is no guidance on the topic from the United States Court of Appeals for the Eighth Circuit, this court will adhere to it. See United States v. Maynie, 257 F.3d 908, 918 (8th Cir.2001) (stating that a court's obligation is to follow what the Supreme Court has said, not guess at what it might say in the future). Moreover, in light of the fictional nature of a corporation, the Supreme Court's statement that a corporation has no racial identity and cannot be the target of discrimination makes sense. While members in or stockholders of the corporation have a racial identity, the corporation has an identity that is separate and distinct from that of its members and organizers. See Moline Properties v. Commissioner, 319 U.S. 436, 439, 63 S. Ct. 1132, 87 L. Ed. 1499 (1943).
[11] That interpretation of NAHASDA, whether ultimately correct or not, is reasonable. As discussed earlier, at least one commentator takes the position that Indian tribes are no longer eligible to participate in the state HOME program because NAHASDA is the "exclusive" block grant housing formula. See Kenison, 8 SPG J. Affordable Housing & Community Dev. L. at 253. Employees of SDHDA arriving at the same conclusion, therefore, signal a not unreasonable or arbitrary interpretation of NAHASDA's effect, and not, as Oti Kaga contends, an intent to discriminate.
[12] As has been noted earlier, that criterion has not been used since 1996. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567788/ | 253 F.Supp.2d 1209 (2003)
Dorothy M. LOWE, Plaintiff,
v.
SURPAS RESOURCE CORPORATION, Ray Cash, and U.S. Bank, Defendants
No. 01-2149-JWL.
United States District Court, D. Kansas.
March 27, 2003.
*1219 Blair K. Drazic, Creve Coeur, MO, James F. Adler, Adler & Manson, Kansas City, MO, Robert Behan, Law Office of Robert Behan, Elm Mott, TX, James L. Renne, Arlington, VA, for Dorothy M. Lowe.
John C. Aisenbrey, Ann Michele Scarlett, Stinson Morrison Hecker, LLP, Kansas City, MO, for Ray Cash.
Sonya L. Allen, Office of State Bank Commissioner, Topeka, KS, Craig Raby, Consumer Protection & Adviocacy Section, Phoenix, AZ, for Arizona State Banking Dept.
Jeffrey D. Hanslick, John R. Phillips, Julia R. Somora, Blackwell Sanders Peper Martin LLP, Kansas City, MO, for Surpas Resource Corp.
Celia K. Garrett, Shook, Hardy & Bacon, L.L.P., Overland Park, KS, for US Bank N.A., N.D.
Michael T. Metcalf, David R. Vandeginste, Miller Law Firm, P.C., Kansas City, MO, for Experian Infromation Solutions, Inc.
MEMORANDUM OPINION
LUNGSTRUM, District Judge.
Plaintiff Dorothy M. Lowe brought this action against Defendants Surpas Resource Corporation ("SRC" or "Surpas"), Ray Cash ("Mr.Cash"), and U.S. Bank (formerly "Mercantile" and "Firstar"). In the Final Pretrial Order ("PTO"), she alleges that defendants violated the Kansas Consumer Protection Act ("KCPA") and committed various torts and acts of negligence under Kansas common law in their attempts to collect debt from Ms. Lowe. Additionally, Ms. Lowe contends that U.S. Bank violated the federal Fair Credit Reporting Act by failing to investigate adequately her claims of identity theft and fraud.
On March 25, 2003, the court issued a summary order on defendants' summary judgment motions (Docs. 170, 172, 175). Therein, the court granted in part and denied in part the motions filed by SRC and Mr. Cash. The court granted U.S. Bank's motion in its entirety. This Memorandum Opinion supplements the court's March 25, 2003 order.
*1220 FACTUAL BACKGROUND
The following facts are either uncontroverted or construed in the light most favorable to Ms. Lowe, the nonmoving party. In June of 1994, Mercantile[1] received a credit card application, which identified plaintiff Dorothy M. Lowe as the primary applicant and her daughter Judith Figiel as the secondary applicant. The application appears to contain the signatures of both the primary and secondary applicants. Mercantile issued a Mercantile Visa Account and a Mercantile Master-Card Account in Ms. Lowe's name, in response to the application. From 1994 through 1997, charges were incurred and payments were made on both credit card accounts. All payments on the accounts stopped on November 7, 1997 and October 21, 1997 respectively, despite a remaining balance of $4,561.31 on the Visa account and $5,291.00 on the MasterCard account. Ms. Lowe contends that she is a victim of identity theft and fraud. She offers evidence suggesting that her daughter, Judith Figiel, and her son-in-law, Bernard Figiel (Judith's husband), opened these two accounts and incurred charges without her consent or authorization.[2]
When payments ceased on the credit card accounts in late 1997, Mercantile attempted to collect the past due balances from Ms. Lowe. On September 17, 1997, James L. Renne (Ms. Lowe's grandson and formerly lead counsel in this litigation), acting as Ms. Lowe's durable power of attorney, drafted a letter disputing the validity of the charges on one of the Mercantile accounts.[3] In that letter, he states that "Ms. Lowe did not open or make purchases on this account nor has she authorized the opening of this account by another in her name ... Any transaction in her name is fraudulent."[4] In a sworn affidavit, Mr. Renne states that he mailed the correspondence, by first class mail, *1221 postage prepaid on that same day. Also in September of 1997, Janet Woodall answered a Mercantile collection call at Ms. Lowe's residence. Ms. Woodall told the Mercantile collector, Tina Jones, that Ms. Lowe disputed the validity of the accounts. In 1998, Ms. Woodall similarly disputed the validity of the debt with another Mercantile representative after the representative threatened to file charges against Ms. Lowe.[5]
When Mercantile's collection efforts failed, it assigned one of the accounts to Client Services, a debt collection agency, on July 6, 1998. Mercantile assigned the second account to Client Services on August 4,1998.
On March 1, 1999, Client Services received a letter from James L. Renne, which stated that "Dorothy M. Lowe did not authorize nor benefit from the Mercantile credit card accounts... [n]or did she authorize or empower any other person to seek credit in her name...," and that "[s]he does not accept any responsibility for balances on these accounts."[6] Client Services notified Mercantile of the dispute on March 3,1999.
On March 18, 1999 Mercantile sent Client Services a fraud affidavit for Ms. Lowe to sign and return. Mercantile requested Client Services forward the signed affidavit, once completed, so it could compare Ms. Lowe's signature on the affidavit with the one on the original credit card applications. Mercantile also requested that Client Services inquire whether Ms. Lowe knew the secondary cardholder, Judith Figiel. Mercantile also forwarded to Client Services copies of credit card statements that reflected the history of transactions on the two credit card accounts.
On August 25, 1999, Mr. Renne mailed another letter disputing the validity of the *1222 credit card debt (signed by Dorothy M. Lowe) to Mercantile. Mr. Renne also attached an affidavit executed by Ms. Lowe on July 16, 1998, describing the fraudulent scheme allegedly employed by her daughter and son-in-law to acquire the Mercantile accounts.[7]
Also on August 25, 1999, Ms. Lowe sent letters to several credit reporting agencies disputing the validity of several reported debts, including the Mercantile accounts. After investigating Ms. Lowe's claims, the credit reporting agencies removed several debts from her credit report. Some of the credit reporting agencies indicated the Mercantile accounts would be deleted.
On October 14, 1999, after Consumer Resources failed to collect on the accounts, Mercantile assigned the accounts to Surpas Resources Corporation, another debt collection agency. At the time SRC received the accounts, Mercantile records did not indicate that Ms. Lowe had disputed the debt.
The relationship between SRC and Mercantile was governed by the Collection Agency Agreement. The Agreement provides that:
The Agency shall perform all collection services under this Agreement as an independent contractor, and nothing contained herein shall be deemed to create any association, partnership, joint[] venture or relationship of employer or employee or principal and agent between the Agency and the Client.
Under the Agreement, Mercantile agreed to pay SRC a percentage of any amount they recovered from Ms. Lowe. SRC was not compensated based upon the number of hours devoted to collecting the accounts. Mercantile did not provide any office supplies or equipment to SRC, did not share a computer system with SRC, did not assist SRC in hiring employees or monitoring their work performance, and did not train or test Surpas' employees. Mercantile, however, was allowed to log onto SRC's computer system to view telephone records detailing SRC's collection efforts.
On October 16, 1999, SRC first initiated its efforts to collect from Ms. Lowe on the Mercantile accounts. From that date through January 21, 2000, SRC made approximately 20 direct contacts with the plaintiff, 2 direct contacts with her attorney and grandson James Renne, 5 direct contacts with members of her family, and left 9 voice messages at her residence. During this time, defendant Ray Cash was employed by SRC as an assistant manager. SRC did not conduct a background check or investigation prior to hiring Mr. Cash. Mr. Cash misrepresented the extent of his education in his resume.
As to the direct collection calls Ms. Lowe received during this time period, she does not specifically recall the identity of the collection callers or the agencies that they represented. SRC, however, was the only collection agency attempting to collect debt from Ms. Lowe during this time period.[8] As to the substance of the conversations *1223 and the tactics employed during the course of these collection efforts, Ms. Lowe specifically recalls that the collectors threatened her with aggressive legal action and threatened to take her home from her. On two occasions, one in November of 1999 and the other in January of 2000, another grandson of Ms. Lowe, Mark Renne, listened in on the collection calls. Mark Renne testified that during the course of these collection calls SRC employee Ray Cash called Ms. Lowe a "low life" and a "thief," threatened to take her home and threatened to personally come to her house to take care of the situation.[9] SRC caught Mr. Cash making similar threats to other debtors in January and February of 2000, resulting in his discipline and subsequent termination. Finally, during the course of many of these collection calls, Ms. Lowe disputed the validity of the debt, informed the callers that her attorney and grandson James Renne was handling the matter, and requested they cease their collection efforts.
As to the direct contacts with Ms. Lowe's family members and her grandson, SRC communicated that it would pursue aggressive legal tactics against Ms. Lowe if she did not make payment on the accounts. Family members communicated to SRC that Ms. Lowe was a victim of fraud. Also, on two occasions, Mr. James L. Renne contacted SRC employees Cassandra Bailey and Ray Cash. On November 15, 1999 he spoke with Ms. Bailey, who confirmed that she was attempting to collect debt on two Mercantile credit card accounts. Mr. Renne requested that SRC stop calling his grandmother because the debt was invalid. On November 10, 1999, Mr. Renne informed Mr. Cash that the accounts were opened without Ms. Lowe's consent. Mr. Cash threatened that Mr. Renne's grandmother could face civil and criminal litigation.
As to the voice messages, the recordings were left on SBC's Callnotesо, which is a voice mail system that allows a user to receive messages from anywhere without an answering machine. James Renne, not Ms. Lowe, set up the answering service on Ms. Lowe's home number and he retrieved and listened to all the messages. Ms. Lowe did not retrieve or listen to the messages left on the service. James Renne made tape recordings of two of the messages from Mr. Cash. During the first message that Mr. Cash left on October 28, 1999, he "wished [Ms. Lowe] good luck" if she chose not to return the call and that the situation would be "rectified with or without [her] cooperation." During the second message that Mr. Cash left later that same day, he indicated that Ms. Lowe's attorney had still not contacted him. There is no evidence that James Renne actually communicated the substance of these or any other voice messages to Ms. Lowe.
In addition to the telephone calls, SRC sent collection letters to Ms. Lowe on October 20, November 17, December 1, and December 10, 1999. SRC last contacted Ms. Lowe on January 21, 2000. It closed the two Mercantile accounts on May 6, 2000 after concluding that it had exhausted all efforts to collect the alleged debt. On April 11, 2001, however, SRC restored one *1224 of the accounts from its archives for some unknown reason and added it to the call list. As a result, SRC attempted to contact Ms. Lowe on May 1, 2001, but no one answered the telephone call.
As a result of these contacts, Ms. Lowe often became nervous, upset and anxious. According to deposition testimony, this distress caused her to tremble, shake, cry and sometimes lose sleep. Ms. Lowe's medical records, however, do not indicate that she suffered any physical injury or mental distress during the time of the collection calls, nor did she mention these calls to her physician. In June of 2001, Ms. Lowe was diagnosed with Alzheimer's disease. On at least two occasions, Ms. Woodall, plaintiffs daughter, told an SRC caller that her mother was "too old" to be bothered with the calls. On several other occasions, Ms. Lowe told SRC that an attorney was managing her financial affairs. SRC records, however do not suggest or indicate that it had knowledge that Ms. Lowe suffered from a debilitating disease or that she was otherwise susceptible to emotional distress.
On August 21, 2000, Mercantile sold the accounts to Collins Financial Services, but repurchased them in August of 2002, after it received notice that Ms. Lowe had filed a complaint against SRC. Collins Financial Services did not attempt to collect on these accounts or have any correspondence with Ms. Lowe. Neither Mercantile nor its successors attempted to collect from Ms. Lowe after SRC exhausted its efforts in May of 2000.
On April 2, 2001, Ms. Lowe filed her initial complaint against SRC, Mr. Cash and "John and Jane Does 1-5." Plaintiff amended her complaint on June 21, 2002, to add claims of negligent hiring, retention and supervision against SRC and to add U.S. Bank as a defendant. Defendants filed their motions for summary judgment on January 27, 2003.
STANDARD
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10th Cir.2002). A fact is "material" if, under the applicable substantive law, it is "essential to the exhibits in proper disposition of the claim." Wright ex rel. Trust Co. of Kansas v. Abbott Laboratories, Inc., 259 F.3d 1226, 1231-32 (10th Cir.2001) (citing Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Adler, 144 F.3d at 670 (citing Anderson v. Liberly Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Spaulding, 279 F.3d at 904 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Adams v. Am. Guarantee & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir.2000) (citing Adler, 144 F.3d at 671).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." *1225 Spaulding, 279 F.3d at 904 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)); Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Celotex, 477 U.S. at 324, 106 S.Ct. 2548. The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256, 106 S.Ct. 2505; accord Eck v. Parke, Davis & Co., 256 F.3d 1013, 1017 (10th Cir.2001). Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Mitchell v. City of Moore, Oklahoma, 218 F.3d 1190, 1197-98 (10th Cir.2000) (quoting Adler, 144 F.3d at 671). To accomplish this, the facts "must be identified by reference to an affidavit, a deposition transcript, or a specific exhibits incorporated therein." Adams, 233 F.3d at 1246.
The court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).
ANALYSIS
I. Kansas Consumer Protection Act Claims
In Ms. Lowe's first theory of recovery, she alleges that the defendants SRC and Ray Cash engaged in deceptive and/or unconscionable acts, in violation of the KCPA, while attempting to collect on two Mercantile credit card accounts. Ms. Lowe asserts these KCPA claims against U.S. Bank under a theory of vicarious liability and also asserts other KCPA claims directly against U.S. Bank.
A. Claims Asserted against Defendants Cash and SRC
Defendants SRC and Cash contend that the KCPA claims should be dismissed in part or in their entirety because: (1) Ms. Lowe does not know whether defendants as opposed to other collection agencies and employees made the telephone calls that form the basis of this claim; (2) telephone calls to which Ms. Lowe was not a party and voice messages that she did not receive are not actionable under the KCPA; (3) there is no admissible evidence to establish the content of the collection calls; and (4) the Act does not permit her to recover to the extent that she requests. The court addresses each of these arguments in turn.
1. Whether Ms. Lowe can Establish that Defendants Made the Alleged Collection Calls
In the PTO, Ms. Lowe alleges 97 separate violations of the KCPA during purported conversations between SRC (often through employee Ray Cash) and the plaintiff. Defendants contend that Ms. Lowe cannot establish a genuine issue of material fact on several of these KCPA claims because she cannot prove the identity of the collection callers.
a. Identity of Surpas
Defendant SRC challenges two categories of collection calls. First, it contends that it did not contact Ms. Lowe on October 25, 29, or 30, 1999, as she alleges in paragraphs 7a(2)al, 2, 19, 25, and 26 of the Pretrial Order.[10] In support of this *1226 argument, Surpas relies on its telephone records that detail the date, time and substance of telephone calls made to alleged debtors. Surpas' records reveal that an employee attempted to contact Ms. Lowe on October 30, 1999, but that no one at the residence answered the call. The records further indicate that SRC did not attempt to contact Ms. Lowe on October 25, or October 29, 1999. Moreover, Ms. Lowe testified that she does not recall the identity of anyone who contacted her regarding the debts.
This evidence places the burden upon Ms. Lowe to "set forth specific facts showing that there is a genuine issue for trial." To that end, Ms. Lowe cites to the deposition of James L. Renne, wherein he testifies that SRC was the only agency placing collection calls to Ms. Lowe from October of 1999 through May of 2000. Second, Ms. Lowe points to SRC's admission that it made at least 20 direct contacts with the plaintiff, 2 direct contacts with her attorney, 5 direct contacts with her family, and left 9 messages at her residence during the relevant time period (October 16, 1999 through January 21, 2000) to suggest that SRC was, more likely than not, the entity that originated the calls. Ms. Lowe further offered evidence that another grandson, Mark Renne, listened in on two collection calls initiated by SRC's agent, Ray Cash. While much of this evidence is circumstantial, the court finds that a rational trier of fact could find, based upon this evidence, that SRC was more likely than not the entity that made the calls on or about the dates alleged in paragraphs 7a(2)al, 2, 19, 25, and 26 of the PTO.
Second, SRC contends that it was not the collection agency that called Ms. Lowe, while her caregiver, Theresa Hernandez, listened on another line (as alleged in paragraphs 82 through 86 of the PTO). In support of this argument, SRC notes that Ms. Hernandez testified that she listened in on phone calls from an unidentified collection agency shortly after she began working for Ms. Lowe in October or November of 1998. Surpas, however, did not initiate its collection efforts against Ms. Lowe until October 16, 1999. Moreover, other entities were attempting to collect the same debt from Ms. Lowe beginning in 1997 through 1999. In her response, Ms. Lowe failed to set forth any specific facts to challenge Surpas' argument. She alleges that Ms. Hernandez was mistaken about the year she began working for her and, therefore, the date she first heard the collection calls. Ms. Lowe, however, fails to offer any evidence to support this allegation. As such, Ms. Lowe has failed to establish a genuine issue of material fact as to the identity of the caller who attempted to collect debt from Ms. Lowe, while Ms. Hernandez listened in on the other line. Summary judgment is granted as to any KCPA claims that specifically rely on those contacts (which SRC identifies to be paragraphs 7a(2)a82-86 of the Pretrial Order).
b. Identity of Defendant Cash
Similarly, Mr. Cash challenges the identity of the caller implicated in paragraphs 7a(2)al-2 of the PTO. In those paragraphs, Ms. Lowe alleges that on or about October 29, 1999, Ray Cash or another male employee of Surpas engaged in collection efforts in violation of the KCPA. Mr. Cash contends that Ms. Lowe cannot establish that he made those calls on October 29, 1999.[11] In support of this argument, *1227 Mr. Cash notes that Surpas' records indicate that he telephoned plaintiffs home number on only four occasions and never on October 29, 1999.[12] Mr. Cash testified during his deposition that he never spoke directly to Ms. Lowe and plaintiff testified she does not recall speaking to a male debt collector. Based on this evidence, Mr. Cash believes he is entitled to summary judgment as to the allegations contained in paragraphs 7a(2)al-2 of the PTO.
Again, this evidence places the burden on Ms. Lowe to "set forth specific facts showing that there is a genuine issue for trial." To that end, Ms. Lowe offers internal memorandum wherein Mr. David Russo reports to SRC that Mr. Cash made threats (to pursue legal action and to take away a creditor's home) similar to those alleged in paragraphs 7a(2)al-2 of the PTO to other debtors. Also, as noted above, Mark Renne listened in on two calls between Ms. Lowe and a male debt collector, who he later identified as Mr. Cash.[13] Ms. Lowe further challenges Mr. Cash's reliance on Surpas' telephone records because collection employees can subsequently alter their contents in SRC's computer system. The court finds that this evidence creates a genuine issue of material fact as to whether Mr. Cash made the telephone contacts alleged in 7a(2)al-2 of the PTO and summary judgment is denied on this ground.
2. Liability for Communications that Ms. Lowe Never Received
The KCPA provides relief to consumers aggrieved by a violation of the Act. Defendants contend that Ms. Lowe cannot, as a matter of law, be aggrieved by communications she never received. Specifically, in paragraphs 7a(2)a 37-63, 69-70, 89, 94 and 96 of the PTO, Ms. Lowe alleges that SRC violated the KCPA during conversations with her lawyer and/or family members.[14] In paragraphs 7a(2)a 5-10, 13. 16, 27, and 32-33 she alleges that SRC violated the KCPA in messages she never heard and that her lawyer retrieved from her voice mail system. Because she never received these communications, defendants argue that they are not actionable under the KCPA.
The KCPA provides that "[n]o supplier shall engage in any deceptive act or practice in connection with a consumer transaction." K.S.A. з 50-626(a). The KCPA further restricts suppliers from engaging "in any unconscionable act or practice in connection with a consumer transaction." K.S.A. з 50-627(a). The Act contemplates that a "consumer who is aggrieved by a violation of this act may recover, but not in a class action, damages or a civil penalty as provided in subsection (a) of K.S.A. 50-636 and amendments thereto, whichever is greater." K.S.A. з 50-634(b) (emphasis added).[15] The Kansas *1228 Supreme Court has held that a consumer is not automatically entitled to з 50-634 remedies each time a supplier violates the Act. Instead, the consumer must demonstrate that the violation was causally connected to the consumer's damages to be entitled to these remedies. Finstad v. Washburn Univ. of Topeka, 252 Kan. 465, 845 P.2d 685 (1993).
In Finstad, students who enrolled in Washburn's court reporting program alleged that the University violated the KCPA by representing in an academic course catalogue that its program was accredited when in fact the National Shorthand Reporters Association had not yet certified it. Id. at 688. Many of the students, however, enrolled in the program before the catalogue was published or without knowledge of the error in the catalogue. Id. The students claimed that they were "aggrieved" consumers under the KCPA "because they paid tuition for a program that was not accredited. Id. The students, however, did not suggest that they were "induced to enroll in the program by the false statement that [the court reporting program] was accredited..." Id. That is, "the students did not demonstrate a causal link between Washburn's false statement and their injuries." Id. The trial court granted summary judgment against the plaintiffs on those grounds. On appeal, the students argued that the KCPA did not require a causal connection between the misrepresentation and the grievance. Id. at 689. Instead, appellants argued that "all they need to show for recovery is that they are consumers who are engaged in a consumer transaction with defendant and that defendant committed a deceptive act or practice under the Act." Id The Kansas Supreme Court disagreed, arguing that the plain language of the statute provides relief only to those consumers aggrieved (i.e. those who suffer loss or injury) because of a violation of the Act. Id. at 689 (noting that "[i]f the students are not aggrieved by the violation, then they do not have a remedy under K.S.A. 50-634(b)"). The court refused to "interpret an aggrieved consumer to be one who is neither aware of nor damaged by a violation of the Act..." and concluded that "the district court did not err in holding that a causal connection is still required to maintain an action under K.S.A. 50-634(b)..." Id. at 692.
The defendants rely on Finstad to argue that, as a matter of law, Ms. Lowe cannot be aggrieved by calls to which she was not a party or voice messages that her attorney retrieved. Indeed, in Finstad, the court refused to interpret an aggrieved consumer as one who is neither aware of nor damaged by a violation of the act. Unlike Finstad, however, where the misrepresentations in a course catalogue did not induce students to enroll in the court reporting program, here Ms. Lowe has demonstrated a genuine issue of material fact as to whether she was "damaged" by the alleged violations of the KCPA. The KCPA does not define the term "aggrieved." In Finstad, the court defined the term as "`[h]aving suffered loss or injury.'" 845 P.2d at 690 (quoting Black's Law Dictionary 65 (6th ed.1990)). Moreover, in Petition of Kansas City, 190 Kan. 308, 374 P.2d 35 (1962), the Kansas Supreme Court defined the term "aggrieved" in the context of G.S.1949, 12-502a as follows:
A party is aggrieved whose legal right is invaded by an act complained of or whose pecuniary interest is directly affected by the order. The term refers to a substantial grievance, a denial of some personal or property right, or the imposition *1229 upon a party of some burden or obligation. In this sense it does not refer to persons who may happen to entertain desires on the subject, but only to those who have rights which may be enforced at law and whose pecuniary interest may be affected.
Id. at 41 (emphasis added). Here, SRC's collection calls imposed upon Ms. Lowe the burden of retaining the assistance of third parties to respond to SRC's inquiries.[16] Ms. Lowe specifically directed SRC's agents to contact James Renne regarding the collection matter. Though Ms. Lowe was not a party to all of the collection calls and voice messages, her agents and family members received these communications and responded to them on her behalf. Moreover, as her attorney, James Renne had a duty to communicate the subject matter of these collection efforts to Ms. Lowe. As such, the court cannot conclude, as a matter of law, that the calls to her attorney and other family members and the voice messages retrieved by her attorney did not incrementally add to Ms. Lowe's "burden." As such, she has demonstrated a genuine issue of material fact that she was "aggrieved" by these telephone calls.
3. Genuine Issue of Fact as to Content of the Conversations
SRC and Mr. Cash argue that for many of the alleged KCPA violations Ms. Lowe has either no evidence or only inadmissible evidence[17] establishing the content of the conversations during the collection calls.
First, as to the claims asserted in paragraphs 7a(2)all-18, 20-24, 27-29, 31-35, 64-68, 71-81, and 97 of the PTO, SRC contends that Ms. Lowe has no evidence to support the content of those communications. In support of that argument, SRC notes that Ms. Lowe has not identified any witness who can testify to the content of the claimed conversations and that she does not recall the substance of those calls. Thus, SRC argues that the substance of the allegedly unlawful collection efforts are founded upon bald assertions that are not supported by any evidence. In response, Ms. Lowe cites to sections of her deposition testimony where she recalls that the debt collectors made various threats to pursue legal action and also threatened to take away her home. Ms. Lowe also notes that Mark Renne listened in on two debt collection calls wherein Mr. Cash called her a thief and a low-life, threatened to come to her home, and threatened to take away her home. Finally, SRC's conversations with Ms. Lowe's family members and the voice messages tend to corroborate Ms. Lowe's recollection of the subject matter and tactics employed by SRC and Mr. Ray Cash. Taken as a whole, this evidence creates a genuine issue of material fact as to the subject matter of the conversations alleged in paragraphs 7a(2)all-18, 20-24, 27-29, 31-35, 64-68, 71-81, and 97 of the PTO. As such, the court denies summary judgment on this particular ground for relief.
*1230 4. Limitation on Damages under the KCPA
Defendants contend that Ms. Lowe is not entitled to multiple recoveries under the KCPA, based on the same wrongful act. Additionally, defendants argue that Ms. Lowe has overstated the amount of permissible statutory damages and that the damage enhancement (available for KCPA violations against the elderly or disabled) does not apply in this action.
a. Multiple Claims Based upon a Single Utterance
SRC contends that a single act or practice cannot constitute multiple violations of the KCPA. Plaintiff does not dispute this argument and informs the court that she is not attempting to claim multiple recoveries based upon a single utterance. To the extent that Ms. Lowe does seek multiple violations based on a single utterance made during the course of a collection call, summary judgment is granted as to the duplicitous claims.[18]
b. Limitation on the Amount of Statutory Damages
Ms. Lowe claims she is entitled to $20,000 for each violation of the KCPA: $10,000 for each violation pursuant to K.S.A. з 50-636 and an additional $10,000 enhancement for each violation pursuant to K.S.A. з 50-677 because the violation was committed against an elder or disabled person. Defendants believe that Ms. Lowe is entitled to only $5,000 per violation, which was the statutory penalty in place at the time they allegedly committed the wrongful acts. SRC and the other defendants also argue that the enhancement does not apply because there is no evidence that they knew or should have known plaintiff was elderly or that she was disabled when it contacted her.
As to the statutory penalty, Ms. Lowe admits that the Legislature increased the civil penalty from $5,000 to $10,000 after defendants completed their alleged wrongful acts and "acknowledges that defendant is correct on this issue." Thus, the court grants summary judgment to the extent that Ms. Lowe seeks civil penalties under K.S.A. з 50-636 in excess of $5,000 per each violation of the KCPA. See, e.g., State ex rel. Stephan v. Commemorative Serv. Corp., 16 Kan.App.2d 389, 823 P.2d 831, 839 (1991)(finding that "[o]ur system of justice does not permit the imposition of ex post facto penalties for actions committed prior to the creation of those penalties").
As to the enhancement, which Ms. Lowe apparently seeks based upon her elderly status, the court finds that summary judgment is not proper at this stage of the proceedings. Kansas law provides that "[i]f any person is found to have violated any provision of the Kansas consumer protection act, and such violation *1231 is committed against elder or disabled persons, in addition to any civil penalty otherwise provided by law, the court may impose an additional civil penalty not to exceed $10,000 for each such violation." K.S.A. з 50-677. In determining whether to impose this enhancement the court is required to consider a number of factors including "whether the defendant knew or should have known that the defendant's conduct was directed to an elder or disabled person." K.S.A. з 50-678(b). However, a defendant's knowledge of the plaintiffs status is not a necessary precondition for imposing the penalty, but instead, it is merely one of several factors the court must consider before imposing the enhanced civil penalty. In any event, the court cannot say as a matter of law that Ms. Lowe would not be entitled to the enhanced penalty, should she ultimately prevail on one of her KCPA claims. As such, the court denies summary judgment on this issue.
In short, the court finds that Ms. Lowe has created a genuine issue of material fact as to the identity of the callers, except for the collection calls Ms. Lowe allegedly received while her caretaker, Ms. Hernandez, listened on the other line. As to those calls, summary judgment is granted because Ms. Lowe has failed to offer evidence from which it could be established that defendants placed those calls. Additionally, the court denies defendants' motion for summary judgment as to all collection calls and conversations to which Ms. Lowe was not a party (calls to family members and her attorney when Ms. Lowe herself was not on the line) and voice messages she did not retrieve because she has demonstrated a genuine issue of material fact as to whether she was "aggrieved" by such communications. The court further finds that Ms. Lowe has created a genuine issue of material fact as to the subject matter and substantive content of the collection calls as well as the tactics employed by defendants in attempting to collect the alleged debt from her. Finally, the court finds that while Ms. Lowe cannot recover multiple penalties for a single utterance under the KCPA, she may recover statutory damages, which are limited to $5,000 per violation (the penalty in place at the time of the alleged wrongdoing), for each separate violation of the Act. Moreover, the court does not find, at this stage of the proceedings, that Ms. Lowe is legally barred from recovering a statutory enhancement based upon her age and/or disability under K.S.A. з 50-677, should she ultimately prevail on one of her KCPA claims.
B. Claims Asserted Against Defendant U.S. Bank
Ms. Lowe also asserts KCPA claims against U.S. Bank under a theory of vicarious liability as well as claims directly against U.S. Bank. Ms. Lowe has failed to create a genuine issue of material fact as to either one of these theories.
1. Vicarious Liability of U.S. Bank for the Acts of SRC and Mr. Cash
"As a general rule, when a person (a contractee) lets out work to another and reserves no control over the work or workmen, the relation of contractee and independent contractor exists, and not that of master and servant, and the contractee is not liable for the negligence or improper execution of the work by the independent contractor." Falls v. Scott, 249 Kan. 54, 815 P.2d 1104, 1109 (1991) (citing Balagna v. Shawnee County, 233 Kan. 1068, 668 P.2d 157 (1983)). In Falls, the Kansas Supreme Court defined an independent contractor relationship and set forth the general test for distinguishing that relationship from an employer-employee. *1232 An independent contractor is defined as one who, in exercising an independent employment, contracts to do certain work according to his own methods, without being subject to the control of his employer, except as to the results or product of his work. The primary test used by the courts in determining whether the employer-employee relationship exists is whether the employer has the right of control and supervision over the work of the alleged employee, and the right to direct the manner in which the work is to be performed, as well as the result which is to be accomplished. It is not the actual interference or exercise of the control by the employer, but the existence of the right or authority to interfere or control, which renders one a servant rather than an independent contractor.
Id. at 1112 (citing Wallis v. Sec'y of Kan. Dept. of Human Res., 236 Kan. 97, 689 P.2d 787 (1984)). "Although the right of control test is the most important single consideration in determining the relationship, it is not exclusiveтАФother relevant factors are also to be considered." McDonnell v. Music Stand, Inc., 20 Kan. App.2d 287, 886 P.2d 895, 899 (1994) (citing Jones v. City of Dodge City, 194 Kan. 777, 402 P.2d 108 (1965)). In addition to this general rule, the Restatement (Second) of Agency з 220(2) (1957) sets out several relevant factors to consider when deciding whether one is an employee or an independent contractor, including:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
The Kansas Supreme Court has recognized that these factors are helpful in determining whether the court should consider an entity to be an employee for purposes of imputing fault. Brillhart v. Scheier, 243 Kan. 591, 758 P.2d 219, 223 (1988). Generally, the question whether an entity is an agent or an independent contractor is a question of fact for the jury, but where "the facts are undisputed or the evidence is susceptible of only a single conclusion, it is a question of law for the court whether one is an employee or an independent contractor." Falls, 815 P.2d at 1112. Moreover, in this case, SRC and U.S. Bank's relationship was governed by an unambiguous written contract and "the interpretation of that agreement is properly a matter of law." Knorp v. Albert, 29 Kan.App.2d 509, 28 P.3d 1024, 1027 (2001).
After considering these factors, the court finds that the evidence is susceptible to only one conclusion: that SRC was an independent contractor and not an employee of U.S. Bank. First, while the agreement permits U.S. Bank to review SRC's collection efforts, it does not authorize U.S. Bank to exercise any control over the manner in which SRC attempts to *1233 collect the debts. Second, SRC's business is dedicated to the collection of debt and U.S. Bank employed SRC for those distinct services. Third, U.S. Bank did not provide any office supplies or equipment to SRC under the terms of the Agreement, did not share a computer system with SRC, did not assist SRC in hiring employees or monitoring their work performance, and did not train or test SRC employees. Fourth, under the agreement, SRC was paid by the job, i.e., a percentage of each account collected, instead of by the hour. Fifth, the parties believed they were creating an independent contractor relationship, as evidenced by the unambiguous language in the agreement that SRC was to "perform all collection services under this Agreement as an independent contractor, and nothing contained herein shall be deemed to create any association, partnership, join[t] venture or relationship of employer and employee or principal and agent between [SRC] and [U.S. Bank]." The court recognizes that either party could terminate the contract upon written notice and that U.S. Bank had great latitude to review SRC collection activity, but these facts do not suggest that U.S. Bank retained the type of control over SRC necessary to establish an agency relationship[19] or that could overcome the unambiguous intent of the contracting parties. McDonnell, 886 P.2d at 899 (finding collection agency was independent contractor, despite language in contract using the term "agent," because creditor did not have right to control how the contractor would collect, contractor was paid a commission on accounts, and power to terminate was equally conferred on both parties).[20]
Ms. Lowe, however, also argues that the general rule of non-liability does not apply because U.S. Bank had nondelegable statutory duties under state and federal law. The Restatement of Torts recognizes that "[o]ne who by statute or by administrative regulation is under a duty to provide specified safeguards or precautions for the safety of others is subject to liability to the others for whose protection the duty is imposed for harm caused by the failure of a contractor employed by him to provide such safeguards or precautions." Restatement (Second) of Torts з 424 (1965). Ms. Lowe suggests that the duties imposed upon creditors and debt collectors under the Kansas Consumer Protection Act, the Fair Debt Collection Practices Act and the Fair Credit Reporting Act are sufficiently analogous to "safeguards or precautions for the safety of others" to fall within this exception to the rule of non-liability for the acts of independent contractors. In support of its position, Ms. Lowe relies on Clark v. Assoc. Commercial Corp., 877 F.Supp. 1439 (D.Kan.1994). In Clark, the court found that defendant had a statutory obligation *1234 to take precautions against a breach of the peace during repossession. Thus, even though defendant hired an independent contractor to repossess the property, the duty to take precautions against a breach of the peace remained with the defendant. Id. at 1447. That duty remained with the defendant because under Tennessee law, which governed the question before the court, it is non-delegable, and thus, "a secured party is vicariously liable for wrongful acts of the repossessor even if the repossessor is an independent contractor." McCall v. Owens, 820 S.W.2d 748, 751-52 (Tenn.Ct.App.1991).
Not all statutes, however, impose affirmative obligations that constitute non-delegable duties. While the Kansas Consumer Protection Act prohibits deceptive and unconscionable acts, that obligation is imposed on all suppliers, not just creditors similarly situated to U.S. Bank. Ms. Lowe fails to identify any affirmative, non-delegable duty under the KCPA. Likewise, the Fair Debt Collection Practices Act ("FDCPA") does not impose non-delegable duties upon U.S. Bank. Congress enacted the FDCPA "to eliminate abusive debt collection practices by debt collectors," 15 U.S.C. з 1692(e), and its provisions apply almost exclusively to debt collectors, which the statute defines as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. з 1692a(6). Thus, actual creditors, such as U.S. Bank, are not generally subject to the Act. McGrady v. Nissan Motor Acceptance Corp., 40 F.Supp.2d 1323, 1335 (M.D.Ala.1998). Finally, Ms. Lowe fails to identify any specific non-delegable duties imposed upon U.S. Bank under the FCRA. The FCRA prohibits all individuals, not just creditors, from misusing credit information, and as such, does not specifically impose non-delegable duties on creditors. See, e.g., Del Amora v. Metro Ford Sales and Serv., Inc., 206 F.Supp.2d 947, 953 (N.D.IU.2002) (creditor did not violate nondelegable duty under FCRA when employee violated obligation to refrain from using or obtaining credit reports for improper purposes because protection applied to "all persons").[21]
Because U.S. Bank is not vicariously liable for the acts of its independent contractor, SRC, or SRC's employee, Mr. Cash, the court grants U.S. Bank's motion for summary judgment on this issue. Therefore, Ms. Lowe's KCPA, invasion of privacy, outrage and negligent hiring, supervision and retention claims,[22] to the extent Ms. Lowe bases them on a theory of vicariously liability, are dismissed as to U.S. Bank.
2. KCPA Claims Asserted Directly Against U.S. Bank
Ms. Lowe argues that U.S. Bank (Mercantile at the time) directly violated the KCPA by misrepresenting to SRC and Collins Financial Services[23] that the Mercantile *1235 credit card debts were constituted valid and collectible debt. U.S. Bank argues that summary judgment is appropriate because, among other arguments, Ms. Lowe "has not alleged that Mercantile or its successors made any misrepresentation to her, or withheld any information from her." Indeed, in her first theory of recovery in the pretrial order, her KCPA claims appear to be based upon misrepresentations made from U.S. Bank to SRC and Collins Financial Services regarding the validity of the accounts. The question is whether these misrepresentations, which were not made directly to Ms. Lowe, are actionable under the KCPA.
As noted above, the KCPA provides that "[n]o supplier shall engage in any deceptive act or practice in connection with a consumer transaction." K.S.A з 50-626(a) (emphasis added). A consumer transaction "means a sale, lease, assignment or other disposition for value of property or services within this state" (except insurance contracts regulated under state law) to a consumer; or a solicitation by a supplier with respect to any of these dispositions. K.S.A. з 50-624(c) (emphasis added). A consumer "means an individual, husband and wife, sole proprietor, or family partnership who seeks or acquires property or services for personal, family, household, business or agricultural purposes." K.S.A. з 50-624(b).
To the extent Ms. Lowe's claims are based on U.S. Bank's alleged misrepresentations to SRC and/or Collins Financial Services, those statements were not made in connection with a "consumer transaction." Instead, those alleged misrepresentations were made in connection with a non-consumer transaction between U.S. Bank and SRC and U.S. Bank and Collins Financial Services, whereby U.S. Bank sold or disposed for value the Mercantile accounts to parties that were not consumers, as that term is defined under the Act. In Limestone Farms, Inc. v. Deere & Co., 29 Kan.App.2d 609, 29 P.3d 457 (2001), the Kansas Court of Appeals found that a supplier's misrepresentations made in connection with such non-consumer transactions are not actionable under the KCPA. In Limestone Farms, Inc., Tim Beim farmed on 2,000 acres of land leased from Limestone Farms on a cash rent basis. Id, at 459. Mr. Beim wanted to plant corn for the 1995 growing season, which needed to be in the ground no later than early May of that year. Id. To accomplish this task, Beim needed to purchase a planter, but because he had not established his own fanning company at the time, he approached his landlord, Limestone, to purchase the planter. Limestone agreed and Mr. Beim approached Smith County Implement, Inc. d/b/a/ Phillips County Implement (PCI) to select a planter. Id. After negotiating a purchase price, Mr. Beim selected a John Deere planter he thought was no more than a year old. The purchase order "listed Limestone Farms as the buyer and the date of purchase was May 3, 1995." Id. Limestone Farm's attorney-in-fact signed the purchase agreement and paid the purchase price with a check drawn on Limestone Farms' account. Id. Mr. Beim's farm company, Interior Farms, L.L.C., was not formed until July of 1995. Id. In July of 1995, Interior Farms paid Limestone Farms for the planter. Id. Once Mr. Beim took possession of the planter purchased from Limestone Farms, he realized that it did not *1236 operate properly. As a result of the defect, Mr. Beim was unable to plant a full crop and was later unable to plant his milo crop for that year. Id. At trial, plaintiffs (Limestone, Tim Beim and Interior Farms) alleged numerous violations of the KCPA and of the Uniform Commercial Code. The trial court granted defendants' summary judgment motion on all counts and plaintiffs Tim Beim and Interior Farms, L.L.C., appealed. In affirming the grant of summary judgment on the KCPA claims, the court explained:
As used in the KCPA, a consumer is an individual or sole proprietor who seeks or acquires property for personal, business, or agricultural purposes. K.S.A. 50-624(b). A consumer transaction includes a sale of property within the state to a consumer. K.S.A. 50-624(c). K.S.A. 50-626 prohibits a supplier from engaging in any deceptive act or practice in connection with a consumer transaction, and K.S.A. 50-627 prohibits a supplier from engaging in an unconscionable act or practice in connection with a consumer transaction. In the present case, it is undisputed Beim never personally bought nor actually acquired the planter. Thus, Beim is not a consumer; therefore, defendants were not involved in a consumer transaction with Beim, and Beim cannot maintain an action based on K.S.A. 50-626 or K.S.A. 50-627. The trial court did not err in granting defendants' motion for summary judgment on this issue.
Id. at 461. As in Limestone Farms, Inc., Ms. Lowe never purchased or acquired a property interest in the Mercantile accounts. Instead, only SRC and Collins Financial Services acquired such interests in their transactions with U.S. Bank. SRC and Collins Financial Services were corporate entities and not "consumers" (as that term is defined under the KCPA) in those transactions. Thus, any misrepresentation that occurred between U.S. Bank and SRC or Collins Financial Services was not made in connection with a consumer transaction and is not actionable under the KCPA. To the extent Ms. Lowe's claims are based on these transactions, they must necessarily fail. For this reason, the court grants summary judgment against Ms. Lowe's KCPA claims asserted directly against U.S. Bank.
In short, the court dismisses the KCPA claims Ms. Lowe asserts against U.S. Bank under a theory of vicarious liability because SRC and its agents were independent contractors and not employees. The court dismisses the claims asserted directly against U.S. Bank because the alleged misrepresentations were not made in connection with a consumer transaction.
II. Invasion of Privacy by Means of Intrusion Upon Seclusion
In Ms. Lowe's second theory of recovery in the PTO, she alleges that the acts of SRC, Mr. Cash and U.S. Bank (vicariously) establish a claim of invasion of privacy by means of intrusion upon seclusion. In support of this claim, Ms. Lowe relies on the same facts supporting the alleged violations of the KCPA.
"Generally, invasion of privacy is actionable where there is: (1) unreasonable intrusion upon the seclusion of another; (2) appropriation of another's name or likeness; (3) unreasonable publicity given to another's private life; or (4) publicity that unreasonably places another in a false light before the public." Finlay v. Finlay, 18 Kan.App.2d 479, 856 P.2d 183, 189 (1993) (citing Restatement (Second) of Torts з 652A (1976)). As to privacy claims based upon a defendant's intrusion upon seclusion, a defendant is liable if he or she intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another and the intrusion would be highly offensive to a reasonable person. Moore *1237 v. R.Z. Sims Chevrolet-Subaru, Inc., 241 Kan. 542, 738 P.2d 852, 856 (1987) (quoting Restatement (Second) of Torts з 652B (1976)). To recover under this particular invasion of privacy theory, however, a plaintiff must establish the existence of two conditions: "First, something in the nature of an intentional interference in the solitude or seclusion of a person's physical being, or prying into his private affairs or concerns, and second, that the intrusion would be highly offensive to a reasonable person." Id. at 857.
A. Liability as to SRC and Mr. Cash
The court must address whether a reasonable juror could find that defendants' collection efforts constitute an intentional interference in the solitude or seclusion of Ms. Lowe's physical being or prying into her private affairs or concerns and whether such an intrusion would be highly offensive to a reasonable person. The Kansas Supreme Court has explained that an actionable invasion:
[M]ay be by physical intrusion into a place in which the plaintiff has secluded himself, as when the defendant forces his way into the plaintiffs room in a hotel or insists over the plaintiffs objection in entering his home. It may also be by the use of the defendant's senses, with or without mechanical aids, to oversee or overhear the plaintiffs private affairs, as by looking into his upstairs windows with binoculars or tapping his telephone wires. It may be by some other form of investigation or examination into his private concerns, as by opening his private and personal mail, searching his safe or his wallet, examining his private bank account, or compelling him by a forged court order to permit an inspection of his personal documents. The intrusion itself makes the defendant subject to liability, even though there is no publication or other use of any kind of the photograph or information outlined.
Id. at 857 (quoting Restatement (Second) of Torts, з 652B cmt b). However, Ms. Lowe's ability to demonstrate a highly offensive intrusion is made more difficult because she shares a creditor/debtor relationship with the defendants. In Dawson, the Kansas Supreme Court explained:
In this situation it must be recognized the right to be left alone is qualified by the rights of others. When one accepts credit, the debtor impliedly consents for the creditor to take reasonable steps to pursue payment even though it may result in actual, though not actionable, invasion of privacy. In the debtor-creditor situation the right of a debtor to privacy is subject to the right of a creditor to take reasonable steps to collect the debt.
529 P.2d at 110.
Kansas courts have seldom addressed privacy claims in the context of collection efforts and therefore the contours of this tort remain somewhat vague. While examining the debtor's interest in his or her privacy compared with the creditor's right to pursue payment, the Kansas Supreme Court explained that "`a creditor has a right to take reasonable action to pursue his debtor and persuade payment, although the steps taken may result to a certain degree in the invasion of the debtor's right of privacy,' but... the debtor has a cause of action for injurious conduct on the part of the creditor which exceeds the bounds of reasonableness." Dawson, 529 P.2d at 110-11. (quoting Housh v. Peth, 99 Ohio App. 485, 135 N.E.2d 440, 449 (.1955)). The issue before this court is whether a reasonable juror could find that SRC and Mr. Cash's contacts exceed the bounds of reasonableness. SRC argues that its contacts were not unreasonable, as a matter of law, because SRC never actually *1238 contacted Ms. Lowe more than twice in a day and never contacted her before 8:30 a.m. or after 8:45 p.m.[24] Moreover, SRC notes that it never attempted to contact Ms. Lowe more than three times in a single day. Likewise, Mr. Cash appears to have attempted to reach Ms. Lowe less than 10 times over a three month period and only spoke to her on two occasions and Mr. Cash attempted to contact Ms. Lowe on numerous occasions. SRC also sent Ms. Lowe collection letters on four separate occasions during this same time period. The defendats made these contacts despite Ms. Lowe and other family member's continued attempts to dispute the validity of the debt. Moreover, Ms. Lowe, her family members, and her attorney grandson requested that SRC and Mr. Cash stop calling her.
The court does not belive that these contacts do not, as a matter of law, exceed the bounds of reasonableness. Based on the frequency of the contacts, the continued attempts to dispute the debt, and the requests that SRC and Mr. Cash cease their collection efforts, the court believes summary judgment would be improper. For example, in Bauer v. Ford Motor Credit Co., 149 F.Supp.2d 1106, a District Judge in Minnesota refused to grant summary judgment on an intrusion upon seclusion claim based upon defendatns' collection efforts.[25] There, the defendants left four messages on Plaintiff's answering machine, made telephone contact with four neighbors or relatives and one employer, and instigated one repossession attempt over a five-month span. Id. at 1109. Moreover, the plaintiffs advised Ford Motor Credit Company that the debt was erroneous and to correct its records, and when it continued to call and send letters, plaintiffs enlisted the help of the local sheriff, the postmaster and an attorney, all of whom attempted to set the defendants straight. Id at 1111. In denying summary judgment, Judge Doty recognized that "a reasonable person should expect that a company charged with collecting on a delinquent account would display a certain degree of persistence when the person on the other end of the telephone denies responsibility for a debt....," but that defendants received multiple and highly reliable confirmations of the inaccuracy ofits records, the court must agree that a repossession attempt at plaintiffs' home, as `highly offensive' conduct." Id.; see also Joseph v. J.J. Mac Intyre companies, L.L.C., 238 F. Supp.2d 1158 (N.D. Cal.2002) (finding that material issues of fact existed as to whether debtor's privacy was invaded when, over 19-month period, debt collection agency made nearly 200 calls to debt *1239 or, who was a physically disabled senior citizen, and, on some days, made multiple calls after debtor requested that no further calls be made, that precluded summary judgment against debtor's claim for intrusion into seclusion under California law, which like the cause of action in Kansas, is founded on Restatement (Second) of Torts з 652B).[26] The court believes that the facts, when viewed in the light most favorable to the plaintiff are sufficiently similar to those in Bauer to justify denial of SRC and Mr. Cash's motion for summary judgment on Ms. Lowe's claim of invasion of privacy by means of intrusion upon seclusion.
B. Liability as to U.S. Bank
Ms. Lowe alleges that defendant U.S. Bank is vicariously liable for the acts of SRC and Ray Cash, and, therefore, asserts the invasion of privacy claim against it under that theory. As previously explained, SRC was an independent contractor and therefore U.S. Bank is not liable for its acts. It is unclear whether Ms. Lowe attempts to assert this claim directly against U.S. Bank. If so, the only allegations Ms. Lowe asserts in the PTO against U.S. Bank directly are that it misrepresented the validity of the accounts to SRC in 1997 and to Collins Financial Services in August of 2000. As discussed below, Ms. Lowe did not assert claims against U.S. Bank until May of 2002 and any claim against U.S. Bank based on its October 1997 alleged misrepresentation is barred by the statute of limitations. Newcomb v. Ingle, 827 F.2d 675, 678 (10th Cir.1987) ("statute of limitations for an invasion of privacy claim in Kansas is Kan. Stat. Ann. з 60-513(a)(4) (1983) which is the two-year tort catch-all provision for actions involving `injury to the rights of another, not arising on contract, and not herein enumerated.'"). Moreover, as discussed below, Collins Financial Services never attempted to collect the Mercantile debt from Ms. Lowe. Thus, Ms. Lowe has failed to establish that she suffered any injury as a result of U.S. Bank's alleged misrepresentation to Collins Financial Services.
III. Intentional Infliction of Emotional Distress (Outrage)
In Ms. Lowe's third theory of recovery in the PTO, she alleges that the acts of SRC, Mr. Cash and U.S. Bank (vicariously) establish a claim of outrage. In support of this claim, Ms. Lowe relies on the same facts supporting the alleged violations of the KCPA and intrusion upon seclusion claims.
To establish a claim of intentional infliction of emotional distress under Kansas law (often referred to as the tort of outrage), Ms. Lowe must demonstrate four elements: "(1) [t]he conduct of the defendant must be intentional or in reckless disregard of the plaintiff; (2) the conduct must be extreme and outrageous; (3) there must be a causal connection between *1240 the defendant's conduct and the plaintiffs mental distress; and (4) the plaintiffs mental distress must be extreme and severe." Moore v. State Bank of Burden, 240 Kan. 382, 729 P.2d 1205, 1211 (1986) (citing Hoard v. Shawnee Mission Med. Ctr., 233 Kan. 267, 662 P.2d 1214 (1983)). More specifically, to survive a claim of summary judgment, "the court must, as a matter of law, first determine that reasonable fact finders might differ as to: (1) whether defendant's conduct may reasonably be regarded as so extreme and outrageous as to permit recovery, and (2) whether plaintiffs emotional distress was so extreme and severe that the law must intervene because no reasonable person should be expected to endure it." Nicol v. Auburn-Washburn USD 437, 231 F.Supp.2d 1107, 1118 (D.Kan.2002) (citing Moore, 729 P.2d at 1211).
A. Extreme and Outrageous Conduct
"`Conduct is not extreme and outrageous' unless it is regarded as being `beyond the bounds of decency and utterly intolerable in a civilized society.'" Nicol, 231 F.Supp.2d at 1118 (quoting Moore, 729 P.2d at 1211). Moreover, "[t]he threshold requirements for outrage causes of action are `necessarily high to separate meritorious claims from those based on trivialities or hyperbole.'" Id. (quoting Rupp v. Purolator Courier Corp., 790 F.Supp. 1069, 1073 (D.Kan.1992))." `The classic test is that liability may be found to exist when the recitation of the facts to an average citizen would arouse resentment against the actor and lead that citizen to spontaneously exclaim, Outrageous!'" Mai v. Williams Indus., Inc., 899 F.Supp. 536, 542 (D.Kan.1995) (quoting Fusaro v. First Family Mortgage Corp., Inc., 257 Kan. 794, 897 P.2d 123, 131 (1995)).
Defendants contend that the only admissible evidence Ms. Lowe has concerning this claim is Mark Renne's testimony suggesting that he listened in on some of the collection calls where Mr. Cash called Ms. Lowe a "low life" and a "thief and that such statements are not extreme and outrageous as a matter of law. Taiwo v. Vu, 249 Kan. 585, 822 P.2d 1024, 1029 (1991) (quoting Roberts v. Saylor, 230 Kan. 289, 637 P.2d 1175, 1179 (1981) (noting that liability does not arise from mere insults, indignities, threats, annoyances, petty expressions, or other trivialities)). In addition to this evidence, however, the court has found that Ms. Lowe has presented evidence from which a reasonable juror could conclude that SRC made other collection calls where collectors threatened to take away her home and pursue aggressive legal tactics if she did not pay the alleged debt. Moreover, Mark Renne heard Mr. Cash, in addition to his insulting comments, threaten to take Ms. Lowe's home away from her. The issue before the court is whether a rational juror could reasonably disagree as to whether these collection efforts were so extreme and outrageous that Ms. Lowe is entitled to relief. A comparison of two decisions addressing this very issue highlights the difficulty in this determination.
The Kansas Supreme Court first recognized the tort of outrage in Dawson v. Assoc. Fin. Serv. Co. of Kansas, Inc., 215 Kan. 814, 529 P.2d 104 (1974). In Dawson, the plaintiff sought relief for injuries she sustained as a result of the defendant's ("Associates") attempt to collect payment on a used car loan. Ms. Dawson purchased a used car with proceeds from a loan she obtained through Associates. Along with the loan, Ms. Dawson purchased a disability policy from the defendant's affiliated entity. After being diagnosed with multiple sclerosis, Ms. Dawson stopped making payments on the car loan. Associates placed a call to Ms. Dawson to inquire about the payments. Because she had purchased the disability policy before *1241 being diagnosed with MS, she informed Associates that she was no longer responsible for the debt and referred the matter to the disability policy carrier. Id. at 107. Soon thereafter, Ms. Dawson received a second call from Associates, during which the caller said that they were "going to repossess the car if the payments were not made". Id. Ms. Dawson again reiterated that she did not believe she was responsible for the payments because of the insurance policy. Id. A few day later, Ms. Dawson received another call from defendant and the caller asked "if she would be home that morning in order for them to come to her house and repossess the car." Id. Ms. Dawson indicated that they better have a court order if they wanted to repossess her car. Id. Mr. Byrd, an employee of Associates, "told her that a repossession would ruin her credit and make it very difficult to purchase another automobile; he was doing business with the appellant's parents which appellant understood to mean he could hurt my parents in their business; and if the car was repossessed the appellant and her parents would have to buy a bond." Id. Ms. Dawson told Mr. Byrd to contact her attorney. Id. Ms. Dawson received a fourth and final call from Mr. Byrd several days later, during which Ms. Dawson began to cry and told him not to call her again and to contact her attorney. Id. at 107-08. Ms. Dawson "testified that after receiving these phone calls her physical condition worsened; that is, she lost control of her bladder, could not walk without assistance and had difficulty with speech and holding objects such as dishes." Id. at 108. Ms. Dawson also proffered testimony from her mother that defendant contacted her (plaintiffs mother) and said they would ruin her daughter's credit. Id. at 113. When the tactics became more threatening, Ms. Dawson's mother proffered that she communicated the content of those telephone calls to her daughter (the plaintiff). Id. The trial court refused to admit the proffered testimony and eventually sustained defendant's motion for a directed verdict after finding that she had failed to produce sufficient evidence to sustain her burden of proof of any of the elements of the alleged tort; as a matter of law..." Id. at 109.
On appeal, the Dawson court recognized the tort of outrage, but acknowledged that "[w]hen one accepts credit, the debtor impliedly consents for the creditor to take reasonable steps to pursue payment even though it may result in actual, though not actionable, invasion of privacy." Id. at 110 (internal citations omitted). "The phrase `reasonable action' is of course not one for which exact legal definition can be prescribed...," and "[w]hat constitutes `reasonable' action must depend largely on the facts of the particular case." Id. at Ill. In reviewing the facts of the case (including the proffered testimony excluded at trial) in light of this balance, the court found that a directed verdict was inappropriate, explaining:
Certainly creditors must be permitted to pursue reasonable methods of collecting debts, and debtors are protected only from extreme and outrageous conduct. Nonetheless, methods of collecting debts which might be reasonable in some circumstances, might also be regarded as outrageous in others where it is known that the debtor is particularly susceptible to emotional distress due to a disease such as multiple sclerosis. Here the appellant made claim for payments on an insurance policy which Associates had sold her. While only the substance of the evidence excluded by the trial court was proffered, the proffer discloses Associates said to the appellant's mother `they were going to ruin (appellant's) credit; and that when the calls from Associates became more threatening the appellant's mother talked to the appellant about them. When the details *1242 of the evidence excluded are presented in open court, the appellant's evidence may be sufficiently strengthened to make a submissible case for the jury. Accordingly, the trial court erred in sustaining Associates' motion for a directed verdict.
Id. at 113.
In other situations, however, courts have granted summary judgment against a plaintiffs outrage claim despite the use of threatening and abusive collection efforts. In Mai v. Williams Indus., Inc., 899 F.Supp. 536 (D.Kan.1995), for example, the court examined whether it should grant summary judgment on plaintiffs outrage claim. Id. at 537. In Mai, plaintiff was the president of PKM Steel Service, Inc. ("PKM"), a steel fabricating company based in Salina, Kansas. Id. at 538. PKM was a subcontractor for the construction of the Denver International Airport. Id. John F. Beasley Construction Company ("Beasley") was "a steel erection company based in Dallas, Texas" and a whollyowned subsidiary of defendant Williams Industries, Inc. Id. Beasley was a subsubcontractor to PKM on the airport project. Id. "In the late spring and early summer of 1993, there was a bona fide dispute between PKM, Beasley, and M.A. Mortenson Company (`Mortenson'), a general contractor on the airport project, regarding payment and performance." Id. at 538. "As of early July 1993, Beasley was in default to its vendors, in default to its union on benefits due, unable to meet its labor payroll, and on the verge of defaulting on its subcontracts on the airport project." Id. "Mortenson had cut a joint payee check for $275,000.00 to PKM and Beasley" and defendants wanted plaintiff, Mr. Mai, to endorse the check so that Beasley could have the funds. Id. Mr. Mai refused and his outrage claim arose from defendants' efforts to change his mind. Id.
During the course of these collection efforts, defendant Frank E. Williams, Jr. left a voice mail on Mr. Mai's home machine wherein he stated that he "intended to be in Salina and take whatever steps necessary to get it done [referring to the endorsement of the Mortenson check] whether it is through the court or whatever personal intervention can happen... I don't want to be sitting in your apartment tomorrow night demanding to know why..." Id. at 540. Later that same evening Mr. Williams left another voice mail, wherein he stated:
I need to warn you that this whole thing is going to get exposed in the Salina Journal. I intend to call a press conference in Salina to tell the whole story. I intend to file an involuntary bankruptcy petition and I intend to file a lawsuit. I intend to put you out of business in total. I intend to take this to the National Erectors Association and advise every steel erector in the United States... You will not get another job erected anywhere. I don't think you understand the magnitude of this problem. I don't think you understand the trouble that you're in. You either sign this joint check... or all these doomsday things are going to come to pass... I will do whatever I can do to destroy PKM Steel and believe me I think you can tell by what Mortenson's agreed to do and the problems that I've created for them on the Dulles job that I'm serious, that I have a lot of people that listen to what I have to say. I think you had better start listening and you better start listening quick because if you don't, you're in a world of trouble. I hate to do this to you. I like you and I like your dad, but you will be destroyed in total. There will be no PKM Steel within the next 6 months unless you agree to sign this check and I hope that you understand this because this is not the way we *1243 like to do business. You need to talk to DuVal tonight. He intends to call you every hour on the hour until the night is over and continue that tomorrow and I intend to call you every hour on the hour beginning at 6:00 your time tomorrow morning. Thank you.
Id. at 540-41. The following day, Mr. Williams left another message stating:
[Y]ou better agree to sign that check today, you better call our boy in Denver and tell him because I intend to be on your doorstep Monday morning and I will continue to stay there until something happens. I hope you can get the police to arrest me for trespassing because that is exactly what I want because that will trigger the press conference I'm looking for with the Salina Journal. If DuVal and Bosworth don't have the guts to do it I will. I'm not fooling, I'm not kidding, it's going to happen. You had better straighten up, you better get your act together because I will be sitting there and you will not see the last of me. PKM Steel won't find an erector to put up another job for them forever. OK. Bye.
Id. at 541. Also, on July 8, 1993, Mr. Williams conveyed the following message via facsimilie: "Unless you return my phone call before the close of business today or agree to sign over the $275,000 check, I will be permanently sitting on your doorstep or camping out in your front yard. Will arrive Kansas City U.S. Air Flight 577 at 7:45 p.m. on Sunday, July 11. Will be at your house as soon as practicable thereafter." Id.
Despite the disturbing tactics employed in the collection efforts, the court held that the facts did not rise to the level of outrage under Kansas law. In reaching this decision, the court explained:
The court has considered the following factors in rendering this decision. There was not a great disparity in power between the parties to this matter. They were experienced high-echelon business people with considerable resources and ready access to legal counsel to protect their rights. We acknowledge plaintiffs claim that defendants considered plaintiff to be inexperienced in construction disputes and a weak negotiator who became emotional in certain previous discussions. But, any hunch or idea that hardball tactics might be successful against plaintiff is distinguishable in our opinion from knowledge that a person is susceptible to emotional distress by reason of some physical or mental condition or peculiarity. The law recognizes that some behavior may be considered outrageous when committed with such knowledge. The evidence in this case does not support a claim that defendants had such knowledge or acted with the intent to cause unreasonable emotional distress.
Id. at 542 (internal citations omitted).
One of the primary factors distinguishing Mai from Dawson was the plaintiffs susceptibility to emotional distress and the defendant's knowledge of such infirmity. Indeed, the Kansas Supreme Court has reasoned that "methods of collecting debts which might be reasonable in some circumstances, might also be regarded as outrageous in others where it is known that the debtor is particularly susceptible to emotional distress due to a disease such as multiple sclerosis." Dawson, 529 P.2d at 113. Likewise, the court in Mai recognized that hardball collection tactics that fall just short of "outrageous," may cross that threshold if a collector knows that a creditor has a particular physical or mental condition that makes him or her more susceptible to injury. The court certainly does not suggest that tactics such as threatening litigation when none is forthcoming, threatening criminal prosecution, or threatening to take away a debtor's *1244 home when it is exempt from collection efforts are not actionable under some theory (indeed, they are, here, under the KCPA), but such statements in the context of this case are not "so outrageous in character, and so extreme in degree, as to go beyond the bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized society." Neufeldt v. L.R. Foy Const. Co., Inc., 236 Kan. 664, 693 P.2d 1194, 1197 (1985) (stating the test for extreme and outrageous conduct). Of crucial importance is Ms. Lowe's physical and mental status, which has the potential to render such threats outrageous. The parties do not dispute that Ms. Lowe is an elderly women who has been diagnosed with Alzheimer's disease subsequent to the collection efforts that are the subject of this lawsuit and that she has recently been admitted to a 24-hour professional nursing home facility. The court, however, believes that the pivotal issue is whether or not defendants knew or had reason to know that Ms. Lowe was particularly vulnerable to emotional distress at the time of the events in question. If they had known or had reason to know of such vulnerability, then a reasonable juror could find that the defendants' alleged threats exceeded the bounds of decency in light of Ms. Lowe's mental condition. But, the evidence in that regard is absent.
SRC argues that none of its records indicate Ms. Lowe's age or that she suffered from any disability. Ms. Lowe, however, notes that SRC's own computer records prove that SRC knew she was susceptible. Ms. Lowe cites specifically to telephone record entries dated October 16, and 20, 1999; November 2, and 8, 1999; and December 8, 10, and 17, 1999. These entries establish clearly that her attorney was handling the collection matter, but they do not suggest and one cannot reasonably infer that an attorney was handling the matter because Ms. Lowe suffered from debilitating mental condition that made her susceptible to emotional distress. While one of the telephone entries suggests that Ms. Lowe's daughter told SRC that her mother was "too old to be bothered," this does not suggest any particular susceptibility to emotional distress. Thus, unlike Dawson, where the collection agency had full knowledge that the plaintiff was battling a disease that made her susceptible to emotional distress and particularly vulnerable to aggressive collection tactics, under the record for summary judgment purposes there is no evidence that either SRC or its agents had knowledge of Ms. Lowe's mental condition.
In short, the court does not believe that defendants' collection tactics rise to the level of extreme and outrageous conduct when Ms. Lowe has failed to offer evidence suggesting that the defendants knew she was particularly vulnerable. As such, the court grants summary judgment as to Ms. Lowe's outrage claim.[27]
B. Extreme and Severe Emotional Distress
"The second threshold requirement which must be met and which the court must first determine as present is that the plaintiffs emotional distress is sufficiently severe, genuine and extreme that no reasonable person should be expected to endure it." Taiwo v. Vu, 249 Kan. 585, 822 P.2d 1024, 1030 (1991). *1245 "Emotional distress passes under various names such as mental suffering, mental anguish, nervous shock, and includes all highly unpleasant mental reactions, such as fright, horror, grief, shame, embarrassment, anger, chagrin, disappointment, and worry... However, it is only when emotional distress is extreme that possible liability arises." Id. "The extreme distress required must be reasonable and justified under the circumstances, and there can be no liability where the plaintiff has appeared to suffer exaggerated and unreasonable emotional distress, unless it results from a peculiar susceptibility to such distress of which the actor had knowledge." Id. In short, the plaintiffs "emotional distress must in fact exist, and it must be severe." Id.
Here, Ms. Lowe has offered evidence that she suffered stress, loss of sleep, fright, and other distress that caused her to cry, shake and lose sleep. On the other hand, Ms. Lowe never consulted a doctor or a mental health professional concerning this distress and she did not mention the collection calls to her treating physician. Moreover, her distress was not manifested in as severe or extreme a fashion as the plaintiff in Dawson, who suffered physical symptoms such as loss of bladder control, inability to walk without assistance and difficulty with speech and her ability to grasp objects. 529 P.2d at 108. The court does not believe that Ms. Lowe has demonstrated a genuine issue of material fact that she suffered distress so severe and extreme that the law must intervene because no reasonable person should be expected to endure it.[28]
IV. Negligent Hiring, Retention and Supervision Claims
In Ms. Lowe's fourth, fifth and sixth theories of recovery in the PTO she asserts claims of negligent hiring, retention and supervision against SRC and U.S. Bank. The claims asserted against SRC are based on its hiring, retention and supervision of Ray Cash. The claims asserted against U.S. Bank are based on its contracting with SRC.
The tort of negligent supervision is separate and distinct from the torts of negligent hiring and negligent retention. Miller v. Dillard's, Inc., 166 F.Supp.2d 1326, 1331 (D.Kan.2001) (citing Anspach v. Tomkins Ind., Inc., 817 F.Supp. 1499, 1519-20 (D.Kan.1993)). Kansas has long recognized a cause of action for negligent hiring. Under Kansas Law, "[a]n employer may be held liable for injuries to a third party which are the result of the unfitness or incompetence of the employee." Prugue v. Monley, 29 Kan.App.2d 635, 28 P.3d 1046, 1049 (2001). "The employer is negligent in hiring or retaining such an employee when the employer knew or should have known of the employee's incompetence or unfitness." Id. at 1050 (citing Schmidt v. HTG, Inc., 265 Kan. 372, 961 P.2d 677 (1998)). Likewise, Kansas law recognizes a claim against an employer for its negligent supervision or retention of an employee who injures a non-employee third party. Beam v. Concord Hospitality, Inc., 873 F.Supp. 491, 503 (D.Kan.1994).
*1246 A. Claims Asserted against SRC[29]
Ms. Lowe alleges that SRC negligently hired Mr. Cash because it knew he had a history of untruthfulness and difficulty following management directions. SRC argues that Ms. Lowe has failed to create a genuine issue of material fact regarding whether SRC knew or should have known that its employee had a dangerous propensity and nevertheless negligently employed him.
On summary judgment, the only evidence Ms. Lowe offers in support of this claim is that Mr. Cash lied about his education in his resume.[30] The court finds that Ms. Lowe's evidence fails to state a claim against SRC on a negligent hiring theory for two reasons. First, Ms. Lowe has not offered any specific evidence suggesting that SRC knew Mr. Cash misrepresented his educational qualifications. Though SRC might have been able to identify the misrepresentation had it conducted a thorough background check, the Kansas Supreme Court has made clear that none of the Kansas negligent hiring decisions "should be unduly extended to find that a duty comes into existence whereby an employer must ascertain the detailed history of every employee, whether criminal or not, and terminate the employment of an individual who is performing acceptable services and is clearly not unfit or incompetent, but who does pose some degree of risk due to previous actions." Schmidt v. HTG, Inc., 265 Kan. 372, 961 P.2d 677, 695 (1998). Second, there is no causal link *1247 between this misrepresentation and Mr. Cash's alleged wrongful conduct. That is, just because he told SRC that he had a master's degree, when in fact he only had a master's certification, does not suggest that he posed an undue risk of engaging in unlawful collection tactics. Under Kansas law, the tort of negligent hiring necessitates such a causal connection. Schmidt, 961 P.2d at 680 ("[T]here must be some causal relationship between the dangerous propensity or quality of the employee, of which the employer has or should have knowledge, and the injuries suffered by the third person; the employer must, by virtue of knowledge of his employee's particular quality or propensity, have reason to believe that an undue risk of harm exists to others as a result of the continued employment of that employee; and the harm which results must be within the risk created by the known propensity for the employer to be liable"). For these two reasons, the court finds that Ms. Lowe has failed to demonstrate a genuine issue of material fact on her negligent hiring claim against SRC.
The court also finds that Ms. Lowe has failed to demonstrate a genuine issue as to the negligent retention and supervision claims. A reasonable juror could hold SRC liable for negligently retaining and/or failing to supervise Mr. Cash if it knew or should have known of his incompetence or unfitness. Prugue v. Monley, 29 Kan.App.2d 635, 28 P.3d 1046, 1050 (2001). SRC argues that it lacked such knowledge. As stated above, SRC had no reason to know that Mr. Cash allegedly was susceptible to commit unlawful collection practices when it hired him. Ms. Lowe, however, offers evidence that SRC realized his propensity to violate collection laws when its general counsel listened in on some of his collection calls on January 12, 2000; January 13, 2000; and February 25, 2000.[31] During these calls, SRC's general counsel heard Mr. Cash employ collection techniques that violated provisions of the Fair Debt Collection Practices Act. SRC monitored Mr. Cash's calls near the end of its efforts to collect debt from Ms. Lowe, which began on October 16, 1999 and ended on January 21, 2000. As such, this evidence does not suggest that SRC knew or should have known that Mr. Cash posed an undue risk of violating collection laws during the time it attempted to collect debt from Ms. Lowe. Moreover, SRC explains that after learning about Mr. Cash's failure to comply with collection laws, it disciplined him and when Mr. Cash again engaged in similar behavior, SRC terminated his employment. Even after viewing the evidence in the light most favorable to the plaintiff, there is simply no evidence that SRC knew or should have known that Mr. Cash posed a threat to debtors during the time he contacted Ms. Lowe. As such, the court grants summary judgment in favor of SRC on Ms. Lowe's negligent retention and supervision claims.
B. Claims asserted against U.S. Bank
Ms. Lowe also asserts negligent hiring, retention and supervision claims against U.S. Bank based on its hiring of SRC. Because SRC was an independent contractor to U.S. Bank, its duties are defined under the Restatement (Second) of Torts з 411, which provides that "[a]n employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a *1248 competent and careful contractor (a) to do work which will involve a risk of physical harm unless it is skillfully and carefully done, or (b) to perform any duty which the employer owes to third persons." The Kansas Court of Appeals adopted this Restatement rule in McDonnell v. Music Stand, Inc., 20 Kan.App.2d 287, 886 P.2d 895, 900 (1994). The court need not address the substantive merit of the claim, however, because Ms. Lowe failed to assert the negligence claims against U.S. Bank within the applicable statute of limitations.
Under Kansas law, the appropriate statute of limitations period for negligence claims is governed by K.S.A. з 60-513(a)(4), which provides that actions must be brought within two years. Univ. of Kansas Memorial Corp. v. Kansas Power and Light Co., 31 Kan.App.2d 177, 61 P.3d 741, 744 (2003). Subsection (b) provides that the cause of action "shall not be deemed to have accrued until the act giving rise to the cause of action first causes substantial injury, or, if the fact of injury is not reasonably ascertainable until some time after the initial act, then the period of limitation shall not commence until the fact of injury becomes reasonably ascertainable to the injured party." K.S.A. з 60-513(b). Kansas Courts have construed the phrase "substantial injury" to mean "actionable injury." Roe v. Diefendorf, 236 Kan. 218, 689 P.2d 855, Syl. 112 (1984). Moreover, "a cause of action accrues, so as to start the running of the statute of limitations, as soon as the right to maintain a legal action arises..." and "[t]he true test to determine when an action accrues is that point in time at which the plaintiff could first have filed and prosecuted his action to a successful conclusion." Kansas Public Employees Retirement Sys. v. Reimer & Roger Assoc., Inc., 262 Kan. 110, 936 P.2d 714, 719 (1997).
U.S. Bank notes that SRC's collection activities ceased on January 21, 2000[32] and the limitation period for Ms. Lowe's negligence claims, therefore, expired on January 21, 2002. Because Ms. Lowe did not assert any claims against U.S. Bank until she filed her motion to amend on May 20, 2002, her negligence claims are barred under Kansas law.
Additionally, even though Ms. Lowe originally filed suit against SRC, Ray Cash, and John and Jane Does 1-5, on April 2, 2001, her claims against U.S. Bank do not relate back to that date. Federal rules recognize that an amendment will relate back to an earlier filing when, among other factors:
the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
Fed.R.Civ.P. 15(c)(3). "Where a plaintiffs failure to name a defendant stems from lack of knowledge rather than a mistake in identification, the plain language of Rule 15(c)(3) does not permit relation back." In re Estate of Kout v. United States, 241 F.Supp.2d 1183 (D.Kan.2002) (citing Henry v. Fed. Deposit his. Corp., 168 F.R.D. 55, 59 (D.Kan.1996); Mitchell v. Unified *1249 Gov., 2000 WL 1920036 (D.Kan. Dec.21, 2000)). "[T]he Tenth Circuit has recognized...the replacement of a John Doe defendantwith a named party constitutes the substitution of a party rather than the correction of a misnomer." Wesley v. Don Stein Buick, Inc., 42 F.Supp.2d 1192, 1198 (D.Kan.1999) (citing Watson v. Unipress, Inc., 733 F.2d 1386, 1389 (10th Cir.1984)). "Moreover, this court has previously held that an amended complaint replacing an unnamed defendant with a named party does not relate back to the date on which the original complaint was filed because the naming of John Doe as a defendant does not constitute a mistake in identification." Id. (citing Henry, 168 F.R.D. at 60; Alexander v. Beech Aircraft Corp., 952 F.2d 1215, 1226-27 (10th Cir.1991)). As such, Ms. Lowe's substitution of U.S. Bank for John and Jane Does does not satisfy the relation back requirements set forth in Fed. Rule Civ. P. 15(c).
Ms. Lowe contends that the statute of limitations period should be tolled for a variety of reasons. First, she argues that she is disabled and the tolling provisions under K.S.A. з 60-515 apply. This tolling provision provides:
[I]f any person entitled to bring an action, other than for the recovery of real property or a penalty or a forfeiture, at the time the cause of action accrued or at any time during the period the statute of limitations is running, is ...an incapacitated person ... such person shall be entitled to bring such action within one year after the person's disability is removed, except that no such action shall be commenced by or on behalf of any person under the disability more than eight years after the time of the act giving rise to the cause of action.
K.S.A. з 60-515(a). The Legislature has provided that in construing the statutes of the state of Kansas:
`Incapacitated person' means an individual whose ability to receive and evaluate relevant information, or to effectively communicate decisions, or both, even with the use of assistive technologies or other supports, is impaired to the degree that the person lacks the capacity to manage the person's estate, or to meet essential needs for the person's physical health, safety or welfare, as defined in K.S.A.2002 Supp. 59-3051, and amendments thereto, whether or not a guardian or a conservator has been appointed for that person.
K.S.A. з 77-201 (Thirty First).
Ms. Lowe argues that Alzheimer's disease has rendered her incapacitated since 1997. The court finds this argument unpersuasive for two reasons. First, Ms. Lowe did not allege or include any claim of disability and/or incapacity in her complaint, nor did she suggest in the PTO that her disability was a defense to the statute of limitations. Under Kansas law, a party seeking to raise the tolling provisions provided by K.S.A. з 60-515 must assert the facts justifying its application in the complaint and, if not, an injured party stands in the position of a person possessing the attributes of a person with legal capacity. Seymour v. Lofgreen, 209 Kan. 72, 495 P.2d 969, 974 (1972) ("[w]here the injured party does not assert legal incapacity as a cause for delay in commencing an action in court, such injured party stands in the position of a person possessing the attributes of a person with legal capacity, when confronted with the two-year statute of limitations in a negligence action"); Gardner v. Toyota Motor Sales, U.S.A, Inc., 793 F.Supp. 287, 289-90 (D.Kan.1992) ("Under Kansas law, a party seeking to raise the tolling provisions provided by 60-515 must assert the facts justifying its application in his complaint"); Storts v. Hardee's Food Sys., Inc., 919 F.Supp. 1513, 1522 (D.Kan.1996) (same). Second, *1250 if Ms. Lowe was and continues to be legally incapacitated, she lacks capacity to sue. See, e.g., In Interest of Baby Boy Bryant, 9 Kan.App.2d 768, 689 P.2d 1203 (1984) (noting that Guardian is only person with capacity to make or communicate responsible decisions on behalf of incompetent or to maintain suit on behalf of ward); Brice Nash v. Brice Nash, 5 Kan.App.2d 332, 615 P.2d 836 (1980) (finding that judgment rendered, under provisions of probate code, that husband was incapacitated person and required guardian and conservator was conclusive and binding on trial court in divorce action; accordingly, trial court properly determined that husband lacked requisite capacity to file suit for divorce in his own name). Thus, if she is truly incapacitated and a legal guardian did not bring suit on her behalf, then the entire complaint should be dismissed.
Second, Ms. Lowe contends that even if the tolling provision in K.S.A. з 60-515 does not apply, the limitation period should be tolled because she was unable to ascertain the cause and nature of her injuries until 2002. Specifically, Ms. Lowe argues that she was unable to identify the culpable party because: (1) "Mercantile was undergoing repeated corporate name and address changes;" (2) "Mercantile was double cloaking [its] conduct by using surrogate collection entities;" and (3) "plaintiff was deceived into thinking her troubles with Mercantile were resolved in 1999 when Mercantile admitted that the debts were the result of fraud and instructed all the major Credit Reporting Agencies to remove all the derogatory information from plaintiffs credit histories." The undisputed evidence, however, clearly indicates that Ms. Lowe was receiving collection calls from SRC from October 16, 1999 through January 21, 2000 and that she complained of these calls to her attorney grandson, James Renne, throughout that time period. Moreover, James Renne admitted in his deposition testimony that he first learned SRC was attempting to collect on the two Mercantile credit card accounts on November 10, 1999. This testimony is corroborated by the transcript of a November 5, 1999 telephone conversation between James Renne and SRC employee, Cassandra Bailey:
Mr. Renne: What account is this supposedly for?
Ms. Bailey: You don't even know what you're talking about. I cannot disclose that information till it's okay with her.
Mr. Renne: She gives me permission to have it. I'm her power of attorney.
Ms. Bailey: Okay. This is her Mercantile Bank of Illinois account.
Mr. Renne: Mercantile?
Ms. Bailey: That's correct.
As such, Ms. Lowe, via her attorney grandson, knew or reasonably could have ascertained Mercantile's identity no later than November 10, 1999.[33] Therefore to *1251 the extent that Mercantile engaged in name changes, "cloaking," or deception about the status of Ms. Lowe's accounts, she knew or could have known that Mercantile was the responsible party as of November 10,1999.
Third, Ms. Lowe contends that the limitation period should be tolled because Mercantile concealed its identity.[34] The Kansas statute provides:
If when a cause of action accrues against a person he or she be out of the state, or has absconded or concealed himself or herself, the period limited for the commencement of the action shall not begin to run until such person comes into the state, or while he or she is so absconded or concealed, and if after the cause of action accrues he or she depart from the state, or abscond or conceal himself or herself, the time of the absence or concealment shall not be computed as any part of the period within which the action must be brought.
K.S.A. з 60-517. However, "[t]he mere inability of a plaintiff to locate a defendant where there has been no attempt by defendant to conceal himself is not sufficient to establish concealment within the meaning of the tolling statute." Hogue v. Johnson, 28 Kan.App.2d 334, 17 P.3d 364, 367 (1999).
Here, the evidence clearly establishes that Mercantile did not actively attempt to conceal its identity from Ms. Lowe, but instead, she simply failed to investigate Mercantile's corporate changes. As explained above, SRC informed Ms. Lowe that it was collecting Mercantile debt as early as November 11, 1999. Moreover, during the entire time SRC was attempting to collect Mercantile debt from Ms. Lowe (October, 1999 through January, 2000) the bank operated under the Mercantile name. Mercantile changed its name to Firstar Bank effective March 10, 2000, nearly two months after SRC's last efforts to collect the debt. Firstar merged with and into U.S. Bank effective August 9, 2001. The bank made no attempt to conceal its identity. The name changes and mergers were known to the public and Ms. Lowe would have discovered these changes upon conducting a reasonable investigation. In fact, Ms. Lowe has offered no evidence that she even attempted to identify the allegedly culpable party, i.e. the underlying creditor, at any time between January 21, 2000 and January 21, 2002. In light of this evidence, the limitation period is not subject to tolling under K.S.A. з 60-517.
Finally, Ms. Lowe contends that the acts of U.S. Bank constitute continuing harms or violations that extend the limitation period. Where applicable, the doctrine provides that when the last act of wrongful conduct is part of an ongoing pattern and occurs within the filing period, allegations concerning earlier acts are not time-barred. Renteria v. Donahue, 92 F.3d 1197, 1996 WL 446905, at *2 n. 4 (10th Cir. Aug.8, 1996). Here, Ms. Lowe has failed to cite any authority suggesting the doctrine applies generally to negligence *1252 claims. To the contrary, "[t]he doctrine is a narrow concept that must be limited to a distinct group of cases..." United Cities Gas Co. v. Brock Exploration Co., 984 F.Supp. 1379, 1389 (D.Kan. 1997). "[T]he continuing violation doctrine has been applied very infrequently outside the Title VII employment discrimination context..." and "[t]he limited areas in which courts have broadened the doctrine's application have involved explicit statutory language, unequivocal legislative intent, or contractual arrangements." Id. at 1388 (internal citations omitted). Ms. Lowe has failed to identify the presence of any of these factors.[35]
V. General Negligence Claim Against U.S. Bank
In addition to the negligent hiring, retention and supervision claims, Ms. Lowe asserts a claim of general negligence in her seventh theory of relief in the PTO. Ms. Lowe alleges that U.S. Bank owed Ms. Lowe a duty of care when it undertook its collection efforts, which it breached by continuing to seek collection on the accounts when it knew or reasonably should have known that the debt was invalid. U.S. Bank contends that the claim is barred by the statute of limitations period or is otherwise not actionable.
Essentially, Ms. Lowe contends that U.S. Bank was negligent in retaining SRC to collect debt it knew or reasonably should have known was invalid. To the extent that this claim relies on SRC's collection efforts, it is barred by the statute of limitations. As noted above, SRC's last collection effort occurred on January 21, 2000. Ms. Lowe did not amend her complaint to add U.S. Bank until June of 2002, several months past the limitation period set forth in K.S.A. з 60-513(a)(4).
Ms. Lowe, however, also alleges that U.S. Bank again breached its duty when it sold the accounts to Collins Financial Services on August 21, 2000. This claim is not barred by the applicable limitation period. Even so, Ms. Lowe has failed to demonstrate that there is a genuine issue of material fact as to this claim. The uncontroverted facts establish that while U.S. Bank (Firstar at the time) sold those accounts, it repurchased them when SRC notified U.S. Bank, on April 12, 2002, that Ms. Lowe had sued SRC for alleged improper collection practices. Moreover, U.S. Bank has offered uncontroverted evidence that Collins Financial Services did not make any collection efforts or have any correspondence with Ms. Lowe. She contends, however, that "Mercantile, having known or [knowing], and even admitting], that the credit card accounts in question were invalid, apparently sold those accounts to Collins Financial with full knowledge that Collins would most likely engage in unwarranted collection efforts with all its consequences..." Even if this evidence would establish a breach of U.S. Bank's alleged duty, it does not establish any injury proximately caused by such a breach. If Collins Financial Services did not engage in any collection efforts, Ms. Lowe suffered no injury. As such, Ms. Lowe has failed to establish a genuine issue of *1253 material fact based upon the sale of the Mercantile accounts to Collins Financial and summary judgment is granted on this claim. Davey v. Hedden, 260 Kan. 413, 920 P.2d 420, 429 (1996) (to maintain a cause of action in negligence, plaintiff must establish a duty, a breach of the duty, that injury resulted from the breach, and that the breach proximately caused the injury).
VI. Fair Credit Reporting Act Claims
Ms. Lowe argues, in her eighth theory of recovery in the Pretrial Order, that U.S. Bank violated provisions of the Fair Credit Reporting Act ("FCRA"). U.S. Bank argues that Ms. Lowe has failed to demonstrate a genuine issue of material fact as to any violation of the Act and alternatively that any such claim is barred by the statute of limitations.
A. Genuine Issue of Material Fact as to FCRA Claims
Congress enacted the FCRA "to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information...." 15 U.S.C. з 1681(b); see also Matthiesen v. Banc One Mortg. Corp., 173 F.3d 1242, 1245 (10th Cir.1999). In furtherance of this objective, the "FCRA places distinct obligations on three types of entities: (1) consumer reporting agencies; (2) users of consumer reports; and (3) furnishers of information to consumer reporting agencies". Aklagi v. Nationscredit Fin., 196 F.Supp.2d 1186, 1192 (D.Kan.2002) (citing Carney v. Experian Info. Solutions, Inc., 57 F.Supp.2d 496, 500 (W.D.Tenn.1999)).
Here, U.S. Bank is a furnisher of credit information "and, as such, its obligations are set forth in 15 U.S.C. з 16818-2." Id. Section 1681s-2 imposes two general sets of duties on providers of credit information. First, under з 1681s-2(a), U.S. Bank has a duty to provide accurate information to a credit reporting agency. Second, under 1681s-2(b), U.S. Bank has a duty, after receiving notice from a consumer reporting agency of a dispute regarding the completeness or accuracy of an account, to (1) conduct an investigation with respect to the disputed information;(2) review all relevant information provided by the consumer reporting agency; (3) report the results of the investigation to the consumer reporting agency; and (4) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and compile and maintain files on consumers on a nationwide basis. 15 U.S.C. зз 1681s-2(b)(1)(A)-(D). Congress, however, did not create a private right of action for violations of з 1681s-2(a). See 15 U.S.C. з 1681s-2(c) (providing that remedy provisions "do not apply to any failure to comply with subsection (a) of this section, except as provided in section 1681s(c)(1)(B) of this title"); 15 U.S.C. з 1681s-2(d) (providing that subsection (a) violations "shall be enforced exclusively under section 1681s of this title by the Federal agencies and officials and the State officials identified in that section"); Aklagi 196 F.Supp.2d at 1192 (recognizing that no private right of action exists for subsection (a) violations). Thus, Ms. Lowe's FCRA claim must necessarily be founded upon a violation of subsection (b).
Under 15 U.S.C. з 1681s-2(b), U.S. Bank is required to conduct an investigation "[a]fter receiving notice pursuant to section 1681i(a)(2) of this title of a dispute" regarding the accuracy of information it provided to a consumer reporting agency. з 1681s-2(b)(1) Aklagi 196 F.Supp.2d at 1196. Section 1681i(a)(2)(A) *1254 requires a consumer reporting agency, within five business days from receiving the consumer's dispute, to notify any person who provided any relevant item of information about the dispute (allegedly U.S. Bank in this case). Courts have consistently held that this duty is triggered "only after the furnisher [allegedly U.S. Bank in this case] receives notice of the dispute from a consumer reporting agency, not just the consumer." Aklagi, 196 F.Supp.2d at 1193 (citing Hasvold v. First USA Bank, 194 F.Supp.2d 1228, 1236 (D.Wyo.2002); Scott v. Amex/Centurion S&T, Nos. 3.-01-CV-1594-H et al., 2001 WL 1645362, at *4 (N.D.Tex. Dec.18, 2001); Fino v. Key Bank, No. Civ. A. 00-375E, 2001 WL 849700, at *5 (W.D.Pa. July 27, 2001); Jaramillo v. Experian Info. Solutions, Inc., 155 F.Supp.2d 356, 363 (E.D.Pa.2001); Yelder v. Credit Bureau of Montgomery, L.L.C., 131 F.Supp.2d 1275, 1289 (M.D.Ala.2001); Dornhecker v. Ameritech Corp., 99 F.Supp.2d 918, 928-29 (N.D.Ill.2000)). Here, U.S. Bank contends that it neither requested Ms. Lowe's credit reports nor received notice from any consumer reporting agency about a dispute concerning the Mercantile accounts. As such, U.S. Bank believes that the consumer reporting agencies never triggered its duty to investigate the validity of the Mercantile accounts. Ms. Lowe, however, has attached letters mailed by James Renne to four credit reporting agencies that dispute various accounts, including those with Mercantile Bank. These letters triggered the consumer reporting agencies' duty to notify Mercantile that Ms. Lowe had disputed the validity of the debt. 15 U.S.C. з 1681i(a)(2). While it is possible that none of the four consumer reporting agencies Ms. Lowe contacted complied with federal law or that they never actually received the letters, the credit reporting agencies notified Ms. Lowe, after conducting their investigations, that the Mercantile debts had been deleted from her credit report.[36] This evidence would provide circumstantial evidence that both these agencies actually received the dispute letters from Ms. Lowe and that they contacted Mercantile regarding the dispute. As such, the court finds that Ms. Lowe has demonstrated a genuine issue of material fact as to the existence of an FCRA violation.
B. Statute of Limitations
The FCRA includes a two-year limitation period. The relevant provision contemplates:
An action to enforce any liability created under this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within two years from the date on which the liability arises, except that where a defendant has materially and willfully misrepresented any information required under this subchapter to be disclosed to an individual and the information so misrepresented is material to the establishment of the defendant's liability to that individual under this subchapter, the action may be brought at any time within two years after discovery by the individual of the misrepresentation.
15 U.S.C. з 1681p. Here, liability arose when U.S. Bank allegedly failed to investigate the claims in September or October of 1999. Thus, the limitation period on Ms. Lowe's claims expired sometime in the fall *1255 of 2001. She did not move to amend her complaint to add U.S. Bank until May 20, 2002. Thus, her claim is time barred, unless the tolling provision contained in з 1681p applies.
It is important to note that Ms. Lowe's discovery rule and equitable tolling arguments do not apply to her FCRA claims. "Congress provided in the FCRA that the two-year statute of limitations runs from `the date on which the liability arises,' subject to a single exception for cases involving a defendant's willful misrepresentation of material information," and "[t]he most natural reading of з 1681p is that Congress implicitly excluded a general discovery rule by explicitly including a more limited one." TRW Inc. v. Andrews, 534 U.S. 19, 28, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001); see also Clark v. State Farm Fire & Cas. Ins. Co., 54 F.3d 669, 672 (10th Cir.1995) (finding that "since the Act sets out the limitation period with a specific discovery exception, a `general discovery exception' to the statute will not be applied because to do so would be contrary to the exception expressed in the statute"); Rylewicz v. Beaton Serv., Ltd., 888 F.2d 1175, 1181 (7th Cir.1989) (equitable tolling or discovery exception may not be read into the statute); Houghton v. Ins. Crime Prevention Inst., 795 F.2d 322, 325 (3d Cir.1986) (same). Therefore, only the express tolling provision contained in the FCRA can save Ms. Lowe's claim. As such, the court must determine whether U.S. Bank "materially and willfully misrepresented any information" required under the Act, and if so whether the information so misrepresented was "material to the establishment of the defendant's liability to that individual."
Ms. Lowe argues that when Mercantile deleted its accounts from her credit reports in late September of 1999, it misrepresented its belief that the accounts were invalid. That is, it communicated, via the credit reports, its belief that the accounts were invalid, when in fact, it actually believed that the credit card debt was legitimate. She further contends that she "relied on these misrepresentations by Mercantile in concluding that Mercantile was doing the right thing." The court is unsure whether Mercantile's acts constitute a misrepresentation (in the first place) and whether Mercantile actually communicated its representations to Ms. Lowe, thereby triggering the statutory tolling provision. Assuming that its conduct did in fact trigger the statutory tolling provision, however, Ms. Lowe could not have reasonably relied on Mercantile's representation after November 10, 1999. On that date, Ms. Lowe's attorney grandson James Renne, who also held her power of attorney, learned that Mercantile had hired SRC to collect on the Mercantile accounts. At that point, Ms. Lowe was on notice that it believed the debt was valid. Because Ms. Lowe did not file her claims against U.S. Bank until June of 2002, they are barred by the limitation period expressed in the FCRA. As such, the court grants summary judgment against Ms. Lowe's FCRA claim against U.S. Bank.
VII. Punitive Damages
Ms. Lowe seeks to recover punitive damages against SRC. SRC contends that she is not entitled to such damages unless SRC authorized or ratified the conduct of which Ms. Lowe complains.
The Kansas punitive damages statute provides that "[i]n no case shall exemplary or punitive damages be assessed... against... [a] principal or employer for the acts of an agent or employee unless the questioned conduct was authorized or ratified by a person expressly empowered to do so on behalf of the principal or employer." K.S.A. з 60-3702(d)(1). *1256 "Based upon the dictionary definitions, Kansas case law, and the law of other jurisdictions, [the Kansas Supreme Court has held] that authorization under the provisions of K.S.A.1992 Supp. 60-3701(d)(1) may be either express or implied and generally is accomplished before or during the employee's questioned conduct." Smith v. Printup, 254 Kan. 315, 866 P.2d 985, 1003 (1993). "It may be based on an express grant of authority or on a course of conduct indicating that the employee was empowered or given the right or authority to engage in the questioned conduct." Id. "Ratification under the provisions of 60-3701(d)(1) may be either express or implied and may be accomplished before, during, or after the employee's questioned conduct." Id. "It may be based on an express ratification or based on a course of conduct indicating the approval, sanctioning, or confirmation of the questioned conduct." Id.
SRC argues that Ms. Lowe failed to identify any person with the express authority to authorize and/or ratify the questioned conduct, and that SRC did not in fact authorize the conduct. SRC offers evidence in the form of testimony from SRC's Vice President of Quality Assurance, Debra Crotwell. After reviewing the allegations in the complaint, she concludes that if SRC employees "conducted themselves as [Ms. Lowe] alleges... then that conduct was not authorized and was contrary to Surpas' policies and practices." SRC also offers evidence that it trains its employees to comply with collection laws, monitors the callers for compliance with the law, and disciplines its collectors when they violate collection regulations. Ms. Lowe argues that this evidence does not warrant summary judgment and that the acts of Mr. Cash, who was in a managerial position at SRC, sufficiently demonstrates a genuine issue of material fact as to "authorization" or "ratification." Indeed, the Kansas Supreme Court, has held that "[a] corporation is liable for punitive damages for the tortious acts of a managerial agent acting within the scope of his employment." Flint Hills Rural Elec. Coop. Assoc. v. Fed. Rural Elec. Ins. Corp., 262 Kan. 512, 521, 941 P.2d 374 (1997); see also Lopresto v. ANR Pipeline Co., 1997 WL 557313, at *2 (D.Kan. Aug.27, 1997) (permitting plaintiff to amend the complaint to add punitive damage claim against defendant corporation based upon acts of employee manager because the Kansas Supreme Court recognizes that "[a] corporation is liable for punitive damages for the tortious acts of a managerial agent acting within the scope of his employment"). Moreover, "ratification and authorization are broad enough to encompass evidence that the corporate defendants knew or should have known about employee misconduct and evidence of corporate policies, procedures, or managerial behavior that a jury reasonably could infer implicitly authorized or ratified the questioned conduct". Smith, 866 P.2d at 1005 (emphasis added). The court is not prepared, at this stage of the proceedings, to conclude that Mr. Cash's managerial behavior fails to establish a genuine issue of material fact as to SRC's authorization and/or ratification. As such, SRC's motion to dismiss Ms. Lowe's claim for punitive damages is denied.
CONCLUSION
Based on the foregoing analysis, the court, in its March 25, 2003 order, granted in part and denied in part the motion for partial summary judgment by defendant Cash (Doc. 170) and the motion for summary judgment by defendant Surpas Resource Corporation (Doc. 172) as follows: First, the court denied these defendants' motions to dismiss plaintiffs Kansas Consumer *1257 Protection Act ("KCPA") claims, except for the claims based upon collection calls where plaintiffs caretaker, Ms. Hermandez, listened in on the other line (plaintiff asserts these claims in paragraphs 7a(2)a82-86 of the Final Pretrial Order ("PTO")). Second, the court denied these defendants' motions to dismiss plaintiffs invasion of privacy claim, based upon a theory of intrusion upon her seclusion. Third, the court granted these defendants' motions to dismiss plaintiffs outrage claim. Fourth, the court granted these defendants' motions to dismiss plaintiffs negligent hiring, supervision and retention claims. Finally, the court denied these defendants' motions to dismiss plaintiffs request for punitive damages.
The court further granted U.S. Bank's motion for summary judgment (Doc. 175) in its entirety. Specifically, the court granted this defendant's motion to dismiss plaintiffs KCPA claims asserted directly against U.S. Bank and those claims asserted under a theory of vicarious liability. The court granted this defendant's motion to dismiss plaintiffs negligence and tort claims as asserted in plaintiffs second through seventh theories of recovery in the PTO. Finally, the court granted this defendant's motion for summary judgment on plaintiffs federal Fair Credit Reporting Act claims.
NOTES
[1] Mercantile Bank retained its "Mercantile" name from 1995 through March 10, 2000, when it changed its name to "Firstar." Firstar changed its name to U.S. Bank in 2001. The court is referring to defendant U.S. Bank whenever it uses the names Mercantile or Firstar within this order.
[2] Indeed, Ms. Lowe offers evidence that the alleged fraud committed by her daughter and son-in-law was not limited to the credit card accounts at issue in this proceeding. Janet Woodall, Ms. Lowe's daughter, swore in an affidavit that Mr. Figiel defrauded Ms. Lowe out of her entire life's savings and stole her mother's identity to open multiple credit card accounts, incurring balances up to $50,000 for his own personal use. U.S. Bank argues that the court should strike this evidence because it is "inconsistent with her deposition testimony" and constitutes a sham affidavit under Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1016 (10th Cir.2002). The court, however, does not believe there is a true conflict in Ms. Woodall's testimony. In her deposition testimony, Ms. Woodall noted that Mr. And Mrs. Figiel tended to Ms. Lowe's personal business beginning in 1992, and that she could not say with certainty that the charges on the Mercantile accounts were not legitimately made to provide Ms. Lowe with supplies or household items. While this testimony may expose limitations as to Ms. Woodall's knowledge concerning the charges on the Mercantile accounts, it is not irreconcilably inconsistent with her claim that her mother was in fact a victim of fraud.
[3] Defendants also filed motions to disqualify James Renne from acting as trial counsel for Ms. Lowe (Docs. 198 and 199). The court considered his testimony for purposes of summary judgment and evaluated the consequences of such testimony separately in connection with the motions to disqualify, which the court granted in part at a hearing held on March 26, 2003.
[4] Defendants argue that Ms. Lowe did not properly authenticate the letter, which was offered as Exhibit 3 in her response and attached as Exhibit 4 to U.S. Bank's original motion for summary judgment. Under D. Kan. Rule 56.1(d) "[a]ll facts on which a motion or opposition is based shall be presented by affidavit, declaration under penalty of perjury, and/or relevant portions of pleadings, depositions, answers to interrogatories and responses to requests for admissions." "The Court will disregard a summary judgment exhibit which plaintiff has failed to properly authenticate." Stevens v. Deluxe Fin. Serv., Inc., 199 F.Supp.2d 1128, 1144 n. 44 (D.Kan.2002). However, Mr. Renne states in his affidavit that the exhibit constitutes a valid copy of the letter that he mailed on September 17, 1997, which sufficiently authenticates the documents for purposes of summary judgment. Id. (finding that a declaration that the letter is a true and accurate copy of letter mailed sufficiently authenticated document for purposes of summary judgment).
[5] These facts are based on statements contained in Ms. Woodall's affidavit. U.S. Bank argues that the court should strike these affidavit statements because Ms. Woodall testified in her deposition that she did not do anything after she heard about the alleged Mercantile debt, which contradicts her affidavit statements that she specifically disputed the validity of the debt. The court finds, however, that a reasonable juror could infer that Ms. Woodall both disputed the debt during the course of the 1997 telephone call and also failed to take immediate remedial steps thereafter. U.S. Bank further argues that the court should strike these affidavit statements because when asked to recall everything she could remember about her conversation with the Mercantile employee, Ms. Woodall did not mention that she disputed the validity of her mother's debt. The court believes that this failure could simply reflect a failure to recall that specific part of the telephone conversation. Her subsequent recall in the affidavit, while potentially going to the credibility of such statements, does not inherently contradict her prior testimony. See e.g., Greyhound Financial Corp. v. Willyard, 1989 WL 201094, at *52 (D.Utah Dec.26, 1989) (noting that there is nothing "inherently inconsistent" between a failure to recall at one point and a recollection refreshed at another point in time).
[6] SRC argues that Ms. Lowe failed to properly authenticate this and other letters contained in Exhibit 3. Some of these letters were signed by James Renne and others by Ms. Lowe. Mr. Renne has attested that these letters are accurate copies that were mailed to the recipients. Though Ms. Lowe did not attest to the accuracy of any of the copies, Mr. Renne's attestation is sufficient authentication because he had personal knowledge of the facts of the mailing of the letters and of their contents which put the recipient on notice.
[7] Mercantile disputes receipt of this letter, but Mr. Renne states in his affidavit that he mailed the letter and affidavit by first class mail, postage prepaid on August 25, 1999. Witt v. Roadway Exp., 136 F.3d 1424, 1430 (10th Cir.1998) ("A rebuttable presumption of receipt does arise on evidence that a properly addressed piece of mail is placed in the care of the postal service.")
[8] In her reply, Ms. Lowe cites the deposition testimony of James Renne wherein he states that based on all available information SRC made all the collection calls during this time period to controvert the facts alleged in ╢╢ 18 and 19 of SRC's statement of uncontroverted facts. In its reply, SRC generally alleges that Ms. Lowe failed to specifically controvert its statement of facts and/or failed to refer with particularity to admissible evidence in support of her purported controversion in ╢╢ 8-9, 13-20, 23-78, 80-88, and 90-101. SRC does not specifically challenge the admissibility of Mr. Renne's testimony and the court believes it specifically controverts SRC's facts suggesting that other agencies were calling Ms. Lowe at the time. Thus, viewing the evidence in the light most favorable to Ms. Lowe, the court assumes for purposes of this motion that SRC was the only agency attempting to collect from her during the relevant time period.
[9] Defendants challenge the validity of Mark Renne's identification of Mr. Cash, but the challenge goes to the credibility of his testimony. As such, the court must properly consider the evidence for purposes of this motion.
[10] SRC's argument could potentially raise two distinct issues: first, whether Ms. Lowe received collection calls on October 25, 29, and 30, 1999; and second, whether SRC was the entity that placed those calls. The thrust of SRC's argument, however, is not that Ms. Lowe did not receive collection calls on those dates, but instead whether SRC was the party to the allegedly improper collection calls. Thus, for purposes of summary judgment, the court will focus on the issue of identity. However, at trial, if Ms. Lowe seeks to recover statutory damages for each separate wrongful collection effort, she must establish both that SRC made the collection call and that it occurred on or about a specific date.
[11] As explained in supra note 10, this argument could potentially raise two distinct issues: whether Ms. Lowe received collection calls on a particular date and whether Mr. Cash placed those calls. The court again will focus on the identity issue.
[12] Surpas records indicate that there was no answer at the residence on two of the four attempts and that Mr. Cash left a message on CallNotesо on the other two attempted contacts.
[13] Mr. Cash, however, contends that Mark Renne's testimony regarding the content of those telephone calls makes it clear that they were not the same calls identified in paragraphs 7a(2)a1-2 of the PTO. Even if this is true, the evidence contradicts Mr. Cash's claim that he never spoke directly to Ms. Lowe.
[14] Mr. Cash also notes that the claims contained in paragraphs 7a(2)a 37-53 are based upon conversations that occurred between him and James Renne. Also, the claims asserted in paragraphs 7a(2)a 89-92, 94-96 are based on conversations between Mr. Cash and Mark Renne. Paragraph 95, however, alleges that an employee of Surpas violated the KCPA in a "conversation in which Dorothy Lowe and her grandson Mark were on the line. As such, this paragraph is not subject to defendant's causation argument.
[15] Similarly, K.S.A. з 50-636(a), the civil penalty provision referenced in this subsection, provides that "[t]he commission of any act or practice declared to be a violation of this act shall render the violator liable to the aggrieved consumer..." (Emphasis added).
[16] The KCPA does not suggest that a consumer must suffer a pecuniary loss to be aggrieved. Thus, whether or not Ms. Lowe compensated James Renne is not determinative of whether she was aggrieved by the acts of SRC and Mr. Cash.
[17] SRC also argues that James Renne is the only witness who can testify as to the substance of the communications alleged in ╢╢ 7a(2)a3, 4, 30 and 36 of the PTO, but that he has repeatedly invoked the attorney-client privilege as to other conversations with Ms. Lowe. According to SRC, Ms. Lowe cannot use her communications with James Renne as both a sword and a shield. The court considers this evidence for purposes of summary judgment, but has instructed counsel that they may re-depose James Renne regarding other conversations with Ms. Lowe.
[18] The court, however, does not necessarily agree with Surpas that "in the context of telephone calls, each call is an act or practice, not each word spoken in the call." The KCPA provides aggrieved victims with the right to recover damages for each separate violation of the act. Within one telephone conversation (just as in one contract, advertisement, brochure, etc.), it is conceivable that a supplier could engage in more than one of the eleven deceptive acts or practices that the Kansas Legislature has determined to be per se violations of the KCPA. K.S.A. з 50-626(b). In certain circumstances each misrepresentation could proximately cause separate and discrete injuries. It seems wholly inconsistent with the Legislature's express mandate to construe the Act broadly (to protect consumers from suppliers who commit deceptive and unconscionable practices) to reward a supplier (by limiting damages) that incorporates successfully all of its wrongful conduct in one discrete encounter. Necessarily, then, the determination of what actually constitutes a violation in any given case must be made on the specific circumstances in question. Here, that inquiry should be deferred to the time of trial.
[19] U.S. Bank's right to review collection efforts reflects its concern with the results of SRC's work, not to the method of collection, and such authority does not indicate the type of control that would create an agency relationship under Kansas law. See McDonnell, 886 P.2d at 899.
[20] In Griffin v. Sec. Pacific Auto. Fin. Serv. Corp., 995 F.Supp. 1266 (D.Kan.1998), the court reached the opposite conclusion. In Griffin, however, there was no evidence suggesting that the parties clearly intended that the collection agency would perform its services as an independent contractor. Here, the Collection Agency Agreement, clearly expresses such intent. Moreover, in Griffin, the court did not explain why McDonnell did not control the outcome. The court finds that the reasoning in McDonnell is more persuasive and more likely reflects the position that the Kansas Supreme Court would adopt. See Fransen v. Conoco, Inc., 64 F.3d 1481, 1492 n. 10 (10th Cir.1995) ("decisions of a state's intermediate appellate courts are some evidence of how the state supreme court would decide the issue")
[21] Moreover, Ms. Lowe did not plead that SRC violated the FCRA and the court only permitted her to amend her complaint to add the claim against U.S. Bank. Thus, to the extent SRC did violate some "non-delegable" duty under that Act, Ms. Lowe did not preserve that claim.
[22] The court understands that Ms. Lowe has asserted a separate negligence claim against U.S. Bank, based on its employment of SRC. As to that claim, Ms. Lowe does not rely on a theory of vicarious liability and it is not therefore subject to dismissal on these particular grounds.
[23] Ms. Lowe actually alleges that sometime between September 1999 and the present, U.S. Bank falsely represented to a collection entity other than SRC that the debt was valid. As discussed later in this opinion, the uncontroverted facts establish that neither U.S. Bank nor its predecessors attempted to collect the debt after SRC exhausted its efforts. U.S. Bank, however, did sell the accounts to Collins Financial Services on or about August 21, 2000. As such, Ms. Lowe's KCPA claims asserted directly against U.S. Bank must necessarily be based on representations made to SRC and/or Collins Financial Services.
[24] The court agrees with defendants that any contacts that originated from Ms. Lowe, her family members or representatives connot constitute an unauthorized intrusion upon her seclusion. See e.g., Mlynek v. Household Fin. Corp., 2000 WL 1310666 (N.D.Ill.Sept.13, 2000) ("[O]f the three phone conversations alleged in the instant case, two were initiated by plaintiff himself, making only one a truly unauthorized intrusion.") Bauer v. Ford Motor Credit Co., of the overall collection effort, they "connot be included in the tally of intrusive contacts").
[25] Minnesota law relies on the Restatement (Second) of Torts, з 652B (1977) in defining the tort of invasion of privacy. Lake v. WalMart Stores, Inc., 582 N.W.2d 231, 233 (Minn. 1998). Kansas courts have also relied on this same Restatement section in analyzing the tort. Moore v. R.Z. Sims Chevrolet-Subaru, Inc., 241 Kan. 542, 738 P.2d 852, 857 (1987). As such the Bauer opinion has persuasive authority.
[26] The court recognizes that a different District Judge in Minnesota distinguished Bauer in another collection case. In Carlson v. First Revenue Assur., 2002 WL 31866305 (D.Minn. Dec 19, 2002), the court granted summary judgment in favor of the defendants on Mr. Carlson's intrusion upon seclusion claim. In so doing, the "court distinguished Bauer because [defendant] did not receive information about the debt from third parties, only from the alleged debtor himself, and the quantity and quality of the contacts [defendant] made were so minimal that, as a matter of law, they cannot be construed as highly offensive." Id. at *3. The court believes that the evidence, when viewed in the light most favorable to the defendants, is more analogous to Bauer than Carlson. SRC and Mr. Cash's contacts were more numerous than in Carlson. Though defendants question the nature and extent of Ms. Lowe's attempts to dispute the debt, SRC was notified of the alleged fraud by several individuals.
[27] As with the invasion of privacy claim, it is unclear whether Ms. Lowe is asserting the outrage claim directly against U.S. Bank. If so, just as with the invasion of privacy claim, the outrage claim based on representations the bank made to SRC in 1997 is time barred and the claim based on representations to Collins Financial Services is not actionable because Ms. Lowe suffered no injury.
[28] In some situations a defendant's conduct may be so extreme and outrageous that the plaintiff's burden to show extreme distress is minimized. Taiwo, 822 P.2d at 1031 ("rule stated is not, however, limited to cases where there has been bodily harm; and if the conduct is sufficiently extreme and outrageous there may be liability for the emotional distress alone, without such harm... In such cases the court may perhaps tend to look for more in the way of outrage as a guarantee that the claim is genuine; but if the enormity of the outrage carries conviction that there has in fact been severe emotional distress, bodily harm is not required"). This is not such a case.
[29] SRC contends that these negligence claims are barred by the applicable statute of limitations. However, Ms. Lowe originally filed claims against SRC based upon a theory of vicarious liability for the alleged wrongful conduct of Mr. Cash on April 4, 2001. While neither party addresses the issue, Ms. Lowe's negligence claims potentially relate back to the date of this filing. In Graboi v. Kibel, 432 F.Supp. 572, 575-76 (S.D.N.Y.1977), for example, the plaintiff, who had been raped by defendant's employee in defendant's apartment building, originally alleged breach of contract and vicarious liability for the employee's tort. Plaintiff amended the complaint to a negligent hiring claim. The court applied the relation back theory after finding that the negligent hiring claim was sufficiently similar to the original claim of vicarious liability to place the defendant on notice. Because the court finds that Ms. Lowe has failed to state a claim against SRC on these negligence claims in any event, it need not address the statute of limitations argument and the matter of relation back as to the claims against SRC.
[30] Ms. Lowe argues that SRC "presents no summary judgment facts to rebut plaintiff's theory," and that she need only produce evidence "after the movant makes a prima facie showing." Ms. Lowe's statement of the burden on summary judgment is not completely accurate. On summary judgment, the moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Spaulding, 279 F.3d at 904 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence by the other party on an essential element of that party's claim. Adams v. Am. Guarantee & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir.2000) (citing Adler, 144 F.3d at 671). Here SRC has pointed out a lack of evidence to support the negligence claims and therefore the burden shifted to Ms. Lowe to "set forth specific facts showing that there is a genuine issue for trial." In her reply, the only facts she sets forth is evidence regarding Mr. Cash's misrepresentation contained in his resume. Ms. Lowe states that "[i]f this goes to trial, plaintiff believes that there will be evidence that defendant kept Cash because of his aggressive tactics." She does not offer any evidence to support this allegation and the court, therefore, does not consider it for purposes of summary judgment. Ms. Lowe also notes that she "intends to present facts of a pattern of Surpas abusing the public," but she fails to explain how such evidence is relevant specifically to her negligence claims.
[31] SRC moves to strike this evidence because Ms. Lowe failed to authenticate properly the internal memorandum that discusses these monitored calls. Because the court ultimately grants SRC and Mr. Cash's motion for summary judgment on these claims, the court declines to reach defendants' evidentiary argument.
[32] Ms. Lowe notes that SRC attempted to collect on the accounts on May 1, 2001. The undisputed evidence, however, at best establishes that SRC accidentally placed this call (because it had long since closed its collection efforts) and in any event no one answered the call. There is no evidence suggesting that SRC contacted Ms. Lowe between January 21, 2000 and May 1, 2001 and Ms. Lowe has alleged no injury or actionable claim based on this unanswered call on May 1, 2001.
[33] James Renne has alleged in his affidavit that "Dorothy Lowe was not able to ascertain what, if any her causes of action, or even injuries, might be until March 2002." He argues that it was not until Elan Financial was served with a subpoena that he could determine that Mercantile's successors, and therefore Mercantile, were involved. This affidavit contradicts his prior deposition testimony. "There is authority for the proposition that in determining whether a material issue of fact exists, an affidavit may not be disregarded because it conflicts with the affiant's prior sworn statements." Lantec, Inc. v. Noveil, Inc., 306 F.3d 1003, 1016 (10th Cir.2002) (citing Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986)). "In assessing conflict under these circumstances, however, courts will disregard a contrary affidavit when they conclude that it constitutes an attempt to create a sham fact issue." Id. "In deciding whether an affidavit is an attempt to create a sham issue of fact", the relevant factors are "whether the affiant was cross-examined during his earlier testimony, whether the affiant had access to the pertinent evidence at the time of his earlier testimony or whether the affidavit was based on newly discovered evidence, and whether the earlier testimony reflects confusion which the affidavit attempts to explain." Id. James Renne's affidavit statements are not based on newly discovered evidence that was not available at the time of his deposition. Moreover, the statements do not attempt to clarify confusion in that testimony, nor do they supplement his statements concerning his knowledge on November 10, 1999. In light of these facts, the court must disregard these statements as they conflict with his deposition testimony.
[34] It is unclear whether Ms. Lowe asserts this statutory argument as an independent grounds for tolling or as further support of the argument that the corporate name changes and employment of independent contractors to collect the debt justify equitable tolling.
[35] Even if the continuing violation doctrine were to apply in this case, Ms. Lowe's claims are not timely because the last act in the series of SRC's collection efforts expired on January 21, 2000. Ms. Lowe argues that in August of 2000, Mercantile unlawfully sold the account to Collins Financial, which perpetuated the cycle of collection efforts. The court does not believe that the wrongful sale of an account to another financial entity is sufficiently similar to unlawful collection efforts so as to constitute substantially the same misconduct that might warrant application of the doctrine. Moreover, as discussed below, the uncontroverted evidence establishes that Collins Financial never attempted to collect on the accounts.
[36] U.S. Bank raises the lack of authentication of these credit reports and contends that the credit reports are hearsay. For purposes of this summary judgment motion, the court will not address those arguments because the court grants U.S. Bank's motion on statute of limitations grounds in any event. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562467/ | 440 F. Supp. 2d 1198 (2006)
Jeffery Martin SIERZEGA, Plaintiff,
v.
Pro Tern Judge Lynn E. ASHCROFT, Judge Joseph C. Guimond, Judge Albin W. Norblad, et al., Defendants.
Civil No. 05-1338-HU.
United States District Court, D. Oregon.
July 21, 2006.
*1199 Jeffery Martin Sierzega, Salem, OR, Plaintiff Pro Se.
Hardy Myers, Attorney General, Liani J.H. Reeves, Assistant Attorney General, Department of Justice, Salem, OR, for Defendants Lipscomb, Guimond, Ashcroft, Norblad, and Rohlfing.
Kim E. Hoyt, Spencer C. Rockwell, Garrett, Hemann, Robertson, Jennings, Comstock & Trethewy, P.C., Salem, OR, for Defendant Jeffrey C. Phillips, DMD.
ORDER
HAGGERTY, Chief Judge.
On April 12, 2006, Magistrate Judge Hubel issued a Findings and Recommendation [45] recommending that the State Defendants' Motion to Dismiss [30] should be granted in part and denied in part and that Phillips's Motion to Dismiss [32] should be denied. Objections to the Findings and Recommendation were filed by plaintiff [49]. Judge Michael W. Mosman subsequently granted plaintiff's Motion to Change or Transfer Venue [55] and recused himself from this action. The disputed Findings & Recommendation was referred to this court for review.
When a party objects to any portion of the Magistrate's Findings and Recommendation, the district court must make a de novo determination of that portion of the Magistrate's report. 28 U.S.C. § 636(b)(1)(B); McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir.1981).
Plaintiff filed objections in a timely manner. The court has given the file of this case a de novo review, and has also carefully evaluated the Magistrate's Findings and Recommendations, the objections, and the Record of the case. The objections are denied, and the Findings and Recommendation is adopted.
ANALYSIS
The Magistrate Judge reviewed this case thoroughly in the Findings and Recommendation and the relevant facts and legal reasoning need be recited only briefly.
Plaintiff Jeffery Sierzega brings this civil rights action against several Marion County Circuit Court judges, a court reporter, several Marion County deputy sheriffs, several City of Salem police officers, Marion County, and the City of Salem. Plaintiff also brings claims against a dentist, Dr. Jeffrey Phillips, DMD. Before the Magistrate Judge were motions to dismiss from Phillips, the Marion County judges, and the court reporter. The Findings and Recommendation concluded that Phillips's motion should be denied, but that the separate motion by the judicial officers *1200 and the court reporter should be granted in part.
Plaintiff objects that the Findings and Recommendation failed to address plaintiffs allegations of fraud, and that policies of judicial immunity should not shield the defendant Judges from this suit. Plaintiff also contends that Magistrate Judge Hubel intentionally misstated plaintiff's allegations and scheduled the filing of any objections on a date when the Magistrate Judge knew plaintiff would be preoccupied with the arrest of plaintiff's only child. Pl.s Objections at 3.
Plaintiff's objections are overruled. Magistrate Judge Hubel granted plaintiff's request for an extension to file objections, and this court has considered the objections and the entire record. The Findings and Recommendation's analysis of judicial immunity and its applicability in the matters presented in this case is sound and correct. To the extent that the "Response to Objections to the Magistrate Judge's Order" [51] filed by defendants Albin W. Norblad, Trisha Rohlfing, Paul J. Lipscomb, Joseph C. Guimond, and Lynn E. Ashcroft was intended to also advance an objection regarding the Findings and Recommendation's conclusion that defendant Rohlfing should not be dismissed, such an objection is also overruled.
CONCLUSION
For the reasons provided above, plaintiffs objections [49] and any objections intended in defendants' responsive briefing [51] are OVERRULED. Defendant Phillips' Motion to Dismiss [32] is denied. The state defendants' Motion to Dismiss [30] is granted in part and denied in part in accordance with the terms of the Findings and Recommendation [45], which is adopted in its entirety.
IT IS SO ORDERED.
FINDINGS & RECOMMENDATION
HUBEL, United States Magistrate Judge.
Plaintiff Jeffery Sierzega brings this civil rights action against several Marion County Circuit Court judges, a court reporter, several Marion County deputy sheriffs, several City of Salem police officers, Marion County, and the City of Salem. He also brings claims against a dentist, Dr. Jeffrey Phillips, DMD.
Presently, Phillips, the Marion County judges, and the court reporter move to dismiss the claims against them. I recommend that Phillips's motion be denied, and that the separate motion by the judicial officers and the court reporter be granted in part and denied in part.
BACKGROUND
Plaintiff's lengthy Amended Complaint begins with allegations that in August 2005, he contacted Phillips by telephone to obtain information regarding treatment that Phillips had provided to plaintiff's child. Am. Compl. at ¶ 21. Plaintiff contends that Phillips then conspired with defendant police officer Seyfried and his superiors with the Salem Police Department, to fabricate facts constituting probable cause to support the issuance of an Oregon Uniform Stalking Citation against plaintiff. Id. at ¶ 22.
Plaintiff states that the stalking citation was served on him on August 9, 2005, and that Seyfried and defendant police officer Carpenter knowingly and intentionally misinformed plaintiff that he was required to make a personal appearance on August 12, 2005, to answer the citation. Id. at ¶¶ 24, 25.
Plaintiff contends that on August 12, 2005, he personally appeared at 11:30 a.m. as specified in the stalking citation only to be advised by defendant court reporter *1201 Rohlfing to make an appearance at 1:30 p.m. instead. Id. at ¶ 29. He states that he filed a motion "for change of judge" while waiting for the 1:30 p.m. hearing, based on his "reasonable belief that he cannot have a fair or impartial hearing before any judge whose identity is being kept a secret from him by the trial court." Id. at ¶ 30.
Plaintiff alleges that he provided defendant Pro Tem Judge Ashcroft with a certified, file- and date-stamped copy of the recusal motion when the 1:30 hearing began, but Judge Ashcroft did not recuse himself. Id. at ¶ 31.
Plaintiff states that Judge Ashcroft and defendant Presiding Judge Lipscomb then arranged with defendants sheriff deputies Welty and Dougall, before the hearing began, to have plaintiff handcuffed and removed from the courtroom during a twenty-minute recess. Id. at ¶ 32. Next, according to plaintiff, Judge Ashcroft then ordered plaintiffs handcuffs removed and gave plaintiff a written assignment for a hearing before defendant Judge Norblad on August 30, 2005. Id. at ¶ 33. Judge Ashcroft also allegedly gave plaintiff a Temporary Stalking Protective Order. Id. at ¶ 34. The temporary order allegedly bears the signature of defendant Judge Guimond. Id. at ¶ 35. Plaintiff contends that Judge Ashcroft forged Judge Guimond's signature with Judge Lipscomb's permission during the recess called by Judge Ashcroft. Id. He further contends that Judge Ashcroft signed Judge Guimond's name on the order with Rohlfing's pen. Id. He also contends that Rohlfing tampered with the taped transcript of the proceedings and deleted three large sections of tape containing incriminating language spoken by Judge Ashcroft. Id.
Shortly thereafter, plaintiff filed a motion to recuse Judge Norblad and then filed a request for access to his case file. Id. at ¶¶ 37, 38. He also subpoenaed certain records from the City of Salem's Chief of Police. Id. at ¶ 39. The City moved to quash the subpoena. Id. Plaintiff then filed a motion to vacate, amend, and dismiss the temporary stalking order "purportedly signed by" Judge Guimond on August 12, 2005. Id. at ¶ 41.
On August 30, 2005, plaintiff appeared before Judge Norblad. Id. at ¶ 42. Judge Norblad was then apprised of the recusal motion. Id. at ¶ 44. He allegedly allowed the motion and "order[ed] plaintiff to wait out in the hall while another judge is assigned to plaintiffs case and another hearing is schedualed [sic]." Id.
Apparently, after waiting for ten minutes, plaintiff and his witnesses decided to leave. Id. at ¶ 45. As plaintiff and his mother were driving home, "their vehicle [was] blocked" by defendants sheriff deputies Bernard and McDermitt who ordered plaintiff to accompany them back to the courthouse. Id. at ¶ 46. Upon his return to the courthouse, Judge Norblad allegedly informed plaintiff that Judge Lipscomb had assigned the case to himself and would conduct a hearing that morning. Id. at ¶ 47.
At the beginning of the hearing before Judge Lipscomb, plaintiff informed Judge Lipscomb that the previous day, plaintiff had filed this civil rights action against Judge Lipscomb. Id. at ¶ 49. Judge Lipscomb allegedly denied plaintiff's request that Judge Lipscomb disqualify himself from hearing the case. Id.
Plaintiff alleges that in the stalking order proceeding, the police reports and sworn statements by Phillips were perjured and fail to constitute probable cause. Id. at ¶ 52. He further contends that he was not allowed to cross-examine Phillips or to call any witnesses to testify on his behalf. Id. at ¶ 53. Nonetheless, plaintiff contends that Judge Lipscomb vacated the *1202 orders purportedly entered by Judge Guimond. Id. at ¶ 56.
Plaintiff states that he was ordered to submit to a mental health evaluation by a health-care provider of his own choice within ten days and that "the PSPO" (which I understand to be a permanent stalking order), be entered. Id. at ¶ 58. Plaintiff further states that on September 9, 2005, he filed proof of compliance with the order regarding the mental health evaluation. Id. at ¶ 62. Later in September, plaintiff moved to modify the PSPO to allow service of a Notice of Appeal on Phillips. Id. at ¶ 62.
On September 26, 2005, Judge Lipscomb recused himself from the case and assigned Judge Ochoa to the case for the hearing on the motion to modify. Id. at ¶ 63. On October 5, 2005, plaintiff alleges that the Court Records Division of the Oregon Court of Appeals "fabricate[d] the date of filing of plaintiff's timely filed Notice of Appeal as 5 October 2005 instead of 29 September 2005[,]" and sent plaintiff a letter assigning plaintiff an appellate case number and giving plaintiff fourteen days to file proof of service of the Notice of Appeal on Phillips. Id. at ¶ 65.
Also on October 5, 2005, plaintiff alleges that Oregon Court of Appeals Judge Mary Deits entered an order "dismissing plaintiffs appeal as being untimely filed with no showing that plaintiff's Notice of Appeal was not filed on 29 September 2005." Id. at ¶ 66.
Plaintiff contends that his request for a copy of the taped transcript of the proceedings held August 12, 2005, and August 30, 2005, was denied, based on a standing order of Judge Lipscomb's to the effect that the written transcript, when certified by the court reporter, is the official record, and that the original recording is not provided to anyone except officers of the court, with a further restriction that no further or unauthorized copying will be allowed. Id. at ¶ 67.
STANDARDS
On a motion to dismiss, the court must review the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974). The court should construe the complaint most favorably to the pleader:
In appraising the sufficiency of the complaint, we follow, of course, the accepted rule that the complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957); American Family Ass'n, Inc. v. City & County of San Francisco, 277 F.3d 1114, 1120 (9th Cir.2002). The allegations of material fact must be taken as true. Moyo v. Gomez, 40 F.3d 982, 984 (9th Cir.1994). However, the court need not accept conclusory allegations as truthful. Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.1992).
DISCUSSION
Based on the facts as outlined above, plaintiff brings the following claims: (1) "Count I": a claim under 42 U.S.C. § 1983 for conspiracy to maliciously prosecute; Am. Compl. at ¶¶ 73-77; (2) "Count II": a claim under 42 U.S.C. § 1983 for violation of equal protection of the laws; Am. Compl. at ¶¶ 78-80; (3) "Count III": a claim under 42 U.S.C. § 1983 for unlawful arrest, search, and seizure; Am. Compl. at ¶¶ 81-86; (4) "Count IV": a claim under 42 U.S.C. § 1983 for conspiracy to maliciously abuse process; Am. Compl. at ¶¶ 86-90; (5) "Count V": a claim under 42 U.S.C. § 1983 for violation of the right to a fair and impartial hearing; Am. Compl. at *1203 ¶¶ 91-97; (6) "Count VI": a claim under 42 U.S.C. § 1983 for unlawful arrest, seizure, and detention; Am. Compl. at ¶¶ 98-104; and (7) "Count VII": claims for forgery, abuse of process, malicious prosecution, and tampering with court records. Am. Compl. at ¶¶ 105-112. Additionally, plaintiff "reserves" several "counts" for other claims such as intentional infliction of emotional distress, negligence, and false arrest, seizure, and detention. Am. Compl. at p. 21.
I. Phillips's Motion to Dismiss
Phillips moves to dismiss Counts I VI for failure to state a claim, and to dismiss Count VII for lack of jurisdiction.
A. Counts I VI
These "counts" are all brought under section 1983. To establish a violation of section 1983, plaintiff must prove that defendants acted under color of state law and deprived plaintiff of a federal constitutional or statutory right. Dawson v. City of Seattle, 435 F.3d 1054, 1061 (9th Cir.2006); Henderson v. City of Simi Valley, 305 F.3d 1052, 1056 (9th Cir.2002). Section 1983 "is the vehicle whereby plaintiffs can challenge actions by governmental officials." Henderson, 305 F.3d at 1056.
Phillips moves to dismiss the section 1983 claims against him because plaintiff fails to allege that he was employed by the Marion County Sheriff's Department, the Salem Police Department, or the State of Oregon in any capacity.[1] Phillips further notes that plaintiff has failed to allege that Phillips acted under the color of state law.
Plaintiff alleges that Phillips is a pediatric dentist. Am. Compl. at ¶ 19. The Amended Complaint contains no allegations capable of suggesting that Phillips is a government official. Additionally, there is no allegation that Phillips acted under color of state law.
In response to the motion, plaintiff notes that he has alleged that Phillips conspired with the other named defendants to deprive him of his constitutional rights. Specifically, he refers to his allegations that Phillips supplied perjured sworn statements to City of Salem police officers to "fabricate evidence in their attempts to manufacture probable cause" for the issuance of the stalking citations against plaintiff. Pltf's Opp. Mem. at p. 2.
The relevant facts as alleged in the Amended Complaint are that "[o]n 7 August 2005 defendant Phillips conspired with defendant Cpl. M. Seyfried and his superiors at Salem Police Dept. to fabricate probable cause for the issuance of a fraudulent Oregon Uniform Stalking Citation against plaintiff based on the perjured sworn statements of defendant Phillips and the falsified police reports of defendants SPD Cpl. J. Humphries, Off. C. Moffitt, Cpl. M. Seyfried, and Sgt. D. Carpenter[.]" Am. Compl. at ¶ 22.
"Count I," alleging a conspiracy to maliciously prosecute, is the only "count" mentioning Phillips. There, plaintiff alleges that *1204 [d]efendants acted in concert under color of state law in their official and individual capacities and under the direction and control of defendant employers City of Salem and Marion County, with malice and intent, to maliciously prosecute plaintiff for stalking with the ulterior purpose of immunizing defendant Dr. Jeffrey Phillips from suit through the "no contact" provisions of a stalking citation and temporary and permanent stalking protective orders that prohibit any contact by plaintiff with defendant Phillips under threat of felony prosecution and for which plaintiff has no remedy under state law.
Id. at ¶ 73.
Plaintiff then contends that "[a]ll the defendants" had an object to be accomplished, had an agreement on the object or course of action, performed one or more unlawful overt acts, and caused plaintiff damages that were a direct result of those unlawful overt acts. Id. at ¶ 74. Plaintiff alleges that the overt acts included, but were not limited to (1) fabricating probable cause for the issuance of the stalking citations, and the temporary and permanent stalking protective orders against plaintiff; (2) forging signatures of a circuit court judge; and (3) subjecting plaintiff to warrantless, unreasonable, and false arrests, searches, seizures, and detentions on three occasions. Id. at ¶ 75.
Although there are no allegations supporting Phillips's status as a government actor, "[p]rivate persons, jointly engaged with state officials in the challenged action, are acting `under color' of law for purposes of § 1983 actions." Collins v. Womancare, 878 F.2d 1145, 1154 (9th Cir.1989) (internal quotation omitted). "Private parties act under color of state law if they willfully participate in joint action with state officials to deprive others of constitutional rights." United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1540 (9th Cir.1989). "Private parties involved in such a conspiracy may be liable under section 1983." Id.
Phillips recognizes that a private individual jointly engaged with state officials may be acting under color of state law for purposes of a section 1983 claim. But, Phillips argues that more than "vague and conclusory" allegations are required. In support, Phillips cites Dennis v. Sparks, 449 U.S. 24, 101 S. Ct. 183, 66 L. Ed. 2d 185 (1980), and Ivey v. Board of Regents of the Univ. of Alaska, 673 F.2d 266 (1982).
Dennis is not on point. The case primarily stands for the proposition that private parties who are alleged to have conspired with a government official to deprive a person of his or her constitutional rights, may maintain the claim against the private parties even when the government official's actions are protected by judicial immunity. Dennis, 449 U.S. at 27-28, 101 S. Ct. 183. The case says nothing about vague and conclusory allegations. The Court did note that "merely resorting to the courts and being on the winning side of a lawsuit does not make a party a co-conspirator or a joint actor with the judge[;]" but, the Court continued, the allegations brought by the plaintiff in Dennis were that "an official act of the defendant judge was the product of a corrupt conspiracy involving bribery of the judge." Id. at 28, 101 S. Ct. 183. This was sufficient.
Ivey is on point, but it is distinguishable. There, the court first recognized its duty to liberally interpret a pro se civil rights complaint. Ivey, 673 F.2d at 268. Even so, the court explained, such an interpretation "may not supply essential elements of the claim that were not initially pled." Id. The court stated that "[v]ague and conclusory allegations of official participation in civil rights violations are not sufficient to withstand a motion to dismiss." *1205 Id. Because the complaint was "devoid of specific factual allegations showing the . . . defendants' participation in the alleged discriminatory employment practice[,]" the plaintiff had failed to state a claim under section 1983. Id.
Ivey is distinguishable because plaintiff here does allege specific facts in support of his section 1983 conspiracy claim. As noted above, he contends that Phillips perjured himself in sworn statements given in support of the stalking citation. He goes on to allege specific actions of other actors that were allegedly part of the conspiracy. In contrast to Ivey, the Amended Complaint here contains more than a bare allegation of conspiracy. See Johnson v. State of Calif, 207 F.3d 650, 655 (9th Cir.2000) (district court erred in dismissing section 1985(3) claim with prejudice because it contained more than bare allegation of conspiracy and additional facts in support of the alleged conspiracy may develop as the plaintiff proceeded with discovery).
It is clear that merely complaining to the police does not convert a private party into a state actor. Collins, 878 F.2d at 1155 (noting also that execution by a private party of a sworn complaint which forms the basis of an arrest is not enough to convert the private party's acts into state action). However, the allegations in this case go further than Phillips making a report to the police. Because of the specific factual allegations made in support of the conspiracy claim, and because Phillips is alleged to have conspired with government officials by intentionally providing false sworn statements, plaintiff has adequately stated a conspiracy claim for the purposes of a Rule 12(b)(6) motion, against Phillips.
I recommend that Phillip's motion to dismiss Counts I-VI be denied.
B. Count VII Supplemental State Law Claims
Phillips moves to dismiss the supplemental state law claims, grouped together as "Count VII" in the Amended Complaint, because without any federal claims remaining against Phillips, there is no independent basis for jurisdiction over these claims. 28 U.S.C. § 1367. Because I recommend that the federal section 1983 claims not be dismissed at this time, I recommend that the motion to dismiss the state supplemental claims alleged in Count VII, also be denied.
II. State Defendants' Motion to Dismiss
Defendants Lipscomb, Guimond, Ashcroft, Norblad, and Rohlfing move to dismiss all claims against them on the basis of judicial immunity. They alternatively move to dismiss the state supplemental claims raised in Count VII as barred by the Eleventh Amendment.
A. Judicial Immunity
1. Ashcroft, Guimond, Norblad, and Lipscomb
"The doctrine of judicial immunity is supported by a long-settled understanding that the independent and impartial exercise of judgment vital to the judiciary might be impaired by exposure to potential liability." Antoine v. Byers & Anderson, Inc., 508 U.S. 429, 435, 113 S. Ct. 2167, 124 L. Ed. 2d 391 (1993). The doctrine discourages collateral attacks on judges and defers to the appellate process for the correction of judicial error. In re Castillo, 297 F.3d 940, 947 (9th Cir.2002). "[J]udges defending against § 1983 actions enjoy absolute immunity from damages liability for acts performed in their judicial capacities[.]" Dennis, 449 U.S. at 27, 101 S. Ct. 183 (internal quotation omitted).
*1206 "A judge is absolutely immune from liability for his judicial acts even if his exercise of authority is flawed by the commission of grave procedural errors." Stump v. Sparkman, 435 U.S. 349, 359, 98 S. Ct. 1099, 55 L. Ed. 2d 331 (1978). "This absolute immunity insulates judges from charges of erroneous acts or irregular action, even when it is alleged that such action was driven by malicious or corrupt motives[.]" Castillo, 297 F.3d at 947. Moreover, even where a judge acts in excess of judicial authority, he or she is not deprived of immunity. Moore v. Brewster, 96 F.3d 1240, 1244 (9th Cir.1996).
The judicial officer defendants argue that judicial immunity extends to all their alleged actions outlined in the Amended Complaint. Although plaintiff alleges that they acted maliciously and improperly, they contend that all of the claims are based on actions they took in deciding and handling matters that were in front of them as judges and thus, they are entitled to absolute immunity.
In response to the motion, plaintiff contends that immunity does not apply because he brings these claims against the judicial officer defendants in their individual capacities as well as their official capacities, and because the judicial officer defendants acted in the absence of jurisdiction. Neither of plaintiff's arguments has merit.
First, the capacity in which the individual is sued is different from the capacity in which a person's actions were taken. See Hafer v. Melo, 502 U.S. 21, 26-27, 112 S. Ct. 358, 116 L. Ed. 2d 301 (1991) ("the phrase `acting in their official capacities' is best understood as a reference to the capacity in which the state officer is sued, not the capacity in which the officer inflicts the alleged injury").
Second, all of the alleged actions taken by these defendants as raised in the Amended Complaint, fall within their roles as judges. All of the alleged improper actions occurred while the judicial officer defendant was performing the normal judicial function of presiding over a case then assigned to that judge or that judge's court. See Ashelman v. Pope, 793 F.2d 1072, 1075-76 (9th Cir.1986) (outlining criteria for evaluating whether a given action is judicial in nature). While the law recognizes that "`a judge is not immune for actions, though judicial in nature, taken in the complete absence of all jurisdiction[,]"' Meek v. County of Riverside, 183 F.3d 962, 965 (9th Cir.1999) (quoting Mireles v. Waco, 502 U.S. 9, 11-12, 112 S. Ct. 286, 116 L. Ed. 2d 9 (1991)), none of the allegations in plaintiffs Amended Complaint are capable of suggesting that any of the judicial officer defendants were acting without jurisdiction.
I recommend that the judicial officer defendants' motion to dismiss all claims against them, be granted.
2. Rohlfing
As noted above, Rohlfing is a court reporter who allegedly told plaintiff to reappear at 1:30 p.m. on August 12, 2005, when he appeared at 11:30 a.m., and who also allegedly erased portions of the taped transcript of the August 12, 2005 hearing before Judge Ashcroft. Am. Compl. at ¶¶ 29, 35.
Under the doctrine of absolute "quasijudicial immunity," the doctrine of judicial immunity, as described above, is extended to those who "perform functions closely associated with the judicial process[,]" or those who have a "sufficiently close nexus with the adjudicative process[.]" Castillo, 297 F.3d at 948 (internal quotation omitted).
The application of the doctrine does not depend on the job title of the defendant, but instead, requires an analysis of the function or act allegedly performed. Id. (noting that "to determine whether a nonjudicial *1207 officer is entitled to absolute quasijudicial immunity, courts must look to the nature of the function performed and not to the identity of the actor performing it."). As explained by the Supreme Court, "[w]hen judicial immunity is extended to officials other than judges, it is because their judgments are functionally comparable to those of judges that is, because they, too, exercise a discretionary judgment as part of their function." Antoine, 508 U.S. at 436, 113 S. Ct. 2167 (internal quotation and brackets omitted).
At issue in this case is Rohlfing's giving plaintiff scheduling information regarding the time of his hearing and allegedly tampering with the tape recording of the August 12, 2005 proceedings before Judge Ashcroft and omitting that portion from the final, written transcript.
As to the scheduling information, Rohlfing is entitled to quasi-judicial immunity for this function. See Rodriguez v. Weprin, 116 F.3d 62, 66 (2d Cir.1997) (court clerk entitled to quasi-judicial immunity for allegedly failing to properly manage the court's calendar; court noted that "[a] court's inherent power to control its docket is part of its function of resolving disputes between parties. This is a function for which judges and their supporting staff are afforded absolute immunity."); Moore, 96 F.3d at 1244 (Clerk of the court performed quasi-judicial functions as to which he was entitled to absolute immunity); Wagshal v. Foster, 28 F.3d 1249, 1252 (D.C.Cir.1994) (court's "case evaluator" performs judicial functions such as identifying factual and legal issues, scheduling discovery and motions with the parties, and coordinating settlement efforts).
I reject the assertion, however, that Rohlfing is entitled to absolute quasi-judicial immunity for her alleged actions in regard to the transcript of the August 12, 2005 hearing before Judge Ashcroft.
In Antoine, the plaintiff brought a section 1983 claim against a court reporter who failed to deliver a complete transcript of a criminal trial on appeal. Although the Ninth Circuit held that the making of an official record of a court proceeding was part of the judicial function, the Supreme Court reversed. The Supreme Court first noted that "[c] ourt reporters were not among the class of person protected by judicial immunity in the 19th century." 508 U.S. at 433, 113 S. Ct. 2167. The Court also rejected the notion that court reporters served as the functional equivalents of "common-law judges who made handwritten notes during trials." Id. at 434, 113 S. Ct. 2167.
After explaining the relevant analysis, quoted above, that judicial immunity is extended to non-judicial officers when the actions at issue are "functionally comparable" to those of judges, because they "exercise a discretionary judgment" as part of the function, the Court then held that "[t]he function performed by court reporters is not in this category." Id at 436, 113 S. Ct. 2167. The Court remarked that court reporters are required by statute to "`record verbatim' court proceedings in their entirety." Id. (quoting 28 U.S.C. § 753(b)). Court reporters "are afforded no discretion in the carrying out of this duty; they are to record, as accurately as possible, what transpires in court." Id.
Although the state law applicable to Rohlfing does not contain the "record verbatim" language of the federal Court Reporter's Act, it does, like the federal law, provide for no discretion. Under Oregon law, a reporter must take accurate notes by shorthand or by means of a mechanical or electronic typing device, or make audio records, of the oral testimony and other proceedings of the trial or hearing to the extent required by the court or by the requesting party. Or.Rev.Stat. § (O.R.S.) *1208 8.340(4), (5). When such a record has been made, "if the court or either party . . . requests a transcript of the notes or audio records into longhand, the official reporter shall cause full and accurate typewritten transcripts to be made of the testimony or other proceedings[.]" O.R.S. 8.350 (emphasis added).
Based on the relevant state law and Antoine, Rohlfing is not entitled to absolute immunity for her alleged actions of erasing and/or failing to transcribe portions of the audio record of the August 12, 2005 proceedings before Judge Ashcroft. I recommend that Rohlfing's motion to dismiss, based on quasi-judicial immunity, be denied.
B. Eleventh Amendment
The judicial officer defendants and Rohlfing argue that plaintiff's Count VII supplemental state common-law claims should be dismissed because the Eleventh Amendment bars state law claims brought in federal court against a state which has not waived its immunity from suit in federal court.
The Eleventh Amendment bars claims in federal court against state officials based on state law violations. Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106, 121-22, 104 S. Ct. 900, 79 L. Ed. 2d 67 (1984). This includes state law claims in federal court based on supplemental (formerly pendent), jurisdiction. Id. (the principle that a claim that state officials violated state law in carrying out their official responsibilities is a claim against the State that is protected by the Eleventh Amendment applies as well to state-law claims brought into federal court under pendent jurisdiction).
The Eleventh Amendment immunity from suit extends to state agencies and officers. Sofamor Danek Group, Inc. v. Brown, 124 F.3d 1179, 1183 (9th Cir.1997). The problem with defendants' argument, however, is that the immunity does not extend to claims brought against state officials in their individual or personal capacities. Pena v. Gardner, 976 F.2d 469, 473-74 (9th Cir.1992) ("the eleventh amendment will not bar pendent state claims by [the plaintiff] against state officials acting in their individual capacities.").
Because the judicial officers enjoy absolute judicial immunity for their alleged actions, I discuss only the allegations regarding Rohlfing's official and individual capacity status. The Amended Complaint is not clear regarding the capacity in which she is sued. In the second full paragraph of the Amended Complaint, plaintiff alleges that the defendant state court judges "are sued in their official and individual capacities." Am. Compl. at p. 2. Plaintiff then alleges that Phillips is sued in his individual capacity. Id. No mention is made of Rohlfing.
Because I must give this pro se pleading a liberal construction, because generally, plaintiff appears to indicate that Rohlfing is to be considered as part of a group with the judicial officer defendants, and because the Amended Complaint is silent regarding the capacity in which Rohlfing is sued, I construe the Amended Complaint to allege that she is sued in both her official and individual capacities. As such, the motion, based on the Eleventh Amendment, should be granted to the extent that she is sued in her official capacity, but should be denied to the extent she is sued in her individual or personal capacity.
CONCLUSION
Phillips's motion to dismiss (# 32) should be denied. The state defendants' motion to dismiss (# 30) should be granted in part and denied in part.
*1209 SCHEDULING ORDER
The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, if any, are due April 27, 2006. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date.
If objections are filed, a response to the objections is due May 11, 2006, and the review of the Findings and Recommendation will go under advisement on that date.
IT IS SO ORDERED.
Apr. 12, 2006.
NOTES
[1] Phillips inappropriately frames his argument as one based on the fact that he was never employed by Marion County, the City of Salem, or the State of Oregon. He goes so far as to submit an affidavit attesting to the fact of his non-employment with these entities. On a Rule 12(b)(6) motion, the only relevant facts are what are pleaded in the Complaint or Amended Complaint. Thus, whether Phillips was or is employed by any of the three governmental bodies who are defendants in this case is beside the point. At this stage of the case, it is only what plaintiff has alleged that matters. Moreover, because my analysis of the motion is confined to the allegations in the Amended Complaint, I disregard Phillips's affidavit. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567175/ | 396 F. Supp. 2d 251 (2005)
Thomas C. WALLACE, Plaintiff,
v.
SUFFOLK COUNTY POLICE DEPARTMENT, County of Suffolk, John Gallagher, Phillip Robilotto and James Abbott, Individually and in their official capacities, Defendants.
No. 04-CV-2599.
United States District Court, E.D. New York.
February 15, 2005.
*252 *253 Gregory Scolieri, Esq., Leeds Morelli & Brown, P.C., Carle Place, for Plaintiff.
Diane Leonardo Beckman, Esq., Suffolk County Attorney's Office, Hauppauge, for Defendants.
*254 MEMORANDUM & ORDER
SEYBERT, District Judge:
INTRODUCTION
Plaintiff Thomas C. Wallace commenced this action pursuant to 42 U.S.C. § 1983 against Defendants County of Suffolk, Suffolk County Police Department ("SCPD") John Gallagher, Phillip Robilotto and James Abbott, alleging retaliation in violation of his First and Fourteenth Amendment rights. Plaintiff contends that Defendants forcibly retired him from the SCPD and committed other harassing acts against him in retaliation for his speech concerning alleged shortcomings of the SCPD. Pending before the Court is Defendants' motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Defendants' motion is GRANTED, in part, and DENIED, in part.
BACKGROUND
The following facts, gleaned from the Complaint and accompanying papers, are deemed true and construed in a light most favorable to the Plaintiff for the purpose of this motion. See King v. American Airlines, 284 F.3d 352, 356 (2d Cir.2002).
Plaintiff was hired by the Suffolk County Police Department ("SCPD") in July 1986 and, in June 1997 was assigned to the Emergency Services Unit ("ESU"). On March 11, 1998, he was injured in the line of a duty in a massive boat explosion. Plaintiff sustained serious injuries as a result of the incident. He has undergone numerous surgeries to remedy his maladies, but still suffers from severe degenerative joint disease in his lower left leg, a herniated disk, a bulging disk in his lower vertebrae, and arthritis in his left hip. Plaintiff never returned to work after the accident.
After the accident, Plaintiff had numerous meetings and conversations with various SCPD representatives. During these meetings, Plaintiff voiced his concern about improprieties allegedly plaguing the SCPD. While it is unclear what occasioned any of these meetings, according to Plaintiff, the first interaction occurred in the summer of 1999, when Plaintiff spoke with the Deputy Commissioner of the SCPD, James Abbott ("Abbott").
During the conversation, Plaintiff expressed his beliefs that: (1) the SCPD did not have adequate training protocols or equipment to ensure the safety of its officers and the public; (2) the existing SCPD rules and protocols were not being followed; (3) the ESU was not adequately staffed; and (4) there was dissension in the ranks of the ESU. Plaintiff told Abbott that the aforementioned conditions placed both the officers and the public at risk. Additionally, Plaintiff informed Abbott of fraudulent documentation and a potential cover-up with respect to the March 11, 1998 boat explosion.
According to Plaintiff, Abbott responded to Plaintiff's complaints by offering to place him on the Commissioner's List, allowing Plaintiff to receive full pay, including raises, until Plaintiff reached the age of 62.
"In or around late 1999," however, Abbott reneged and denied ever making this proposal. (Compl.ś 16). Instead, Abbott allegedly informed Plaintiff that he was going to be retired by the Risk Management Department.
Plaintiff's next meeting with SCPD representatives occurred on April 10, 2000, when Chief Joseph Monteith ("Monteith"), and other SCPD personnel went to Plaintiff's home. Plaintiff once again raised concerns about officer training and safety, as well as the lack of adherence to SCPD's rules, procedures, and protocols within *255 SCPD. Plaintiff told Monteith that he would "go public with these issues if an investigation did not commence." (Compl.ś 17).
In September 2000, Plaintiff had another conversation with Abbott. Plaintiff made the same allegations of corruption and mismanagement raised in prior meetings, together with a new allegation. Specifically, Plaintiff suggested that Phillip Robilotto ("Robilotto"), the on-scene commander on the day of the accident and the head of the SCPD's Internal Affairs Department, might have been suppressing an investigation of the accident. Plaintiff requested that Abbott commence an investigation into these claims.
Abbott declined Plaintiff's request, allegedly informing Plaintiff that "we are not doing anything that will make the police look bad." When Plaintiff indicated that, absent an investigation, he would go to Newsday with his allegations, Abbott told Plaintiff, "that can't happen" and expressed to Plaintiff that the SCPD would not "take kindly to any type of effrontery." (Compl.ś 18). Additionally, Abbott allegedly told Plaintiff, "words to the effect of, `do something now, and lament it for a lifetime.'" (Compl.ś 18).
In October 2001, Plaintiff, with his then lawyer Thomas Speer, met with Robilotto. During the meeting, Plaintiff raised all of the aforementioned allegations of malfeasance, including the alleged cover-up of the March 11, 1998 accident. According to Plaintiff, Robilotto responded, "you don't understand how powerful the police department is." (Compl.ś 19).
In or around November 2002, the SCPD, without Plaintiff's consent, filed for Plaintiff to receive his retirement. Plaintiff believes that John Gallagher ("Gallagher"), Commissioner of the SCPD, and Robilotto prepared the paperwork. According to Plaintiff, his retirement documentation omitted certain injuries that he suffered in the March 11, 1998 accident. Plaintiff contends that this paperwork was submitted prematurely, and omitted his injuries in retaliation for Plaintiff's comments about the SCPD. On April 6, 2004, New York Retirement and Local Systems rejected the retirement application.
In April 2003, Plaintiff told an SCPD Internal Affairs lieutenant that he wished to file a complaint regarding the aforementioned shortcomings of the SCPD. In May 2003, Plaintiff filed a complaint with the Suffolk County District Attorney's Office, presumably concerning the same grounds. In September 2003, Plaintiff sent Commissioner Gallagher a letter listing the same allegations of SCPD malfeasance or nonfeasance expressed in Plaintiff's prior interactions with SCPD personnel.
On October 20, 2003, the SCPD informed Plaintiff that he had been cleared to return to work. The determination was, apparently, based on a medical examination of Plaintiff conducted by the SCPD. Plaintiff, however, contends that the medical examination was a sham, and that the determination to reinstate him was retaliatory. Plaintiff alleges that he was reinstated before he was physically capable of returning to active duty because he continued to speak out against the SCPD.
Despite being reinstated, Plaintiff remained out of work, using his sick time to cover his absences. In a letter dated February 12, 2004, Plaintiff was directed, by the SCPD, to appear for a medical evaluation on February 24, 2004. Plaintiff failed to attend the evaluation; he alerted the SCPD that medical reasons precluded his attendance.
By letter dated March 4, 2004, the SCPD informed Plaintiff that the Internal Affairs Department was commencing an investigation into Plaintiff's failure to attend *256 the medical examination; the letter also informed Plaintiff that Internal Affairs was conducting an investigation into the charges Plaintiff raised in April 2003 concerning officer safety and training, falsification of documents, lack of supervision, and lack of adherence to SCPD procedures.
On June 7, 2004, Plaintiff was retired from the SCPD. Approximately three weeks later, Plaintiff commenced this action, alleging violations of 42 U.S.C. § 1983. Plaintiff contends that the Defendants violated his First and Fourteenth Amendment Rights by retaliating against him for speaking out on matters of public concern. The Defendants have moved to dismiss the Complaint.
DISCUSSION
I. Standard On A Motion To Dismiss
A district court should grant a motion to dismiss only if" `it is clear that no relief could be granted under any set of facts that could be proved consistent with allegations.'" H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984)). In applying this standard, a district court must "read the facts alleged in the complaint in the light most favorable" to the plaintiff and accept these factual allegations as true. H.J. Inc., 492 U.S. at 249, 109 S. Ct. 2893; see also Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 165, 113 S. Ct. 1160, 122 L. Ed. 2d 517 (1993) (noting the Federal Rules' liberal system of notice pleading).
In deciding a motion to dismiss, the district court's duty "is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Sims v. Artuz, 230 F.3d 14, 20 (2d Cir.2000); see also Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The appropriate inquiry, therefore, is not whether a plaintiff's claims are ultimately meritorious, but whether the plaintiff is entitled to offer evidence to support them. See Ricciuti v. New York City Transit Auth., 941 F.2d 119, 123-24 (2d Cir.1991) (plaintiff is not compelled to prove his or her case at the pleading stage).
Additionally, a plaintiff is not required to set out in detail the facts upon which he or she bases a claim. Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). A plaintiff need only give a statement of his or her claim that will give the defendant "fair notice of what the ... claim is and the grounds upon which it rests." Id. Therefore, where a complaint is filed that charges each element necessary to recover, the dismissal of the case for failure to set out evidential facts can seldom be warranted. See U.S. v. Employing Plasterers Ass'n, 347 U.S. 186, 189, 74 S. Ct. 452, 98 L. Ed. 618 (1954). Moreover, pleadings are more liberally construed where, as here, `the plaintiff alleges civil rights violations....' Tsai v. Rockefeller Univ., 137 F. Supp. 2d 276, 280 (S.D.N.Y.2001) (quoting Cruz v. Gomez, 202 F.3d 593, 596 (2d Cir.2000)) (quoting Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir.1998)).
However, allegations that are so baldly conclusory that they fail to give notice of the basic events and circumstances of which a plaintiff complains are meaningless as a practical matter and, as a matter of law, are insufficient to state a claim. See Barr v. Abrams, 810 F.2d 358, 363 (2d Cir.1987).
II. Plaintiff's Section 1983 Claims
In order to state a claim for relief pursuant to 42 U.S.C. § 1983, "a plaintiff must *257 allege (1) that the challenged conduct was attributable at least in part to a person acting under color of state law, and (2) the conduct deprived the plaintiff of a right guaranteed under the Constitution of the United States." Snider v. Dylaq, 188 F.3d 51, 53 (2d Cir.1999); see also Dwares v. New York, 985 F.2d 94, 98 (2d Cir.1993) (overruled on other grounds).
Here, there is no issue as to whether the challenged conduct was perpetrated by officials acting under the color of state law. The only issue is whether Plaintiff has alleged a violation of his constitutional rights. Plaintiff claims that Defendants violated his First Amendment rights by harassing him, and taking other retaliatory measures against him in an effort to silence his complaints concerning the SCPD. Plaintiff further alleges that the same retaliatory actions violated his right to equal protection of the laws provided by the Fourteenth Amendment.
A. First Amendment Retaliation Claims
To state a First Amendment retaliation claim, a plaintiff must establish that "(1) his speech was constitutionally protected, (2) he suffered an adverse employment action, and (3) that a causal connection exists between his speech and the adverse employment determination against him, so that it can be said that his speech was a motivating factor in the determination." Gorman-Bakos v. Cornell Coop. Extension, 252 F.3d 545, 553 (2d Cir.2001); see also Morris v. Lindau, 196 F.3d 102, 110 (2d Cir.1999). The Court considers each of the three elements in turn.
1. Constitutionally Protected Speech
It is well established that a "governmental employer may impose certain restraints on the speech of its employees, restraints that would be unconstitutional if applied to the general public." City of San Diego v. Roe, 543 U.S. 77, 125 S. Ct. 521, 523, 160 L. Ed. 2d 410 (2004). But a public employee does not forfeit First Amendment rights in exchange for a paycheck. See Connick v. Myers, 461 U.S. 138, 140, 103 S. Ct. 1684, 75 L. Ed. 2d 708 (1983). Most notably, courts have protected a public employee's right to comment on matters of public concern. See Roe, 125 S.Ct. at 525; DePace v. Flaherty, 183 F. Supp. 2d 633, 636-37 (S.D.N.Y.). The rationale for affording this protection is that "public employees are often the members of the community who are likely to have informed opinions as to the operations of their public employers, operations which are of substantial concern to the public." Roe, 125 S.Ct. at 525.
Whether a public employee's speech relates to a matter of public concern depends on the "content, form, and context of a given statement, as revealed by the whole record." Connick, 461 U.S. at 146-47, 103 S. Ct. 1684. Within this construct, the Court must determine whether Plaintiff's speech concerns a "subject of legitimate news interest; that is, a subject of general interest and of value and concern to the public at the time of publication." Roe, 125 S.Ct. at 526. If the speech pertains to such matters, it relates to a matter of public concern. See Lewis v. Cowen, 165 F.3d 154, 163 (2d Cir.1999).
Defendants contend that the personal nature of Plaintiff's complaints precludes a finding that Plaintiff's speech pertained to matters of public concern. See Ezekwo v. New York City Health & Hosp. Corp., 940 F.2d 775, 781 (2d Cir.1991) (rejecting First Amendment retaliation claim because plaintiff's speech concerned a matter that was personal in nature). Defendants' argument, however, oversimplifies Plaintiff's allegations.
*258 While portions of Plaintiff's speech relate to experiences unique to Plaintiff, much of the speech concerned matters of great importance to the general public. For example, the Complaint alleges that Plaintiff repeatedly spoke to Defendants about the condition of the SCPD's ESU unit, stating that "the department did not have proper training protocols ... [or] equipment to ensure the safety of its officers and the public," and that the ESU's failure to adhere to the existing training protocols, rules and procedures "placed officers and the public in danger." (Pl.'s Compl. ś 14).
The Court finds such speech to be of significant concern to the general public, as it is analogous to "speech on crime rates, police staffing, equipment shortages and related budgetary matters" that "quite plainly involve matters of public concern." Morris, 196 F.3d at 111; see White Plains Towing Corp. v. Patterson, 991 F.2d 1049, 1060 (2d Cir.1993) (stating that "a state police corps' performance of its duties is a matter of public concern"). Indeed, there is little doubt that the public has great interest in acquiring information about the proper functioning of its police force â particularly where the information purports to directly relate to their own safety. See Cahill v. O'Donnell, 7 F. Supp. 2d 341, 349 (S.D.N.Y.1998) (holding that investigations into purported police misconduct where civilians were, or could have been harmed is a matter of public concern).
That certain of Plaintiff's statements concern events personal to Plaintiff does not preclude a finding that his speech was constitutionally protected. In order to invalidate Plaintiff's First Amendment retaliation claim on the grounds that Plaintiff's speech was not protected, the Court would have to conclude that Plaintiff's speech, as a whole, was unprotected, motivated only by Plaintiff's personal interest. See Ezekwo, 940 F.2d at 781. The Court declines to reach this conclusion. Based on the Complaint, the Court finds it difficult to ascertain what, if anything, Plaintiff had to gain by pointing out the SCPD's alleged shortcomings. To the contrary, it appears Plaintiff's speech was primarily motivated by concern for the safety of the public and his fellow officers. Such speech is not precluded from First Amendment protection simply because it may have been spurred by Plaintiff's own unsettling experiences. See Johnson v. Ganim, 342 F.3d 105, 114 (2d Cir.2003) ("There is no question that [plaintiff] took a personal interest in the matters about which he wrote.... The thrust of the speech, however, is aimed at the alleged system-wide epidemic that affected ... the voting public as a whole. Indeed, if the letter is viewed as requesting that action be taken, the benefit of such action would inure more to the group than to him specifically. Therefore, the `predominant content' of [plaintiff's speech] addressed matters of public concern.").
Notwithstanding the subject matter of Plaintiff's speech, Defendants contend that much of the speech is not protected because it was not delivered in a public forum. According to Defendants, the first incident of protected speech occurred in May 2003, when Plaintiff filed a complaint with the Suffolk County District Attorney. It is well-established, however, that "[t]he mere fact that a public employee chooses to discuss privately his concerns with his employer as opposed to expressing his view publicly does not alter the analysis [of whether a statement relates to a matter of public concern]." Ezekwo, 940 F.2d at 781; see Givhan v. Western Line Consol. Sch. Dist., 439 U.S. 410, 415-16, 99 S. Ct. 693, 58 L. Ed. 2d 619 (1979) ("Neither the [First] Amendment itself nor our decisions indicate that [freedom of speech] is lost to the public employee who arranges to communicate *259 privately with his employer rather than to spread his views before the public"). Accordingly, Defendants' attempt to label Plaintiff's pre-May 2003 speech as unprotected is unavailing.
2. Adverse Employment Action
The Court next considers whether Plaintiff has sufficiently alleged an adverse employment action. In order to plead an adverse employment action, Plaintiff must allege that he experienced a "materially adverse change in the terms and conditions of employment." Galabya v. New York City Bd. of Educ., 202 F.3d 636, 640 (2d Cir.2000). The change "must be more disruptive than a mere inconvenience or an alteration of job responsibilities." Id. Some examples of adverse employment actions are termination, "demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices ... unique to particular situation." Id.; see also Phillips v. Bowen, 278 F.3d 103, 109 (2d Cir.2002).
While "less flagrant reprisals" than termination or reduction in benefits may constitute adverse employment actions, "`not every unpleasant matter short of [discharge or demotion] creates a cause of action' for retaliatory discharge." Wanamaker v. Columbian Rope Co., 108 F.3d 462, 466 (2d Cir.1997) (quoting Welsh v. Derwinski, 14 F.3d 85, 86 (1st Cir.1994)). But an accumulation of "seemingly minor incidents" may combine to establish an "atmosphere of adverse employment action," sufficient to allege a retaliation claim. Phillips, 278 F.3d at 109. In determining whether an adverse employment action has occurred, the Court must "pore over [the] case to determine whether the challenged employment action reaches the level of adverse'" Richardson v. New York State Dep't of Corr. Serv., 180 F.3d 426, 446 (2d Cir.1999) (quoting Wanamaker, 108 F.3d at 466).
Plaintiff alleges that the following actions either constitute separate adverse employment actions or combine to establish an atmosphere of adverse employment action: (1) in November 2002, Defendants Robilotto and Gallagher prematurely submitted Plaintiff's retirement papers, and omitted Plaintiff's March 11, 1998 injuries from the paperwork; (2) in October 2003, the SCPD determined that Plaintiff was physically capable of returning to work; (3) in March 2004, the SCPD attempted to charge Plaintiff with insubordination for his failure to attend a medical examination; and (4) the SCPD failed to place Plaintiff on the Commissioner's List as promised in September 1999. The Court separately considers each of Plaintiff's allegations, and then considers their combined impact.
a. The Submission Of Plaintiff's Retirement Papers
Plaintiff alleges that, in November 2002, Defendants Robilotto and Gallagher prematurely â and without Plaintiff's consent â submitted his retirement papers in retaliation for his continuing criticisms about the SCPD. Plaintiff contends that, when his retirement paperwork was submitted, several other officers had been on leave from the SCPD longer than Plaintiff and should have had their paperwork submitted ahead of him. Plaintiff maintains that he was singled out for retirement because of his continuing complaints about the SCPD.
Additionally, and indisputably in tension with Plaintiff's objections to the timing of the submission of his retirement paperwork, Plaintiff contends that the retirement paperwork was deficient because it failed to include any reference to the injuries Plaintiff sustained in the March 11, 1998 boat explosion. Presumably, the failure *260 to include such injuries caused the New York Retirement and Local Systems to reject Plaintiff's application. (Pl.'s Mem. of Law in Opp. to Defs.' Mot. to Dismiss at 13). Therefore, according to Plaintiff, the SCPD was trying to retire him prematurely as a punishment for his protected speech, but, at the same time, was purposefully handicapping their own efforts by omitting information that would make the approval of Plaintiff's retirement more likely. The Court can only construe such allegations as pleading in the alternative.
Defendants contend that no adverse employment action can be divined from the filing of the retirement papers because: (1) the paperwork was submitted before Plaintiff engaged in any protected speech or activity; (2) SCPD officials are authorized, by statute to submit retirement paperwork on behalf of employees, with or without their consent; and (3) it is unclear how the omission of certain injuries from his retirement paperwork could be considered adverse.
The Court finds the alleged premature submission of Plaintiff's retirement paperwork insufficient to establish any adverse employment action. Most pertinent to the Court's analysis is the simple fact that the November 2002 retirement application was rejected by the New York Retirement and Local Systems in April, 2004. Because the paperwork was rejected, Plaintiff never experienced any material change in his employment circumstances due to the submission.
However, Plaintiff's claim that his injuries were purposefully omitted from his retirement application in an effort to penalize him for his protected speech is sufficient, at this stage, to establish an adverse employment action. The failure to include this information arguably precluded Plaintiff from obtaining his retirement benefits in a timely manner. The alleged deprivation of benefits is sufficient, at this time, to support Plaintiff's retaliation claim.
Defendants' arguments do not disturb this conclusion. As explained above, the Complaint contains allegations of protected speech occurring long before the filing of Plaintiff's retirement papers, rendering Defendants' timing argument inapplicable. Defendants' reliance upon the retirement statute is similarly unavailing. As Plaintiff properly points out, acts that are otherwise authorized by law can take on a different character when executed with a retaliatory motive. In other words, Plaintiff is not objecting to the legitimacy of the procedure followed, but rather the alleged retaliatory motives undergirding its application to him. See Amnesty Amer. v. Town of West Hartford, 361 F.3d 113, 125 (2d Cir.2004) (stating that a § 1983 violation may be pled by establishing a practice or custom of unconstitutional application of a constitutionally valid law). The issue of whether or not Defendants were justified in their actions is a question of fact, improperly raised on a motion to dismiss.
b. Reinstatement To Active Duty
Plaintiff contends that the SCPD retaliated against him by reinstating him to active duty before he was physically capable of returning. Specifically, Plaintiff alleges that the SCPD made him undergo a "predetermined" medical exam, and then reinstated him to active duty in October 2003, almost one year after the SCPD filed his retirement paperwork. Defendant contends that Plaintiff's reinstatement cannot be construed as an adverse employment action because Plaintiff was only reinstated to light duty and the reinstatement was authorized by statute. See N.Y. Gen. Mun. L. § 207-c.
Notwithstanding the tension between Plaintiff's objection to his reinstatement *261 and the seemingly contrary grievances found throughout the Complaint,[1] Plaintiff's claim that he was forced to return to work prematurely sufficiently alleges an adverse employment action. The claim is not based on a "mere alteration in job responsibilities," Galabya, 202 F.3d at 636, but rather a request that Plaintiff perform work that he was physically incapable of performing. Such alleged change in the circumstances of Plaintiff's employment status sufficiently states an adverse employment action. See Wanamaker, 108 F.3d at 466.
That Plaintiff was only reinstated to perform "light" duty is of no moment. Indeed, the nature of Plaintiff's duties upon return, when viewed within the context of the Complaint, are immaterial. Plaintiff simply avers that, at the time of his reinstatement, he was physically incapable of returning to work; there is no indication as to whether he was capable of performing any duties, including light work, at the time of his reinstatement. At most, the nature of Plaintiff's duties upon reinstatement raises an issue of fact with respect to the propriety of Defendants' actions â a question outside the realm of the Court's consideration on a motion to dismiss.
Defendants' reliance on adherence to New York's General Business Law is, for the reasons explained above (in Section II, A, 2, a), similarly unavailing.
c. The Charge Of Insubordination
Plaintiff contends that the Internal Affairs Department investigation of his failure to attend a medical exam amounts to an adverse employment action. Specifically, Plaintiff claims that "[t]he SCPD is/was attempting to charge plaintiff with insubordination for not being able to attend a medical evaluation.... the charge of insubordination against plaintiff was a retaliatory measure against plaintiff for speaking out on matters of public concern." (Compl.ś 31).
Defendants correctly point out, however, that, in general, "[a]n employee is not `adversely affected' by disciplinary charges in the workplace unless the charges are decided against him." Washington v. County of Rockland, 211 F. Supp. 2d 507, 514 (S.D.N.Y.2002) (citing Yerdon v. Henry, 91 F.3d 370, 378 (2d Cir.1996)). Here, the Complaint does not allege either that the charges were decided against Plaintiff, or that Plaintiff suffered any changes in the circumstances of his employment status as a result of the charges. Therefore, Plaintiff may not rely on the investigation, by itself, as an adverse employment action.
d. Failure To Place Plaintiff On The Commissioner's List
Finally, Plaintiff contends that Abbott's failure to follow through on a promise to place him on the Commissioner's List constitutes an adverse employment action. Plaintiff characterizes this action as a deprivation of benefits.
This alleged promise â by Plaintiff's own admission â amounted to nothing more than a bribe. (Pl.'s Mem. of Law in Opp. to Defs.' Mot. to Dismiss at 16 ("In return [for being placed on the Commissioner's List], Abbott implied that he wanted Plaintiff to forget about any of the other issues that might embarrass the [SCPD].... It can be inferred that these statements were a promise that keeping quiet will result in rewards.")). The Court only entertains this purported adverse employment *262 action long enough to note that it is highly unlikely that the Framers of the Constitution intended for the First Amendment to protect a Plaintiff's entitlement to the equivalent of "hush money." Accordingly, Plaintiff may not rely on the Defendants' failure to place him on the Commissioner's List as an adverse employment action.
e. Atmosphere Of Adverse Employment Action
To the extent Plaintiff alleges that the Defendants purposefully excluded his health condition from his retirement papers and ordered his return to work before he was physically able, the Court finds Plaintiff has sufficiently alleged an atmosphere of adverse employment action sufficient to withstand a motion to dismiss. Additionally, Plaintiff's allegations that: (1) he was consistently informed that he should remain silent; (2) his retirement paperwork was prematurely submitted; and (3) an investigation was improperly launched against him â while not rising to the level of independent adverse employment actions â may also be considered in determining whether there was an "atmosphere of adverse employment action." See Phillips, 278 F.3d at 108.
3. Causation
Finally, the Court considers whether Plaintiff has alleged a causal connection between his protected speech and Defendants' alleged adverse employment action. A plaintiff states a sufficient causal connection by alleging close temporal proximity between the protected speech and the adverse employment action. See Reed v. A.W. Lawrence & Co., 95 F.3d 1170, 1178 (2d Cir.1996). Additionally, a plaintiff may demonstrate a causal connection "through evidence of retaliatory animus directed against the Plaintiff by the defendant." Gordon v. New York City Bd. of Educ., 232 F.3d 111, 117 (2d Cir.2000). In determining the existence of a causal connection between the protected speech and the alleged retaliatory action, the Court is mindful that "[c]ausation generally is a question for the finder of fact." DePace, 183 F.Supp.2d at 638.
Construing the Complaint's allegations in a light most favorable to the Plaintiff, the Court finds a sufficient factual predicate to permit a finding of a causal connection between Plaintiff's protected speech and the alleged retaliation. Plaintiff alleges that he began voicing his concerns about the SCPD in September 1999, and was immediately made aware that the SCPD wished him to remain silent. Plaintiff avers that, from September 1999 until November 2002 (the date of the first viable adverse employment action), he received warnings and veiled threats from SCPD officials as a result of his continuing complaints. While a significant time period (approximately three years) lapsed between the first instance of Plaintiff's protected speech and the first alleged retaliatory action, the sequence of events indicates an ongoing struggle between Plaintiff and the SCPD concerning his continuing allegations of malfeasance and non-feasance. This battle arguably culminated in the November 2002 adverse employment action, and the other alleged retaliations that followed. Assuming Plaintiff's allegations to be true, there is a sufficient basis for a reasonable jury to find a causal link between Plaintiff's speech and the Defendants' alleged retaliatory actions. See Chertkova v. Conn. Life Ins., 92 F.3d 81, 90 (2d Cir.1996) (stating that the sequence of events is important in determining the existence of a causal connection in retaliation claim).
*263 B. Plaintiff's Fourteenth Amendment Claim
Plaintiff contends, albeit in summary fashion, that the same factual predicate for his First Amendment retaliation claim is sufficient to state an equal protection violation. Plaintiff maintains that he was singled out from other co-workers, impermissibly, because of his protected speech.
In order to allege an equal protection claim, Plaintiff must allege "(1) he was treated differently than others similarly situated, and (2) such selective treatment was based on impermissible considerations, in this case his First Amendment rights." DePace, 183 F.Supp.2d at 639. Upon cursory examination, Plaintiff appears to have met this minimum pleading requirement.
However, the Second Circuit, in Bernheim v. Litt, held that the same facts supporting an alleged retaliation claim may not also serve as the predicate of an equal protection claim. 79 F.3d 318, 323 (2d Cir.1996). The court reasoned:
The remaining harms that [plaintiff] sets forth in her equal protection claim are alleged to be the product, not of discrimination, but of retaliation for her complaints of discrimination. Although claims of retaliation are commonly brought under the First Amendment, and may also be brought under Title VII, we know of no court that has recognized a claim under the equal protection for retaliation following complaints of racial discrimination.... Accordingly, [plaintiff's] equal protection claim cannot stand.
Id. (Internal citations omitted); see also Lange v. Town of Monroe, 213 F. Supp. 2d 411, 419 (S.D.N.Y.2002). The only fact differentiating Bernheim from this case is the subject matter of Plaintiff's speech; and the Court finds no principled basis for limiting the Second Circuit's holding based on subject matter. See Ratliff v. DeKalb County, 62 F.3d 338, 340-41 (11th Cir.1995) ("The right to be free from retaliation is clearly established as a first amendment right and as a statutory right under Title VII; but no clearly established right exists under the equal protection clause to be free from retaliation." (emphasis in original)); see also Boyd v. Illinois State Police, 384 F.3d 888, 898 (7th Cir.2004); Grossbaum v. Indianapolis-Marion County Bldg., 100 F.3d 1287, 1296 (7th Cir.1996). Accordingly, Plaintiff's equal protection claim predicated on Defendants' alleged retaliatory actions is DISMISSED.
III. Plaintiff's Monell Claims
Defendants Suffolk County and SCPD ("Municipal Defendants") argue that Plaintiff has not alleged any policy or custom of denial of constitutional rights that would permit a finding of municipal liability. According to Defendants, the Complaint contains only "broad, simple and conclusory statements" and, thus, does not allege a sufficient basis for municipal liability. The Court disagrees. While the Complaint does not allege a widespread custom or practice of discrimination, it does contain sufficient allegations, which, if proven true, would support a claim for municipal liability.
In order to impose liability against a municipality pursuant to 42 U.S.C. § 1983, a plaintiff must allege that the violation of his constitutional rights was part of a governmental custom, policy, ordinance, regulation or decision. See Monell v. Dep't of Soc. Svcs., 436 U.S. 658, 690, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). Specifically, Plaintiff must plead three elements: "(1) an official policy or custom that (2) causes the plaintiff to be subjected to (3) a denial of a constitutional right." Batista v. Rodriguez, 702 F.2d 393, 397 (2d Cir.1983). Where a plaintiff simply alleges *264 "constitutional torts committed by city employees without official sanction," a claim for municipal liability must fail. Amnesty, 361 F.3d at 125.
A plaintiff may satisfy the Monell pleading criteria in several ways. For example, a plaintiff may allege that a municipality's official policy or ordinance is unconstitutional on its face; or that the ordinance is constitutional on its face, but "the city causes its employees to apply it unconstitutionally, such that the unconstitutional application might itself be considered municipal policy.... Such circumstances may be found ... where the city is aware that its policy may be unconstitutionally applied by inadequately trained employees but the city consciously chooses not to train them." Amnesty, 361 F.3d at 125.
Where a plaintiff alleges that their constitutional rights have been violated by "a city employee's single tortious decision or course of action, the inquiry focuses on whether the actions of the employee in question may be said to represent the conscious choices of the municipality itself. Such an action constitutes the act of the municipality and therefore provides a basis for municipal liability where it is taken by, or is attributable to, one of the city's authorized policymakers." Id. at 125-26; see Pembaur v. City of Cincinnati, 475 U.S. 469, 481-82, 106 S. Ct. 1292, 89 L. Ed. 2d 452 (1986).
Here, Plaintiff makes the following specific allegation concerning the Municipal Defendants:
Defendants [Suffolk County and the Suffolk County Police Department] have ... deprived plaintiff of his constitutional rights.... Defendants intentionally committed, condoned or were deliberately indifferent to aforementioned violations of plaintiff's constitutional rights. Such deliberate indifference may be inferred in the following ways: a) Defendants['] custom or practice of discriminating/retaliating against plaintiff based on his constitutionally protected forms of speech, expression and association. The discriminatory practices were so persistent and widespread that they constitute the constructive acquiescence of policymakers. b) Supervisors failed to properly investigate and address allegations of retaliation and/or harassment. c) Inadequate training ... was so likely to result in the retaliation ... that policymakers can reasonably be said to have been deliberately indifferent to the need to provide better training and supervision. d) Policymakers engaged in and/or tacitly condoned the retaliation.
(Compl.ś 38).
The Municipal Defendants accurately point out that Plaintiff has failed to allege any widespread practice or custom of abrogating employees' First Amendment rights. Most pertinent to this point, the Complaint references only the "Defendants[']... custom or practice of discriminating ... against plaintiff based on his constitutionally protected forms of speech." (Id.) (emphasis added). There is no allegation that the Municipal Defendants have adopted an affirmative policy or custom of abrogating the protected speech of any other employees.
However, Plaintiff has alleged that supervisors failed to properly investigate his claims of retaliation, that inadequate training was so likely to lead to the retaliatory actions taken against him "that policymakers can reasonably be said to have been deliberately indifferent to the need to provide better training and supervision," and that policy makers, themselves, perpetrated or condoned the retaliations against him. Such pleading satisfies the minimum requirements of Rule 8. Accordingly, the *265 Municipal Defendants' motion to dismiss is DENIED.
IV. Qualified Immunity
Having determined that Plaintiff has sufficiently alleged a § 1983 claim, the Court considers the Individual Defendants' (Abbott, Gallagher and Robilotto) claim of qualified immunity. See Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001) (stating that the threshold question, before passing on qualified immunity, is whether plaintiff has alleged any constitutional violation).
Qualified immunity shields government officials from civil liability resulting from the performance of their discretionary functions only where 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); see Lennon v. Miller, 66 F.3d 416, 420 (2d Cir.1995). In order to establish entitlement to qualified immunity, the Defendants must demonstrate that either: (1) their actions did not clearly violate Plaintiff's First Amendment rights, or (2) it was objectively reasonable for them to believe their actions did not violate Plaintiff's First Amendment rights. See Salim v. Proulx, 93 F.3d 86, 89 (2d Cir.1996). The Court adds that, although "a qualified immunity defense may be advanced on a 12(b)(6) motion, it faces a `formidable hurdle' when advanced at such an early stage in the proceedings." The Cathedral Church of the Intercessor v. The Incorporated Village of Malverne, 353 F. Supp. 2d 375, 391 (E.D.N.Y.2005) (quoting McKenna v. Wright, 386 F.3d 432, 434 (2d Cir.2004)).
At this stage, the Court denies the Individual Defendants' request for qualified immunity. As explained above, Plaintiff has sufficiently alleged conduct by the Individual Defendants that, if proven true, would constitute a violation of his well-established First Amendment rights. See Szoke v. Carter, 974 F. Supp. 360, 369 (S.D.N.Y.1997); see also Frank v. Relin, 1 F.3d 1317, 1328 (2d Cir.1993) (noting that "it was established prior to 1985 that government employees had a right under the First Amendment, though not an unlimited right, to speak on matters of public concern."). Moreover, the Individual Defendants' alleged actions cannot be considered objectively reasonable. For example, the Complaint contains allegations that the Individual Defendants issued veiled threats to Plaintiff, took retaliatory personnel actions against him, and/or permitted instances of improper retaliation against Plaintiff. Accordingly, the Individual Defendants' motion to dismiss Plaintiff's § 1983 claims on the grounds of qualified immunity is DENIED.
V. Plaintiff's Claims Against Abbott
Finally, Defendant Abbott argues that Plaintiff's claims against him must be dismissed as untimely. According to Abbott, the Complaint's latest allegation with respect to his conduct concerns an incident occurring in September 2000, more than three years prior to the date this action was filed (June 23, 2004). Because New York applies a three-year statute of limitations period to § 1983 claims, Abbott contends that Plaintiff's claims against him are time-barred. See Pinaud v. County of Suffolk, 52 F.3d 1139, 1156 (2d Cir.1995).
Plaintiff maintains that the Complaint alleges Abbott's role in constitutional violations occurring much later than September 2000. Plaintiff relies on the Complaint's allegations concerning his inaccurate retirement application, his reinstatement to active duty, and the Internal Affairs investigation as sufficient pleading of Abbott's *266 constitutional violations. (Compl.śś 27, 31, 32, 33, 35). Further, to the extent the Court limits the allegations relevant to Abbott's conduct to the events ending in September 2000, Plaintiff argues that the statute of limitations must be tolled due to the Defendants' "continuing violation" of his constitutional rights. See Washington v. County of Rockland, 373 F.3d 310, 318 (2d Cir.2004).
In order to state a claim against an individual defendant pursuant to 42 U.S.C. § 1983, a plaintiff must allege the defendant had "personal involvement" in the unconstitutional action. See Back v. Hastings on Hudson Union Free Sch. Dist., 365 F.3d 107, 122 (2d Cir.2004). Where the target of a plaintiff's allegations is a supervisor, or other high ranking official, the Second Circuit has explained:
An individual cannot be held liable for damages under § 1983 "merely because he held a high position of authority," but can be held liable if he was personally involved in the alleged deprivation. Personal involvement can be shown by [] evidence that: (1) the defendant participated directly in the alleged constitutional violation, (2) the defendant, after being informed of the violation through a report or appeal, failed to remedy the wrong, (3) the defendant created a policy or custom under which unconstitutional practices occurred, or allowed the continuance of such a policy or custom, (4) the defendant was grossly negligent in supervising subordinates who committed the wrongful acts, or (5) the defendant exhibited deliberate indifference ... by failing to act on information indicating that unconstitutional acts were occurring.
Id. at 127 (citations omitted).
Here, the Complaint makes the following references to Abbott:
James Abbott was during relevant times, an individual employed by the SCPD ... was the 1st Deputy Commissioner of the Suffolk County Police Department and therefore, was responsible for its maintenance and operation, including but not limited to, the hiring, firing, promotion and discipline of employees and all other employment related issues. Additionally, defendant Abbott was a policymaker for the SCPD, charged with the responsibility of insuring that employees were not subjected to unlawful retaliation or harassment. He was also responsible for properly training and supervising employees with respect to employment issues. Defendant Abbott worked in Suffolk County. (ś 9.)
In or around the Summer of 1999, plaintiff had a conversation with the then Deputy Commissioner of the Suffolk County Police Department, Abbott. In this conversation, plaintiff spoke about ... issues of public concern.... (ś 14.)
Abbott told plaintiff, in or around the Summer of 1999, that as far as plaintiff's injuries were concerned, the SCPD would take care of plaintiff by placing him on the Commissioner's List.... In return, Abbott implied that he wanted plaintiff to forget about any of the ... issues he raised. (ś 15.)
In or around late 1999 ... plaintiff told Abbott that serious issues of malfeasance existed within the SCPD. During this conversation, Abbott denied the promises ... previously made to plaintiff regarding the Commissioner's List and told plaintiff that Risk Management was retiring plaintiff. (ś 16.)
In or around September 2000, in a meeting between plaintiff and Abbott, plaintiff raised issues [of public concern].... During the meeting, Abbott told plaintiff "we are not doing anything that will *267 make the police department look bad." Also, Abbott told plaintiff that the Department would not investigate plaintiff's claims. Abbott told plaintiff that he "dropped a bomb" on him.... Also ... Abbott told plaintiff words to the effect of "do something now, and lament it for a lifetime." ś 18.
While the specific references to Abbott cease after the alleged September 2000 conversation, there are sufficient allegations that Abbott was personally involved in the alleged retaliatory actions occurring after that date. Plaintiff avers that Abbott was a high ranking official and policy maker in the SCPD. Plaintiff avers that Abbott was familiar with, and responded negatively to Plaintiff's protected speech concerning the SCPD. Plaintiff further alleges that "during relevant times," Abbott was responsible for all SCPD employment decisions. Finally, Plaintiff maintains that Abbott (and the other Individual Defendants) "participated in and/or permitted the aforementioned harassment and/or retaliation to perpetuate, without abatement, in violation of plaintiff's constitutional ... rights." (Compl.ś 40). Such allegations implicate Abbott, through non-feasance, in all the alleged retaliatory actions taken against Plaintiff listed in the Complaint. Accordingly, Abbott's contention that Plaintiff's claims against him are time barred is unavailing.[2]
CONCLUSION
The Defendants' motion to dismiss is GRANTED, in part, and DENIED, in part.
Defendants' motion to dismiss Plaintiff's § 1983 claim alleging retaliation in violation of his First Amendment rights is DENIED.
Defendants' motion to dismiss Plaintiff's § 1983 claim alleging a violation of his Fourteenth Amendment equal protection rights is GRANTED. Plaintiff's Fourteenth Amendment claim is hereby DISMISSED, without prejudice.
Defendants' motion to dismiss Plaintiff's § 1983 claim alleging retaliation in violation of his First Amendment rights is DENIED.
SO ORDERED
NOTES
[1] Plaintiff objects to Defendants' filing of his retirement papers because the filing was premature, but also objects that the application was improperly rejected. Plaintiff's objection to his reinstatement is seemingly inconsistent with his objection to premature retirement.
[2] Because the Court has determined that Plaintiff has failed to plead any adverse employment action prior to November 2002, the Court need not address the preservation of any claims that accrued in September 2000. Accordingly, the Court does not address the relevance of the tolling exception for "continuing violations." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562981/ | 450 F. Supp. 2d 1096 (2006)
In re PIXAR SECURITIES LITIGATION.
This Document Relates To All Actions.
No. C 05-04290 JSW.
United States District Court, N.D. California.
September 12, 2006.
*1097 Karen T. Rogers, Jeff S. Westerman, Milberg Weiss Bershad & Schulman LLP, Los Angeles, CA, Peter E. Seidman, Richard H. Weiss, Steven G. Schulman, Milberg Weiss Bershad Hynes & Lerach LLP, New York, NY, for Plaintiffs.
Boris Feldman, Cheryl W. Foung, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, for Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS
WHITE, District Judge.
Lead plaintiff Frederick P. Arndt ("Plaintiff') brings this action individually and on behalf of all other persons who purchased or otherwise acquired the common stock of defendant Pixar ("Pixar") between February 10 and June 30, 2005 (the "Class Period"),[1] pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b-5, 17 C.F.R. 240.10b-5. Now before the Court is the motion by defendants Pixar, Steven P. Jobs ("Jobs"), Edwin E. Catmull ("Catmull"), and Simon T. Box ("Bax") (collectively "Defendants") to dismiss the Amended Complaint ("Complaint"). Defendants move to dismiss asserting that Plaintiff fails to meet the heightened pleading requirements of the Private Securities Litigation Reform Act *1098 ("PSLRA") and fail to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6) and 12(b)(9).
The motion to dismiss is now fully briefed and ripe for decision. The Court finds that this matter is appropriate for disposition without oral argument and the matter is deemed submitted. See N.D. Civ. L.R. 7-1(b). Accordingly, the hearing set for September 15, 2006 is VACATED. Having carefully reviewed the parties' papers, considered their arguments and the relevant legal authority, the Court hereby GRANTS Defendants' motion to dismiss.
FACTUAL BACKGROUND
Plaintiff alleges that Defendants "flooded the market" with copies of The Incredibles home videos to capitalize on a very narrow sales window. (Compl., ¶ 62.) According to Plaintiff, "flooding the market" had the effect of artificially inflating the video sales for The Incredibles "in the days immediately following its release" and Defendants failed to disclose "the risk that large numbers of unsold home video units would be returned to [Pixar]." (Id.) Plaintiff brings claims based on Defendants' allegedly materially false or misleading statements regarding the release of The Incredibles DVD. The Court will address the additional specific facts as required in the analysis.
ANALYSIS
Section 10(b) of the Securities Exchange Act provides, in part, that it is unlawful "to use or employ in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe." 15 U.S.C. § 78j(b). Rule 10b-5 makes it unlawful for any person to use interstate commerce:
(a) To employ any device, scheme, or artifice to defraud;
(b) To make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or;
(c) To engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5.
To plead a claim under section 10(b) and Rule 10b-5, a plaintiff must allege (1) a misrepresentation or omission, (2) of material fact, (3) made with scienter, (4) on which the plaintiff justifiably relied, (5) that proximately caused the alleged loss. Binder v. Gillespie, 184 F.3d 1059, 1063 (9th Cir.1999). Additionally, as in all actions alleging fraud, a plaintiff must state with particularity the circumstances constituting fraud. Greebel v. FTP Software, Inc., 194 F.3d 185, 193 (9th Cir. 1999); Fed.R.Civ.P. 9(b).
Plaintiffs also claim that individual defendants are liable pursuant to Section 20(a) of the Securities Exchange Act, which provides for derivative liability for those who control others found to be primarily liable under the provisions of that act. See In re Ramp Networks, Inc. Sec. Lit., 201 F. Supp. 2d 1051, 1063 (N.D.Cal. 2002). Where a plaintiff asserts a Section 20(a) claim based on an underlying violation of section 10(b), the pleading requirements for both violations are the same. Id.
A. Applicable Pleading Standards.
1. Rule 12(b)(6).
A motion to dismiss is proper under Rule 12(b)(6) where the pleadings fail to *1099 state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss should not be granted unless it appears beyond a doubt that a plaintiff can show no set of facts supporting his or her claim. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957); see also De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.1978).
1. Private Securities Litigation Reform Act.
In order to limit the number of frivolous private securities lawsuits, Congress enacted the PSLRA in December of 1995, and created heightened pleading standards for such lawsuits. 15 U.S.C. § 78u-4(b). The PSLRA requires that "the complaint shall specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed." 15 U.S.C. § 78u-4(b)(1)(B). Furthermore, the PSLRA requires that the plaintiff "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2).
The heightened standard set by the PSLRA was intended to put an end to securities fraud lawsuits that plead "fraud by hindsight." In re Silicon Graphics, Inc. Sec. Lit., 183 F.3d 970, 988 (9th Cir. 1999). "The PSLRA significantly altered pleading requirements in private securities fraud litigation by requiring that a complaint plead with particularity both falsity and scienter." In re Vantive Corp. Sec. Lit., 283 F.3d 1079, 1084 (9th Cir.2002) (citing Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir.2001)) (emphasis added). "Thus the complaint must allege that the defendant made false or misleading statements either intentionally or with deliberate recklessness or, if the challenged representation is a forward looking statement, with `actual knowledge . . . that the statement was false or misleading.'" Id. at 1085 (citing 15 U.S.C. § 78u-5(c)(1)(B)(I)). This is often accomplished "by pointing to inconsistent contemporaneous statements or information (such as internal reports) made by or available to the defendants." Yourish v. California Amplifier, 191 F.3d 983, 993 (9th Cir.1999) (quoting In re Glen-Fed Sec. Lit., 42 F.3d 1541, 1549 (9th Cir.1991) (en banc)); see also id. at 994 (discussing insufficiency of plaintiffs' allegations with regard to the non-disclosure of confidential non-public information).
Under the PSLRA, a complaint still is construed in the light most favorable to the nonmoving party and all material allegations in the complaint are taken to be true. Silicon Graphics, 183 F.3d at 983. To determine whether a plaintiff has pled a strong inference of scienter, however, "the court must consider all reasonable inferences to be drawn from the allegations, including inferences unfavorable to the plaintiffs." Gompper v. VISX, Inc., 298 F.3d 893, 897 (9th Cir.2002). The Court "should consider all the allegations in their entirety, together with any reasonable inferences therefrom, in concluding whether, on balance, the plaintiffs' complaint gives rise to the requisite inference of scienter." Id. "Conclusory allegations of law and unwarranted inferences, however, are insufficient to defeat a motion to dismiss." In re Northpoint Communications Group, Inc. Sec. Lit. (Northpoint II), 221 F. Supp. 2d 1090, 1094 (N.D.Cal.2002).
Finally, the Court may consider the facts alleged in the complaint, documents attached to the complaint, documents relied upon but not attached to the complaint when the authenticity of those documents is not questioned, and other matters for which the Court can take judicial notice. *1100 Northpoint II, 221 F.Supp.2d at 1094; see also Silicon Graphics, 183 F.3d at 986.
B. Request for Judicial Notice.
Defendants request that the Court take judicial notice of a number of documents attached as exhibits to the Declaration of Cheryl W. Foung ("Foung Decl."). The documents at issue in Defendants' request include transcripts of investor conference calls and SEC filings. Plaintiffs do not dispute the accuracy of the documents attached to the request, and the requested documents are the types of documents of which this Court properly make take judicial notice. See, e.g., In re Calpine Corp. Sec. Lit., 288 F. Supp. 2d 1054, 1076 (N.D.Ca1.2003) (court "may properly take judicial notice of SEC filings and documents expressly referenced" in a complaint"); see also Plevy v. Haggerty, 38 F. Supp. 2d 816, 821 (C.D.Cal.1998). Accordingly, the Court GRANTS Defendants' request with respect to Exhibits 2, 3, 6-15.[2]
C. Plaintiff Fails To Plead Sufficient Facts to Demonstrate Falsity.
The PSLRA requires that Plaintiff allege with the requisite particularity each statement alleged to be false or misleading, the reason or reasons why the statement was false or misleading, and if those allegations are made on information and belief, all facts on which that belief is formed. See 15 U.S.C. § 78u-4(b)(1)(B); see also Employers Teamsters Local Nos. 175 and 505 Pension Trust Fund v. Clorox Co., 353 F.3d 1125, 1134 (9th Cir.2004).
1. Plaintiff does not clearly identify which statements are false.
Plaintiff sets forth the statements which he contends are materially false and misleading in paragraphs 51, 54-55, and 57-61 of his Complaint. These paragraphs contain extensive block quotes with multiple statements. These paragraphs, on their face, appear to contain true facts or statements which Plaintiff does not seem to contest. (Compl.¶¶ 51, 54-55, 57-61.) For example, on March 17, 2005, Defendants filed Pixar's 2004 10-K form with the SEC in which Plaintiff alleges that Defendants state, inter alia:
towards the end of the life cycle for a revenue stream, Disney may inform us, and has in the past informed us, of additional distribution costs to those previously forecasted. Such revisions have impacted and may continue to impact our revenue share and our film gross profit.
. . .
Under the Co-Production Agreement, we share equally with Disney in the profits of The Incredibles, Finding Nemo, Monsters, Inc., Toy Story 2 and A Bug's Life after Disney recovers its marketing, distribution and other predefined costs and fees.
(Id., ¶ 54.) Plaintiff then claims that each of the statements in paragraphs 51, 54-55, and 57-61 of his Complaint are materially false and misleading when made because Defendants "intentionally flooded the market with millions of copies of The Incredibles home videos, far in excess of actual or forecast demand, in an effort to capitalize on a very narrow sales window." (Id., ¶ 62.) According to Plaintiff, "flooding the market" had the effect of artificially inflating the video sales for The Incredibles "in the days immediately following its release" and Defendants failed to disclose "the risk that large numbers of unsold home video units would be returned to [Pixar]." (Id.) Plaintiff further alleges that "Pixar lacked *1101 an internal system of controls adequate for the purpose of preventing the dissemination of materially false and misleading information." (Id.)
As the party bringing this action, Plaintiff is responsible for identifying with particularity what statements are false and misleading. 15 U.S.C. § 78u-4(b)(1). He has not fulfilled his responsibility in this regard, and the Court is "unwilling . . . to search through" the Complaint in an effort to link the allegedly false statements to the reasons those statements purportedly are false. In re Autodesk Sec. Lit., 132 F. Supp. 2d 833, 841-842 (N.D.Cal.2000).
2. Plaintiff has not sufficiently plead facts to show that statements identified in his opposition brief are materially false or misleading.
In opposition to Defendants' motion, Plaintiff appears to narrow the statements he alleges were false or misleading. In his opposition brief, Plaintiff points to the following smaller excerpts he contends were false when made:
(1) "[P]reorders of The Incredibles home videos indicate that its domestic release will be as successful as that of Monsters, Inc." and "we expect continuing international home video revenues from The Incredibles to drive our results for the second quarter," (made on February 10, 2005);
(2) "We recognize film revenue . . . when earned and reasonably estimable." (made on March 17, 2005);
(3) "Looking ahead to the second quarter we expect to report earnings per diluted share of approximately $0.15. The primary driver of these results will be international home video revenues from The Incredibles. . . ." (made on May 5, 2005); and
(4) "We have also made adjustments to our home video revenues for estimates on return reserves that may differ from those reported by Disney. In determining our home video reserves for a particular title, we review information such as Disney's current return reserves, the historical returns for our previous titles, actual rates of returns, inventory levels in the distribution channel and other business and industry trend information that are available." (made on May 12, 2005).
(Opp. at 5-6, citing Compl., ¶¶ 51, 54, 57, 59.)
However, Plaintiff fails to allege sufficient facts to demonstrate that those statements are actionable. Plaintiff groups all these statements together and contends that they are all false for the same reasons discussed above, i.e. that Defendants "flooded the market" and failed to disclose "the risk that large numbers of unsold home video units would be returned to [Pixar]," and that Defendants had inadequate controls. (Compl., ¶ 62.) Plaintiff does not address whether the alleged market shift regarding video sales applies to both domestic and international sales. Nor does Plaintiff identify specifically which portions of these statements he contends were false. For example, it is not clear whether Plaintiff is alleging that Pixar has not made adjustments to its home video revenues for estimates on return reserves that differ from those reported by Disney, or whether he is alleging that Pixar does not review Disney's current return reserves or historical returns for previous titles in determining home video reserves. Moreover, Plaintiff fails to allege how many videos Defendants sent out, how many were actually returned,[3] at what level Defendants set the *1102 reserves for The Incredibles, or what level of reserves Defendants should have set based on the alleged market trend. Nor does Plaintiff allege what amount Pixar "recognized as revenue" or what amount of such recognized revenue was improper. Finally, Plaintiff does not describe what Pixar's "controls" were or what controls would have been adequate based on what standards.
Plaintiff also alleges facts which are inconsistent with his contention that the above statements are false. For example, Plaintiff alleges that the following statements are false: "We have also made adjustments to our home video revenues for estimates on return reserves that may differ from those reported by Disney. In determining our home video reserves for a particular title, we review information such as Disney's current return reserves, the historical returns for our previous titles, actual rates of returns, inventory levels in the distribution channel and other business and industry trend information that are available." (Id., ¶ 59.) However, in support of his allegation that Disney shared its data regarding the market with Defendants, Plaintiff points to the same and other similar statements made by Defendants in other SEC filings. (Id., ¶¶ 37, 38.) Accordingly, the Court finds that Plaintiff failed to sufficiently plead facts that demonstrate that statements identified in his opposition brief are materially false or misleading.
3. Plaintiff has not sufficiently plead facts to show that Defendants were aware that the alleged statements were false or misleading when made.
Another defect with Plaintiff's Complaint is that it fails to allege a sufficient basis to demonstrate that before each statement was made on February 10, March 17, May 5, or May 12, 2005, Defendants were aware that such statements were false or misleading. Plaintiff alleges that "Mr' the months preceding the Class Period, there was a dramatic shift in the pattern of sales in the home video market" in that DVD releases started generating a greater proportion of their total sales in the first week. (Id., ¶ 43.) As support for the proposition that Defendants were aware of this alleged market shift, Plaintiff points to an excerpt from a newspaper article published on May 31, 2005, after all of the alleged false statements were made, and an announcement made on May 10, 2005, two days before the last alleged false statement, from one company regarding disappointing sales from one video. (Id., ¶¶ 43, 44.) Plaintiff has not alleged any, let alone sufficient facts, to support his contention that, at the time the alleged statements were made, Defendants knew of a clear trend that was well understood *1103 regarding DVD sales in the domestic and international markets. See In re Dreamworks Animation SKG, Inc. Sec. Lit., 2006 U.S. Dist. LEXIS 24456, * 7-10 (C.D. Cal. April 12, 2006) (finding that series of articles published in late 2004 and 2005, including the May 31, 2005 article relied on by Plaintiff, "[did] not suggest the existence of a clear trend that would have been well understood," but rather, "describe a fast-changing DVD market").
Plaintiff alleges that when Defendants made the allegedly false statements they had information regarding actual returns which made their statements regarding expected revenue false. Plaintiff relies on confidential witnesses from third-party distributors and a former Disney employee to allege that Disney had access to detailed data and that Disney shared such information with Pixar.[4] Based on these confidential sources, Plaintiff alleges that Disney has "access to tremendous amounts of detailed data regarding the market for the home entertainment unit it distributes," and that Disney is provided daily reports. (Id., ¶ 35.) While the confidential sources from distributors may have personal knowledge regarding how often their companies provide information to Disney, Plaintiff has not provided information demonstrating how the confidential sources would be knowledgeable as to how often Disney reviews or analyzes this information, or more importantly, when it provides such information to Pixar. Although CS-5 may have had information regarding when retailers provided Disney sales information when he or she worked at Disney, CS-5 did not work at Disney during the Class Period. Moreover, CS-5 did not provide any information regarding how often Disney reviewed or analyzed the sales information when he or she worked at Disney, or how often and in what form Disney provided such information to Pixar. See Dreamworks Animation, 2006 U.S. Dist. LEXIS 24456, at * 15-17 (in the absence of particularized information identifying internal reports of sales data and the contents of such reports, finding general statements by a confidential witness that Blockbuster sales data was provided to the defendant company on a daily basis was insufficient to support the allegations that defendants had knowledge of actual sales and returns of DVDs).
To support his allegation that Defendants were aware of the market data provided to Disney, Plaintiff also relies on the Co-Production Agreement between Disney and Pixar which provides that Disney shares its market data with Pixar. (Compl., ¶ 36.) However, he fails to allege how frequently Disney provides such information to Pixar. The Court concludes that Plaintiff has not alleged sufficient facts to demonstrate that Defendants knew, at the time they were made, that they alleged statements were false or misleading.[5]
*1104 D. Plaintiff Fails to Plead Sufficient Facts To Demonstrate Scienter.
The PSLRA also requires a plaintiff to allege particular facts giving rise to a strong inference that "the defendant made false or misleading statements either intentionally or with deliberate recklessness." Vantive, 283 F.3d at 1085; 15 U.S.C. § 78u-4(b)(2). Where the pleadings are not sufficiently particularized or where, even taken as a whole, they do not raise a strong inference of scienter, dismissal pursuant to Rule 12(b)(6) is proper. Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1038 (9th Cir.2002). Moreover, to determine whether a plaintiff has pled a strong inference of scienter, "the court must consider all reasonable inferences to be drawn from the allegations, including inferences unfavorable to the plaintiffs." Gompper, 298 F.3d at 897.
Plaintiff argues that Defendants had motive to lie in order increase stock prices during a period in which it was negotiating a new distribution agreement. (Compl., ¶¶ 39, 78.) Even if Defendants did have a motive to commit fraud, which at this time the Court is not determining whether or not Plaintiff sufficiently alleged, "[m]ere motive and opportunity is insufficient." See No. 84 Employer-Teamster Joint Council Pension Trust Fund v. America West Holding Corp., 320 F.3d 920, 937 (9th Cir.2003) (citing Silicon Graphics, 183 F.3d at 979). Plaintiff also relies on stock sales by Bax and Catmul, as well as sales by non-defendant insiders John A. Lasseter, Sarah McArthur and Lois J. Scali to show scienter. "Although `unusual' or `suspicious' stock sales by corporate insiders may constitute circumstantial evidence of scienter, . . . insider trading is suspicious only when it is dramatically out of line with prior trading practices at times calculated to maximize the personal benefit from undisclosed inside information." Silicon Graphics, 183 F.3d at 986 (internal quotations and citations omitted). Thus, courts consider the following factors in determining whether stock sales by inside officers or directors provide sufficient evidence of scienter: "(1) the amount and percentage of shares sold by insiders; (2) the timing of the sales; and (3) whether the sales were consistent with the insider's prior trading history." Id.; see also Ronconi, 253 F.3d at 435.
In Silicon Graphics, the Ninth Circuit held that selling between 6.9 and 7.7 percent was a relatively small portion and thus not unusual or suspicious. Silicon Graphics, 183 F.3d at 987. The court found that the 43.6 percent sold by one senior vice-president of the company did not give rise to a strong inference of deliberate recklessness because: (1) he only sold only 20,000 stocks; (2) the amount was only 5 percent of the stocks sales with which the plaintiff was concerned; (3) the senior vice-president had only been with the company for one year and had no significant trading history for purposes of comparison; and (4) the other officers sold relatively insignificant portions of their holdings. Id. The court further held that the 73.3 percent sold by another senior vice-president was insufficient to allege scienter based on the circumstances of that case, including that he was forbidden to sell stocks before the class period and he did not make any of the allegedly misleading statements. Id. at 987-88.
In Ronconi, the court held that selling 10 and 17 percent of the insiders' respective stock holdings was not suspicious. Ronconi, 253 F.3d at 435. Even though one officer sold 98 percent of her stock during the class period, the Ronconi court found such allegations were insufficient to *1105 demonstrate scienter because the plaintiffs failed to allege sufficient trading history from which the court could conclude "that her trading was dramatically out of line with prior trading practices" and because the rest of the corporate insiders did not sell significant portions of their stock holdings. Id. at 436 (quotations omitted); see also In re Copper Mountain Sec. Lit., 311 F. Supp. 2d 857, 875 (N.D.Ca1.2004) (finding sales of between 17 and 21 percent not suspicious enough to raise a strong inference of scienter); In re FVC.COM Sec. Lit., 136 F. Supp. 2d 1031, 1039 (N.D.Cal. 2000) (finding sale of 13.3 percent of defendants' stocks was "not suspicious and in fact suggests that defendants were not aware at the time of their stock sales that the . . . press releases contained false information").
On May 10, 2005, Bax sold 30,000 shares, which was which was 15% percent of his stock holdings at that time. (Foung Decl., Exs. 11, 12.) However, Bax joined Pixar in 2004 and his options did not begin vesting until May 3, 2005, and thus he did not have any Pixar shares to sell before the Class Period began. (Id., Exs. 3, 11-12.) Without a meaningful trading history from which to compare, the Court cannot conclude that Box's trades were suspicious and thus supportive of scienter. See Vantive, 283 F.3d at 1095 (finding that a defendant who joined the company during the class period had no relevant trading history and thus court was reluctant to attribute significance to the defendant's sale of 48% of his holdings during the class period); see also Ronconi, 253 F.3d at 436 (finding one officer's sale of 98% off her stock during the class period was insufficient to demonstrate scienter because the plaintiffs failed to allege sufficient trading history from which the court could conclude "that her trading was dramatically out of line with prior trading practices").
Between February 17 and May 18, 2005, Catmull sold 150,000 shares, which was at most 24.7% of his stock holdings.[6] Standing alone, the sale of almost 25% over a five month period is not suspicious. See Ronconi, 253 F.3d at 435 (finding 10 and 17 percent of the insiders' respective stock holdings was not suspicious"); see also Copper Mountain, 311 F.Supp.2d at 875 (finding sales of between 17 and 21 percent not suspicious enough to raise a strong inference of scienter); FVC.COM, 136 F.Supp.2d at 1039 (finding sale of 29% by one insider insufficient to demonstrate scienter). Moreover, Catmull's stock sales during the Class Period must be considered in light of his trading history. In the two quarters before the Class Period began, taking the stock split of April 2005 into account, Catmull sold 100,000 shares. (Foung Decl., Exs. 6-7.) Thus, the Court finds that his sales during the Class Period were not "dramatically out of line with [his] prior trading practices." See Silicon Graphics, 183 F.3d at 986.
Finally, when the holdings of all three individual defendants, Bax, Catmull and Jobs, are considered, the individual defendants sold less than 1% of their total holdings. (Foung Decl., Exs. 3, 8-12.) Even if the sales and holdings of insiders John A. Lasseter, Sarah McArthur and Lois J. Scali alleged in the Complaint are taken into account, the insiders retained *1106 over 99 percent of their total holdings. (Id., Compl, ¶ 77.) This fact undermines any inference of scienter. See Silicon Graphics, 183 F.3d at 986 (finding no strong inference of fraud where defendants retained over 90% of their stock holdings); see also FVC.COM, 136 F.Supp.2d at 1038 (finding no scienter where defendants retained over 86% of stock holdings and all insiders retained over 90%).
Plaintiff argues that the lack of stock sales during the Class Period by Jobs, the chief executive officer, chairman of the board and the largest share holder, does not weigh against a strong inference of scienter. However, the cases Plaintiff cites in support of this argument are inapposite. See America West, 320 F.3d 920; McGann v. Ernst & Young, 102 F.3d 390 (9th Cir.1996); In re Cabletron Sys., Inc., 311 F.3d 11 (1st Cir.2002); In re U.S. Aggregates, Inc. Sec. Lit., 2003 WL 252138, 2003 U.S. Dist. LEXIS 12168 (N.D.Cal. Jan. 24, 2003); In re Nuko Info. Sys., Inc. Sec. Lit., 199 F.R.D. 338 (N.D.Cal.2000).
In America West, the plaintiff alleged that stock sales by nine officers and directors and two majority shareholders supported a strong inference of scienter. Id. at 938. In that case, "[m]ost of the individuals sold 100% of their shares, with the lowest percentage being 88%," and the two majority shareholders both sold over 99% of their publicly-traded stock for a total of $66 .5 million. Id. at 938-39. The court found the large numbers and percentages sold, the timing of the sales, and the prior trading history of each defendant indicated the sales during the class period were unusual and suspicious. Id. at 939-41. Despite this strong evidence of scienter, the defendant argued that the lack of stock sales by three other defendants who made the misleading statements undermined the inference of scienter. Id. at 944. However, the plaintiff alleged that these three defendants were motivated to inflate the company's financial results and stock prices by a reason other than profiting though selling sharestheir eligibility for stock options and executive bonuses were based principally on the company's financial performance. The plaintiff alleged that these defendants did not receive any option awards based on the year before the class period, and that after the inflated financial results, they each received substantial option awards. Id. The court found that the plaintiff's allegations thus supported a strong inference of scienter. Id. In contrast here, Plaintiff has not alleged that Defendants personally reaped economic benefits other than by alleged insider trading. Accordingly, Plaintiff's reliance on American West is misplaced.
In McGann, the court evaluated whether an accounting firm that allegedly prepared a fraudulent audit report knowing that its client would disseminate the statements in the report to the securities market could be held primarily liable under Section 10(b) for committing fraudulent acts "in connection with the trading of securities." McGann, 102 F.3d at 391. In other words, the issue in McGann was not whether the defendant acted with scienter, but rather, whether the alleged fraudulent acts fell within the purview of Section 10(b) and Rule 10b-5 at all. The court affirmed that "Rule 10b-5 is violated whenever assertions are made . . . in a manner reasonably calculated to influence the investing public." Id. at 393 (quoting Wessel v. Buhler, 437 F.2d 279, 282 (9th Cir.1971). Thus, the court held that to be liable under Section 10(b), the fraud did not need to be connected to a particular securities transaction by the defendant. Id. at 394. Here, there is no issue as to whether the alleged conduct, if fraudulent and done with scienter, was "in connection *1107 with the trading of securities." Therefore, McGann is inapplicable.
Cabletron, Nuko Information, and U.S. Aggregates are similarly inapposite. In Cabletron, the court found that complaint adequately demonstrated scienter without the allegations of insider trading and thus, the court specifically refrained from determining whether the insider trading allegations, standing alone, would have sufficed. Cabletron, 311 F.3d at 39-40. In both Nuko Information and U.S. Aggregates, the plaintiffs did not rely on allegations of insider trading to establish scienter. Therefore, the courts found that the failure to allege selling or trading did not negate the inference of scienter. Nuko Info., 199 F.R.D. at 344; U.S. Aggregates, 2003 WL 252138, at *3, 2003 U.S. Dist. LEXIS 12168, at * 12. In contrast here, Plaintiff relies heavily on allegations of insider trading to establish scienter. Therefore, the absence of insider trading by a defendant is highly relevant and undermines any inference of scienter.
Accordingly, the Court finds that Plaintiff's allegations are insufficient to demonstrate a strong inference of scienter.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' motion to dismiss. This ruling is without prejudice to Plaintiff filing an amended complaint. Plaintiff shall file any amended complaint within thirty days of the date of this Order. If Plaintiff does not file an amended complaint within thirty days, this case shall be dismissed. If an amended complaint is filed, Defendants shall either file an answer or move to dismiss within twenty days of service of the amended complaint.
IT IS SO ORDERED.
NOTES
[1] The Court has not yet certified a class and refers to the time period involved as the "Class Period" for ease of reference.
[2] The remainder of the documents Defendants ask the Court to take judicial notice of were not necessary to the resolution of this motion. Accordingly, Defendants' request is DENIED with respect Exhibits 1, 4-5, 16-23.
[3] The only specific allegation Plaintiff sets forth regarding the amount of returns is vague and insufficient. Plaintiff alleges that according to Confidential Source 2 ("CS-2") who, during the Class Period, was a video buyer for United American Video, a DVD distributor involved in the distribution of The Incredibles DVD, "within 30 days after the initial release of The Incredibles (and the Shrek 2) DVD, United American Video began getting returns from its retail customers, especially the CVS chain." (Compl., ¶¶ 4, 50.) Plaintiff further alleges that, lalccording to CS-2, the 30-day cycle was specific to those two DVDs. As much as 60 percent of The Incredibles DVDs were returned." (Id., ¶ 50.) Plaintiff does not explain what the "30-day cycle" is. It is unclear whether CS-2 meant that other DVDs had not started to be returned within 30 days or how many of the The Incredibles DVDs were returned within this thirty-day period. Also, Plaintiff fails to explain what CS-2 meant by 60 percent. 60 percent of what number of DVDs was returned and from which stores? Without this type of information, these allegations are insufficient to support Plaintiff's Complaint. See Silicon Graphics, 183 F.3d at 985 (holding that in the absence of specific details, the court could not ascertain whether there was any basis for the plaintiff's allegations).
[4] During the Class Period, Confidential Source 1 ("CS-1") was a warehouse coordinator for Technicolor Video Services, a company that handled the distribution of Disney products. (Compl., ¶ 4.) Confidential Source 2 ("CS-2") was a video buyer for United American Video, a DVD distributor involved in the distribution of The Incredibles DVD. (Id.) Confidential Source 3 ("CS-3") was, and still is, a vice president of a purchasing firm that distributes DVDs and other products. (Id.) Plaintiff alleges that Confidential Source 4 ("CS-4") was a Walmart Purchasing Assistant, but does not specify the time period in which CS-4 worked in this position. (Id.) Prior to the Class Period, ending sometime in 2004, Confidential Source 5 ("CS-5") was the Director of Sales Planning and Forecasting, International Division at Disney/Buena Vista Home Entertainment. (Id.) Confidential Source 6 ("CS-6") was, and still is, an independent contractor working with Entertainment Resources Inc., a distributory of entertainment products, including The Incredibles DVD. (Id.)
[5] Because the Court finds that Plaintiff failed to satisfy the heightened pleading standards in establishing falsity, the Court need not address at this point whether the alleged false statements are protected by the safe harbor doctrine.
[6] Plaintiff alleges that Catmull sold 24.7% of his holdings. (Compl., ¶ 77.) Defendants argue that Catmull actually sold only 19.7 % of his holdings, or 14.4% of his holdings if the shares he beneficially owned on behalf of his children and trusts were considered. (Mot. at 22.) It is not clear to the Court based on the documents attached to the declaration of Cheryl W. Foung how either party has calculated Catmull's total holdings. However, even if the Court were to consider the higher percentage proffered by Plaintiff for purposes of this motion, such percentage would be insufficient to demonstrate scienter. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562481/ | 440 F. Supp. 2d 378 (2006)
ROBYN MEREDITH, INC., H & W Partnership, Robyn Meredith (H.K.) Ltd., and Alan Wallace, Plaintiffs,
v.
Daniel H. LEVY and Maureen D. Schimmenti, Defendants.
Civil Action No. 05-4736.
United States District Court, D. New Jersey.
July 27, 2006.
*379 Eric M. Wood, Fox Rothschild LLP, Atlantic City, NJ, for Plaintiffs.
Lawrence M. Rolnick, Emily A. Kaller, Lowenstein Sandler PC, Roseland, NJ for Defendants.
OPINION
RODRIGUEZ, Senior District Judge.
This matter has come before the Court on Defendants' Motion to Dismiss the Complaint for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). Because Plaintiffs' claims are not actionable under the federal securities laws, Defendants' motion will be granted.
*380 FACTUAL BACKGROUND
This action arises from the sale of businesses and related equipment, and leases of property by Plaintiff Robyn Meredith, Inc. ("RMI") to DonnKenny Apparel, Inc. ("DKAI"). DKAI is not a party to this action, nor is DKAI's parent company, DonnKenny, Inc. ("DK"). Named as Defendants are Daniel H. Levy, former Chief Executive Officer of DK, and Maureen D. Schimmenti, former Chief Financial Officer, Vice President-Finance, Secretary, and Principal Financial and Accounting Officer of DK.
Plaintiffs allege that the Defendants fraudulently and negligently misrepresented facts concerning DK's financial condition to induce Plaintiffs to enter into long-term sales and employment contracts with DKAI in the Fall of 2003, and to accept DKAI securities. They allege that the Defendants intentionally ignored industry-accepted methods for valuing inventory in an effort to create the appearance of financial security on behalf of DKAI. In February 2005, no longer capable of meeting its financial obligations, DK filed for bankruptcy and, as a wholly-owned subsidiary of DK, DKAI entered into bankruptcy proceedings as well.
Prior to being de-listed as a result of the bankruptcy, DK had been a publicly traded company on the NASDAQ stock exchange. In the apparel wholesale business, DK financed several subsidiaries, including DKAI. In accordance with securities laws, DK filed quarterly and annual financial statements with the United States Securities and Exchange Commission ("SEC").
On October 1, 2003, RMI entered into an asset purchase agreement ("the Agreement") with DK, selling substantially all of its business to DK, through its subsidiary DKAI. The terms of the Agreement included the following:
(1) $3,404,363 cash consideration for assets of RMI;
(2) $1,200,000 in the form of a Note payable by DKAI over three years, also consideration for the assets of RMI;
(3) A three-year employment contract at DKAI for Plaintiff Alan Wallace, the former President and a principal shareholder of RMI, with a base salary of 8300,000 per year;
(4) A three-year employment contract at DKAI for non-party Harris Snyder, a shareholder of RMI and partner of Plaintiff H & W Partnership, with a base salary of $225,000 per year;
(5) A three-year employment contract at DKAI for non-party Matthew Wallace, a shareholder of RMI, with a base salary of $275,000 per year.
(6) Assumption by DKAI of computer equipment and machinery leases to RMI, and an agreement that DKAI would lease real property from Plaintiff H & W Partnership for a three year period, at a rate of $113,850 per year.
Additionally, Defendant Levy, on behalf of DK, separately agreed that for $270,000 an affiliate of DK would assume all assets of Plaintiff Robyn Meredith (H.K.) Ltd. ("H.K."), a Hong Kong corporation established for facilitating apparel imports to the United States from China.
Before entering into the contracts described above, Plaintiff Alan Wallace allegedly performed due diligence on DKAI and DK. He reviewed DK's Form 10-K for the year 2002 and Forms 10-Q for the first two quarters of 2003. Each form had been filed with the SEC, and each was signed by both defendants, Daniel H. Levy and Maureen D. Schimmenti. Plaintiffs allege that Wallace relied on the representations in the Form 10-K and Forms 10-Q when he decided to enter into the Agreement. Further, Wallace relied upon Defendants' representation that DK practiced the "lower *381 of cost or value" method of valuing inventory, which is customary in the apparel business and required by Generally Accepted Accounting Principles (GAAP). According to the Plaintiffs, clothing loses value at the end of each retail season. Thus, last season's clothing ordinarily must be liquidated at prices below cost. It follows that out of season inventory valued at cost would not provide an accurate assessment of a company's finances and worth. Further, the more out of season the apparel is, the higher the difference would be between the reported value at cost and the actual value. After observing substantial amounts of inventory in DK's warehouses, and after consulting his accountant, Wallace authorized Plaintiffs to enter into the Agreement.
After the Agreement closed on October 1, 2003, the principals of RMI, including Alan Wallace and Harris Snyder, joined DKAI as employees. Wallace and Snyder, in their duties as employees of DKAI, were asked to liquidate much of DKAI's inventory in 2004 and 2005. During that liquidation, Wallace allegedly discovered that substantially all of the back inventory consisted of previous seasons' fashions, but was valued on DK's books at cost, significantly above market value. Further, Wallace found that DKAI had no way to value existing inventory appropriately, but valued all inventory at cost. DKAI continued to liquidate inventory in the second half of 2004 to meet capital needs. Plaintiffs maintain that such inventory liquidations were accompanied by product write-downs, demonstrating that the inventory was not valued at lower of cost or market.
On February 7, 2005, DK, DKAI, and other affiliated companies filed Bankruptcy Petitions in the Southern District of New York. Payments due to Plaintiffs under the Agreement ceased at that time.
CLAIMS AND ARGUMENTS
The Complaint originally set forth seven counts, but in briefing the motion before the Court, Plaintiffs have withdrawn Counts IV and V[1]. The remaining claims of RMI allege I. Violations of Section 10(b) of the Exchange Act and Rule 10b-5; II. Violations of Section 18 of the Exchange Act; III. Violations of Section 20(a) of the Exchange Act; VI. Common Law Fraud; and VII. Negligent Misrepresentation. All Plaintiffs join in the last two claims.
Plaintiffs outline alleged misrepresentations made by Defendants Levy and Shimmenti as follows.
(1) Both signed a Form 10-K on March 28, 2003, stating that the value of DK's inventory on December 31, 2002 was $15.9 million, valued at the lower of cost or market, and that current product demand was taken into account in the establishment of inventory reserves, which were sufficient to account for the actual value of inventory.
(2) Similarly, on May 14, 2003, Levy and Shimmenti signed and filed a Form 10-Q for the first quarter of 2003, which stated that at March 31, 2003, DK's inventory was valued at $13,561,000, valued at the lower of cost or market, and that current product demand was taken into account in the establishment of inventory reserves, which were sufficient to account for the actual value of inventory.
(3) On August 14, 2003, they signed and filed a Form 10-Q for the second quarter of 2003, which stated that as of June 30, 2003, DK's inventory was valued at $16.7 million, valued at the lower of cost or market, and that current product demand was taken into account in the establishment of inventory reserves, which were sufficient to account for the actual *382 value of inventory. In addition, although the Form 10-Q disclosed that the company agreed to purchase in 2003 and 2004 $2.7 million of raw materials in connection with manufacturing Bill Blass coats, it did not disclose that the inventory DKAI was committed to acquire was out of style and worth significantly less than the amount DKAI agreed to pay, and DK did not maintain a reserve to cover the loss that the commitment would create.
Plaintiffs allege that Wallace relied upon these misrepresentations in deciding to enter into the Agreement and, as a result, Plaintiffs suffered losses in the value of the DKAI note and the loss of payments from DKAI.
By way of this lawsuit, Plaintiffs seek the remaining balance on the Note, $766,667, plus interest from February 2005; the remaining balance of equipment leases of $285,000, plus interest from February 2005; defaulted lease payments due to H & W Partnership, $306,166, plus interest from February 2005; the promised purchase price of H.K., $270,000, plus interest from October 1, 2003; and the unpaid amounts due under Alan Wallace's employment contract, $447,124.
The Defendants seek dismissal of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). They claim the Plaintiffs have failed to properly allege any violation of the securities laws because the Note contained in the Agreement was not a "security." In essence, Defendants argue that Plaintiffs have attempted to transform the $1.2 million promissory note, which evidenced nothing more than a loan from RMI to DKAI, into a "security." Defendants further assert the Plaintiffs have not stated a claim for securities fraud because: (1) the allegations are of the "inactionable fraud by hindsight"; and (2) the Plaintiffs have not pleaded the requisite requirement of Defendants' scienter. In addition, Defendants have asserted that the alleged Section 18 violation is time barred under the one-year statute of limitations period, and that the common law claims fail to satisfy the pleading requirements of the Federal Rules. Finally, Defendants state that the inability to join DK and DKAI as parties to this action, because they are protected under bankruptcy laws, could prejudice DK, DKAI, and Defendants and warrants dismissal.
LEGAL STANDARD
On a motion to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6), the court is required to accept as true all allegations in the Complaint and all reasonable inferences that can be drawn therefrom, viewing them in the light most favorable to the plaintiff. A Rule 12(b)(6) motion to dismiss should be granted if it appears to a certainty that no relief could be granted under any set of facts which could be proved. R & J Holding Co. v. The Redevelopment Authority of the County of Montgomery, 165 Fed.Appx. 175, 178 (3d Cir.2006). See also Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir.2005). Plaintiffs must be given the benefit of every favorable inference that can be drawn from those allegations. Sehrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir.1991). Although consideration of facts on a motion to dismiss is typically limited to those contained in the Complaint, courts may consider authentic documents that are "integral to or explicitly relied upon in the complaint." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997).
DISCUSSION
In Count I of the Complaint, RMI alleges that Defendants made material misrepresentations or failed to disclose material facts in violation of Section 10(b) of the Securities and Exchange Act of 1934 ("Exchange *383 Act") and Commission Rule 10b-5 in order to acquire the assets of RMI, which DK and DKAI needed to remain solvent. RMI further alleges that it relied upon the accuracy of the Form 10-K, Forms 10-Q, and Sarbanes-Oxley Certifications filed by Defendants in acquiring securities of DKAI, which it would not have agreed to acquire if it knew DKAI's true financial condition. Similarly, in Count II, RMI contends that Defendants violated Section 18 of the Exchange Act and are therefore liable for damages the Plaintiffs suffered in connection with the purchases of DKAI securities. Finally, in Count III, RMI asserts that, as controlling persons of DK and DKAI, Defendants are liable pursuant to Section 20(a) of the Exchange Act.
Private securities fraud actions are based upon federal securities statutes and their implementing regulations. Section 10(b) of the Exchange Act prohibits (1) the "use or employment . . . of any deceptive device," (2) "in connection with the purchase or sale of any security," and (3) "in contravention of Securities and Exchange Commission rules and regulations. 15 U.S.C. § 78j(b). Rule 10b-5 makes it unlawful for "any person . . . to make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made not misleading . . . in connection with the purchase or sale of any security." 17 C.F.R. § 240.10b-5(b). The courts have implied a private damages action from these statutes and Rule. Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 125 S. Ct. 1627, 161 L. Ed. 2d 577 (2005). A section 10(b) action's basic elements include: (1) a material misrepresentation or omission; (2) scienter, or wrongful state of mind; (3) a connection with the purchase or sale of a security; (4) reliance; and (5) economic loss proximately caused by the plaintiff's reliance. Dura, 544 U.S. at 341-42, 125 S. Ct. 1627; see also GSC Partners CDO Fund v. Washington, 368 F.3d 228, 237 (3d Cir.2004) (holding that to state a claim, those elements must be stated with "particularity" pursuant to the Private Securities Litigation Reform Act of 1995 ("PSLRA"), 15 U.S.C. § 78u-4(b)(2)).
Section 18 provides for a private right of action for damages resulting from the purchase or sale of a security in reliance upon a false or misleading statement contained in any document or report filed with the SEC pursuant to the Exchange Act. 15 U.S.C. § 78r(a). It requires proof of reliance, but not scienter. In re Suprema Specialties, Inc. Sec. Litig., 438 F.3d 256, 283 (3d Cir.2006). Section 20(a) imposes joint and several liability upon a person who controlled another person or entity which committed a primary violation of the securities laws. Id. at 284.
The definition of "security" in section 3(a)(10) of the Exchange Act includes a list of financial instruments, beginning with "any note." Although courts initially interpreted "any note" literally, classifying a note as a security has become more stringent under the test articulated by the Supreme Court in Reves v. Ernst & Young, 494 U.S. 56, 110 S. Ct. 945, 108 L. Ed. 2d 47 (1990). Stoiber v. SEC, 161 F.3d 745, 748 (D.C.Cir.1998). In Reves, the Supreme Court held that "the phrase `any note' should not be interpreted to mean literally `any note,' but must be understood against the backdrop of what Congress was attempting to accomplish in enacting the Securities Acts." 494 U.S. at 63, 110 S. Ct. 945.
The Court has recognized a list of instruments that are "notes" but are not "securities." These include "the note delivered in consumer financing," the note secured by a mortgage on a home, the short-term note secured by a lien on a small business or some of its assets, the note evidencing a character loan to a bank *384 customer, short-term notes secured by an assignment of accounts receivable, or a note which simply formalizes an open-account debt incurred in the ordinary cause of business. Reyes, 494 U.S. at 65, 110 S. Ct. 945. See also Exchange Nat. Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126, 1137 (5th Cir.1976).
In order to make a determination on instruments not specifically excluded by the Court, the "family resemblance" test was adopted. Id. at 64-65, 110 S. Ct. 945. That test begins with a presumption that every note is a security. Id. at 65, 110 S. Ct. 945. Such presumption is rebuttable, however, as the Congressional intent of creating the Securities Act was to regulate the investment market, not to create a general federal cause of action for fraud. Id. Thus, four factors must be examined in order to determine whether a note is a "security." First, courts assess the motivations that would prompt a reasonable seller and buyer to enter into the transaction. Id. at 66, 110 S. Ct. 945. For example, if a seller of a note is attempting to raise money for general business purposes or to finance investments, and the buyer's interest is in profiting from the note, then the note is likely to be a security. Second, the courts look to the "plan of distribution" of the note to determine whether it is an instrument in which there is "common trading for speculation of investment." Id. Third, the reasonable expectations of the investing public are examined. Id. Finally, courts inquire into whether some factor such as the existence of another regulatory scheme significantly reduces the risk of the instrument, thereby rendering application of the Securities Acts unnecessary. Id. at 67, 110 S. Ct. 945. Failure to satisfy one of the factors is not dispositive since they are considered as a whole. See, e.g., McNabb v. SEC, 298 F.3d 1126, 1132-33 (9th Cir.2002). However, if the note in question cannot satisfy any of the four factors, or if it is found on the list of the above enumerated "non-securities," then the note will not be classified a "security." Reyes, 494 U.S. at 67, 110 S. Ct. 945.
There is "some necessity for fine-tuning the definition of [a] `note' to avoid sweeping within the coverage of section 10(b) of the 1934 Act every consumer and business loan financing current operational costs." Lino v. City Investing Co., 487 F.2d 689 (3d Cir.1973). See also Ruefenacht v. O'Halloran, 737 F.2d 320, 325 (3d Cir. 1984). Lino has been recognized as the first circuit decision holding that a particular note did not fall within the definition of a security. Ruefenacht, 737 F.2d at 323. There, plaintiff purchased two franchise licensing agreements. Payment was made by cash and several promissory notes. Plaintiff contended he was induced to purchase these agreements by the material misstatements of the defendant. The defendant argued that none of the instruments involved in the transaction were "securities," and thus, the action should be dismissed. The Circuit's focus was not "whether [the plaintiff] sold securities but whether [the defendant] purchased them." Lino, 487 F.2d at 694. Declaring that the notes were not securities, the court held that "in no way" could the defendant have purchased plaintiffs notes for speculation or investment. Id. at 695. Further, the court reasoned that to accept plaintiffs argument would mean that "any consumer who bought an article `on time' and issued a note [could] sue in federal court on the theory that the retailer had purchased `his security.'" Id.
Another court in this circuit has found that a loan for a specific transaction in the form of a promissory note was not a security. Bank of America Nat'l Trust & Savings Ass'n v. Hotel Rittenhouse Assoc., 595 F. Supp. 800, 801 (E.D.Pa.1984). There, plaintiffs sought to recover on a promissory note and mortgage, which were *385 executed in connection with a construction loan for a hotel-apartment-condominium project. When payments on the loan ceased, plaintiffs sought recovery and the defendant counterclaimed. Reviewing the counterclaims, the court considered whether any of the instruments involved in the sale (i.e., the note) were "securities" within the meaning of the federal securities laws. Id. at 804. Holding that the note in question was not a security, the court pointed out that the parties negotiated a loan for a specific real estate development project, and the loan was executed through a promissory note secured by a pledge of collateral, and that such situations are "plainly distinct from a note executed in the acquisition of general investment capital." Id. at 805. Further, the court found persuasive that no public offering was involved and the note was given in the standard commercial context. Id.
There are, however, certain circumstances under which courts have recognized a note as a security. Notes sold by a broker for financing commodities trading and personal usage were deemed "securities," after the court applied the Reves test. Stoiber v. SEC, 161 F.3d 745 (D.C.Cir.1998). There, a broker approached thirteen customers and asked to borrow various sums of money totaling $495,000. Id. at 747. Each customer gave the broker various amounts of money, and in return was issued unsecured promissory notes with terms of two to five years and fixed interest rates ranging from six to twelve percent. Id. Looking to escape securities fraud allegations, the broker argued that the promissory notes were not securities. The court applied the four-factor Reves test.
Under the first factor, "motivation," the court had "little trouble concluding that [the broker]'s main purpose for using the notes points in the direction of their being securities." Id. at 749. The customers were primarily motivated by the opportunity to earn a profit, and they knew at the time of the transactions that most of the money would be used for commodities trading. Id. This satisfied the court that the notes fell within the "financing substantial investments" language of Reves. Id.
The "plan of distribution" analysis also pointed in the direction that the notes were securities. Although the court recognized that none of the notes had been resold, and that thirteen customers does not constitute a "broad segment of the public," it was persuaded by the fact that the broker solicited individuals and offered little detail about the reason for his request for money (other than that the money would be used for commodities trading). Id. at 751. Ultimately, the solicitation and trading aspects supported the court's conclusion that the notes were securities.
Declaring the third "perception" factor a "wash," the court next considered the argument that the circumstances surrounding the loans and the laws of the State of Illinois already provided adequate protection to lenders. The lack of collateral and insurance offered to the investors influenced the court's decision that there was no adequate substitute for the protection of federal law and the court declined to expand the types of alternative protection contemplated in Reves. Id. at 752. Thus, the court never considered the open question of whether state law can ever be an adequate substitute under the fourth Reves factor.
Applying the Reves test to the facts of this case, the Court finds that the promissory note used as partial consideration for the sale of RMI's business to DKAI is not a security. Like the note discussed in Lino, the note given to the Plaintiffs was partial payment, combined with cash, for the sale of a business. This Court concludes, *386 as the Lino court did, that "in no way" could the defendants have purchased the notes for speculation or investment. Unlike the note in Stoiber, the note here was not held out as an investment to RMI, but as a loan for completing the commercial sale of business between the two parties. Moreover, nothing in the record suggests a particularly high interest rate on the note for investment purposes.
The Plaintiffs here argue that the "Defendants sold the Note in an effort to raise capital for general business operations." That, however, is a manipulation of words. The Defendants did not sell the note to anyone, nor has Plaintiff alleged any attempt to sell the note. The Plaintiffs cite a press release by which the acquisition of RMI was announced to the public as evidence that the acquisition, and more specifically the note, was "sold" to the public as a reason for investing in DK. That argument is too attenuated for this Court to find that DKAI actually sold the note to the public. Perhaps the note was advertised to the public as evidence that DKAI was committed to economic growth. Even that, however, would not be sufficient.
Moreover, Plaintiffs argue unpersuasively that the only way they could receive payment under the note was if "DKAI successfully operated its business at a level that could service RMI's debt." This argument fails under the logic that "the repayment of any loan rests on the business or consumer successfully operating at a level that enables it to service the entity's other priorities." Eagle Trim, Inc. v. Eagle-Picher Indus., Inc., 205 F. Supp. 2d 746, 752 (E.D.Mich.2002) (performing a Reyes analysis to find that a mortgage note was not a security, and therefore the plaintiff's claim of securities fraud was invalid).
Regarding the plan of distribution, while it may be true that an instrument of debt can be distributed to only one investor and still be a security, the nature of this note was a commercial transaction and not an investment. Unlike the note in Stoiber, the note here was not issued to multiple parties, and neither party solicited the other in an attempt to raise money for general capital to trade commodities. The note was "nonnegotiable" and was offered to a single party in connection with a specific commercial transaction. The Court therefore finds that the second factor- in the Reyes analysis favors the conclusion that the note in this case is not a security.
As to the third prong of the Reyes test, Plaintiffs contend that they acquired what they believed was an investment in a public company subject to SEC filing requirements, and that they were protected by the federal securities laws, and thus, it follows that the public would view the Note as a security issued by DKAI. The Court is not persuaded by that argument. Regardless of whether the acquisition was subject to SEC procedural requirements, the facts here would lead the general public to believe the note was a loan, in the commercial borrower/lender context, payable over several years, as partial payment for the sale of a business. Therefore, if the public perception factor is applicable to this case, it favors Defendants.
On the other hand, the risk reducing factor favors the Plaintiffs because the Note is uncollateralized, uninsured, and not regulated by any statute or agency. In their original motion to dismiss, the Defendants' argument on this point was limited to a footnote. In their Reply Memorandum in Further Support of the Motion to Dismiss, the Defendants expanded their argument by asserting the lack of a federal remedy here because Congress did not intend to provide a broad federal remedy for all fraud when enacting the Securities Exchange Act. There are circumstances, however, under which a federal remedy should be, and is, available *387 to a plaintiff that can satisfy the Reves test.
When all four Reves factors are considered, the note at issue fails to satisfy the "security" test. The non-negotiable promissory note arose out of this transaction as a loan for part of the purchase price of the assets of RMI, repayable in equal monthly installments over three years. Even considering the allegations in a light most favorable to the Plaintiff, this Court concludes that the non-interest bearing promissory note at issue is not a security. Accordingly, Counts I, II, and III will be dismissed.
Having disposed of the federal claims, the Court turns to 28 U.S.C. § 1367, which provides, in pertinent part:
(a) . . . [I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. . . .
(c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if . . . (3) the district court has dismissed all claims over which it has original jurisdiction. . . .
In keeping with section 1367, the Court has the discretion to exercise supplemental jurisdiction over the remainder of the claims in the Complaint.
It will, however, decline to do so based, first, on the consideration set forth in section 1367(c)(3), namely, the dismissal of all claims over which the Court had original jurisdiction. See Figueroa v. Buccaneev Hotel Inc., 188 F.3d 172, 181 (3d Cir.1999). See also Borough of West Mifflin v. Lancaster, 45 F.3d 780, 788 (3d Cir.1995) ("where the claim over which the district court has original jurisdiction is dismissed before trial, the district court must decline to decide the pendent state claims unless considerations of judicial economy, convenience, and fairness to the parties provide an affirmative justification for doing so"). In addition, the Court is mindful of the well-settled guidance from the Third Circuit that where there are both federal and state law claims and the federal claims are dismissed, the Court may dismiss the state law claims on jurisdictional grounds and ordinarily should refrain from exercising pendent jurisdiction in the absence of extraordinary circumstances. University of Maryland at Baltimore v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1540 (3d Cir. 1993); Tully v. Mott Supermarkets, Inc., 540 F.2d 187, 196 (3d Cir.1976).
Because Defendants' motion to dismiss Plaintiffs' federal securities claims has been granted, and finding an absence of any "extraordinary circumstances," the Court will not exercise supplemental jurisdiction over the State common law claims in this case.
CONCLUSION
For the foregoing reasons, Defendants' Motion to Dismiss the Complaint for failure to state a claim will be granted as to Counts I, II, and III, and the Court will not retain supplemental jurisdiction over Counts VI or VII.
NOTES
[1] See Pls.' Mem. Of Law in Opp'n to Defs.' Mot. To Dismiss, p. 18 n. S. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567257/ | 396 F. Supp. 2d 36 (2005)
Raul GONSALVES, Petitioner
v.
Michael THOMPSON, Respondent.
No. CIV.A. 05-10618-RCL.
United States District Court, D. Massachusetts.
October 25, 2005.
*37 *38 Eva M. Badway, Attorney General's Office, Boston, MA, for Michael Thompson, Respondent.
MEMORANDUM AND ORDER ON RESPONDENT'S MOTION TO DISMISS AND PETITIONER'S MOTION FOR RECONSIDERATION
LINDSAY, District Judge.
I. Introduction
Before the court is a motion to dismiss a petition for a writ of habeas corpus. Raul Gonsalves ("Petitioner"), currently is incarcerated at the Massachusetts Correctional Institution Shirley ("MCI Shirley"). Acting pro se, he filed a petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2254, raising three issues: (1) the Commonwealth's failure to preserve exculpatory evidence for defense inspection; (2) ineffective assistance of counsel; and (3) unconstitutional vagueness of Massachusetts General Laws ch. 266, § 28 as applied by the Massachusetts state courts. (Pet. Under 28 U.S.C. § 2254 for Writ of Habeas Corpus ("Habeas Pet.") 5-6) Respondent Michael Thompson ("Respondent"), the Superintendent of MCI Shirley, has filed a motion to dismiss the petition pursuant to Federal Rule of Civil Procedure 12(b)(6), asserting that claims one and three have not been exhausted. He does not challenge claim two on exhaustion grounds. Petitioner, for his part, has filed a Motion for Reconsideration of the Procedural Order to Name Only Michael Thompson as Respondent. For the following reasons, I GRANT Respondent's motion to dismiss, subject to the conditions described below; and I DENY Petitioner's motion for reconsideration.
II. Facts and Procedural History
On May 11, 1999, Petitioner was indicted for receiving a stolen motor vehicle in violation of Mass. Gen. Laws ch. 266, § 28.[1] (Case Summary, Criminal Docket, Commonwealth v. Gonsalves, No. BACR1999-48336 (Mass.Sup.Ct.1999)) The vehicle in question was a four-wheel, all-terrain vehicle ("ATV") used for off-road recreation. The trial judge granted Petitioner's pretrial motion to inspect the ATV, but the police mistakenly released it to a salvage company before Petitioner's investigator had an opportunity to examine it. Petitioner's motion to dismiss the indictment due to the Commonwealth's loss or destruction of evidence was denied because photographs of the ATV were available. Petitioner was convicted by a Superior Court jury of one count of receiving a stolen motor vehicle and was sentenced to a minimum of four years and a maximum of five years incarceration. Upon completion of his sentence, the Petitioner expects to be deported to Portugal. (Petr.'s Mem. Supp. Habeas Pet. 41)
After his conviction, Petitioner timely filed an appeal, arguing, inter alia, that the ATV in question was not a "motor vehicle" as defined in Mass. Gen. Laws ch. 266, § 28. He argued that he should have been prosecuted under Mass. Gen. Laws ch. 266, § 60, which proscribes the receipt of stolen property, and contains a maximum penalty of five years, as opposed to the fifteen year maximum under section 28. The Massachusetts Appeals Court ("Appeals Court") affirmed his conviction, holding that an ATV "fairly may be deemed a motor vehicle for the purposes of G.L. c. 266, § 28." Commonwealth v. Gonsalves, 56 Mass.App.Ct. 506, 508, 778 N.E.2d 997 (2002).
*39 Petitioner then filed his first application for leave to obtain further appellate review ("ALOFAR") in the Massachusetts Supreme Judicial Court ("SJC"), (Application of Def.-Appellant for Leave to Obtain Further Appellate Review, Dec. 11, 2002). The SJC denied the petition. Commonwealth v. Gonsalves, 438 Mass. 1105, 782 N.E.2d 515 (2003). Until this point, Petitioner had been represented by counsel. After the denial of his first ALOFAR, he proceeded pro se.
Next, Petitioner filed a motion for a new trial in the Barnstable Superior Court on June 9, 2003. The motion was denied; Petitioner timely appealed; and the Appeals Court affirmed denial of the motion for a new trial. (Case Summary, Criminal Docket, Commonwealth v. Gonsalves, No. BACR1999-48336 (Mass.Sup.Ct.1999))
On August 11, 2003, Petitioner filed a petition for relief in the SJC pursuant to Mass. Gen. Laws ch. 211, § 3, challenging the Appeals Court's decision that an off-road vehicle is a "motor vehicle" under Mass. Gen. Laws. ch. 266, § 28. (Pet. Pursuant to Mass. Gen. Laws ch. 211, § 3 ("Ch. 211, § 3 Pet.")) The petition was denied by a single justice, and Petitioner's appeal was subsequently denied by the full bench of the SJC. Gonsalves v. Commonwealth, 442 Mass. 1016, 812 N.E.2d 262 (2004).
Petitioner filed a second ALOFAR on November 15, 2004. (Application of Def.-Appellant for Leave to Obtain Further Appellate Review, Nov. 15, 2004) The SJC denied his petition, Commonwealth v. Gonsalves, 443 Mass. 1105, 823 N.E.2d 782 (2005), and Petitioner subsequently filed the current petition for a writ of habeas corpus on March 14, 2005.
III. Discussion
A. Respondent's Motion to Dismiss
Respondent argues that Petitioner has not exhausted state remedies with respect to the first and third claims of his petition for a writ of habeas corpus. Petitioner contends that he has exhausted both claims, and that even if the claims are unexhausted, this court should reach the merits of his petition.
It is clearly settled that a petitioner who seeks a writ of habeas corpus pursuant to 28 U.S.C. § 2254 must first exhaust available remedies in state court. See 28 U.S.C. § 2254(b)(1) ("An application for a writ of habeas corpus on behalf of a person in custody pursuant to the judgment of a State court shall not be granted unless it appears that (A) the applicant has exhausted the remedies available in the courts of the State....").
1. Standard for Meeting Exhaustion Requirement Fair Presentment
In order to satisfy the exhaustion requirement of section 2254(b)(1), the petitioner "must fairly present or do his best to present the issue to the state's highest tribunal." Mele v. Fitchburg Dist. Court, 850 F.2d 817, 820 (1st Cir.1988). A claim has been "fairly presented" if it has been "presented in such a way as to make it probable that a reasonable jurist would have been alerted to the existence of the federal question." Scarpa v. DuBois, 38 F.3d 1, 6 (1st Cir.1994), cert denied, 513 U.S. 1129, 115 S. Ct. 940, 130 L. Ed. 2d 885 (1995). There are several ways to satisfy the requirement of "fair presentment," including: citing a specific provision of the Constitution, presenting the substance of a constitutional claim in a way that likely will alert the court to the presence of a federal claim, relying on federal precedent, claiming a particular right guaranteed by the Constitution, and asserting a state law claim that is functionally identical to a federal claim. Scarpa, 38 F.3d at 6.
*40 The typical path to habeas corpus in Massachusetts begins with an appeal to the Appeals Court by the person who ultimately becomes the habeas petitioner. If the Appeals Court resolves the appeal against the petitioner, the party may seek review in the SJC by means of an ALOFAR. See Mele, 850 F.2d at 820 (citing Mass. R.App. P. 27.1(b)). If a petitioner follows this path, and the ALOFAR is denied, the ALOFAR is "the decisive pleading" for purposes of determining whether the petitioner has satisfied the exhaustion requirement.[2]Adelson v. DiPaola, 131 F.3d 259, 263 (1st Cir.1997). The petitioner, however, may not raise an issue before the Appeals Court, abandon it in his ALOFAR, and then raise it again in his habeas petition; rather, in order to survive the exhaustion requirement, an issue must be raised "within the four corners of the ALOFAR." Mele, 850 F.2d at 823. However, if a petitioner has "consistently asserted" a particular claim, but it is unclear whether he is making a state or federal claim in his ALOFAR, the court may read his ALOFAR against the backdrop of his earlier appeals in order to determine whether he has "sufficiently alerted the state courts to the substance of the constitutional claim." Scarpa, 38 F.3d at 7 (holding that a petitioner who consistently asserted an ineffective assistance of counsel claim had satisfied the exhaustion requirement even though his ALOFAR did not specifically refer to the federal Constitution or federal cases). See also Barresi v. Maloney, 296 F.3d 48, 52 n. 1 (1st Cir.2002); Clements v. Maloney, 359 F. Supp. 2d 2, 8-9 (D.Mass.2005) ("[A]mbiguous phrasing in the statement of an issue in the ALOFAR may lead to uncertainty about whether the argument is intended to be advanced under state or federal law. Consulting the manner in which the same issue was framed in prior pleadings may resolve the ambiguity.").
The ALOFAR, however, is not the exclusive method for presenting a federal claim to the SJC. Massachusetts General Laws ch. 211, § 3, provides a separate opportunity for presenting an issue to the Commonwealth's highest court, stating, inter alia, "The supreme judicial court shall have general superintendence of all courts of inferior jurisdiction to correct and prevent errors and abuses therein if no other remedy is expressly provided...." Mass. Gen. Laws ch. 211, § 3. Although the typical habeas petitioner utilizes the ALOFAR to present his claims to the SJC, the ALOFAR is not a necessary step in the process of exhausting state remedies. A petitioner need not pursue every possible avenue of state review or file repetitive petitions, O'Sullivan v. Boerckel, 526 U.S. 838, 844, 119 S. Ct. 1728, 144 L. Ed. 2d 1 (1999); rather, he is only "at risk to present the state courts with a fair opportunity to confront and correct an alleged infirmity," Mele, 850 F.2d at 820. A petition pursuant to Mass. Gen. Laws ch. 211, § 3 provides just *41 such an opportunity. See Gonzalez v. Justices of Mun. Court of Boston, No. Civ.A. 0310859GAO, 2003 WL 22937727, at *3 (D.Mass. Nov. 25, 2003) (holding that the petitioner's arguments in his Opposition to the Commonwealth's Petition for Relief Pursuant to Mass. Gen. Laws ch. 221, § 3 were sufficient to satisfy the exhaustion requirement), aff'd, 382 F.3d 1 (1st Cir.2004), vacated on other grounds, ___ U.S. ___, 125 S. Ct. 1640, 161 L. Ed. 2d 474 (2005).
a. Claim One Exculpatory Evidence
Petitioner argues in his habeas petition that his right to due process was violated when the police disposed of potentially exculpatory evidence the ATV before his investigator had an opportunity to examine it. (Habeas Pet. 5) Respondent, for his part, argues that the issue has not been exhausted, because it was not presented in either of Petitioner's two ALOFARs. (Respt.'s Mem. Supp. of Mot. to Dismiss 4-5) Petitioner explains that he presented the issue in his appeal to the Appeals Court, but the argument was abandoned by appellate counsel in his first ALOFAR due to the page limit for argument in an ALOFAR. (Petr.'s Mem. Supp. of Reply to Mot. to Dismiss 2-3) He points out that if his ALOFAR had been granted, the SJC would have considered all of the papers previously submitted to the Appeals Court, including the argument regarding exculpatory evidence. (Petr.'s Mem. Supp. of Reply to Mot. to Dismiss 3)
Petitioner's argument has been expressly rejected by the First Circuit in Mele, which held that an issue must be presented within the "four corners of the ALOFAR" in order to satisfy the fair presentment requirement. Mele, 850 F.2d at 823. I will not read his ALOFAR against the backdrop of his earlier appeals because Petitioner did not "consistently assert" the claim regarding exculpatory evidence. See Scarpa, 38 F.3d at 7. Rather, he abandoned it in both of his ALOFARs. Therefore, I find that Petitioner failed to exhaust the first claim in his habeas petition.
b. Claim Three Vagueness
Petitioner next argues that Mass. Gen. Laws ch. 266, § 28 is unconstitutionally vague and overbroad because it does not define "motor vehicle" and "allows the police and prosecutor to proceed with selective law enforcement." (Habeas Pet. 6; Petr.'s Mem. Supp. of Habeas Pet. 10) In support of this argument, Petitioner cites the Supreme Court's holding that an important aspect of the vagueness doctrine is the establishment of "minimal guidelines to govern law enforcement." (Petr.'s Mem. Supp. of Habeas Pet. 32-33 (citing Kolender v. Lawson, 461 U.S. 352, 358, 103 S. Ct. 1855, 75 L. Ed. 2d 903 (1983)))
Respondent argues that although the Petitioner's ALOFARs addressed the issue of the statute's definition of "motor vehicle," neither ALOFAR claimed that the statute was unconstitutionally vague; therefore, the federal issue was not fairly presented to the SJC. (Respt.'s Mem. Supp. of Mot. to Dismiss 5) Petitioner argues that he raised the issue in his second ALOFAR and in his petition pursuant to Mass. Gen. Laws ch. 211, § 3. (Petr.'s Mem. Supp. of Reply to Mot. to Dismiss 4) Because I find that Petitioner fairly presented the claim of unconstitutional vagueness in his chapter 211, § 3 petition, there is no need for me to reach the issue of whether it was fairly presented in his second ALOFAR.
In his petition pursuant to Mass. Gen. Laws ch. 211, § 3, Petitioner argued that the inclusion of ATVs as "motor vehicles" within the scope of Mass. Gen. Laws ch. 266, § 28 allows for selective law enforcement. *42 In effect, he said, a person in possession of an allegedly stolen ATV could be prosecuted under either section 28, with a maximum penalty of fifteen years imprisonment, or section 60, with a maximum penalty of five years imprisonment. Petitioner stated that "Due Process is denied where inherently vague statutory language permits selective law enforcement," citing the Supreme Court in Smith v. Goguen, 415 U.S. 566, 94 S. Ct. 1242, 39 L. Ed. 2d 605 (1974), and Kolender v. Lawson, 461 U.S. 352, 103 S. Ct. 1855, 75 L. Ed. 2d 903 (1983). (Ch. 211, § 3 Pet. 3.) Both decisions address the federal constitutional doctrine of vagueness.[3] Further, Petitioner argued that "[a] law is void for vagueness if persons `of common intelligence must necessarily guess at its meaning and differ as to its application.'" (Ch. 211, § 3 Pet. 3 (quoting Caswell v. Licensing Comm'n for Brockton, 387 Mass. 864, 873, 444 N.E.2d 922 (1983) (quoting Smith v. Goguen, 415 U.S. 566, 572 n. 8, 94 S. Ct. 1242, 39 L. Ed. 2d 605 (1974))))
Petitioner satisfied the fair presentment requirement in several ways in his chapter 211 petition. He referred to the federal constitutional doctrine of vagueness; he cited a specific provision of the Constitution, the Fourteenth Amendment; and he relied on federal constitutional precedents. He presented his federal claim in such a way that "it is more likely than not that a reasonable jurist would recognize the constitutional dimensions of the petitioner's claims." Barresi, 296 F.3d at 52. Therefore, I find that Petitioner has satisfied the exhaustion requirement with respect to the third claim in his habeas petition.
2. Exceptions to the Exhaustion Requirement
Petitioner argues that even if he has failed to exhaust state court remedies, this court should consider the merits of his petition. He thus would argue that I should consider the first claim of the present petition (the one claim he has not exhausted) on its merits. He argues that review is available if he can demonstrate cause and prejudice, citing Coleman v. Thompson, 501 U.S. 722, 750, 111 S. Ct. 2546, 115 L. Ed. 2d 640 (1991), and Gunter v. Maloney, 291 F.3d 74, 78 (1st Cir.2002). (Petr.'s Reply to Mot. to Dismiss) The cause and prejudice exception, however, applies only to habeas petitions that would otherwise be barred by procedural default, not those barred by failure to exhaust state remedies. See Coleman, 501 U.S. at 750, 111 S. Ct. 2546 (holding that "[i]n all cases in which a state prisoner has defaulted his federal claims in state court pursuant to an independent and adequate state procedural rule, federal habeas review of the claims is barred unless the prisoner can demonstrate cause for the default and actual prejudice as a result of the alleged violation of federal law"); Gunter, 291 F.3d at 78 (holding that a "finding by a state court that a defendant procedurally defaulted a claim bars federal habeas corpus relief on that claim unless that defendant as a petitioner shows ... cause for the default and prejudice from the claimed violation of federal law").
Petitioner further argues that I should consider his petition because of his *43 actual innocence, citing Dretke v. Haley, 541 U.S. 386, 392-93, 124 S. Ct. 1847, 158 L. Ed. 2d 659 (2004). (Petr.'s Mem. Supp. of Reply to Mot. to Dismiss 5) Again, the "actual innocence" exception may apply only in the context of petitions barred by procedural default. See Dretke, 541 U.S. at 393-94, 124 S. Ct. 1847 (declining to extend the actual innocence exception to procedural default situations, but holding that "a federal court faced with allegations of actual innocence, whether of the sentence or of the crime charged, must first address all nondefaulted claims for comparable relief and other grounds for cause to excuse the procedural default").
The only exceptions to the exhaustion requirement are listed in the statute. The petitioner need not exhaust state remedies if "there is an absence of available State corrective process" or "circumstances exist that render such process ineffective to protect the rights of the applicant." 28 U.S.C. § 2254(b)(1)(B). In addition, the Commonwealth may expressly waive the requirement. 28 U.S.C. § 2254(b)(3). None of these exceptions applies to the case now before me.
3. Consequences of Failure to Exhaust State Remedies
Respondent argues that if any of Petitioner's claims is unexhausted, the entire petition must be dismissed, while Petitioner contends that even if some claims are unexhausted, I may rule on the merits of the exhausted claims.
The Supreme Court has made clear that if each claim in a petition for a writ of habeas corpus has not been exhausted, the district court must dismiss the entire "mixed petition." Rose v. Lundy, 455 U.S. 509, 510, 102 S. Ct. 1198, 71 L. Ed. 2d 379 (1982). The Petitioner may return to state court to exhaust his claims or may amend and resubmit the habeas petition to present only the exhausted claims. Rose, 455 U.S. at 510, 102 S. Ct. 1198. The district court may reach the merits of the petition only in order to deny the petition in its entirety. See 28 U.S.C. § 2254(b)(2) ("An application for a writ of habeas corpus may be denied on the merits, notwithstanding the failure of the applicant to exhaust the remedies available in the courts of the State."). Petitioner cites Cravalho v. Maine, 300 F. Supp. 2d 189, 195 (D.Me.2004), for the proposition that a district court may address the merits of a habeas petition even if some claims are unexhausted. (Petr.'s Mem. Supp. of Reply to Mot. to Dismiss 5) However, the court in Cravalho cited 28 U.S.C. § 2254(b)(2) and proceeded to deny the habeas petition. Cravalho, 300 F.Supp.2d at 195-97. Thus, as Cravalho fully recognizes, I may consider the merits of Petitioner's claims only in order to deny his petition.
The Supreme Court has recently approved the use of a "stay and abeyance" in certain cases of mixed petitions. In Rhines v. Weber, 544 U.S. 269, 125 S. Ct. 1528, 161 L. Ed. 2d 440 (2005), the Court acknowledged that the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), Pub.L. 104-132, 110 Stat. 1214, placed some petitioners in a difficult position by adding a one-year statute of limitations for habeas petitions under 28 U.S.C. § 2254, while simultaneously codifying the exhaustion requirement. See Rhines, 125 S.Ct. at 1533. Because the limitations period is not stayed during the pendency of federal proceedings, a petitioner whose petition is dismissed due to failure to exhaust some claims may find the limitations period expired. The Court therefore allowed for use of the stay and abeyance procedure under limited circumstances: the district court must determine "there was good cause for the petitioner's *44 failure to exhaust his claims first in state court," and the unexhausted claims must not be "plainly meritless." Rhines, 125 S.Ct. at 1535. Further, "district courts should place reasonable time limits on a petitioner's trip to state court and back." Rhines, 125 S.Ct. at 1535.
Petitioner has not requested a stay and abeyance; however, Respondent argues that a stay should not be granted. (Respt.'s Mem. Supp. of Mot. to Dismiss 6.)
As noted earlier, Petitioner has failed to exhaust the first claim presented in his petition for a writ of habeas corpus. Petitioner argues that the omission of the claim in his first ALOFAR was due to his appellate counsel's choice and space constraints. When a party is faced with a page limit, he must choose which of his arguments are most important. If an argument is abandoned in the ALOFAR because of the page limit, the party has decided that the argument is not significant enough, relative to other arguments, for SJC consideration. Such decisions must frequently be made. Here, a rational choice was made to abandon the argument concerning the loss of exculpatory evidence in favor of arguments thought to be stronger. Petitioner may not go back now and retrieve the abandoned argument. Furthermore, Petitioner had the opportunity to raise the claim in his subsequent petition pursuant to Mass. Gen. Laws ch. 211, § 3 or in his second ALOFAR. He did not do so, and he has offered no good cause for his failure to include the claim in these filings. Therefore, I will not issue a stay and abeyance to allow Petitioner to return to state court to exhaust this claim.
On the other hand, I will not immediately dismiss the petition. Instead, I will enter today a conditional order of dismissal, one that is subject to further response from the petitioner. The Supreme Court made clear that even if the district court determines that a stay is inappropriate, "the court should allow the petitioner to delete the unexhausted claims and to proceed with the exhausted claims if dismissal of the entire petition would unreasonably impair the petitioner's right to obtain federal relief." Rhines, 125 S.Ct. at 1535. Therefore, I will give Petitioner thirty days from the date of the entry of this memorandum and order to inform the court whether he intends to attempt to exhaust his first claim in state court or proceed in this court on his unexhausted claims. If, at the end of the thirty-day period, Petitioner has not informed the court of his intention to proceed here on his unexhausted claims, the order of dismissal will become final.
B. Petitioner's Motion for Reconsideration
Petitioner asks me to reconsider my decision to remove the Attorney General of Massachusetts as one of the respondents. Petitioner faces deportation upon the completion of his sentence; at that time, he argues, he will be in the custody of the Department of Homeland Security ("DHS"). His contention appears to be that because he faces future DHS custody, he must name the Attorney General under Rule 2(b) of the Rules Governing § 2254 cases, which prescribes the procedure to be used for a petition challenging a judgment under which the petitioner will be subject to custody in the future. (Petr.'s Mot. for Reconsideration 1-2)
An examination of the Rule and the accompanying Advisory Committee Notes reveals that Rule 2(b) is not applicable to the Petitioner, and that he cannot name the Attorney General as a respondent. The Rules Governing § 2254 draw a distinction between a petitioner "currently in custody under a state-court judgment" and a petitioner who "may be subject to future custody under the state-court judgment." *45 If the petitioner is currently in custody, he must "name as respondent the state officer who has custody." Rules Governing § 2254 Cases, Rule 2(a). However, "[i]f the petitioner is not yet in custody but may be subject to future custody under the state-court judgment being contested, the petition must name as respondents both the officer who has current custody and the attorney general of the state where the judgment was entered." Rules Governing § 2254 Cases, Rule 2(a)-(b). The Advisory Committee Notes explain that, although Rule 2(b) might apply to a petitioner who is currently in prison, it will apply only if the petitioner "is attacking a state action which will cause him to be kept in custody in the future rather than the government action under which he is presently confined." Rules Governing § 2254 Cases, Rule 2(b) Advisory Committee's Note.
Thus, it is clear that Rule 2(b) does not apply to the petitioner as long as he is in custody in Massachusetts and challenging a judgment of a Massachusetts court. Rather, Rule 2(a) dictates that he name only his current custodian as respondent. Accordingly, I will not reconsider my decision to remove the Attorney General of Massachusetts as a respondent in this case.
IV. Conclusion
Respondent's Motion to Dismiss is hereby GRANTED subject to the condition that:
(a) Petitioner has thirty (30) days from the date of the entry of this memorandum and order to advise this court whether he intends to return to state court to attempt to exhaust his pending state remedies, or whether he will proceed in this court on the basis of his exhausted claims.
(b) At the conclusion of the thirty (30) days, unless this court has been advised of Petitioner's intention to proceed with his exhausted claims, this conditional order of dismissal will become final.
Petitioner's Motion for Reconsideration of the Procedural Order to Name Only Michael Thompson as Respondent is DENIED.
IT IS SO ORDERED.
NOTES
[1] Unless otherwise indicated, the facts are drawn from the decision of the Massachusetts Appeals Court in Commonwealth v. Gonsalves, 56 Mass.App.Ct. 506, 778 N.E.2d 997 (2002).
[2] In most cases, the SJC denies the ALOFAR; in some cases, however, the SJC may grant the ALOFAR and subsequently deny relief. In such cases, the ultimate decision of the SJC is the decisive pleading, and the exhaustion requirement has been met if the ALOFAR "presents" to the SJC for decision the issue that ultimately becomes the subject of the habeas petition. For purposes of the exhaustion requirement, it does not matter whether the SJC actually rules on the issue, so long as the issue was presented in the ALOFAR. See RANDY HERTZ & JAMES S. LIEBMAN, FEDERAL HABEAS CORPUS PRACTICE AND PROCEDURE § 23.3a (4th ed.2001) (pointing out that "[a]ssessment of the petitioner's satisfaction of [the exhaustion] requirement focuses on whether she actually afforded the state courts the opportunity to rule on the claim and not on whether the state courts actually availed themselves of that opportunity.") (noting a variety of circumstances in which presentment can occur and the exhaustion requirement can be met).
[3] In Goguen, the Supreme Court affirmed the grant of a writ of habeas corpus and held that a portion of the Massachusetts flag misuse statute was unconstitutionally vague. Goguen, 415 U.S. at 567, 94 S. Ct. 1242. And in Kolender, the Court held that a loitering statute "as it has been construed is unconstitutionally vague within the meaning of the Due Process clause of the Fourteenth Amendment by failing to clarify what is contemplated by the requirement that a suspect provide a `credible and reliable' identification." Kolender, 461 U.S. at 353-54, 103 S. Ct. 1855. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567217/ | 396 F. Supp. 2d 466 (2005)
Rose Marie QADER, Plaintiff,
v.
The People of the State of NEW YORK, Bernadette Ulma (Police Court Officer), the Entire New Rochelle Police Department, Defendant.
No. 03 CIV. 8650(CM).
United States District Court, S.D. New York.
October 31, 2005.
*467 *468 Rose Marie Qader, White Plains, NY, pro se.
Lisa Ghartey, Eliot Spitzer, Attorney General of the State of NY, New York City, Lalit Kumar Loomba, Wilson, Elser, Moskowitz, Edelman & Dicker, White Plains, NY, for Defendant.
ORDER AND DECISION GRANTING DEFENDANTS' MOTION TO DISMISS
MCMAHON, District Judge.
On July 9, 2004, plaintiff's son appeared before Judge John P. Colangelo at the New Rochelle City Court. (Complaint ("Cplt.") ś 2). After his case was called, a fight broke out between plaintiff's son and three police officers. (Cplt.ś 3). Plaintiff, upon witnessing this altercation, exclaimed "O' My God O' My God." (Cplt.ś 4). As a result, Officer Bernadette Ulma handcuffed plaintiff, brought her before Judge Colangelo, and "insisted to the Judge that the plaintiff should be arrested." (Cplt.śś 6, 10). The Judge directed plaintiff to apologize for her disruptive behavior and, when she refused, held plaintiff in criminal contempt and "booked" her for 10 days in the Westchester County Jail in Valhalla, New York. (Cplt.śś 11-12). Officer Ulma then allegedly removed plaintiff from the courtroom by pulling her ponytail, beat her and stepped on her "backside," and threatened to "put her face in the toilet bowl." (Cplt.śś 13, 18-20). Thereafter, "the entire police department" refused to take plaintiff to the hospital and mocked her by laughing and giggling. (Cplt.ś 20). "The entire New Rochelle Police Department" also fingerprinted the plaintiff and took her picture "for no reason." (Cplt.ś 22). As a result of this sequence of events, plaintiff suffered from "tremendous stress," a "terrible headache," dizziness, and fear of police officers, such that plaintiff "cannot cope with the daily life." (Cplt.śś 16, 23). Plaintiff brings this action, pursuant to 42 U.S.C. § 1983, for violation of her constitutional rights. She seeks $15,000,000.00 in damages.
This is the third federal action initiated by plaintiff concerning the same event. In both of the two prior actions, Magistrate Judge Yanthis recommended dismissal under Monell v. Department of Social Services, on the ground that plaintiff failed to allege the existence of a municipal policy or practice, or that any of her alleged injuries were proximately caused by such a policy or practice. Adopting Magistrate Yanthis's Report and Recommendation, Judge Robinson dismissed the first case, Qader v. the New Rochelle Police Department, 04-cv-7172, on April 12, 2005. Judge Brieant, also adopting Magistrate Yanthis's Report and Recommendation, dismissed the second action, Qader v. the Town of New Rochelle, 04-cv-7173, on February 16, 2005. With the exception of the named defendants in each action, the three Complaints are virtually indistinguishable.
*469 Defendants move to dismiss this action for failure to state a claim and lack of subject matter jurisdiction. For the following reasons, defendants' motion is granted and the case is dismissed in its entirety.
Standard of Review
Dismissal of a complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is proper where "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Harris v. City of New York, 186 F.3d 243, 247 (2d Cir.1999). The test is not whether the plaintiff ultimately is likely to prevail, but whether he is entitled to offer evidence to support his claims. Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir.1998). The court assumes that all factual allegations in the complaint are true, and draws all reasonable inferences in the plaintiff's favor. EEOC v. Staten Island Sav. Bank, 207 F.3d 144, 148 (2d Cir.2000). "In considering a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a district court must limit itself to facts stated in the complaint or in documents attached to the complaint as exhibits or incorporated in the complaint by reference." Kramer v. Time Warner, Inc. 937 F.2d 767, 773 (2d Cir.1991).
"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000); see also Fed.R.Civ.P. 12(b)(1). The burden rests on the party invoking the court's authority to establish that the court possesses subject matter jurisdiction over the action. See Shenandoah v. Halbritter, 366 F.3d 89, 91 (2d Cir.2004) (internal citations omitted). That party must show by a preponderance of the evidence that subject matter jurisdiction exists. See Luckett v. Bure, 290 F.3d 493, 497 (2d Cir.2002). In reviewing a motion to dismiss for lack of subject matter jurisdiction, a court may consider material outside the complaint. See Makarova, 201 F.3d at 113.
Claims Against the New Rochelle Police Department
Because the New Rochelle Police Department is not a "suable entity" under 42 U.S.C. § 1983, plaintiff's action effectively is against the City of New Rochelle. See Lewis v. City of Mount Vernon, 984 F. Supp. 748, 756 n. 2 (S.D.N.Y.1997) (citing Orraca v. City of New York, 897 F. Supp. 148, 151-52 (S.D.N.Y.1995)). Pursuant to 42 U.S.C. § 1983, in order to state a valid claim against the City of New Rochelle, plaintiff must allege the existence of a specific municipal policy or practice and a causal connection between that policy or practice and the deprivation of her constitutional rights. See Ricciuti v. New York City Transit Auth., 941 F.2d 119, 122 (2d Cir.1991) (citing Monell v. Dep't of Soc. Serv., 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978)). Plaintiff has not alleged a municipal policy or a causal connection and, therefore, her claim against the City must be dismissed.
Additionally, because plaintiff's two previous actions against the City of New Rochelle and/or the Police Department of New Rochelle have already been dismissed, plaintiff's case is precluded under the doctrine of res judicata. See Monahan v. New York City Dep't of Corrections, 214 F.3d 275, 285 (2d Cir.2000) (stating that the doctrine of res judicata holds that "a final judgment on the merits of an action precludes the parties and their privies from relitigating issues that were or could have been raised in that action"); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126, 1130-31 (2d Cir.1976) (stating that "judgments under *470 12(b)(6) are on the merits, with res judicata effects").
The court notes that plaintiff's claims of improper fingerprinting and photographing and denial of medical treatment fail on additional grounds.
First, plaintiff's allegation that she suffered a violation of her constitutional rights by being fingerprinted and photographed is erroneous and frivolous. Because she had been found guilty of criminal contempt, fingerprinting and photographing were not only appropriate, but also were mandated under Section 160.10(1) and (3) of the New York Criminal Procedure Law.
Second, because plaintiff had already been found guilty of criminal contempt when she came into the custody of the New Rochelle Police Department, her claim for denial of medical treatment must be analyzed under the Eighth Amendment's cruel and unusual punishment clause. See Estelle v. Gamble, 429 U.S. 97, 97 S. Ct. 285, 50 L. Ed. 2d 251 (1976). "In order to establish an Eighth Amendment claim arising out of inadequate medical care, a prisoner must prove `deliberate indifference to [her] serious medical needs.'" Chance v. Armstrong, 143 F.3d 698, 702 (2d Cir.1998) (quoting Estelle, 429 U.S. at 104, 97 S. Ct. 285). This standard incorporates both an objective and a subjective component. Smith v. Carpenter, 316 F.3d 178, 183-84 (2d Cir.2003). The objective component addresses the severity of the plaintiff's medical needs while the subjective component, requiring deliberate indifference, focuses on the state of mind of the defendant. Id. In this case, plaintiff's dizziness and "terrible headache" do not satisfy the objective component, and thus her medical needs do not rise to the level of a constitutional claim.
Claims Against the State of New York and Officer Ulma
First, plaintiff's claims against the State of New York and Officer Bernadette Ulma (a court officer with the New York State Unified Court System) are barred by the Eleventh Amendment. Eleventh Amendment immunity "represents a real limitation on a federal court's federal-question jurisdiction." Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 270, 117 S. Ct. 2028, 138 L. Ed. 2d 438 (1997). "[I]n the absence of consent a suit in which the state or one of its agencies or departments is named as a defendant is proscribed by the Eleventh Amendment." Papasan v. Allain, 478 U.S. 265, 267, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986) (citing Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100, 104 S. Ct. 900, 79 L. Ed. 2d 67 (1984)). Because the State of New York has not consented to suit, plaintiff's action against the State is barred by the Eleventh Amendment. Additionally, because Officer Ulma is being sued in her official capacity, the suit is deemed to be against the State. See Kentucky v. Graham, 473 U.S. 159, 166-67, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985); Gan v. City of New York, 996 F.2d 522, 529 (2d Cir.1993). Therefore, Eleventh Amendment immunity extends to plaintiff's action against Officer Ulma. See id.
Second, to the extent Officer Ulma is being sued in her individual capacity, plaintiff fails to state a claim against Officer Ulma for false arrest or malicious prosecution. The existence of probable cause to arrest constitutes justification and "is a complete defense to an action for false arrest." Weyant v. Okst, 101 F.3d 845, 852 (2d Cir.1996) (quoting Bernard v. United States, 25 F.3d 98, 102 (2d Cir.1994)). Likewise, the existence of probable cause is a complete defense to a claim of malicious prosecution. Savino v. The *471 City of New York, 331 F.3d 63, 72 (2d Cir.2003). Probable cause exists when an officer has "knowledge or reasonably trustworthy information sufficient to warrant a person of reasonable caution in the belief that an offense has been committed by the person to be arrested." Martinez v. Simonetti, 202 F.3d 625, 634 (2d Cir.2000) (quoting Singer v. Fulton County Sheriff, 63 F.3d 110, 119 (2d Cir.1995)). In this case, Judge Colangelo's order of criminal contempt provided the requisite probable cause for Officer Ulma to arrest plaintiff. Therefore, plaintiff fails to state a claim against Officer Ulma in her individual capacity for either false arrest or malicious prosecution.
Conclusion
For the foregoing reasons, the Complaint is dismissed in its entirety.
The Clerk of the Court is directed to enter judgment in favor of defendants, and to close the file. The conference scheduled for November 3, 2005, is removed from the calendar.
This constitutes the decision and order of the Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2563320/ | 574 F. Supp. 2d 154 (2008)
UNITED STATES of America
v.
Timothy P. JOHNSON, Jr., Defendant.
Criminal Action No. 07-323 (RMC).
United States District Court, District of Columbia.
September 5, 2008.
*155 Michael C. Dawson, The Dawson Law Group, LLC, New Brunswick, NJ, Renard Dexter Johnson, Silver Spring, MD, for Defendant.
Nancy Boggs Jackson, U.S. Attorney's Office, Washington, DC, for Plaintiff.
MEMORANDUM OPINION
ROSEMARY M. COLLYER, District Judge.
Defendant Timothy P. Johnson, Jr., moves to suppress tangible evidence and to dismiss Count Three of the criminal indictment brought against him by the United States. The Court will deny the first motion and order further briefing on the second.
I. BACKGROUND
On November 27, 2007, the Federal Bureau of Investigation ("FBI") conducted a search of 4511 B Street, S.E., Apartment # 101, Washington, D.C., pursuant to a search warrant issued by the Superior Court of the District of Columbia. Def.'s Mot. to Suppress at 2 [Dkt. # 9]. Recovered during that search was, inter alia, marijuana; heroin; phencyclidine ("PCP"); cocaine base, also known as "crack"; prescription pills; materials used to process and package illegal narcotics; weapons and ammunition; and documents bearing Mr. Johnson's name. Gov't's Resp. to Def.'s Mots. at 5 [Dkt. # 14]. Mr. Johnson was subsequently indicted in a three-count indictment charging him with unlawful possession with intent to distribute 100 grams or more of a mixture and substance containing phencyclidine in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(iv); using, carrying and possessing a firearm during a drug trafficking offense in violation of 18 U.S.C. § 924(c)(1); and unlawful possession of a firearm and ammunition by a person convicted of a crime punishable by imprisonment for a term exceeding one year in violation of 18 U.S.C. § 922(g)(1). See Indictment [Dkt. # 4].
Mr. Johnson now moves the Court to suppress the evidence seized during the execution of the search warrant ("Search Warrant") on the grounds that the Search Warrant was deficient; that law enforcement violated the knock and announce statute; and that the executing officers failed to execute the Search Warrant in accordance with the Superior Court's order. He separately moves the Court for an order dismissing count three of the indictment.
II. DISCUSSION
The Court will address each motion in turn.
A. Motion to Suppress Evidence
1. Was the Search Warrant Valid?
Detective William T. Sepeck of the FBI obtained the Search Warrant on November 21, 2007, after submitting an affidavit that stated that a confidential source ("CS"), within the last 24 hours, had notified Special Agent William Grover of a drug transaction being conducted from Apartment # 101 of 4511 B Street, S.E., Washington, D.C. See Def.'s Mot. to Suppress, Ex. A, Aff. of Detective William T. Sepeck, Jr. ("Sepeck Aff.") ¶ 7. Detective Sepeck further swore that agents took photos and escorted the CS to the location, where she positively identified the exterior of 4311 B Street, S.E., and Apartment # 101 from the photographs. See id.
The Search Warrant was executed in the early morning hours of November 27, 2007, while Mr. Johnson and Ms. Arita Sheppard were sleeping. Def.'s Mot. to Suppress at 2. "Thinking that intruders *156 were breaking into the premises, for his safety and Ms. Sheppard[sic], Mr. Johnson attempted to leave the apartment through the window located near where he and Ms. Sheppard were sleeping." Id. Contraband was discovered during the search and Mr. Johnson was arrested and charged. Id.
a. Was There Probable Cause Behind the Search Warrant?
Mr. Johnson contends that the Search Warrant lacked probable cause. He notes that the Fourth Amendment of the United States Constitution safeguards the "right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures," and that "no warrants shall issue, but on probable cause...." U.S. Const. amend. IV.
Probable cause is determined based on the totality of the circumstances, taking into consideration the "factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act." Illinois v. Gates, 462 U.S. 213, 230-31, 103 S. Ct. 2317, 76 L. Ed. 2d 527 (1983). Regarding the determination of whether probable cause exists, the Supreme Court has instructed:
The task of the issuing magistrate is simply to make a practical, commonsense decision whether, given all the circumstances set forth in the affidavit before him, including the "veracity" and "basis of knowledge" of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a "substantial basis for ... concluding" that probable cause existed.
Id. at 238-39, 103 S. Ct. 2317 (internal citations omitted).
Mr. Johnson challenges the adequacy of the information provided by Detective Sepeck concerning the background and veracity of the CS; the basis of knowledge of the CS; and the lack of corroboration by law enforcement inasmuch as the "only investigation into this alleged transaction revealed a different address of 4311 B Street, S.E.," not 4511 B Street, S.E., where the search was actually conducted. Def.'s Mot. to Suppress at 4.
The Court finds that the affidavit provided by Detective Sepeck, especially as augmented by handwritten additions at the reviewing judge's request, see Sepeck Aff. at 3; Gov't's Resp. to Def.'s Mots. at 4, adequately described the CS, the basis for the CS to know about the prior transaction, and its corroboration by law enforcement. Such affidavits "are normally drafted by nonlawyers in the midst and haste of a criminal investigation. Technical requirements of elaborate specificity once exacted under common law pleading have no proper place in this area." United States v. Ventresca, 380 U.S. 102, 108, 85 S. Ct. 741, 13 L. Ed. 2d 684 (1965). This affidavit clearly met that test.
Were there a real issue about the affidavit's sufficiency, suppression of the evidence obtained would not be the appropriate remedy if the officers conducting the search acted in "objectively reasonable reliance" on the warrant's validity. United States v. Leon, 468 U.S. 897, 922, 104 S. Ct. 3405, 82 L. Ed. 2d 677 (1984). Further, suppression is appropriate only if "the magistrate abandoned his detached and neutral role" in assessing the affidavit or if "the officers were dishonest or reckless in preparing their affidavit or could not have harbored an objectively reasonable belief in the existence of probable cause." Id. at 926, 104 S. Ct. 3405. There is no evidence presented, or hinted at, by Mr. Johnson that challenges the reasonable reliance of the executing officers on the validity of the Search Warrant, much less that the Superior Court judge "abandoned" her judicial role.
*157 The challenge to the adequacy of the Search Warrant is without merit.
b. Was the Affidavit in Support of the Search Warrant Facially Deficient?
Mr. Johnson also challenges Detective Sepeck's affidavit because it contains a mistake. At the time the affidavit was presented to the Superior Court judge, she asked the detective to add to the affidavit that law enforcement had taken photos of the address to be searched, that those photos had been shown to the CS, and that the CS had accompanied law enforcement to the address. Gov't's Resp. to Def.'s Mots. at 4. In adding this information by hand, Detective Sepeck mistakenly wrote the address of the criminal activity as 4311 B Street, S.E., rather than 4511 B Street, S.E. Id. Neither the detective nor the judge noticed the mistake at the time. Id. Nonetheless, it clearly is simply a mistake. Id. The address described in the warrant is the description of 4511 B Street, S.E.; the photos taken by law enforcement are of 4511 B Street, S.E.; and the CS reviewed the photos and identified the correct location as 4511 B Street, S.E. Moreover, there is no 4311 B Street, S.E., in D.C.
Detective Sepeck's handwritten additions to his affidavit were clearly made "in the midst and haste of a criminal investigation." Ventresca, 380 U.S. at 108, 85 S. Ct. 741. Those additions were made in front of the Superior Court judge and at her request, after Detective Sepeck had described these further efforts at corroboration by law enforcement. The simple error in the address numbers was not noted and had no effect on the fundamentals of the affidavitor, more importantly, the facial validity of the Search Warrant itself upon which the executing officers relied.
The challenge to the facial deficiency of the affidavit is without merit.
2. Did Law Enforcement Violate the Knock and Announce Requirement?
Unless exigent circumstances exist, law enforcement officers executing a search warrant must generally knock and announce themselves prior to entering a premises. Richards v. Wisconsin, 520 U.S. 385, 392-96, 117 S. Ct. 1416, 137 L. Ed. 2d 615 (1997). See also 18 U.S.C. § 3109 (allowing forcible entry "if, after notice of his authority and purpose, [an officer] is refused admittance...."). Mr. Johnson contends that there was no prior knock and announce before officers broke into the apartment.
This contention, as a matter of fact, has been fully rebutted by totally credible testimony presented at the motions hearing. As a matter of law, even if it were true, it would not lead to suppression of the evidence gathered during the search. Hudson v. Michigan, 547 U.S. 586, 599, 126 S. Ct. 2159, 165 L. Ed. 2d 56 (2006) (holding that "the social costs of applying the exclusionary rule to knock-and-announce violations are considerable; the incentive to such violations is minimal to begin with, and the extant deterrences against them are substantial.... Resort to the massive remedy of suppressing evidence of guilt is unjustified.").
This challenge to the execution of the search warrant is without merit.
3. Did the Officers Mishandle the Paperwork on the Search?
Mr. Johnson complains that the officers failed to leave a copy of the Search Warrant and return in the apartment and that they filed a copy of the warrant and return with the Superior Court a day late. The first complaint is wrong as a matter of fact; the second is accurate but without moment.
*158 Special Agent Sparks credibly testified at the motions hearing, and identified photos at the scene, that demonstrate that he left a copy of the warrant and seizure list on a desk that was identified by the FBI as Room A, after completion of the search. Mr. Johnson's complaint to the contrary has no evidentiary support and is rejected.
However, Mr. Johnson correctly notes that the warrant return was made to the Superior Court a day late, in violation of D.C.Code § 23-521(f)(6). The United States, relying again on Hudson, 547 U.S. 586, 126 S. Ct. 2159, argues that the technical violation of the D.C.Code does not warrant suppression.
The Court concludes that the United States has the better part of the argument. Hudson explained that the knock and announce rule protects a defendant's interests in privacy and dignity, but has never protected "one's interest in preventing the government from seeing or taking evidence described in a warrant. Since the interests that were violated in this case [by the failure to knock and announce prior to entry] have nothing to do with the seizure of the evidence, the exclusionary rule is inapplicable." 547 U.S. at 594, 126 S. Ct. 2159 (emphasis in original). Similarly, the interests of the Superior Court in having prompt execution and return of warrantsto avoid searches based on stale evidence or to interfere with a citizen's challenges to a searchhave nothing to do with the seizure of the evidence in this case. Hudson has been applied beyond its knock-and-announce fact pattern. See Virginia v. Moore, ___ U.S. ___, 128 S. Ct. 1598, 1607-09, 170 L. Ed. 2d 559 (2008) (no suppression where evidence was gathered from a search incident to arrest despite a state law which permitted only the issuance of a citation); United States v. Ankeny, 502 F.3d 829, 837 (9th Cir. 2007); (suppression not required for evidence obtained pursuant to valid warrant where warrant was executed in extreme manner because "the alleged Fourth Amendment violation and the discovery of the evidence lack the causal nexus that is required to invoke the exclusionary rule"); United States v. Hector, 474 F.3d 1150, 1152 (9th Cir.2007) (failure to display search warrant during search and failure to provide a copy of the warrant did not require suppression because the alleged constitutional violations were not the "`unattenuated but-for cause' of obtaining the disputed evidence") (citing Hudson, 547 U.S. at 592, 594, 126 S. Ct. 2159). Virginia v. Moore is particularly instructive. It makes clear that State law does not govern the interpretation or applicability of Hudson. Whether the D.C. Circuit would adopt the reasoning of the 9th Circuit in Ankeny and Hector is, therefore, less critical.
The Court concludes that Mr. Johnson's complaint that law enforcement officers failed to return the search warrant to the Superior Court in violation of the D.C.Code, while true, does not affect the Fourth Amendment analysis and does not require suppression of the evidence seized during the search.
B. Motion to Dismiss Count Three
Count Three of the indictment charges Mr. Johnson with a violation of 18 U.S.C. § 922(g), which makes it unlawful for certain individuals, including Mr. Johnson, to "ship or transport in interstate or foreign commerce, or possess in or affecting commerce, any firearm or ammunition; or to receive any firearm or ammunition which has been shipped or transported in interstate or foreign commerce." He anticipates that the United States will present evidence that the gun in question had previously been manufactured outside the District of Columbia and, by the laws of nature, must have at some point crossed *159 state lines into D.C. since it was found here, and, therefore, that its possession by Mr. Johnson was "in or affecting commerce." Def.'s Mot. to Dismiss Count Three at 2. [Dkt. # 10].
Defendant's pretrial motions were set for hearing on July 18, 2008, with trial to commence on August 4, 2008. Mr. Johnson's counsel filed his two motions on July 14, 2008, which gave the United States insufficient time to prepare and file its responses. Therefore, the motions hearing was continued to August 8 and the United States filed a single response to both motions on August 7, 2008. The entirety of the response to the motion to dismiss stated:
The government submits that this motion is not ripe and should be summarily denied. The defendant is requesting the court [to] dismiss count three of the indictment based simply on what the defendant guesses the government will present as evidence. This motion may become ripe after the presentation of the government's evidence is complete but certainly not pretrial.
Gov't's Resp. to Def.'s Mots. at 8. The Court finds that Defendant's argument raises serious legal questions aside from evidentiary ones. Therefore, it will direct the United States to file a further brief on the issue and afford Defendant an opportunity to file a reply.
The Motion to Dismiss Count Three remains under advisement, pending supplemental briefing. The Court finds that it is in the interest of justice to suspend the Speedy Trial Act to allow further briefing and resolution so that Mr. Johnson's arguments can be given the careful attention they are due. The Speedy Trial Act will be suspended until two weeks after submission of Mr. Johnson's reply.
A memorializing order accompanies this memorandum opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2563068/ | 300 F. Supp. 2d 556 (2004)
Levi MOHNEY, et al., Plaintiff,
v.
USA HOCKEY, INC., etc., et al., Defendant.
No. 3:97 CV 7417.
United States District Court, N.D. Ohio, Western Division.
January 23, 2004.
*557 James R. Oates, Merrillville, IN, Fred C. Jug, Brandt, Milnes & Rea, Pittsburgh, PA, for Plaintiffs.
Rudolph A. Peckinpaugh, Jr., Eastman & Smith, Toledo, OH, Ann-Jeannine Foeller, Dickinson Wright, Detroit, MI, William A. Viscomi, Ernest W. Auciello, Jr., Timothy P. Whitford, Gallagher, Sharp, Fulton & Norman, Cleveland, OH, Stephen D. Straus, Traub, Eglin, Lieberman & Straus, Hawthorne, NY, Martin J. Witherell, Mary Ann Whipple, Ray A. Farris, Mark A. Shaw, Fuller & Henry, David W. Doerner, Doyle, Lewis & Warner, William *558 H. Bracy, City of Toledo, Department of Law, John R. Kuhl, Bracy & Kuhl, Toledo, OH, for Defendants.
MEMORANDUM OPINION
KATZ, District Judge.
This matter is before the Court on Plaintiffs Levi Mohney, Mary Mohney and Timothy Mohney's ("Mohney") motion for partial summary judgment (Doc. No. 227); Defendant Bauer Nike Hockey, Inc.'s ("Bauer") motion for summary judgment (Doc. Nos. 219 & 234); Plaintiffs' motion to exclude Defendant's expert testimony (Doc. No. 224); Defendant's motion to exclude Plaintiffs' expert testimony (Doc. No. 219 & 236); Defendant's motion to strike affidavits filed in support of Plaintiffs' opposition to Defendant's motions for summary judgment (Doc. No. 267); Plaintiffs' motion to determine the sufficiency of Defendants' Objections and Admissions (Doc. No. 275); Plaintiffs' motion to compel satisfaction of expert costs (Doc. No. 318); Plaintiffs' supplemental motion for the satisfaction of expert costs (Doc. No. 326); Plaintiffs' motion for order for oral argument for purposes of clarification of issue prior to mediation conference (Doc. No. 352); Plaintiffs' motion for oral argument (Doc. No. 357); and Plaintiffs' motion to compel/motion for sanctions (Doc. No. 265), which the Court previously took under advisement.
The Court has jurisdiction to decide this matter pursuant to 28 U.S.C. § 1332. For the reasons stated below, Defendant's motion to strike affidavits filed in support of Plaintiffs' opposition to Defendants' motions for summary judgment will be granted in part and denied in part. Plaintiffs' motion to determine the sufficiency Defendant's Objections and Admissions will be granted in part and denied in part. Defendant's motion to exclude Plaintiffs' expert testimony will be granted in part and denied in part. Plaintiffs' motion to exclude Defendant's expert testimony will be denied as moot. Defendant's motion for summary judgment will be granted. Plaintiffs' motion for partial summary judgment will be denied. Plaintiffs' motion to compel satisfaction of expert costs will be granted in part and denied in part. Plaintiffs' supplemental motion for the satisfaction of expert costs will be denied. Plaintiffs' motion for order for oral argument for purposes of clarification of issue prior to mediation conference will be denied as moot. Plaintiffs' motion for oral argument will be denied. Plaintiffs' motion for sanctions will be denied as moot.
BACKGROUND
The factual background of this matter is more fully set forth in Mohney v. USA Hockey, Inc., 77 F. Supp. 2d 859 (N.D.Ohio 1999). On May 21, 1995, Levi Mohney ("Levi") became a quadriplegic as a result of an incident that occurred while he participated in a scrimmage that was part of a developmental hockey camp. During the first scrimmage, one of the player's from Levi's team iced the puck by shooting it beyond the other teams red line. To avoid the imposition of an icing infraction against his team, Levi cut in front of Jason Reneger, a player from the other team. As the two players were quickly skating toward the boards, Renger fell into Levi from behind, and both players became entangled losing control and colliding with the boards causing Levi to sustain severe spinal damage at the C5-C6 level resulting in quadriplegia. At the time of the accident, Levi was wearing a helmet manufactured by Bauer and a face mask manufactured by Karhu. The mask was a cage type mask held in place by two j-clips. Plaintiffs assert that the mask released allowing Levi's head to torque into a crown position when the right-hand side j-clip dislodged when the two screw-nut combinations *559 affixing the j-clip to the helmet vibrated loose.
This Court granted summary judgment to Defendants on all of the Monheys' counts, including his products liability claims. Plaintiffs appealed the judgment of this Court. The Sixth Circuit Court of Appeals affirmed in part and reversed in part. Mohney v. USA Hockey, Inc., 5 Fed.Appx. 450 (6th Cir.2001). The Sixth Circuit Court of Appeals affirmed this Court's grant of summary judgment in favor of Defendants Reneger, USA Hockey, Central States Hockey League and Toledo Cherokees and reversed with respect to then Defendants Bauer and Karhu, USA Inc. ("Karhu"), allowing Plaintiffs' products liability claims to proceed. The record in this case, includes volumes of deposition materials, multiple expert reports, an extensive (approximately thirty (30) hours) Daubert hearing and oral argument on Daubert motions, along with a Post-Daubert briefs and a number of other filings. Plaintiffs have now had an opportunity to develop and present evidence on their product liability claims.
Since the Daubert hearing, Plaintiffs and Karhu have negotiated a settlement, which has been filed under seal. (Doc. Nos. 347 & 348). The Court has delayed ruling on pending motions to afford Plaintiffs and Bauer an opportunity to resolve the within action by settlement. Those efforts appear to have been in vain and the Court will proceed to rule on all pending motions.[1]
DISCUSSION
1. DEFENDANTS' MOTION TO EXCLUDE AFFIDAVITS
Pursuant to Fed.R.Civ P. 26 and 37, Bauer moves the Court to exclude the affidavits of Jamey Cearley, Terry Cearley and Dr. S. Ramnath (Doc. No. 261, Exs. F, G, and E), Dr. S. Ramnath, and Dr. Daniel A. Funk (Doc. No. 260.Ex.A) which Plaintiffs have filed in opposition to Defendants' motions for summary judgment, and to exclude the testimony of Plaintiffs' retained experts. Defendant asserts that the affidavits of Jamey and Terry Cearley should be excluded because Plaintiffs' have failed to timely identify them as witnesses and, due to the speed of the incident, it is physically impossible for them to have seen whether Levi struck the boards face first followed by a torque into the crown position.
For purposes of Plaintiffs' opposition to Defendants' motions for summary judgment and to exclude testimony by Plaintiffs' retained experts, the relevant inquiry is not whether Jamey and Terry Cearley were able to see the torque of Levi's head, but rather whether they observed a face first impact. No valid argument has been proffered that either was unable to see the initial point of contact. With respect to the lack of identification, Jamey and Terry Cearley's names have been known to all parties since at least 1997. Thus, Jamey and Terry Cearley's affidavits are admissible.
Defendant also seeks to exclude the affidavits of Dr. Funk and Dr. Ramnath, arguing that it is tantamount to offering expert testimony in contravention of disclosure requirements in Rule 26. Dr. Funk's affidavit presents findings regarding the helmet-mask combination in this case and their role in causing Levi's head to torque from a face first to a crown position. This affidavit represents an attempt to buttress the opinions offered by Mr. Johanson and Dr. Collins, Plaintiffs' *560 retained liability experts, with testimony from an unlisted/unidentified expert witness. Thus, Dr. Funk's affidavit is inadmissible and stricken in its entirety.
Plaintiffs argue that as Levi's treating physician Dr. Ramnath is qualified to testify as to the cause of his injuries without disclosure/designation as an expert, and accompanying written report pursuant to Rule 26(a)(2)(B) directing the Court to Martin v. CSX Transp., Inc., 215 F.R.D. 554 (S.D.Ind.2003). Initially, the Court observes that Martin does not endorse the position that a treating physician may testify without disclosure under Rule 26(a)(2)(A) & (B). There the plaintiff had disclosed his treating physicians as potential witness pursuant to Rule 26(a)(2)(A). Id. at 555.
The Martin court did find that the treating physicians testimony was admissible without a written report stating:
It is within the normal range of duties for a health care provider to develop opinions regarding causation and prognosis during the ordinary course of an examination. To assume otherwise is a limiting perspective, which narrows the role of the treating physician. Instead, to properly treat and diagnose a patient, the doctor needs to understand the cause of the patient's injuries. As such, a physician "whose proposed opinion testimony will come from his knowledge acquired as a treating physician, is not someone from which a Rule 26(a)(2)(B) report is required."
Id. at 577 (citations omitted).[2] In so doing, in Martin, the court also asserted that the "disclosure under Rule 26(a)(2)(A) provides sufficient opportunity" for the defendant to discover and prepare for the treating physicians testimony. Id. at 557.
In Hardyman v. Norfolk & Western Ry. Co., 243 F.3d 255, 269 (6th Cir.2001), the court asserted that treating physicians were permitted to testify based on their general experience as to the "diagnostic cause and effect" of the plaintiff's carpel tunnel syndrome. See also Prater v. Consol. Rail Corp., 272 F. Supp. 2d 706, 712 (N.D.Ohio 2003).
Courts consistently have found that treating physicians are not expert witnesses merely by virtue of their expertise in the respective fields. Only if their testimony is based on outside knowledge, not on personal knowledge of the patient and his or her treatment, may they be deemed experts.
Fisher v. Ford Motor Co., 178 F.R.D. 195, 197 (N.D.Ohio 1998) (citations omitted). "[T]he application of the Rule 26 disclosure requirements depends on the substance of the treating physician's testimony rather than his or her status." Hawkins v. Graceland, 210 F.R.D. 210, 211 (W.D.Tenn.2002). See also Brown v. Best Foods, 169 F.R.D. 385, 387 (N.D.Ala.1996); Salas v. United States, 165 F.R.D. 31, 33 (W.D.N.Y.1995). In Sullivan v. Glock, Inc., 175 F.R.D. 497, 501 (D.Md.1997) the court stated:
To the extent that the source of the facts which form the basis for a treating physician's opinions derive from information learned during the actual treatment of the patient as opposed to being subsequently supplied by an attorney involved in litigating a case involving the condition or injury then no *561 Rule 26(a)(2)(B) statement should be required.
By way of affidavit, Dr. Ramnath seeks to testify:
Levi Mohney was admitted to Flower Hospital on the morning of May 21, 1995. (Doc. No. 261, Ex. E, ¶ 1).
I completed the history and physical of Levi Mohney upon admission. A true and correct copy of the history and physical according to the Flower Hospital medical records is attached hereto as Appendix "A". Id. at ¶ 2.
Levi Mohney presented with the following history upon admission: "This seventeen year old young man was playing hockey at approximately 11:00 this morning and was thrown face forward into the boards, striking his face against the boards." Id. at ¶ 3.
Upon admission, I was called to the Emergency Room regarding a possible spinal cord injury and a fracture dislocation at C5-C6. Id. at ¶ 4.
X-rays of the cervical spine showed a fracture of the anterior portion of C5 and dislocation of C5 on C6 with the posterior margin of C5 about 8-9mm posterior to the posterior margin of C6. A CT scan of the cervical spine showed fractures of the body of C5, fractured lamina of C5 on the left, a vertical fracture through body of C6 and a fractured transverse formen at C7 on the left. Id. at ¶ 5.
Levi Mohney sustained an immediate and complete spinal cord injury and my impression is recorded in the Flower Hospital records as a fracture/dislocation C5-6 with C5-6 quadriplegia. Id. at ¶ 6.
The history that was obtained in the Flower Hospital Emergency Room was provided by the patient and his family within one (1) hour of the injury. Id. at ¶ 7.
This affidavit is made based upon my personal knowledge and findings of May 21, 1995, as recorded in the Flower hospital medical records. This affidavit is also based upon my review of the x-ray films that were obtained upon admission. Id. at ¶ 8.
I have had an opportunity to review the MiniDV tape of the accident. The accident is consistent with the history recorded in my records. Levi Mohney hit the boards face first. Subsequent to the initial impact, his head rotates down so that the crown of his head is in contact with the boards. Id. at ¶ 9.
This history is consistent with the facial impact and rotation into a crown presentation with a vertical load and hyperflexion type of injury. Id. at ¶ 10.
The injuries of Levi Mohney sustained are consistent with the history and physical findings of the injury recorded in the medical records of Flowers Hospital, and with the tape of the accident. Id. at ¶ 11.
It is clear that Paragraphs 1-8 contain information related to Dr. Ramnath's role as Levi's treating physician, and are admissible. The status of Paragraphs 9-11 are different.
The substance of these paragraphs is synonymous with the type of testimony offered by Dr. Richard Collins, Plaintiffs' causation expert, and is based on information learned outside the scope of Dr. Ramnath's role as Levi's treating physician. The Court acknowledges that Paragraph 10 does not mention the Mini-DV tape and Paragraph 11 references Levi's medical history along with the tape. The content of these paragraphs, however, is inherently linked to Dr. Ramnath's review of the Mini-DV described in Paragraph 9. Otherwise they would provide nothing more than that contained in Paragraphs 1-8, which describe Levi's medical condition, *562 and incorporate his medical records and history.[3] Dr. Ramnath's affidavit is admissible only to the extent that it buttresses and is derived from his role as Levi's treating physician. Therefore, Paragraphs 9, 10 and 11 are stricken.
Thus, Defendants' motion to strike the affidavits of Jamey and Terry Cearley, Dr. S. Ramnath and Dr. Daniel A. Funk is granted in part and denied in part.
2. PLAINTIFFS' MOTION TO DETERMINE SUFFICIENCY OF DEFENDANTS' OBJECTIONS AND ADMISSIONS
Fed.R.Civ.P. 36(a) sets forth in pertinent part:
If objection is made, the reasons therefor shall be stated. The answer shall specifically deny the matter or set in detail the reasons why the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify an answer or deny only a part of the matter of which an admission is requested, the party shall specify so much of it as is true and qualify or deny the remainder. An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless the party states that the party has made a reasonable inquiry and that the information known or readily obtainable by the party is insufficient to enable the party to admit or deny. A party who considers that a matter of which an admission has been requested presents a genuine issue for trial may not, on that ground alone object to the request;
. . . . .
The party who has requested the admissions my move to determine the sufficiency of the answers or objections. Unless the court determines that an objection is justified, it shall order that an answer be served. If the court determines that an answer does not comply with the requirements of this rule, it may order either that the matter is admitted or that an amended answer be served.[4]
Plaintiffs has moved to determine the sufficiency of Defendants Objections and Admissions with respect to Requests 2, 3, 4, 5, 6, 7, 8, 9 and 12 and request that the Court enter an order that each be deemed admitted. They assert that Defendant's responses fail to comply with Rule 36(a).[5]
Request 2: Any and all "warnings" that accompanied the Jofa mask have been produced in discovery in this case and are limited to the document that was identified as document 0005 at the deposition of the Jofa corporate designee. Also, any and all warnings that accompanied the helmet have been produced in discovery.
*563 Request 3: Absolutely no instructions and/or warnings were provided concerning the type of hardware and/or type of screws to be used to affix or join together the products that are the subject of this litigation.
Request 4: One of the two (2) brackets (also referred to in this case as L [sic] j-clips) that was used to mount the subject mask to the subject helmet failed at the time the product impacted the boards and Levi Mohney was injured.
Request 5: Levi Mohney's head was up at the time the subject product came into impact with the boards.
Request 6: At the time Levi Mohney was injured, the mask came into contact with the boards and the force of this impact caused one of the L[sic] j-clips/bracket to fail.
Request 7: Defendant, Jofa, and Defendant, Cooper [sic] Bauer, both were aware of the "Heads Up: Don't Duck Program" and the importance of the position of a hockey player's head as a way of preventing spinal cord injuries prior to Levi Mohney being injured. In addition to this Request for Admission, please consider this particular request as a request to produce all documents in their possession related to the "Heads Up: Don't Duck Program" and/or incidence of spinal cord injuries and/or relationships of such injuries to hockey helmets and/or mask in the possession of the Defendants on or before the date of Levi Mohney's injury.
Request 8: The helmet and mask that are the subject of this litigation were not compatible pursuant to the standards established by H.E.C.C. and/or ASTM. Please consider all copies of the compatibility lists in the possession of the Defendants.
Request 9: The products did not contain a warning that the Cooper helmet and Jofa mask were not to be used together and/or not compatible.
Request 12: The mask and helmet that are the subject of this litigation did not properly fit together.
Bauer denied Requests 4 and 6. Defendant answered that after reasonable inquiry, based on information known or readily available, that it was unable to admit or deny Request 5. Moreover, the testimony and other evidence demonstrates that these facts are in dispute and are central to the outcome of this matter. Thus, Requests 4, 5 and 6 are not deemed admitted.
Request 2 is vague and overly broad. Further, the discovery process, including depositions and the Court's orders to produce relevant documents, has satisfactorily addressed this issue. Therefore, Request 2 is not deemed admitted beyond that already stated. Bauer denied Request 3. and objected to this request on the basis that it lacks knowledge regarding "instructions and/or warnings" accompanying the mask or those provided by any other unidentified entities. Regarding Request 9, Bauer admits that it was not required to provide a warning regarding compatibility, and objected to the request with respect to the mask on the basis that it lacked knowledge regarding warnings provided with the mask. The qualified denials are proper under Fed.R.Civ.P. 36(a). Moreover, these requests are vague, especially in this case where a third-party affixed the mask to the helmet. Therefore, Requests 3 and 9 are not deemed admitted.
As to its own knowledge, Defendant objected to Request 7 on the basis that the request was vague and ambiguous. Bauer also objected to the request regarding Karhu's knowledge. The Court's review of deposition testimony by Bauer's corporate representatives demonstrates that Defendant was aware of the "Heads Up: Don't Duck" program and that the position of a *564 hockey player's head was important to preventing spinal cord injuries. (Doc. No. 264, Weber Dep. p. 106-07). Thus, Request 7 is deemed admitted.
Testimony by Defendant's expert witness, Mr. David Halstead ("Halstead") establishes that the mask and helmet were neither compatible nor did they conform to relevant ASTM standards. (Doc. No. 231, Halstead Dep., pp. 210-11). Therefore, Requests 8 and 12 are deemed admitted. Thus, Plaintiffs' motion to determine the sufficiency of Defendants' Objections and Admissions, and deem these requests admitted is granted in part and denied in part.
3. DAUBERT MOTIONS
A. DAUBERT STANDARD
The legal standard to be used in Daubert challenges was set forth by Judge Bechtle in his memorandum opinion issued on February 1, 2001:
Federal Rule of Evidence 702 obligates judges to ensure that any scientific testimony or evidence admitted is relevant and reliable. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999) (quoting Daubert, 509 U.S. at 589, 113 S. Ct. 2786). The party offering the expert has the burden of proving admissibility. Daubert, 509 U.S. at 592 n. 10, 113 S. Ct. 2786. The subject of an expert's testimony must be grounded in the methods and procedures of science and based on more than subjective belief or speculation. Id. at 589-590, 113 S. Ct. 2786. Further, Rule 702 requires that expert testimony assist the trier of fact, i.e., it must "fit" the issues in the case by having a "valid scientific connection to the pertinent inquiry." Id. at 591-92, 113 S. Ct. 2786.
In determining "whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact," the court must assess whether the methodology underlying the testimony is scientifically valid and whether it can properly be applied to the facts in issue. Id. at 592-93, 113 S. Ct. 2786. Furthermore, the court must examine the expert's conclusions in order to determine whether they can reliably follow from the facts known to the expert and the methodology used. Heller v. Shaw Indus., Inc., 167 F.3d 146, 153 (3d Cir.1999).
In Daubert, the Court identified several factors to assist courts in evaluating whether a scientific theory or methodology constitutes reliable scientific knowledge. These include: whether the theory or technique can be or has been tested; whether the theory has been subjected to peer review and publication; whether a technique has a known or potential rate of error and whether there are standards controlling the technique's operation; and whether the theory or method has general acceptance in the scientific community. Daubert, 509 U.S. at 593-94, 113 S. Ct. 2786. These factors "are simply useful signposts, not dispositive hurdles that a party must overcome in order to have expert testimony admitted." Heller, 167 F.3d at 152.
In addition, a court should "exclude proffered expert testimony if the subject of the testimony lies outside the witness's area of expertise." 4 Weinstein's Fed. Evid. § 702.06[1], at 702-52 (2000). In other words, a party cannot qualify as an expert generally by showing that the expert has specialized knowledge or training which would qualify him or her to opine on some other issue. Redman v. John D. Brush & Co., 111 F.3d 1174, 1179 (4th Cir.1997); Barrett v. Atl. Richfield Co., 95 F.3d 375, 382b (5th Cir.1996).
Moreover, testimony of an expert that constitutes mere personal belief as to *565 the weight of the evidence invades the province of the jury. McGowan v. Cooper Indus., Inc., 863 F.2d 1266, 1273 (6th Cir.1988); STX, Inc. v. Brine, Inc., 37 F. Supp. 2d 740, 768 (D.Md.1999) (quotation omitted), aff'd, No. 99-1540, 2000 WL 564010 (Fed.Cir. May 8, 2000); Sec. & Exch. Comm'n v. Lipson, 46 F. Supp. 2d 758, 763 (N.D.Ill.1998).
Lastly, the court "should also be mindful of other applicable rules." Daubert, 509 U.S. at 595, 113 S. Ct. 2786. Federal Rule of Evidence 703 "provides that expert opinions based on otherwise inadmissible hearsay are to be admitted only if the facts and data are `of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject.'" Id. (quoting Fed.R.Evid. 703). Under Rule 703, "[i]f the underlying data are so lacking in probative force and reliability that no reasonable expert could base an opinion on them, an opinion which rests entirely upon them must be excluded." In re Paoli RR. Yard PCB Litig., 35 F.3d [717,] 748 (quoting In re "Agent Orange" Prod. Liab. Litig., 611 F. Supp. 1223, 1245 (E.D.N.Y.1985)).
In re: "Diet Drugs" (Phentermine, Fenfluramine, Dexfenfluramine) Prod. Liab. Litig., No. MDL 1203, 2001 WL 454586, at *5-6 (E.D.Pa. Feb.1, 2001) (footnotes omitted). The district court is not required to hold a hearing to address a Daubert issue. See Greenwell v. Boatwright, 184 F.3d 492, 498 (6th Cir.1999).
B. Defendant's Daubert Motions
The Mohneys' have retained the services of Mr. Norman Johanson and Dr. Richard Collins. Mr. Johanson has been retained to provide an opinion regarding alleged product defects associated with the helmet-mask combination Levi was wearing at the time of the incident. Dr. Collins opines on the mechanism by which Levi sustained his injuries due to the alleged defects. Bauer asserts that the opinions and testimony of both Mr. Jonhanson and Dr. Collins should be excluded for failing to satisfy any of the four factors for determining reliability set forth in Daubert. Defendant also argues that there is substantial evidence indicating that Dr. Collins abandoned his role as a scientist and become a paid advocate of Plaintiffs.
The Court has conducted an extensive inquiry into the qualifications of Mr. Johanson and Dr. Collins, and the reliability of their opinions. This inquiry has included a review of their deposition testimony, expert reports, testimony during a Daubert hearing (consisting approximately thirty (30) hours of testimony), along with summary of such evidence during oral arguments.
1. Mr. Johanson
a. Qualifications
Mr. Johanson holds a degree in mechanical engineering. He has significant experience in engineering that includes product design, review of safety issues, failure analysis, metallurgical evaluation functions and product testing. Thus, the Court finds that Mr. Johanson is qualified as an expert in mechanical engineering.
b. Reliability of Testimony
Mr. Johanson concludes that the incompatibility of the helmet and mask resulted in an asymmetric attachment of the mask.[6] This asymmetric fit was due to the interaction of the alignment of the two *566 center vertical wires on the mask and the location of pre-drilled holes on the front of the helmet. Mr. Johanson maintains that this asymmetric fit resulted in the mask's full engagement with the left-hand side j-clip, but only minimal engagement with the right-hand side j-clip. The minimal engagement created pressure in a counter clock wise direction that he believes exacerbated a pre-existing loose fit of the two screw-nut combinations affixing this j-clip to the helmet. According to Mr. Johanson, Levi's face striking the boards provided the final force necessary for these screw-nut combinations to instantly and simultaneously vibrate apart at or near the initial time of impact. As a result, the j-clip dislodged allowing the mask to release leading to the downward torque that Dr. Collins opines led to Levi's spinal injuries.
Mr. Johanson testified that because the relevant defects were readily apparent, he did not need to perform any testing to form his opinions in this case (Doc. No. 249, Johanson Dep. Vol. II, p. 12). The Court notes, however, that since his deposition and in response to the opinions of Defendant's experts, Mr. Johanson performed what he alleges to be a test demonstrating that the screws and nuts holding the j-clip in place can vibrate loose.
(1) Incompatibility of Mask and Helmet
Mr. Johanson's opines that the helmet-mask combination is incompatible as shown by the asymmetric fit as supported by his inspection and associated measurements. In his report, Mr. Johanson states: "Either the mask's wire spacing or the helmet's bolt hole spacing would have to be reduced to less than 1" or increased to more than 1.8" in order to have the Jofa mask attached symmetrically on the Cooper helmet. The Jofa mask can only be attached by shifting the mask to one side or the other." (Doc. No. 224, Ex. G, p. 6). Mr. Johanson found that either the mask's wire spacing or helmet's bolt space must be adjusted to have the requisite symmetric fit. The Court acknowledges that visual inspection is sufficient to demonstrate that the helmet and mask fit together asymmetrically. His measurements represent an objective assessment regarding the cause of this fit, which can be verified and critiqued. Mr. Johanson's testimony regarding the incompatibility of the helmet and mask has a reliable basis. It is also consistent with the Court's disposition of the Mohneys' motion to determine sufficiency of Defendants Objections and Answers. Thus, Bauer's motion to exclude *567 the testimony of Mr. Johanson on this issue is denied.
(2) Hardware Affixing Mask to Helmet
Mr. Johanson opines that the right-hand side j-clip immediately and simultaneously dislodged as the result of the already loose fitting screwnut combinations vibrating apart when Levi first collided with the boards.[7] In providing this conclusion he assumes that the remaining screw-nut combinations on the left-hand side j-clip are the same as those that were used on the right-hand side, which were never recovered. He concluded from observation that "minimal thread held the screw and nut in place." (Doc. No. 261, Ex. J, Johanson Aff., ¶ 5).
The Court finds that Mr. Johanson's opinion regarding the dislodging of the right-hand side j-clip is deficient. His opinion regarding the screw-nut combinations fastening the right-hand side j-clip to the helmet is based on visual inspection and observation. Mr. Johanson's testified at his deposition that he did not attempt to determine the thread class of the screws. (Doc. No. 249, Johanson Dep. Vol I., pp. 210-11). He also stated that he made no effort to test whether the thread class on the left-hand side was or was not sufficient even though such testing could have been done. Id. at 211. Mr. Johanson conceded to this lack of measurement and testing during the Daubert Hearing (Doc. No. 315, Daubert Hearing, Vol. III, pp. 593, 595). He asserted, however, that the correct interpretation of his deposition testimony was he had no reason to believe that "thread class" itself was or was not sufficient, but maintained that the "thread class" was unsuited for affixing j-clips. Id. at 595. While this may be true, his testimony establishes a lack of objective replicable testing or analysis, controlled by any standards, in support of his opinion that screw-nut combinations used to affix the j-clips to Levi's helmet were insufficient.
To buttress his opinion, and to refute the opinions of Defendant's experts, Mr. Johanson conducted a "test" by shaking the j-clip back and forth with his hand while resting an exemplar helmet on a table. (Doc. No. 315, Daubert hearing, Vol. III, pp. 598-600).[8] Mr. Johanson's shaking of a j-clip, however, is really no test at all. While he asserts that the force he exerted was less than that if combined with the asymmetry characterizing Levi's helmet and mask (Id. at 599), Mr. Johanson failed to explain or specify how the alleged test conditions otherwise replicated or even approximated those at the time of the incident. In short, Mr. Johanson's shaking of the j-clip is nothing more than an ad hoc demonstration without any controlling standards, rather than an objective scientific test that is replicable and verifiable. Moreover, his testimony and report also establish that he has cited no research or publications of any kind quantifying the impact forces necessary to vibrate loose the screw-nut combinations used to fasten the j-clips to Levi's helmet. Though Mr. Johanson may be correct in his opinion, admissibility turns on whether his opinion is the end product of a reliable methodology, which it is not. As a consequence, his *568 testimony regarding the failure of the right-hand side j-clip must be excluded.
2. Dr. Collins
a. Qualifications
Dr. Collins holds a Ph.D. in mechanical engineering. Dr. Collins has several scientific journal publications and reports to his credit. In addition to his position at Robson-Lapina, an expert consultative firm, when issuing his first report in this case, he has held positions as a professor of biological and medical engineering, physics, medicine, mathematics and biomedical and human factors engineering. Thus, the Court finds that Dr. Collins is qualified as an expert in the field of bio-mechanical engineering.
b. Reliability of Testimony
Dr. Collins has submitted a report along with two supplements containing his findings (Doc. No. 224, Ex. E). These reports along with his testimony during the Daubert hearing detail his theory and method of analysis demonstrating how the release of the mask resulted in the complete dissipation of the horizontal force acting on Levi's head. The complete and instantaneous dissipation of the horizontal force allowed the vertical force to dominate, resulting in a vertical torque that caused Levi's head to move from a face first position to a crown position causing a burst fracture of the C-5 to C-6 region resulting in quadriplegia (Doc. No. 246, Collins Dep., Vol. III, pp. 765-69). Critical to this conclusion is that the right-hand side j-clip dislodged either before or at time of initial impact, the underpinning for which he must rely on the opinion of Mr. Johanson.
As an initial matter, the Court must address Bauer's argument that several documents exchanged between Dr. Collins, Lance Robson and Tom Lacek during Dr. Collins employment at Robson-Lapina individually and collectively demonstrate that Dr. Collins has abandoned his role as an expert scientist blindly adopting Levi's testimony, and, following instructions from his attorneys, fabricated an opinion to conform to Plaintiffs' pre-existing theory of liability. These documents include several e-mails and preliminary reports downloaded from the Robson-Lapina computers, some of which indicate that Dr. Collins believed Levi sustained his injury from a crown first impact. (DH-6).
The Court is persuaded by Plaintiffs' arguments that Dr. Collins neither collaborated with the Plaintiffs' attorneys nor abandoned his role as an expert. Before the Daubert hearing, Mr. Robson, the President and a principle of Robson-Lapina, provided an affidavit clarifying that his criticisms of Dr. Collins were not directed at his failure to follow the scientific method or abandon his neutral role as a scientist. (Doc No. 274, Ex. A). In his affidavit, Mr. Robson maintains Dr. Collins initial report, issued during his employment at Robson-Lapina, was based on appropriate application of engineering and scientific principle and method of analysis based on the facts and information in this case. Id. at ¶ 14. Mr. Robson provided similar testimony at the Daubert hearing. Tom Lacek, Dr. Collins' mentor at Robson-Lapina, provided an affidavit (Doc No. 274, Ex. B) and testimony at the Daubert hearing whose relevant sum and substance is the same.[9]
Moreover, the Court is convinced by Dr. Collins own testimony that these documents *569 represent the interactive process all scientific inquires undergo in the evolution of a working hypothesis designed to reconcile all of the facts and data in a given situation. He describes the documents as illustrating a progression toward the torquing theory described in increasing detail in all of his published reports in this case. Dr. Collins also testified at the Daubert hearing that communication with Plaintiffs' counsel represents nothing more than the communication between a professional and his client. He also testified that he would neither change a report at an attorney's request nor include anything that he could not properly defend and support. Dr. Collins curriculum vitae demonstrates that he is a well published and respected member of the academic community. He is a man who has held several professorships at reputable universities. The Court finds it hard to believe that he would be willing to tarnish his distinguished career over this case. Thus, the Court rejects Defendant's assertion that Dr. Collins' opinion should be rejected as a "concocted theory" developed at the behest of the Plaintiffs' attorneys.
Dr. Collins' first supplemental report, dated July 30, 2002, contains measurements he performed regarding the distance of the mask from the front of the helmet, and a qualitative explanation of how this contributed to the rotational forces he argues took place as Levi struck the boards. (Doc. No. 224, Ex. E, First Supplement, pp. 1-2). In presenting his findings he notes that the front of the mask, in violation of ASTM standards, extends more than .8 inches from the front of the helmet, having the affect of increasing downward torque on Levi's head such that it rotated from face first to a crown impact with the boards. Id. In his second supplemental report, dated October 16, 2002, Dr. Collins uses several pieces of information to develop an illustrative quantitative analysis. (Doc. No. 224, Ex. E, Second Supplement, pp. 2-7). He describes this quantitative assessment as being grounded in Newton's laws of physics.
The Court focuses its attention on the second supplemental report and Dr. Collins testimony. This report represents the culmination of his analysis and most rigorous support for his novel application of dynamics in analyzing the mechanism of Levi's injuries. Under cross-examination, Defendants listed seven (7) inputs, most of which are assumptions, upon which Dr. Collins analysis and use of Newton's laws depends. These inputs are: 1) Levi was traveling at a speed/velocity of 7.8 mph prior to colliding with the boards; 2) the initial orientation of Levi's head was 72 degrees from the horizontal (based on a published paper of Dr. Richard Bishop an expert Karhu and Bauer have retained in this case); 3) a 45 degree angle of Levi's head upon impact; 4) the impact was with the upper portion of the mask; 5) the boards were rigid relative to the mask; 6) the deformation and release of the mask upon impact was instantaneous (i.e. causing complete dissipation of the horizontal force); and 7) the release of the j-clip as described by Mr. Johanson. (Doc. No. 314, Daubert hearing, Vol II., pp. 339-42, 349-50).[10]
*570 Dr. Collins report states, and his testimony confirms, that he estimated 7.8 mph based on a review of a CD-ROM version of the incident. This was not based on the imposition of a time clock on the frame sequence of the event. During the Daubert hearing, the Defendants proffered a CD-ROM version of the incident taken from the Mini-DV version with a time sequence burned onto the frames. Plaintiffs did not object after being assured of proper media transfer and representation that the frame rate was thirty (30) frames per second. Defendants also produced a copy of a blue print with the dimensions of the ice rink. (DH-9).
After reviewing the time sequence, together with the dimensions from the blue print, Dr. Collins conceded that the velocity of Levi's impact was probably double what he estimated and as a result the amount of time for the torque to occur was half of the 14.55 milliseconds he estimated. Id. at 377-78. Dr. Collins' testimony clarified that determining the frame rate would have been of assistance in conducting his method of analysis. Id. at 381-82. He also conceded that he did not have the dimensions of the ice rink when he made his estimate, even though it would have been easy to obtain the blue print Defendant produced.
Dr. Collins also can no longer rely on the abrupt release of the j-clip, which is not a mere input but a necessary prerequisite for his rendition of events. The Court has already ruled that Mr. Johanson's opinion on that issue is inadmissible, and even if Dr. Collins has adopted it as his own, he provides no basis for such an opinion. Moreover, in response to the Court's inquiry, Dr. Collins testified that even without the instantaneous release of the right-hand side j-clip, the shape of the face mask might induce the torque necessary to have caused Levi's injuries, after which the whole mask detaches. (Doc. No. 314, Daubert hearing, Vol. II, pp. 353-54) Dr. Collins, however, also testified that he has not pursued this "analysis in any detail." Id. at 353.
Plaintiffs argue that such infirmities go toward the weight of Dr. Collins' analysis rather than its admissibility directing the Court to Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1333 (11th Cir.2003) and Ford v. Nationwide Mut. Fire. Ins. Co., 62 Fed. Appx. 6 (1st Cir. Apr.8, 2003). In Quiet Tech., the court stated that the plaintiff's argument, which was not directed at the validity of the methodology employed, "but rather that the specific numbers ... used were wrong," goes to the weight of the evidence, and are best exposed through cross-examination. Id. 1345 (citations omitted). Likewise, in Ford, the court affirmed the admission of the defendant's accident reconstructions where the plaintiffs challenged the foundation. Ford, 62 Fed.Appx. at 7-11. The Court, however, is persuaded that the aforementioned shortcomings in Dr. Collins analysis combined with an overwhelming reliance on assumed values impugns the reliability of his analysis, especially in light of the novelty of his theory.
In Coffey v. Dowley Mfg., Inc., 187 F. Supp. 2d 958 (M.D.Tenn.2002), affd., No. 02-5454, 2003 WL 23156640, 2003 U.S.App. LEXIS 26610 (6th Cir. Dec. 18, 2003) the plaintiff was injured while using a Super Hub-Shark ("SHS"), an automotive tool. The plaintiffs hired a professor of mechanical engineering who opined that the SHS was defective in design because the bolts would fail due to tensile and bending loads when used to remove hubs and rotors. The expert visually inspected the SHS, and conducted a computerized finite element analysis "to determine the torque that would be required to fracture the stud bolts." Coffey, 187 F.Supp.2d at 962. He acknowledged having assumed "certain *571 variables in completing the finite element analysis." Id. at 964. The Coffey court found that several of these assumptions were incorrect and stated:
[I]f [the expert] assumed certain parameters for his computerized finite element analysis, and those parameters were later proven to be incorrect, then the conclusion reached by the computer model would also be incorrect. This would be true if any of the parameters assumed by [the expert] were incorrect.
Id. at 974.
In Coffey, the court also asserted:
Lastly, [the expert] relied on a finite element analysis that was the product of a number of "guesstimations" and speculations. Like a house of cards, once those foundations are disproved, the whole analysis collapses. Here, [the expert's] use and reliance upon a faulty finite element analysis constituted a faulty method, based upon faulty principles. (emphasis added).
Id. at 976.
In addition, in Coffey, relying on Pride v. BIC Corp., 218 F.3d 566, 578 (6th Cir.2000), the court maintained that reliance upon a theoretical form of testing did not represent an appropriate means of validating the expert's opinion because actual physical testing could have been done. Id. at 977. The parallels between the deficiencies of the expert in Coffey, and Dr. Collins' analysis now before the Court, are unmistakable. Dr. Collins acknowledged that physical testing could have been conducted to evaluate and verify his opinions and conclusions. (Doc. 245, Collins dep., Vol II, p. 491).
Even assuming arguendo that physically replicating the conditions present when Levi collided into the boards may be difficult and/or cost prohibitive, there were other available options to test Dr. Collins novel theory. The substantial reliance on assumed values for the parameters in the mathematical equations that form the basis of this method of analysis mandates that the selection of these values be validated by at least minimal testing. Dr. Collins could have employed computer modeling. He also might have used sensitivity analysis by assuming not only different values for all the assumed values but also different speeds, which he himself described as a standard practice. (Doc. No. 314, Daubert hearing, Vol II, pp. 342, 389). By assessing results in this manner, potential error rates in analysis and computation might have been developed and the robustness of the base analysis determined. All of this is missing from Dr. Collins analysis.
Plaintiffs argue, and the Court recognizes, that the use of dynamics (i.e. analysis of forces to predict motion in objects) even without actual testing may be recognized as a valid form of analyzing product design and their motion. See Clay v. Ford Motor Co., 215 F.3d 663 (6th Cir.2000). In Clay, the court affirmed admission of an expert's opinion premised on dynamics to reconstruct the sequence of events in an automobile accident. The expert had never worked in the automobile manufacturing industry, tested a model of the vehicle at issue, or published "an article on auto handling and stability, although he ha[d] made presentations on those topics." Id. at 668. The expert's investigation was limited to reviewing a police accident report, some depositions, statements, photos and visiting the scene the day before testifying. Id. The defendant challenged admissibility based on the experts's failure to test his theories that the subject vehicle over steers and jacks, not the propriety of using dynamics. The Clay court asserted that "[t]he district court in its discretion, could have decided that [the expert's] failure" went to the weight, not admissibility of his testimony. Id. at 668-69.
*572 The Mohneys also assert that Dr. Collins testimony should not be excluded because of his years of experience as a published and well respect bio-mechanical engineer. See Clark v. Chrysler Corp., 310 F.3d 461 (6th Cir.2002). In Clark, the court rejected the defendant's challenge to the admission of the plaintiff's experts due to a lack of testing relative to the accident at issue. The Clark court affirmed the admission of the B-Pillar expert's testimony as he had a thorough technical knowledge of door latch systems, conducted extensive testing on latch systems including bypass failure which the plaintiff alleged, developed a test for bypass failure adopted by the government, demonstrated familiarity with the type of latch at issue, examined the actual latch along with others of the same kind, and showed knowledge of the "state-of-the-art and state-of the industry in door latches" at the time the decedent's truck was made. Id. at 467-70. Similarly, the latch expert had an extensive background in automobile safety testing including crash tests involving door latches, examined the subject truck, accident scene, police report, photos and depositions, and testified as to the state-of-the-art and state-of-the-industry and general testing of B-Pillars at the time the truck was made. Id. at 470-72.
While Dr. Collins' may have applied Newton's Laws of Physics in conducting an analysis of forces, reviewed photos and depositions, measured and examined the head protection system Levi wore, the novelty of Dr. Collins along with the infirmities of this theoretical analysis makes the lack of testing glaring and egregious. Indeed, neither the Court nor any expert testifying in this case has been able to identify any tests or scholarly literature, using dynamics or otherwise, documenting the mechanism of injury Dr. Collins opines occurred to Levi. See Demaree v. Toyota Motor Corp., 37 F. Supp. 2d 959 (W.D.Ky.1999).[11] Moreover, the record fails to establish that Dr. Collins' experience as it applies to this case approaches that found to be satisfactory in Clark.
In sum, Mr. Johanson's opinion that the helmet and mask at issue are incompatible is admissible, but his testimony regarding the failure of the j-clip and release of the mask when Levi struck the boards is not. Dr. Collins opinion regarding the mechanism of injury is excluded in its entirety. Thus, Bauer's motion to exclude the testimony of Mr. Johanson and Dr. Collins is granted in part and denied in part.
C. Plaintiffs' Daubert Motion
Bauer has retained the services of four expert witnesses. These experts include Dr. Patrick J. Bishop, Dr. Joseph Torg, Dr. Lawrence Thibault, and Mr. David Halstead. The Court need not consider whether Defendant's expert witnesses satisfy the Daubert requirements. The opinions of Mr. Johanson and Dr. Collins do not satisfy the requirements set forth in Daubert, and his failure to warn claim fails without considering the admissibility of any expert testimony. Therefore, the Mohneys' motion to exclude Defendant's expert witnesses is denied as moot.
4. MOTIONS FOR SUMMARY JUDGMENT
A. Summary Judgment Standard
As an initial matter, the Court sets forth the relative burdens of the parties once a *573 motion for summary judgment is made. Summary judgment must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). Of course, the moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact. Id. at 323, 106 S. Ct. at 2553. The burden then shifts to the nonmoving party who "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986) (quoting Fed.R.Civ.P. 56(e)).
Once the burden of production has so shifted, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is not sufficient "simply [to] show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). Rather, Rule 56(e) "requires the nonmoving party to go beyond the [unverified] pleadings" and present some type of evidentiary material in support of its position. Celotex, 477 U.S. at 324, 106 S. Ct. at 2553. Summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
B. DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Bauer moves for summary judgment on the Mohneys' products liability claims and presents several arguments in support thereof. The Court finds that the issues of whether Bauer is a manufacturer under Ohio law, the inadmissibility of Plaintiffs' expert opinions, and Levi's testimony that he failed to read any warnings are dispositive.[12]
1. Bauer is Only a Component Manufacturer
Bauer asserts that under Ohio law, as a manufacturer of non-defective components, it is not liable for any alleged defects introduced due to its helmet's combination with Karhu's mask on the part of a third-party. O.R.C. § 2307.71(M) provides in pertinent part:
"Products liability claim" means a claim that is asserted in a civil action and that seeks to recover compensatory damages from a manufacturer or supplier for death, physical injury to person, emotional distress, or physical damage to property other than the product in question, that allegedly arose from any of the following:
(1) The design, formulation, production, construction, creation, assembly, rebuilding, testing or marketing of that product;
(2) Any warning or instruction, or lack of warning or instruction, associated with that product.
(3) Any failure of that product to conform to any relevant representation or warranty.
*574 Relatedly, O.R.C. § 2307.71(I) defines manufacturer as "a person engaged in a business to design, formulate, produce, create, make, construct, assemble, or rebuild a product or a component of a product."[13] "Under this definition an entity is a manufacturer if it assembles components into a design which creates a product." Leibreich v. A.J. Refrigeration, Inc., 67 Ohio St. 3d 266, 617 N.E.2d 1068, 1073 (1993). In Leibreich, the defendant asserted that it was not liable as a manufacturer since there was "no allegation that the refrigeration unit was defective or negligently installed." Id. at 1072. The plaintiff countered that the defendant played the most important role in creating "a new product, allegedly a defective product, through its design and assembly of components." Id. The Ohio Supreme Court reversed the trial court's grant of summary judgment to the defendant stating:
Given A.J. Refrigeration's role in the design and assembly of the truck, appellants claim that A.J. Refrigeration is responsible for ensuring that the delivery truck was safe for its intended use. Appellants argue that A.J. Refrigeration should have recommended and included in the design a different braking system which would have held the truck stationary when it was left unattended with the engine running. The evidence on the issue of whether A.J. Refrigeration was a manufacturer for purposes of strict liability in torts supports competing inferences. Determining how much input and final control A.J. Refrigeration had over the design and assembly process is a question for the jury to determine.
Id. at 1073.
In contrast to Bauer, the defendant in Leibreich played a direct role in installing and integrating its refrigeration unit (i.e.component) into a larger system of non-defective components that allegedly resulted in a dangerous final product. Id. See also Miles v. Kohli & Kaliher Assoc. Ltd., 917 F.2d 235, 245 (6th Cir.1990) (duty to warn arises where the components manufacturer also provided the specifications and instructions for assembling the finished product).
In Jacobs v. E.I. Du Pont De Nemours & Co., 67 F.3d 1219, 1242 (6th Cir.1995) the court maintained that "where a component part is not dangerous until incorporated into a finished product, courts have held that the component part supplier cannot be held liable on a common law design or manufacturing defect theory, unless the supplier exercised some control over the final products design." Likewise, in Schaffer v. A.O. Smith Harvestore Prods., Inc., 74 F.3d 722, 729 (6th Cir.1996), the court stated under Ohio law "[w]ithout any evidence of defect in the component parts themselves, summary judgment is appropriate as to [ ] defective products claims." See also Cervelli v. Thompson/Center Arms, 183 F. Supp. 2d 1032, 1046 (S.D.Ohio 2002) (asserting that under Ohio law manufacturers of non-defective components have not duty to warn about the dangers that may result from its integration into a product where the component manufacturer did not participate in the design or assembly process); Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 364 N.E.2d 267, 272 (1977) (holding that the duty to warn "does not extend to the speculative anticipation of how manufactured components, not in and of themselves dangerous or defective, can become potentially dangerous dependent upon the nature of their integration into a unit designed and assembled by another").
*575 Here, Plaintiffs argue that Bauer is a manufacturer because a helmet is a final product placed into the stream of commerce. During depositions prior to the Daubert hearing both Dr. Collins and Mr. Johanson testified that the incompatible combination of the mask and helmet, which are components of head protection system created the product defect (Doc. No. 245, Collins Dep., Vol. II, p. 497; Doc. No. 249, Johanson Dep., Vol. II, pp. 50-51, 118). Moreover, Mr. Johanson describes the mask and helmet as components of a head protection system (Doc. No. 249, Johanson Dep., Vol. II, p. 98). He also stated that the mask does not have the same defective nature if used with an appropriate helmet. (Doc. No. 249, Johanson Dep., Vol. II, pp. 120-21). Mr. Johanson did not equivocate from this position at the Daubert hearing. Mr. Johanson testified:
Q. Mr. Johanson, do you have an opinion as it relates to warnings whether or not the manufacturer should have informed Levi that the Cooper helmet and the Jofa facemask shouldn't be used together?
A. I do.
Q. And what is that opinion, sir?
A. The opinion is that both of the manufacturers of the component parts that make up a head protection system, that being the manufacturer of the helmet and that manufacturer of the mask, ...
(Doc. No. 314, Daubert hearing, Vol. II, p. 442) (emphasis added).
He also testified:
Q. To your knowledge did Dr. Collins then incorporate that finding and that opinion, your learned opinion, into his injury analysis?
A. I believe he did.
Q. Thank you. Please continue.
A. After reviewing the mask to helmet attachment characteristics, I then entered into my analysis. The preface to the analysis, I identify helmets and facemasks as two components of an ice hockey head protection system ...
(Doc. No. 315, Daubert hearing, Vol. III, p. 535) (emphasis added).
Mr. Johanson further stated:
Q. What steps did you take to determine how often an incompatible facemask can rotate and torque I'm sorry, I used the word torque into a crown-first presentation.
A. I don't believe that question is appropriate for the incompatibility defect we have here. You have two major components of a head protection system that are incompatible and hazardous to a user ...
Id. at 643 (emphasis added).
Plaintiffs provide no evidence that Bauer combined the helmet and mask into a single unit. Timothy Mohney testified that when the helmet at issue was purchased it had not come with a mask already attached as he would have used a mask already at home. (Doc. No. 39, T. Mohney Dep., Vol. I, pp. 37-38). Levi also testified that when the helmet was purchased it did not come with the mask attached, nor could he remember whether the mask and helmet were even purchased at the same time. (Doc. No. 40, L. Mohney Dep., Vol. I, p. 145). Levi has since testified that the components came together as a helmet-mask combination. (Doc. No. 247, L Mohney Dep., Vol. II, p. 280). Nevertheless, it is undisputed that Bauer did not sell its products as a single unit, and that whether purchased separately or as a unit, a third-party combined the helmet and mask into the helmet-mask combination Levi wore at the time of the incident.
Jean Francois Laprier, a corporate designee of Bauer, testified that the helmet in this case was designed to be used with j-clips *576 and that the purpose of the j-clips was to hold the mask in place, comply with requisite impact tests and avoid collapsing inward (Doc. No. 263, Laprier Dep., pp. 36-37, 44-45). Granted, there appears to be some doubt as to who provided the j-clips and associated screw-nut combinations for affixed to Levi's helmet. Mr. Laprier asserts that the j-clip hardware, including the clip, are "sold with the face mask." Id. at 37. On the other hand, Plaintiffs contend that Halstead's testimony at the Daubert hearing establishes that the j-clips likely came from Bauer, or at least raises a factual issue. With respect to an exemplar, not Levi's helmet, Mr. Halstead testified.
Q. The white J-clips that you're referring to, who provided those J-clips? Did they come from the manufacturer of Cooper, Bauer Nike?
A. My suspicion is and it is a suspicion; I'm pretty certain I'm more than pretty certain they didn't come from Jofa, because I don't believe they came with the face protector. They probably came from Bauer. That would be my best guess. I'm not certain of that.
Q. So it's your understanding that the J Clips would have come from Bauer Nike but not from Jofa; is that correct, sir?
A. Those particular J-clips could have come from Bauer Nike and probably did not come from Jofa; that's as good as I can get it for you, Mr. Jug.
(Doc. No. 315, Daubert hearing, Vol. III, p. 796).
The record establishes, however, that Bauer was not the entity responsible for providing instructions on the assembly of Levi's mask and helmet. In fact, Laprier has testified that it was the responsibility of the mask manufacturer to specify whether j-clips are to be used with a particular mask or not. (Doc. No. 263, Laprier Dep., p. 42). Similarly, Larry Weber, another corporate designee of Bauer, testified that if sold separately, the mask manufacturer was to provide instructions on how to properly use j-clips. (Doc. No. 264, Weber Dep., p. 90). The mask was supposed to be accompanied by literature that included a section entitled "Mounting Instructions" specifying how the mask was to be affixed to a helmet. (Doc. No. 227, Ex. F).[14] Accordingly, Bauer is not a manufacturer for purposes of Levi's products liability claims and is entitled to summary judgment.[15]
2. Insufficient Evidence Due to Exclusion of the Plaintiffs' Experts
Bauer also moves for summary judgment arguing that the exclusion of Mr. Johanson and Dr. Collins leaves Plaintiffs without any competent evidence of product defect and causation. "A plaintiff cannot recover on a product liability claim unless he establishes, by a preponderance of the evidence, that the product was defective in manufacture or construction, was defective in design or formulation, was defective due to inadequate warning or instruction, or because it did not conform to a representation made by its manufacturer." United States Aviation Underwriters, Inc. v. B.F. Goodrich Co., 149 Ohio App. 3d 569, 778 N.E.2d 122, 126 (2002). A plaintiff must also demonstrate that the alleged defect was the proximate cause of his injury. United States Aviation, 778 N.E.2d at 126-27. See also Kelley v. Cairns & Bros., Inc., 89 Ohio App. 3d 598, 626 N.E.2d 986, 993 (1993).
*577 The Court has excluded Mr. Johanson's opinion as to the failure of the right-hand side j-clip used to affix the facemask to Levi's helmet were insufficient resulting in its dislodgment of the right-hand side j-clip is deficient, on which Dr. Collins' opinion depends. In addition to the myriad of its own shortcomings, exclusion of evidence as to the j-clip's failure is fatal to Dr. Collins' opinion. While there may be other theories upon which the purported torque of Levi's head might have occurred, Plaintiff is left without any admissible evidence as to the alleged defect and proximate cause of what is plainly a very abrupt complex sequence of events. Thus, Bauer is entitled to summary judgment on all but Plaintiffs' failure to warn claims on this basis, which the Court addresses based on a lack of proximate cause particular to failure to warn claims.
3. Failure to Warn
Bauer asserts that it is also entitled to summary judgment on Levi's failure to warn claims because there is no competent evidence to establish that the "head protection unit" posed a risk of spinal injury, the risk of spinal injury in playing hockey is an open and obvious danger, there were adequate warnings, and Levi's failure to read the warnings that were provided establishes a lack of proximate cause between use of the helmet-mask combination and his injures.[16] O.R.C. § 2307.76 states in pertinent part:
(A) Subject to divisions (B) and (C) of this section, a product is defective due to inadequate warning or instruction if either of the following applies:
(1) It is defective due to inadequate warning or instruction at the time of marketing if, when it left the control of the manufacturer, both of the following applied:
(a) The manufacturer knew or, in the exercise of reasonable care, should have known about a risk that is associated with the product and that allegedly caused harm for which the claimant seeks to recover compensatory damages;
(b) The manufacture failed to provide the warning or instruction that a manufacturer exercising reasonable care would have provided concerning that risk, in light of the likelihood that the product would cause the harm of the type for which the claimant seeks to recover compensatory damages and in light of the likely seriousness of that harm.
(B) A product is not defective due to lack of warning or instruction or inadequate warning or instruction as a result of a failure to warn or instruct about an open or obvious risk or a risk that is a matter of common knowledge.
"Under Ohio law, a plaintiff asserting a products liability `claim [ ] based on failure to provide adequate warnings not only must convince the fact finder that the warning provided is unreasonable, hence inadequate, but he also must establish the existence of proximate cause between the [product] and the fact of the plaintiff's injury.'" Hisrich v. Volvo Cars of N. Am., Inc., 226 F.3d 445, 450-51 (6th Cir.2000) (quoting Seley v. G.D. Searle & *578 Co., 67 Ohio St. 2d 192, 423 N.E.2d 831, 838 (1981)). That is to say that a plaintiff must establish a manufacturer's duty to warn, that such duty was breached and that such breach was the proximate cause of the plaintiff's injury. Brown v. McDonalds Corp., 101 Ohio App. 3d 294, 655 N.E.2d 440, 443 (1995). The standard imposed is the same whether such a claim sounds in negligence or strict liability. Crislip v. TCH Liquidating Co., 52 Ohio St. 3d 251, 556 N.E.2d 1177, 1181-83 (1990).[17]
"In analyzing the proximate cause issue as it relates to failure-to-warn cases, the Ohio Supreme Court `divided proximate causation ... into two sub-issues: (1) whether lack of adequate warnings contributed to the plaintiff's [use of the product], and (2) whether [use of the product] constituted a proximate cause of the plaintiff's injury.'" Hisrich, 226 F.3d at 451 (quoting Seley, 423 N.E.2d at 838). Moreover, in Seley, the Ohio Supreme Court stated that:
[there is] a presumption that an adequate warning, if given, will be read and heeded. In such a situation, the presumption established works to the benefit of the manufacturer. However, where no warning is given, or where an inadequate warning is given, a rebuttable presumption arises, beneficial to the plaintiff, that the failure to adequately warn was the proximate cause of the plaintiff's [use of the product]. This presumption, absent the production of rebutting evidence by the defendant, is sufficient to satisfy the first branch of the plaintiff's proximate cause burden.
Seley, 423 N.E.2d at 838 (citations omitted).
In Seley, the Ohio Supreme Court also made clear:
[A] fact finder may find a warning to be unreasonable, hence inadequate, in its factual content, its expression of the facts, or the method or form in which it is conveyed. The adequacy of such warnings is measured not only by what is stated, but also by the manner in which it is stated. A reasonable warning not only conveys a fair indication of the nature of the dangers involved, but also warns with the degree of intensity demanded by the nature of the risk. A warning may be found to be unreasonable in that it was unduly delayed, reluctant in tone or lacking in a sense of urgency.
Id. at 837 (citations omitted). See also Hisrich, 226 F.3d at 453.
Even assuming arguendo that the warnings in this case, including that on the back of the helmet, were inadequate, the presumption of proximate cause is rebutted, and a claim of a failure to warn fails where the evidence directly establishes that a plaintiff did not read the warnings. Hisrich, 226 F.3d at 451(citing Phan v. Presrite Corp., 100 Ohio App. 3d 195, 653 N.E.2d 708, 711 (1994)). Levi's deposition testimony provides direct evidence he did not read any of the warnings. (Doc. No. 40, L. Mohney Dep., Vol. I, pp. 60-61, 129).[18] In fact, Levi testified:
*579 Q. All right. We talked about this earlier, but I guess I'd like to read this into the record now. There is a warning that is affixed to the back of the helmet, is there not?
A. Now I know that, yeah.
Q. Okay. You told us that you never read that before; right?
A. Before I got hurt, no.
Q. But it's there on the helmet; true?
A. Yeah.
Q. And it was able for you to strike that. It was in plain view for you to read?
A. Yeah, it is.
Id. at 88-89 (emphasis added).
Levi also testified that he would not have read "the instructions or the warnings for the face mask before" putting it onto the helmet. Id. at 146. In fact, he further testified:
Q. Do you have any independent recollection now of your having attached cages or face masks to helmets yourself?
A. Sometimes I did, yes.
Q. How did you know how to do that?
A. Just common sense.
Q. So you didn't look at or review any instructions before you did something like that?
A. No. I never read no instructions.
Q. You didn't think it was necessary to read any instructions before you did something like that?
A. They had a little diagram. That was it.
Q. You don't remember whether you read any kind of warnings or other information that might have come with any of the cages that you had acquired over the years to put on your helmets?
A. No.
Q. You don't remember?
A. (Witness indicates negatively.) I know I didn't read any of the warnings or any of that stuff.
Q. Why are you so sure of that?
A. Because it was the warning was on the back of the helmet, and I did not have to look on the back of the helmet.
Q. How many times do you think you took that helmet off and put that helmet on during the time that you had it and before you got hurt.
A. Hundreds of times.
Q. So hundreds of times you took that helmet off and put that helmet on, and you never looked at the back of it or read what was on it?
A. No.
Q. You certainly had the opportunity to do so; right, though?
A. Yeah.
Q. Literally hundreds of times?
A. The opportunity was there, yes.
Id. at 164-65.
The testimony does more than suggest he did not read any of the warnings. It is unequivocally establishes that he did not.
Levi has now submitted an affidavit wherein he asserts that he simply does not recall whether he did or did not read the warnings. (Doc. No. 261, Ex. K, Levi Mohney Aff. ¶¶ 5, 7) and directs the Court to McConnell v. Cosco, Inc., 238 F. Supp. 2d 970 (S.D.Ohio 2003) and Falkner v. Para-Chem, No. 21288, 2003 WL 21396693, 2003 Ohio App. LEXIS 2819 (Ohio Ct.App. 9th Dist. June 18, 2003). The Court is mindful, however, that "a party cannot create a genuine issue of material fact by filing an affidavit, after a motion for summary judgment has been made, that essentially contradicts his earlier deposition testimony." Penny v. United Parcel Serv., 128 F.3d 408, 415 (6th Cir.1997). See also Reid v. *580 Sears, Roebuck & Co., 790 F.2d 453, 460 (6th Cir.1986).
In McConnell, a child suffered severe brain damage when his neck caught on a highchair's tray due to his caregiver's failure to strap him into the chair. The infant and his mother filed suit against the highchair manufacturer and the store in which the highchair was purchased alleging several claims including failure to adequately warn. While it did not have an instruction manual, the highchair contained warnings on the back and under the tray not to leave children unattended, to strap them in and not to rely on the tray to keep children in place. The McConnell court denied the defendants' motion for summary judgment due in part to a factual issue regarding the adequacy of the warnings placement. McConnell, 238 F.Supp.2d at 977. In McConnell, the court stated:
Furthermore, [the caregiver's] testimony supports [p]laintiffs' alternative position that even if the warnings were adequate in content, they were not adequately displayed on the highchair. If the display of the warnings was inadequate, then [d]efendants cannot claim that [the caregiver's] failure to read the warnings absolves them of liability. Rather, a warning that is inadequate because it is not properly displayed can be the proximate cause of harm even if the user did not read the warning. Were the law otherwise, manufacturers would be free from liability for providing any warning no matter how obscure, but would be encouraged to use obscure warnings so that consumers would still use their product despite its risks.
Id. at 979-80 (citations omitted).
Likewise, in Falkner, the court found a failure to read an "`inconspicuous' `Do Not Use Indoors, Because of Flammability' warning" regarding the use of carpet glue failed to rebut the presumption of proximate cause. Falkner, No. 21288, 2003 WL 21396693, **9-10, 2003 Ohio App. LEXIS 2819, at **26-27. Moreover, one of the defendant's own employee's conceded that the "warning was `not necessarily' conspicuous, and could easily be missed." Id., 2003 WL 21396693, *7, 2003 Ohio App. LEXIS 2819, at *19.
Any contention that the warning(s) were inconspicuous or obscure is belied by Levi's own testimony supra, that the warning was in plain view. Parenthetically, the label on which the warning is provided is white, and sits against the black helmet. The word "WARNING," which appears in all capital letters, appears in white type face against a black backdrop encompassed within the white label, and is prominently displayed separate and above the actual warning. The actual warning then appears in black lettering against the white background. Levi's attempt to create a factual issue as to the adequacy of the placement and prominence of the helmet's warning by way of affidavit to obfuscate his earlier deposition testimony that he did not read the warning provided on the helmet is without merit. Thus, Bauer's motion for summary judgment on Levi's failure to warn claim is granted.
3. Mary and Timothy Monheys' Derivative Claims Are Barred
Bauer argues that they are entitled to summary judgment on the claims of Timothy and Mary Mohney, Levi's parents, for medical expenses and loss of services since they are derivative of the primary claims of Levi. Defendant is entitled to summary judgment on Levi's claims. If Bauer is not liable to Levi, then Timothy and Mary Mohney's claims cannot survive. See Grindell v. Huber, 28 Ohio St. 2d 71, 275 N.E.2d 614, 616-17 (1971); Looman v. Bell-Herron Middle Sch., 129 Ohio App. 3d 39, 716 N.E.2d 1197, 1199 (1998). Thus, *581 Defendant is entitled to summary judgment on Timothy and Mary Mohneys' claims for medical expenses and loss of services.
C. PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT
1. Product Defects
Plaintiffs move for summary judgment on their products liability claims, arguing that there exists no genuine issue of material fact regarding whether the helmet-mask combination was defectively designed and that the Defendants failed to provide adequate warnings on their products. The Court has granted Defendant's motion for summary judgment on all of Levi's product liability claims, and his parents claims for medical expenses and loss of services. Thus, Plaintiffs' motion for partial summary judgment on their product liability claims is denied.
2. Permanent Disability/Damages
Plaintiffs also move for summary judgment on the issue of permanent disability/damages, asserting that there is no genuine issue of material fact that Levi's is a complete quadriplegic and completely disabled from any gainful employment. Plaintiffs' claims have been disposed of based on Defendant's and motion for summary judgment. Accordingly, the Mohneys' motion for partial summary judgment on the issue of permanent disability/damages is denied.[19]
4. PLAINTIFFS' MOTION TO COMPEL SATISFACTION OF EXPERT COSTS AND SUPPLEMENTAL MOTION FOR THE SATISFACTION OF EXPERT COSTS
Plaintiffs move the Court to compel Defendant to satisfy expert fees and costs related to the production of documents from the Robson-Lapina computer system, the appearance and testimony of Mr. Johanson, Mr. Lacek and Mr. Robson at the Daubert hearing; and the fees and costs of Dr. Collins for his appearance and testimony at the Daubert hearing.[20] Plaintiffs have attached invoices thereto, which the Court has carefully reviewed. The production of materials from the Robson-Lapina computer system was in compliance with a duly served subpoena.
Plaintiffs seek a total of $35,404.19 on behalf of Robson-Lapina as relates to Mr. Johanson, Mr. Lacek and Mr. Robson wherein they seek $30,387.50 for 110.5 hours of their time at an hourly rate of $275.00, along with $2,674.99 in expenses; $1,900.00 for retrieving information from the Robson-Lapina computer system; and $441.70 for company expenses including $179.50 in Federal Express charges, $235.20 in photocopying and $27.00 in notary fees.
Plaintiffs' also seek $24,771.10 for Dr. Collins. This amount includes $9,467.70 in relation to Daubert hearing, post Daubert hearing review of one of defendant's expert witnesses and discussion in preparation for later oral argument before this Court, along with $15,303.40 (simply denoted as carried over from a pervious invoice *582 which on its face provides insufficient information for the Court to consider).
Rule 26(b)(4)(C) states:
Unless manifest injustice would result, (i) the court shall require that the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery pay the expert a reasonable fee for time spent in responding to discovery under this subdivision; and (ii) with respect to discovery obtained under subdivision (b)(4)(B) of this rule the court shall require the party seeking discovery to pay the other party a fair portion of the fees and expenses reasonably incurred by the latter party in obtaining facts and opinions from the expert.
Before proceeding further, in regard to the production of documents from the Robson-Lapina computer system, Bauer sent Robson-Lapina a letter dated December 19, 2002, stating:
You have stated that you will produce a "back up" tape that existed on or about September 4, 2002, when your firm changed its computer system. We would like to arrange this production to take place on or by December 29, 2002, as ordered by Judge Katz. We would like to send defendants' information technology consultant to participate in the process, in conjunction with Robson Lapina's consultant if you choose to have one present.
. . . . .
We submit that Robson Lapina cannot refuse to fully respond to the subpoena, as you have proposed you will. As I stated, defendants will bear the costs of this effort and conduct the search in a confidential manner without reviewing materials concerning other Robson Lapina business. Once again, the information technology consultants could jointly conduct the search, and download only materials concerning Mr. Johanson's and [Dr.] Collins' work in this case.
(Doc. No. 324, Ex. A).
On December 26, 2002, Mr. Robson responded by way of letter confirming defendants willingness to pay for such costs. (Doc. No. 324, Ex. B). While the December 19 letter cannot be construed as an offer to pay professional fees of Mr. Johanson, Mr. Lacek or Mr. Robson's for their attendance at the Daubert hearing, Bauer's represented that it would pay the cost of technology persons used to complete the document retrieval.
Bauer concedes that the information obtained as a result of the subpoena were the same as those requested during the course of discovery. While neither Mr. Robson nor Mr. Lacek have been so designated, Mr. Johanson has been designated as one of Plaintiffs' experts. Based on a detailed review of the attached invoices, the Court finds that Mr. Johanson spent 3.25 hours in activities related to reviewing the documents from the Robson-Lapina computer system that were ultimately produced in this very complex case. See M.T. McBrian, Inc. v. Liebert Corp., 173 F.R.D. 491, 493 (N.D.Ill.1997) (explaining that compelling circumstances such as the complexity of a case that includes voluminous material can justify payment of an expert's preparation time under Rule 26(b)(4)(C)). Bauer made use of these materials not only at the Daubert hearing, but in filings before the hearing as part of replies in support of its Daubert and summary judgment motions. Accordingly, Bauer must compensate Robson-Lapina for Mr. Johanson's time in the amount of $893.75.
Plaintiffs, however, cannot rely on Rule 26(b)(4)(C) to compel satisfaction of the costs and fees for Mr. Johanson, Mr. Lacek, Mr. Robson or Dr. Collins testimony at the Daubert hearing. A Daubert hearing is an evidentiary hearing not encompassed *583 within discovery proceedings. While Mr. Lacek and Mr. Robson are employed by Robson-Lapina, Plaintiffs' retained expert firm, these individuals are not Plaintiffs' experts in this case. Further, as Bauer is entitled to summary judgment on all claims, Plaintiffs cannot base any claim for recovery of costs and/or fees to the extent otherwise permitted as a prevailing party. As a consequence, Plaintiffs' motion to compel satisfaction of expert costs is granted to the extent that Bauer is ordered to pay Robson-Lapina a total of $2,793.75 including $ 1,900.00 for the cost of document retrieval, and $893.75 for Mr. Johanson's time in reviewing those documents. Plaintiffs' supplemental motion for the satisfaction of expert costs is denied in its entirety.
CONCLUSION
The rulings contained in this Memorandum Opinion dispose of Plaintiffs case before this Court. As noted in an earlier Memorandum Opinion of this Court, this case presents a terrible injury to a young man, significantly and adversely impacting his quality of life. No one connected with this case has ever contested the tragic impact of the injuries cause by the unfortunate accident in which Levi was involved. That impact has been directly felt by Levi and his entire family. Harsh as the result of this Court's conclusions appear to be, courts must always be driven and controlled by the Rule of Law and not permit "hard facts to make bad law."
For the reasons stated above, Defendant's motion to strike affidavits filed in support of Plaintiffs' opposition to Defendant's motions for summary judgment (Doc. No. 267) is granted in part and denied in part. Plaintiffs' motion to determine the sufficiency Defendants' Objections and Admissions (Doc. No. 275) is granted in part and denied in part. Defendants' motion to exclude Plaintiffs' expert testimony (Doc. Nos. 219 & 236) is granted in part and denied in part. Plaintiffs' motion to exclude Defendants' expert testimony (Doc. No. 224) is denied as moot. Defendant's motion for summary judgment (Doc. Nos. 219 & 234) is granted. Plaintiffs' motion for partial summary judgment (Doc. No. 227) is denied. Plaintiffs' motion to compel satisfaction of expert costs (Doc. No. 318) is granted in part and denied in part. Plaintiffs' supplemental motion for the satisfaction of expert costs (Doc. No. 326) will be denied. Plaintiffs' motion for order for oral argument for purposes of clarification of issue prior to mediation conference (Doc. No. 352) is denied as moot. Plaintiffs' motion for oral argument (Doc. No. 357) is denied. Plaintiffs' motion for sanctions (Doc. No. 265) is denied as moot.
IT IS SO ORDERED.
NOTES
[1] Since Bauer's motions reference and incorporate those of Karhu prior to its settlement with Plaintiffs, the Court includes them in its consideration and disposition of the motions ruled on herein.
[2] Indeed as Plaintiffs point out, the requirement of a formal written report:
[A]pplies only to those experts who are retained or specially employed to provide such testimony in the case or whose duties as an employee of a party regularly involve the giving of such testimony. A treating physician, for example, can be deposed or called to testify at trial without any requirement of a written report.
Fed.R.Civ.P. 26 advisory committee's note (1993).
[3] In Plaintiffs' reply to Defendant's response of October 3, 2003 (Doc. No. 364), they do not even argue that Paragraph 9 is premised on his role as one of Levi's treating physicians seeking to admit Paragraph 10, and those portions of Paragraph 11 that are "unrelated" to Dr. Ramnath's review of the tape.
[4] Some of Plaintiffs' Requests for Admissions also seek production of documents. Rule 36(a) does not contemplate such production.
[5] Initially, Plaintiffs also moved to have these requests deemed admitted with respect to Karhu for filing an untimely response. Karhu's response denied that it had filed an untimely response, and also contained a motion seeking leaving to answer requests for admissions out of time pursuant to Rule 36(a) (Doc. No. 298). During the Daubert hearing, however, Plaintiffs' counsel, Mr. Jug, represented to the Court that timing was not a true concern because Bauer responses, which are essentially mirror images of Karhu's, were timely filed.
[6] Mr. Johanson measured the Shore A hardness of the helmet's liner and opines that it had experienced "a significant degradation of impact attenuation capability" due to a change from 25-45, further leading to Levi's injuries. (Doc. No. 224, Ex. G, p. 7, 10). In contrast to the incompatibility of the mask and helmet, the Court finds that Mr. Johanson's testimony on this alleged defect must be excluded. He acknowledges that he cannot quantify when it moves from safe to unsafe in this regard. (Doc. No. 249, Johanson Dep., Vol. I, p. 189-90). Thus, Mr. Johanson's testimony regarding the change in Shore A hardness of the helmet lining is excluded.
He also asserts that the helmet's chin strap was defective. Mr. Johanson's report and his testimony provided during the Daubert hearing demonstrates that the chin strap is not central to Plaintiffs' theory of product defect, the asymmetric fit of the helmet and mask, and its role in causing Levi's injury. Though noting that the helmet's single strap system is insufficient and contributed to Levi's injuries (Doc. No. 224, Ex. G, p. 7), the findings section of Mr. Johanson's report does not identify the chin strap as a cause of Levi's injuries. (Doc. No. 224, Ex. G, pp. 9-10).
Mr. Johanson has also provided an opinion that the warnings on the mask and helmet were insufficient to warn Levi of the incompatibility of the two due to the asymmetric fit. The Court need not consider the admissibility of any testimony Mr. Johanson might offer as to the adequacy of any warnings/instructions provided, and thus will not address Defendant's motion for summary judgment on the failure to warn claim on this basis. As explained below, Bauer is entitled to summary judgment on Levi's failure to warn claim because Levi has directly and unequivocally testified that he never read any of the warnings on the helmet (or mask).
[7] During the Daubert hearing, Mr. Johanson testified that he could not specify the exact moment during the incident that the screw-nut combinations instantaneously dislodged and the right-hand side j-clip released. (Doc. No. 314, Daubert hearing, Vol. II., pp. 585-87). Bauer argues that this makes his opinion on this matter inadmissible. The Court disagrees. Mr. Johanson also testified that in all probability this instantaneous release occurred at the beginning of the 40 milliseconds Dr. Collins has estimated as comprising the entire incident. (Doc. No. 314, Daubert hearing, Vol. II, p. 622).
[8] Mr. Johanson proffered a videotape of this exercise to the Court. (DH-25).
[9] The Court notes that Plaintiffs have not listed Mr. Lacek as an expert witness. Paragraphs 8 and 10 of Mr. Lacek's affidavit provide testimony regarding the methodology Dr. Collins employed in completing his two supplemental reports in addition to his February 20, 2002 report. The supplemental reports were completed after Dr. Collins' termination from Robson-Lapina. Testimony from Mr. Lacek concerning the supplemental reports falls outside the scope of any internal peer review process to which Robson-Lapina subjects its employees' reports, and represents expert testimony from an unlisted/unidentified expert witness. Likewise, Mr. Lacek's review of Defendants' expert reports in Paragraph 9 also provides expert testimony from an unlisted/unidentified expert witness and is stricken in its entirety. Therefore, Paragraphs 8 and 10 are stricken to the extent that they address Dr. Collins' supplemental reports, and Paragraph 9 is stricken in its entirety.
[10] Dr. Collins analysis also assumes the mass of Levi's head neck complex was 7.22 kg and the moment of inertia was 0.126 kg-ms 2.
[11] In Demaree, the court excluded an expert's testimony for several reasons including inter alia that no other engineer shared the expert's opinion, there was no literature supporting his opinion, and his failure to perform any form of "virtual" testing including computer modeling or finite element analysis or "perform any mathematical calculations." Id. at 963-64. While Dr. Collins has performed mathematical calculations, the Court has found these calculations and thus the method employed to be suspect and unreliable.
[12] The Court need not address Defendant's arguments that they are entitled to summary judgment under the physical facts rule and/or implied assumption of risk.
[13] In addition to a statutory cause of action based on strict liability, a plaintiff may assert a common law negligent design claim as well. Carrel v. Allied Prods. Corp., 78 Ohio St. 3d 284, 677 N.E.2d 795, 798-800 (1997).
[14] These instructions also indicate that the mask was accompanied by screws and clips for affixing the mask to the front of the helmet.
[15] As discussed in greater detail below, Bauer is entitled to summary judgment on Levi's failure to warn claim, on the separate basis of lack of proximate cause.
[16] Thomas Blaine Hoshizaki, a corporate designee of Karhu, has testified that it was common knowledge that players would combine masks and helmets from different manufacturers together. (Doc. No. 226, Hoshizaki Dep., p. 108). Mr. Laprier testified that such mixing and matching was a common occurrence. (Doc. No. 263, Laprier Dep., p. 126). Other evidence exists that Defendant knew that players mix and match helmets and face masks from different manufacturers that were not compatible. (Doc. No. 261, Ex. A & B; Doc. No. 232, Sabelli Dep., p. 35).
[17] One important distinction, however, is that the defense of comparative negligence is available for a failure to warn claim premised on negligence. Id. at 1183.
[18] The actual warning on the back of the helmet reads:
Ice Hockey is a collision sport which is dangerous. This helmet affords no protection from neck or spinal injury. Severe head, brain, or spinal injuries including paralysis or death may occur despite using this helmet. Do not use this helmet if the shell is cracked, or if the interior padding is deteriorated. Read instructions carefully before wearing.
Warnings also appeared "on a hang tag attached to the helmet, and on the box containing the helmet." Mohney, 77 F.Supp.2d at 878.
[19] The Court also notes that in a Memorandum Opinion and Order (Doc. No. 239), dated December 3, 2002, subsequently clarified in a later Memorandum Opinion and Order (Doc. No. 258), dated December 18, 2002, the Court had bifurcated the trial as between liability and damages. The issue of damages would have been presented to the jury only if Plaintiffs had prevailed on the issue of liability at trial.
[20] Plaintiffs raised the issue of the satisfaction of expert costs during the Daubert hearing. (Doc. No. 313, Daubert Hearing, Vol. I, pp. 253-54) on which the Court reserved ruling. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562874/ | 450 F. Supp. 2d 452 (2006)
Shuron SPENCER, Petitioner,
v.
Thomas CARROLL, Warden, and Carl C. Danberg, Attorney General of the State of Delaware, Respondents.
No. 05-407 SLR.
United States District Court, D. Delaware.
September 19, 2006.
Shuron Spencer. Pro se petitioner.
Elizabeth R. McFarlan, Deputy Attorney General, Delaware Department of Justice, Wilmington, Counsel for respondents.
MEMORANDUM OPINION
SUE L. ROBINSON, Chief Judge.
I. INTRODUCTION
Petitioner Shuron Spencer ("petitioner") is an inmate in custody at the Delaware Correctional Institution in Smyrna, Delaware. Before the court is petitioner's application for a writ of habeas corpus pursuant to 28 U.S.C. § 2254. (D.I.1) The State has filed its answer that habeas relief is not warranted. For the reasons that follow, petitioner's application will be denied.
II. FACTUAL AND PROCEDURAL BACKGROUND
The facts of petitioner's case, as adduced at trial and reported by the Delaware Supreme Court on direct appeal, are as follows:
*453 The charges against [petitioner] arose from a shooting that occurred at a gas station on March 7, 2003. The victim, Lamar Scott, was pumping gas when [petitioner] emerged from a car. [Petitioner] began arguing with Scott and then shot Scott in the right knee. When Scott turned and began to move away, [petitioner] then shot Scott in the right buttock. Four to six seconds elapsed between the two shots.
[Petitioner] was later arrested and charged with two counts of assault, for each of the two times he shot Scott. [Petitioner] was also charged with two counts of [possession of a deadly weapon during the commission of a felony] ["PFDCF"], for the two assaults he committed. At trial, [petitioner] moved to dismiss one count of assault and one count of PFDCF, arguing that the two shots were part of one continuous criminal act and that charging [petitioner] with two separate assaults violated his constitutional prohibition against Double Jeopardy. [Petitioner] also argued that because he was properly chargeable with only one count of assault, he could only be charged with only one count of PC DCF .
The Superior Court concluded that a criminal intent to shoot a victim could be formed in an instant, and that each time [petitioner] pulled the trigger he formed a separate intent to harm Scott. Therefore, the Court held, [petitioner] had committed two distinct felonies because he shot and injured Scott twice and that before each shot, [petitioner] had formed a separate criminal intent.
Spencer v. State, 868 A.2d 821 (Del.2005).
A Delaware Superior Court jury convicted petitioner of two counts of second degree assault, two counts of PFDCF, and one count of possession of a deadly weapon by a person prohibited. The Delaware Superior Court sentenced petitioner to two years in prison for each assault conviction, three years of mandatory prison time for each of the two PFDCF convictions, and two years in prison, suspended after one year for decreasing levels of supervision, for the person prohibited conviction. (D.I.11)
Petitioner appealed, arguing that the separation of his actions into two distinct counts of assault violated his constitutional right against Double Jeopardy. Spencer, 868 A.2d 821. The Delaware Supreme Court rejected that argument and affirmed petitioner's convictions and sentences. Id. at 825.
III. GOVERNING LEGAL PRINCPLES
Pursuant to the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), a federal court may consider a habeas petition filed by a state prisoner only "on the ground that he is in custody in violation of the Constitution or laws or treaties of the United States." 28 U.S.C. § 2254(a). Absent exceptional circumstances, a federal court cannot review a habeas petition unless the petitioner has exhausted all means of available relief for his claims under state law. 28 U.S.C. § 2254(b); O'Sullivan v. Boerckel, 526 U.S. 838, 842-44, 119 S. Ct. 1728, 144 L. Ed. 2d 1 (1999); Picard v. Connor, 404 U.S. 270, 275, 92 S. Ct. 509, 30 L. Ed. 2d 438 (1971). A petitioner satisfies the exhaustion requirement by invoking "one complete round of the State's established appellate review process," which involves fairly presenting the claim to the state's highest court, either on direct appeal or in a post-conviction proceeding. O'Sullivan v. Boerckel, 526 U.S. 838, 844-45, 119 S. Ct. 1728, 144 L. Ed. 2d 1 (1999); See Lambert v. Blackwell, 134 F.3d 506, 513 (3d Cir. 1997).
*454 If the state's highest court adjudicated a federal habeas claim on the merits, then a federal court must review the claim under the deferential standard contained in 28 U.S.C. § 2254(d). A state court decision constitutes an adjudication on the merits for the purposes of § 2254(d) if the "decision finally resolv[es] the parties' claims, with res judicata effect, [and] is based on the substance of the claim advanced, rather than on a procedural, or other ground." Rompilla v. Horn, 355 F.3d 233, 247 (3d Cir.2004) (internal citations omitted), rev'd on other grounds by Rompilla v. Beard, 545 U.S. 374, 125 S. Ct. 2456, 162 L. Ed. 2d 360 (2005). Pursuant to § 2254(d), federal habeas relief may only be granted when the state court's decision was "contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States," or the state court's decision was an unreasonable determination of the facts based on the evidence adduced in the trial. 28 U.S.C. § 2254(d)(1) & (2); Williams v. Taylor, 529 U.S. 362, 412, 120 S. Ct. 1495, 146 L. Ed. 2d 389 (2000); Appel v. Horn, 250 F.3d 203, 210 (3d Cir.2001).
AEDPA also requires a federal court to presume that a state court's implicit and explicit determinations of factual issues are correct. 28 U.S.C. § 2254(e)(1); Campbell v. Vaughn, 209 F.3d 280, 286 (3d Cir.2000). A petitioner can only rebut this presumption of correctness by clear and convincing evidence. 28 U.S.C. § 2254(e)(1); Miller-El v. Cockrell, 537 U.S. 322, 341, 123 S. Ct. 1029, 154 L. Ed. 2d 931 (2003)(stating that the clear and convincing standard in § 2254(e)(1) applies to factual issues, whereas the unreasonable application standard of § 2254(d)(2) applies to factual decisions).
IV. DISCUSSION
Petitioner asserts one claim in his § 2254 application, namely, that his two second degree assault convictions violate the Double Jeopardy Clause because they constitutes multiple punishments for a continuing second degree assaultive offense. (D.I. 1 at 5) The Delaware Supreme Court denied the claim as meritless. Therefore, the court must review petitioner's claim under § 2254(d)(1) and determine if the Delaware Supreme Court's decision was contrary to, or an unreasonable application of, Supreme Court precedent.
The Double Jeopardy Clause protects against multiple punishments for the same offense. U.S. const. amend. V; North Carolina v. Pearce, 395 U.S. 711, 717, 89 S. Ct. 2072, 23 L. Ed. 2d 656 (1969). There are two general categories of multiple punishment cases: (1) cases involving a single act or transaction that constitutes a violation of "two distinct statutory provisions"; and (2) cases involving multiple violations of the same statute. See Rutledge v. United States, 517 U.S. 292, 297, n. 6, 116 S. Ct. 1241, 134 L. Ed. 2d 419 (1996); Bell v. United States, 349 U.S. 81, 83-84, 75 S. Ct. 620, 99 L. Ed. 905 (1955). In either multiple punishment category, however, the "Double Jeopardy Clause does no more than prevent the sentencing court from prescribing greater punishment than the legislature intended." Missouri v. Hunter, 459 U.S. 359, 366, 103 S. Ct. 673, 74 L. Ed. 2d 535 (1983); Jones v. Thomas, 491 U.S. 376, 381, 109 S. Ct. 2522, 105 L. Ed. 2d 322 (1989). Garrett v. United States, 471 U.S. 773, 778-79, 105 S. Ct. 2407, 85 L. Ed. 2d 764 (1985); Bell, 349 U.S. at 82, 75 S. Ct. 620.
Consequently, when a legislature's intent to impose multiple punishments is clearly expressed in the criminal statute, the pertinent double jeopardy inquiry is limited to ensuring that "the total punishment did not exceed that authorized by the legislature." Jones, 491 U.S. at 381, 109 *455 S.Ct. 2522. However, when the legislative intent is unclear, courts generally apply rules of statutory construction to determine if the legislature intended multiple punishments in the particular situation. See Garrett, 471 U.S. at 778-79, 105 S. Ct. 2407. For example, when a sentencing court imposes multiple punishments for violating a single federal statute, and Congress' intent is not clear, the reviewing court must determine the "unit of prosecution" under the statute, or the precise act or conduct criminalized under the statute, as intended by Congress.[1]Bell, 349 U.S. 81, 83-84, 75 S. Ct. 620, 99 L. Ed. 905 (1955); Sanabria v. United States, 437 U.S. 54, 69-70, 98 S. Ct. 2170, 57 L. Ed. 2d 43 (1978); United States v. Universal C.I.T. Credit Corp., 344 U.S. 218, 221, 73 S. Ct. 227, 97 L. Ed. 260 (1952). Determining the allowable unit of prosecution depends, in part, on the "key element" of the offense. See Ebeling v. Morgan, 237 U.S. 625, 629, 35 S. Ct. 710, 59 L. Ed. 1151 (1915); Bell, 349 U.S. 81, 75 S. Ct. 620, 99 L. Ed. 905.
Finally, although the United States Supreme Court has held that a federal court is bound to accept a state supreme court's construction of that state's statutes, the Court has not expressly addressed whether a certain level of inquiry is required before a federal court is* bound by the state court's statutory construction. Missouri, 459 U.S. at 368, 103 S. Ct. 673; O'Brien v. Skinner, 414 U.S. 524, 531, 94 S. Ct. 740, 38 L. Ed. 2d 702 (1974)("it is not [the function of the Supreme Court] to construe a state statute contrary to the construction given it by the highest state court."). The Court of Appeals for the Third Circuit has addressed this issue, and has expressly rejected "the suggestion that the double jeopardy clause dictates the rules of construction which state courts must follow in their interpretation of state law." Gillespie v. Ryan, 837 F.2d 628, 631 n. 2 (3d Cir.1988). Consequently, a state court's failure to "frame its analysis strictly in terms of legislative intent" or to expressly determine the "unit of prosecution" is not dispositive of the double jeopardy issue. Id.; See also Tarrant v. Ponte, 751 F.2d 459, 463 (1st Cir.1985)(noting that, "as a matter of comity, . . . federal courts will be slow to impute to a state court the lack of a principled basis for decision, i.e., disregard of the criminal statute that defines the offense.").
The second degree assault statute under which petitioner was prosecuted reads, in pertinent part, that "[a] person is guilty of assault in the second degree when (1)[t]he person recklessly or intentionally causes serious physical injury to another person." Del.Code Ann. tit. 11, § 612. In petitioner's case, the Delaware Supreme Court did not expressly analyze the General Assembly's intent to impose multiple punishments for continuous assaultive episodes that violate the second degree assault statute; rather, after reviewing prior Delaware caselaw involving the imposition of multiple punishments for various other crimes, the Delaware Supreme Court concluded that the "critical [double jeopardy] inquiry is whether the temporal and spatial separation between the acts supports a factual finding that the defendant formed a separate intent to commit each criminal act." Spencer, 868 A.2d at 823. Yet, because several of the cases reviewed by the Delaware Supreme Court (or cases cited within the initial set of cases) recognized the importance of discerning the legislative intent in resolving double jeopardy questions,[2] the Delaware Supreme Court *456 "clearly was construing [Delaware] law."[3] Accordingly, the court concludes that the state court's shorthand inquiry into legislative intent was not contrary to, or an unreasonable application of, the inquiry into legislative intent required by governing Supreme Court precedent.
Having determined that the Delaware Supreme Court analyzed the legislative intent behind the second degree assault statute, the court is bound to accept the Delaware Supreme Court's conclusion that multiple punishments may be imposed for a continuous second degree assaultive episode when the facts support a finding of separate and distinct intent to inflict each injury within that episode. Nevertheless, because the Delaware Supreme Court formulated its inquiry as one of factual intent, the court must next determine if the Delaware Supreme Court's conclusion that petitioner formed "separate intents to harm Scott before inflicting each injury" was an unreasonable determination of the facts based on the evidence adduced at the trial. 28 U.S.C. § 2254(d)(2).
Here, the Delaware Supreme Court opined that,
although the temporal and spatial separation between the first and second shot was small, that separation was sufficient to support a finding that [petitioner] had formed a separate intent to harm Scott between the two gun shots. Scott turned his back to [petitioner] after the first shot, as evidenced by both pictures . . . of the crime taking place and by the fact that Scott was shot in the buttocks. The evidence of record is sufficient for a rational trier of fact to conclude that the intent [petitioner] had formed to shoot Scott in the leg was distinct from the intent he formed thereafter to shoot Scott in the buttocks after Scott turned his back to run away from his assailant. Spencer, 868 A.2d at 824. Viewing the totality of circumstances, and given petitioner's failure to provide clear and convincing evidence to the contrary, the court finds that the jury could reasonably conclude that petitioner formed separate intents to inflict two separate injuries. The two shots fired by petitioner were separated in time by several seconds, each shot inflicted a separate injury, and the victim moved the location of his body in the time interval between each shot. If there was sufficient time between the two shots for the victim to attempt to escape and actually change the location of his body, a jury could reasonably conclude that there was sufficient time for petitioner to form a new and separate intent before firing the second shot. Accordingly, the court concludes that the Delaware Supreme Court's decision does not warrant federal habeas relief.
V. CERTIFICATE OF APPEALABIITY
Finally, the court must decide whether to issue a certificate of appealability. See Third Circuit Local Appellate Rule 22.2. A certificate of appealability may only be issued when a petitioner makes a "substantial showing of the denial of a constitutional right." 28 U.S.C. § 2253(c)(2). This showing is satisfied when the petitioner demonstrates "that reasonable jurists would find the district court's assessment of the denial of a constitutional claims debatable or wrong." Slack v. McDaniel 529 U.S. 473, 484, 120 S. Ct. 1595, 146 L. Ed. 2d 542 (2000).
For the reasons stated above, the court concludes that petitioner is not entitled to federal habeas relief. Reasonable jurists would not find this conclusion debatable. Consequently, petitioner has failed to make a substantial showing of the denial of a constitutional right, and a certificate of appealability will not be issued.
*457 VI. CONCLUSION
For the foregoing reasons, petitioner's application for habeas relief filed pursuant to 28 U.S.C. § will be denied.
An appropriate order will be entered.
ORDER
For the reasons set forth in the memorandum opinion issued this date, IT IS HEREBY ORDERED that:
1. Petitioner Shuron Spencer's application for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 is DENIED. (D.I.1)
2. The court declines to issue a certificate of appeallability. See 28 U.S.C. § 2253(c)(2).
NOTES
[1] In contrast, when the issue is whether separate counts under two separate statutes constitute one offense, courts follow the test articulated in Blockburger v. U.S., 284 U.S. 299, 302-03, 52 S. Ct. 180, 76 L. Ed. 306 (1932).
[2] The Delaware Supreme Court reviewed the following cases: (1) Williams v. State, 796 A.2d 1281 (Del.2002)(where defendant was charged with two counts of possession of cocaine with intent to deliver); (2) Feddiman v. State, 558 A.2d 278 (De1.1989)(where defendant was charged with eight counts of unlawful sexual intercourse); (3) Washington v. State, 836 A.2d 485 (Del.2003)(where defendant was charged with two counts of robbery); and (4) Whitfield v. State, 867 A.2d 168 (Del.2004)(where defendant was charged with attempted robbery, reckless endangerment, and assault).
[3] Gillespie, 837 F.2d at 631 n. 2. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567625/ | 694 F. Supp. 2d 1177 (2010)
Charles EASTER, Plaintiff,
v.
CDC, et al., Defendants.
Case No. 09cv0555-LAB (RBB).
United States District Court, S.D. California.
March 9, 2010.
*1179 Charles Easter, Chino, CA, pro se.
Attorney General, State of California Office of the Attorney General, San Diego, CA, Susan E. Coleman, Manning & Marder, Kass, Ellrod, Ramirez, Los Angeles, CA, for Defendants.
ORDER ADOPTING REPORT AND RECOMMENDATION;
ORDER GRANTING IN PART MOTION TO DISMISS; AND
ORDER DISMISSING CLAIMS
LARRY ALAN BURNS, District Judge.
On March 18, 2009, Plaintiff, a prisoner proceeding pro se, filed his complaint seeking damages pursuant to 42 U.S.C. § 1983. Plaintiff was attacked by a group of fellow inmates and attacked a second time after, he alleges, Defendants failed to protect him. This suit is a continuation of an earlier suit that was dismissed to permit Plaintiff to exhaust is administrative remedies.
Defendants then moved to dismiss all claims except Petitioner's Eighth Amendment claim based on Defendants' alleged deliberate indifference to Plaintiff's safety. This matter was referred to Magistrate Judge Ruben Brooks for a report and recommendation pursuant to pursuant to 28 U.S.C. § 636 and Civil Local Rule 72.1(d). Following extensions of time to allow for briefing, Judge Brooks issued his report and recommendation (the "R & R"). The R & R permitted any party to file and serve written objections no later than February 26, 2010. Objections have not been received from either party.
A district judge "may accept, reject, or modify the recommended decision" on a dispositive matter prepared by a magistrate judge proceeding without the consent of the parties for all purposes. Fed. R.Civ.P. 72(b); see 28 U.S.C. § 636(b)(1). *1180 "The court shall make a de novo determination of those portions of the [report and recommendation] to which objection is made." 28 U.S.C. § 636(b)(1). Section 636(b)(1) does not require some lesser review by the district court when no objections are filed. Thomas v. Arn, 474 U.S. 140, 149-50, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985). The "statute makes it clear that the district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise." United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.2003) (en banc) (emphasis in original). The statutory provision does not require that the district court conduct some lesser review when no objections are filed. Thomas, 474 U.S. at 149-50, 106 S. Ct. 466 (1985) ("It does not appear that Congress intended to require district court review of a magistrate's factual or legal conclusions under a de novo or any other standard when neither party objects to those findings").
The Court has reviewed the R & R and it appears to be correct and its legal conclusions valid. The Court therefore ADOPTS the R & R. Defendants' Motion to Dismiss the monetary claims against Defendants Morris, Panichello, and Perez in their official capacities is GRANTED and these claims are DISMISSED without leave to amend. Supplemental state claims against Defendants in their official capacities are DISMISSED without leave to amend. Plaintiff's claim under the Fourteenth Amendment is DISMISSED without leave to amend because the allegations are preempted by the Eighth Amendment. Plaintiff's Fifth Amendment claim is DISMISSED with leave to amend his claim involving placement in administrative segregation, but without leave to amend his claim for violation of the prohibition against double jeopardy. Plaintiff's claim for injunctive relief is moot because it is not available to him, and is therefore STRICKEN.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS [DOC. NO. 15]
RUBEN B. BROOKS, United States Magistrate Judge.
Plaintiff Charles Easter, now a state prisoner proceeding pro se and in forma pauperis, filed this civil rights complaint pursuant to 42 U.S.C. § 1983 on March 18, 2009 [doc. no. 1]. At the time he filed this action, Easter was not incarcerated and was living in Escondido, California. (Compl. 1.) The events giving rise to this suit occurred approximately two and one-half years earlier, while Plaintiff was housed at R.J. Donovan Correctional Facility. (Id.) Easter alleges that Defendants violated the Fifth, Eighth, and Fourteenth Amendments of the United States and California Constitutions by improperly placing him in a prison yard where he had been previously assaulted by other inmates which caused him to be assaulted a second time. (Id. at 3-6.)
On August 14, 2009, Defendants Captain B. Morris, Lieutenant L. Panichello, and Officer E. Perez filed a Motion to Dismiss Plaintiffs Complaint for Failure to State a Claim [doc. no. 15].[1] Attached to the Motion was a Memorandum of Points and Authorities in Support of Defendants' Motion to Dismiss and the Declaration of James Reinmiller, Custodian of Records for the Government Claims Program [doc. nos. 15-2, 15-3]. Defendants Morris, Panichello, and Perez argue that they cannot *1181 be sued for damages in their official capacities; Plaintiff's state law claims are barred; Easter's Fourteenth Amendment claim is duplicative; Plaintiff fails to state a claim for violation of the Fifth Amendment; and Easter fails to show that he is entitled to injunctive relief. (Mot. to Dismiss 1.)
A Kingele/Rand notice was issued by the Court on October 26, 2009 [doc. no. 18]. Plaintiff requested additional time to file his opposition and was granted an extension to December 31, 2009 [doc. nos. 21-22]. Easter's Opposition to Defendants' Motion to Dismiss was filed on December 8, 2009 [doc. no. 24]. Easter filed a second Opposition to Memorandum of Points and Authorities nunc pro tunc to December 28, 2009 [doc. no. 26]. Defendants filed a Reply on January 21, 2010 [doc. no. 28]. The Court found Defendants' Motion suitable for decision without oral argument pursuant to civil local rule 7.1(d)(1) [doc. no. 16].
For the reasons set forth below, the district court should GRANT IN PART and DENY IN PART Defendants' Motion to Dismiss.
I. PROCEDURAL BACKGROUND
This action is a resumption of the lawsuit Easter first filed on January 29, 2007. See Easter v. CDC, Civ. No. 07-cv-187-L(LAB) (S.D.Cal. filed Jan. 29, 2007). In that action, Easter alleged that the Defendants were deliberately indifferent to his safety, acted negligently, and violated his right to be free from cruel and unusual punishment by placing him on the same prison yard where he had been previously assaulted by other inmates. Id. (comp. at 3, 6).
On November 20, 2008, United States District Court Judge M. James Lorenz granted the defendants' motions to dismiss and dismissed the complaint without prejudice. Id. (order adopting & modifying report & recommendation at 1-3). Judge Lorenz concluded that Easter filed his administrative grievance on February 7, 2007, after he had filed suit on January 29, 2007. Because the administrative grievance procedure was ongoing, the court dismissed the complaint without prejudice.
The present Complaint, filed on March 18, 2009, is a continuation of Plaintiffs attempt to litigate the civil rights violations he first alleged on January 29, 2007.
II. FACTUAL BACKGROUND
Easter was incarcerated at the Richard J. Donovan Correctional Facility ("Donovan"). (Compl. 1.) On August 27, 2006, while housed in yard four of building seventeen, he was assaulted by fifteen inmates and hospitalized. (Compl. 3, 5.) An incident report was completed and Easter's enemy concerns were noted. (Id. at 3.) Plaintiff was initially released to facility two because he had enemies at facility four. (Id. Attach. # 1, 11.) Then, he was rehoused with his inmate enemies in building seventeen, yard four, and on November 14, 2006, he "was attacked and stabbed and sent to the hospital with life threatening injuries." (Id.)
Easter contends that Captain Morris approved the move; Lieutenant Panichello ordered Plaintiff to move, although Easter complained about his inmate enemies and had other housing; and Correctional Officer Perez oversaw the move, even though he was aware of the prior attack on Easter. (Id. at 3-5.)
III. LEGAL STANDARDS
APPLICABLE TO DEFENDANTS' MOTION TO DISMISS
A. Motions to Dismiss For Failure to State a Claim
A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency *1182 of the claims in the complaint. Davis v. Monroe County Bd. of Educ., 526 U.S. 629, 633, 119 S. Ct. 1661, 143 L. Ed. 2d 839 (1999). "The old formulathat the complaint must not be dismissed unless it is beyond doubt without meritwas discarded by the Bell Atlantic decision [Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 n. 8, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) ]." Limestone Dev. Corp. v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir.2008).[2] A complaint must be dismissed if it does not contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp., 550 U.S. at 570, 127 S. Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). The Court must accept as true all material allegations in the complaint, as well as reasonable inferences to be drawn from them, and must construe the complaint in the light most favorable to the plaintiff. Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969, 973 (9th Cir.2004) (citing Karam v. City of Burbank, 352 F.3d 1188, 1192 (9th Cir.2003)); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995); N.L. Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986).
The Court does not look at whether the plaintiff will "ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974); See Bell Atl. Corp., 550 U.S. at 563 n. 8, 127 S. Ct. 1955. A dismissal under Rule 12(b)(6) is generally proper only where there "is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988)).
The Court need not accept conclusory allegations in the complaint as true; rather, it must "examine whether [they] follow from the description of facts as alleged by the plaintiff." Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir.1992) (citation omitted); see Halkin v. VeriFone, Inc., 11 F.3d 865, 868 (9th Cir.1993); see also Cholla Ready Mix, 382 F.3d at 973 (citing Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir.1994)) (stating that when considering a Rule 12(b)(6) motion, a court "is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged[ ]"). "Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001).
In addition, when resolving a motion to dismiss for failure to state a claim, the Court generally does not consider materials outside the pleadings. Schneider v. Cal. Dep't of Corrs., 151 F.3d 1194, 1197 n. 1 (9th Cir.1998); Jacobellis v. State Farm Fire & Cas. Co., 120 F.3d 171, 172 (9th Cir.1997); Allarcom Pay Television Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 385 (9th Cir.1995). "The focus of any Rule 12(b)(6) dismissal ... is the complaint." Schneider, 151 F.3d at 1197 n. 1. This precludes consideration of "new" allegations *1183 that are raised in a plaintiff's opposition to a motion to dismiss brought pursuant to Rule 12(b)(6). Id. (citing Harrell v. United States, 13 F.3d 232, 236 (7th Cir. 1993); 2 James Wm. Moore et al., Moore's Federal Practice § 12.34[2] (3d ed. 1997) ("The court may not ... take into account additional facts asserted in a memorandum opposing the motion to dismiss, because such memoranda do not constitute pleadings under Rule 7(a).")).
But "[w]hen a plaintiff has attached various exhibits to the complaint, those exhibits may be considered in determining whether dismissal [i]s proper ...." Parks Sch. of Bus., 51 F.3d at 1484 (citing Cooper v. Bell, 628 F.2d 1208, 1210 n. 2 (9th Cir.1980)). The Court may also consider "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading ...." Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir.2002); Stone v. Writer's Guild of Am. W., Inc., 101 F.3d 1312, 1313-14 (9th Cir.1996).
These Rule 12(b)(6) guidelines apply to Defendants' Motion to Dismiss.
B. Standards Applicable to Pro Se Litigants
Where a plaintiff appears in propria persona in a civil rights case, the Court must construe the pleadings liberally. Karim-Panahi v. Los Angeles Police Dep't, 839 F.2d 621, 623 (9th Cir.1988). The rule of liberal construction is "particularly important in civil rights cases." Ferdik v. Bonzelet, 963 F.2d 1258, 1261 (9th Cir.1992). Still, when examining a pro se civil rights complaint, the Court may not "supply essential elements of claims that were not initially pled." Ivey v. Bd. of Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th Cir.1982). "Vague and conclusory allegations of official participation in civil rights violations are not sufficient to withstand a motion to dismiss." Id.; see also Jones v. Cmty. Redev. Agency, 733 F.2d 646, 649 (9th Cir.1984) (finding conclusory allegations unsupported by facts insufficient to state a claim under § 1983). "The plaintiff must allege with at least some degree of particularity overt acts which defendants engaged in that support the plaintiffs claim." Jones, 733 F.2d at 649 (internal quotation omitted).
Nevertheless, the Court must give a pro se litigant leave to amend his complaint "unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (en banc) (quotation omitted) (citing Noll v. Carlson, 809 F.2d 1446, 1447 (9th Cir. 1987)). Thus, before a pro se civil rights complaint may be dismissed, the court must provide the plaintiff with a statement of the complaint's deficiencies. Karim-Panahi, 839 F.2d at 623-24. Where amendment of a pro se litigant's complaint would be futile, denial of leave to amend is appropriate. See James v. Giles, 221 F.3d 1074, 1077 (9th Cir.2000).
C. Stating a Claim Under 42 U.S.C. § 1983
To state a claim under § 1983, the plaintiff must allege facts sufficient to show (1) a person acting "under color of state law" committed the conduct at issue, and (2) the conduct deprived the plaintiff of some right, privilege, or immunity protected by the Constitution or laws of the United States. 42 U.S.C.A. § 1983 (West 2003); Shah v. County of Los Angeles, 797 F.2d 743, 746 (9th Cir.1986).
IV. DISCUSSION
A. Absolute Immunity
The Eleventh Amendment grants the states immunity from private civil *1184 suits. U.S. Const. amend. XI; Seven Up Pete Venture v. Schweitzer, 523 F.3d 948, 952 (9th Cir.2008); Henry v. County of Shasta, 132 F.3d 512, 517 (9th Cir.1997), as amended, 137 F.3d 1372 (9th Cir.1998). This immunity applies to civil rights claims brought under § 1983; thus, an inmate cannot recover damages from the state under § 1983 unless the state waives its immunity. Will v. Mich. Dep't of State Police, 491 U.S. 58, 66, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989); Barber v. Hawaii, 42 F.3d 1185, 1198 (9th Cir.1994).
Eleventh Amendment immunity also extends to state officials sued in federal court in their official capacities. Will, 491 U.S. at 71, 109 S. Ct. 2304 (citing Brandon v. Holt, 469 U.S. 464, 471, 105 S. Ct. 873, 83 L. Ed. 2d 878 (1985)) ("[A] suit against a state official in his or her official capacity is not a suit against the official but rather is a suit against the official's office."); Seven Up Pete Venture, 523 F.3d at 952-53. "As such, it is no different from a suit against the State itself." Will, 491 U.S. at 71, 109 S. Ct. 2304 (citing Kentucky v. Graham, 473 U.S. 159, 165-66, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985); Monell v. Dept. of Soc. Servs., 436 U.S. 658, 690 n. 55, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978)).
A narrow exception to Eleventh Amendment immunity applies to suits against individuals in their official capacities when the relief sought is "prospective injunctive relief in order to end a continuing violation of federal law." Armstrong v. Wilson, 124 F.3d 1019, 1025 (9th Cir.1997) (quoting Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 73, 116 S. Ct. 1114, 134 L. Ed. 2d 252 (1996)) (internal quotations omitted); see also Seven Up Pete Venture, 523 F.3d at 953.
Easter's Complaint asserts claims against the Defendants in their individual and official capacities. (Compl. 2.) Defendants argue that they are entitled to immunity under the Eleventh Amendment for actions taken in their official capacities. (Mot. Dismiss Attach. # 2 Mem. P. & A. 3.) Plaintiff counters by asserting, "If [an] official was working at the time means they were acting under color of law ... so all you have to do is prove th[ere] was an injury to bring a su[it] about." (Opp'n Mem. P. & A. 2 [doc. no. 26].)
In his prayer for relief, Plaintiff requests compensatory and punitive damages from Defendants totaling $25,000,000 "after taxes." (Compl. 7.) Easter is correct that he may assert claims against Defendants in their individual and official capacities; however, he may not seek monetary damages from Defendants in their official capacities as a remedy. The requests for monetary damages against Defendants in their official capacities are actually claims against the State of California. See Will, 491 U.S. at 71, 109 S. Ct. 2304. Because the state is immune from liability for monetary damages, Defendants' Motion to Dismiss the monetary claims against Defendants Morris, Panichello, and Perez in their official capacities should be GRANTED without leave to amend. Accordingly, Easter may only proceed against Defendants in their individual capacities when seeking compensatory and punitive damages.
B. California Tort Claims Act
Easter alleges that Defendants Morris, Panichello, and Perez each participated in transferring him to a prison yard where they knew his inmate enemies had been placed. (Compl. 2-5.) He asserts, in part, that this violated his rights under the California Constitution. (Id.) A plaintiff cannot pursue a violation of the California Constitution under the guise of a federal civil rights claim. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir.2003). Instead, it must be treated as a supplemental state law claim.
*1185 Defendants construe Plaintiffs allegations as also asserting a claim of negligence against them. (Mot. Dismiss Attach. # 2 Mem. P. & A. 4; Reply 2.) But the Complaint does not contain a claim for negligence. (Compl. 3-5.) It indicates there was a prior suit on the same or similar facts in which Easter alleged wanton, willful, and intentional negligence. (Id. at 6.) Plaintiff has not reasserted those claims in his current Complaint. (Id. at 2-6.) Consequently, Easter has failed to state a claim of negligence because he has not given Defendants notice of it. See Fontana v. Haskin, 262 F.3d 871, 877 (9th Cir.2001) (citing Am. Timber & Trading Co. v. First Nat'l Bank, 690 F.2d 781, 786 (9th Cir.1982)) (explaining that the complaint must make "sufficient factual averments [to] show that the claimant may be entitled to some relief[ ]").
Even if the Complaint were construed to allege a claim of negligence, Defendants assert that a negligence claim, as well as any claims raised under California's Constitution, are barred because Easter has not filed a tort claim with the Victim Compensation and Government Claims Board. (Mot. Dismiss Attach. # 2 Mem. P. & A. 4; Reply 2-3.)
In his Opposition, Easter explains that his cellmate provided him with the forms he needed to submit his claims to the Victim Compensation and Government Claims Board. (Opp'n Mot. Dismiss 1 [doc. no. 24].) Plaintiff states, "I did file a board of control claim in February 200[7] with the law library officer (Tanzy) who never returned any of my paper work back to me." (Id.; see also Opp'n Mem. P. & A. 3 [doc. no. 26].) He asks the court not to dismiss his Complaint against Defendants in their individual capacities because Easter argues that he was not required to submit those claims to the state agency before litigating them. (See Opp'n Mot. Dismiss 3 [doc. no. 24]; Opp'n Mem. P. & A. 3 [doc. no. 26].) He also asks the Court not to dismiss his claims against Defendants in their official capacities. (Id.) Easter asserts that "42 U.S.C. [§ ] 1983 allows [him] to sue in federal [court] without filing a Government tort claim." (Opp'n Mem. P. & A. 5 [doc. no. 26].)
It is well established that when adjudicating a supplemental state law claim, this Court must apply state substantive law. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966). Under the California Tort Claims Act, filing a tort claim within the time and in the manner prescribed by statute is a prerequisite to filing a lawsuit against any state employee or agency. See Cal. Gov't Code §§ 905.2, 911.2 (West Supp.2009); Cal. Gov't Code §§ 945.4, 950.2 (West 1995). A personal injury claim must be filed within six months of when the cause of action accrues. Cal. Gov't Code § 911.2. This applies to "injur[ies] resulting from an act or omission [of a public employee] in the scope of his employment as a public employee ...." Cal. Gov't Code § 950.2.
Defendants assert Easter has not filed any tort claims related to the incident. (Mot. Dismiss Attach. # 2 Mem. P. & A. 5; Reply 2.) In his declaration, James Reinmiller, Custodian of Records for the Victim Compensation and Government Claims Board, states that he was unable to locate any records that Easter has ever filed a claim. (Mot. Dismiss Attach. # 3 Reinmiller Decl. 2.)
Easter contends that he has filed a tort claim; he explains that he provided the form to an officer at the law library; but he does not assert that he sent the form to the Victim Compensation and Government Claims Board. (Opp'n Mot. Dismiss 1 [doc. no. 24].) Plaintiff has not provided any evidence of submitting his tort claim. He has attached one hundred *1186 pages of exhibits to his Complaint, four exhibits to his Opposition to Motion to Dismiss, and three exhibits to his Opposition to Memorandum of Points and Authorities. (Id. Attach. # 1 Exs. 1-100; Opp'n Mot. Dismiss [doc. no. 24] Attach. # 1 Exs. A-D; Opp'n Mem. P. & A. [doc. no. 26] Attach. # 1 Exs. A-C.) Still, he has not provided a copy of a tort claim submitted to the Victim Compensation and Government Claims Board.
For these reasons, the Motion to Dismiss supplemental state claims against Defendants in their official capacities should be GRANTED without leave to amend. Accordingly, Easter may only proceed against Defendants in their individual capacities when asserting state law claims.
C. Fourteenth Amendment Claim
Plaintiff disputes that his Fourteenth Amendment claim is duplicative. He contends that "any time you violate a person's right you can state a claim of the amendment of the one being violated." (Opp' n Mem. P. & A. 3 [doc. no. 26].) Additionally, "when you violate any amendments you violate the Fourteenth Amendment ...." (Id. at 5.)
"[T]he treatment a prisoner receives and the conditions under which he is confined are subject to scrutiny under the Eighth Amendment." Helling v. McKinney, 509 U.S. 25, 31, 113 S. Ct. 2475, 125 L. Ed. 2d 22 (1993). The Eighth Amendment "requires that inmates be furnished with the basic human needs, one of which is `reasonable safety.'" Id. at 33, 113 S. Ct. 2475 (quoting DeShaney v. Winnebago County Dep't of Soc. Servs., 489 U.S. 189, 200, 109 S. Ct. 998, 103 L. Ed. 2d 249 (1989)). Claims that Defendants failed to protect Plaintiff from a substantial risk of serious harm at the hands of other inmates are properly analyzed under the Eighth Amendment because Easter was a state inmate incarcerated pursuant to a valid conviction at the time of the attacks. See Farmer v. Brennan, 511 U.S. 825, 834, 114 S. Ct. 1970, 128 L. Ed. 2d 811 (1994) (citing Helling, 509 U.S. at 35, 113 S. Ct. 2475); Wilson v. Seiter, 501 U.S. 294, 303, 111 S. Ct. 2321, 115 L. Ed. 2d 271 (1991); Robinson v. Prunty, 249 F.3d 862, 866 (9th Cir.2001).
Here, Easter alleges that Morris, Panichello, and Perez violated his Eighth and Fourteenth Amendment rights by improperly placing him in a prison yard where he was previously assaulted by other inmates; as a result, he was attacked again. (Compl. 3-6.) A Fourteenth Amendment claim is foreclosed by Supreme Court precedent. "Where a particular amendment `provides an explicit textual source of constitutional protection' against a particular sort of government behavior, `that Amendment, not the more generalized notion of "substantive due process," must be the guide for analyzing [a plaintiff's] claims.'" Albright v. Oliver, 510 U.S. 266, 273, 114 S. Ct. 807, 127 L. Ed. 2d 114 (1994) (Rehnquist, C.J., for plurality) (quoting Graham v. Connor, 490 U.S. 386, 395, 109 S. Ct. 1865, 104 L. Ed. 2d 443 (1989)).
The Court may limit its inquiry to the Constitutional Amendment that more specifically addresses plaintiff's claim in lieu of general notions of substantive due processes. See Albright v. Oliver, 510 U.S. at 286, 114 S. Ct. 807 (Kennedy & Thomas, JJ., concurring) (refraining from evaluating petitioner's due process claim under § 1983 because his allegations could be addressed under the state's malicious prosecution law); Graham v. Connor, 490 U.S. at 395 n. 10, 109 S. Ct. 1865 (citing Whitley v. Albers, 475 U.S., 312, 327, 106 S. Ct. 1078, 89 L. Ed. 2d 251 (1986)) ("Any protection that `substantive due process' affords convicted prisoners against excessive force is, we have held, at best redundant of that *1187 provided by the Eighth Amendment."); Whitley, 475 U.S. at 327, 106 S. Ct. 1078 ("[T]he Eighth Amendment ... serves as the primary source of substantive protection to convicted prisoners ... where the deliberate use of force is challenged as excessive and unjustified[ ]"); Gerstein v. Pugh, 420 U.S. 103, 125 n. 27, 95 S. Ct. 854, 43 L. Ed. 2d 54 (1975) (finding that the more specific Fourth Amendment should be used to analyze the protections that must be afforded to those accused of criminal conduct rather than "variable procedural due process"); Patel v. Penman, 103 F.3d 868, 874 (9th Cir.1996), overruled on other grounds by, Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 126 S. Ct. 980, 163 L. Ed. 2d 974 (2006) (finding that the Takings Clause preempted plaintiffs' substantive due process claim in a dispute over city-issued building permits.)
Easter has attempted to raise a claim under the Eighth and Fourteenth Amendments based on the same conduct by the Defendants. (Compl. 3-6.) Because the Eighth Amendment provides an explicit source of protection from the type of conduct Plaintiff alleges, his claim is preempted by the Eighth Amendment and should not be analyzed as a substantive due process claim under the Fourteenth Amendment. See Wolff v. Hood, 242 F. Supp. 2d 811, 819 (D.Or.2002) (finding that plaintiff could not state a substantive due process claim for prison officials' failure to protect him from violence by other inmates because the Eighth Amendment provides explicit constitutional protection). Defendants' Motion to Dismiss Easter's substantive due process claim under the Fourteenth Amendment should be GRANTED without leave to amend because the allegations should be resolved under the Eighth Amendment.
D. Fifth Amendment Claim
1. Administrative Segregation
Defendants contend that Easter has failed to state a claim for violation of his Fifth Amendment rights because the Complaint does not allege that "his property was taken, nor his life, and [Easter] was already in custody." (Mot. Dismiss Attach. # 2 Mem. P. & A. 6.) Defendants explain that after Plaintiff was assaulted, he was placed in administrative segregation. (Id.; Reply 3.) "[T]his was done for his protection and is not a cognizable constitutional claim." (Mot. Dismiss Attach. # 2 Mem. P. & A. 6; see also Reply 3.)
Easter's Complaint attempts to allege a claim against each Defendant under the Fifth Amendment. (Compl. 3-5.) But Plaintiff does not make any specific allegations regarding how each Defendant violated his Fifth Amendment rights. (Id.) Although Defendants contend that Easter bases his claim on his placement in administrative segregation after his assault, those allegations do not appear in the Complaint. (Id.) Thus, Easter has not stated a claim for violation of the Fifth Amendment.
In his Opposition, Plaintiff asserts that after the incident he was "put in ad seg housing and was deprived of appropriate [needs] when [this] wasn't a disciplinary action." (Opp' n Mem. P. & A. 4 [doc. no. 26].) This issue is raised for the first time in Easter's Opposition. Under Federal Rule of Civil Procedure 12(b)(6), the Court must focus on the Complaint. Fed. R.Civ.P. 12(b)(6); Schneider, 151 F.3d at 1197 n. 1. Thus, when deciding the current Motion, this Court is precluded from considering allegations that first appear in the Opposition. Schneider, 151 F.3d at 1197 n. 1. (citing Harrell v. United States, 13 F.3d 232, 236 (7th Cir.1993)). Based on the contents of the Complaint, Easter has failed to put Defendants on notice of a *1188 claim under the Fifth Amendment. See Fontana, 262 F.3d at 877.
It is not clear whether Easter has exhausted administrative remedies and can cure his pleading defect by alleging additional facts. See Lopez, 203 F.3d at 1127. Still, there may be facts that show that the placement, length, and conditions of administrative segregation constituted an "atypical and significant hardship on the inmate in relation to the ordinary incidents of prison life." See Sandin v. Conner, 515 U.S. 472, 484, 115 S. Ct. 2293, 132 L. Ed. 2d 418 (1995). Thus, Defendants' Motion to Dismiss Plaintiffs Fifth Amendment claim regarding his placement in administrative segregation should be GRANTED with leave to amend.
2. Double Jeopardy
In his Opposition, Easter seems to suggest that his Fifth Amendment claim includes a violation of the Double Jeopardy Clause. (Opp' n Mem. P. & A. 3-4 [doc. no. 26].) He contends that he was "twice put in jeopardy of life or limb" by Defendants, and his right to be free from double jeopardy was violated. (Id. at 5.)
The Double Jeopardy Clause of the Fifth Amendment states that no person "shall ... be subject for the same offence to be twice put in jeopardy of life or limb ...." U.S. Const. amend. V. It is well established that the Double Jeopardy Clause "`protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense.'" United States v. Wilson, 420 U.S. 332, 343, 95 S. Ct. 1013, 43 L. Ed. 2d 232 (1975) (quoting North Carolina v. Pearce, 395 U.S. 711, 89 S. Ct. 2072, 23 L. Ed. 2d 656 (1969)); see also Monge v. California, 524 U.S. 721, 727-28, 118 S. Ct. 2246, 141 L. Ed. 2d 615 (1998).
[T]he Clause embodies two vitally important interests. The first is the "deeply ingrained" principle that "the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty."
Yeager v. United States, ___ U.S. ___, 129 S. Ct. 2360, 2365-66, 174 L. Ed. 2d 78 (2009) (quoting (Green v. United States, 355 U.S. 184, 187-88, 78 S. Ct. 221, 2 L. Ed. 2d 199 (1957)).)
Easter has not alleged that he was prosecuted more than once for the same offense. Plaintiff alleges that on August 27, 2006, while housed in yard four of building seventeen at Donovan, he was assaulted by other inmates. (Compl. 3, 5.) An incident report was completed noting his enemy concerns. (Id. at 3.) Although he was subsequently housed in facility two, Easter was later rehoused with his inmate enemies, and on November 14, 2006, he "was attacked and stabbed and sent to the hospital with life threatening injuries." (Id.) These allegations are more properly analyzed under the Eighth Amendment as discussed above.
Defendants' Motion to Dismiss Plaintiffs Fifth Amendment claim, to the extent it alleges a double jeopardy violation, should be GRANTED without leave to amend.
E. Injunctive Relief
Injunctive relief is an equitable remedy that is appropriate where the plaintiff can show he will suffer a "likelihood of substantial and immediate irreparable injury" if an injunction is not granted. Hodgers-Durgin v. De La Vina, 199 F.3d 1037, 1040 (9th Cir.1999) (en banc) *1189 (quoting City of Los Angeles v. Lyons, 461 U.S. 95, 111, 103 S. Ct. 1660, 75 L. Ed. 2d 675 (1983)); see also Doran v. Salem Inn, Inc., 422 U.S. 922, 932, 95 S. Ct. 2561, 45 L. Ed. 2d 648 (1975).
Defendants assert that Plaintiff is not entitled to an injunction because he fails to allege any ongoing or prospective violations of his rights. (Mot. Dismiss Attach. # 2 Mem. P. & A. 7; Reply 4.) Defendants also contend that because Easter is no longer at R.J. Donovan Correctional Facility, there is no risk of continuing or future violations. (Mot. Dismiss Attach. # 2 Mem. P. & A. 8; Reply 4.)
Easter argues that his claim for injunctive relief "speak[s] for itself." (Opp' n Mem. P. & A. 4 [doc. no. 26].) He explains that when he is released on parole, if he is returned to prison for any reason, he will be sent to the same receiving center. (Id.) That would make him subject to the Defendants' authority once again. (Id.) Easter also asserts that he has suffered an actual injury because these Defendants may have another opportunity to deprive him of his rights. (Id.)
The traditional criteria for granting an injunction are "`(1) a strong likelihood of success on the merits; (2) the possibility of irreparable injury to the plaintiffs if injunctive relief is not granted; (3) a balance of hardships favoring the plaintiffs; and (4) advancement of the public interest.'" Mayweathers v. Newland, 258 F.3d 930, 938 (9th Cir.2001) (quoting Textile Unltd., Inc. v. A..BMH & Co., 240 F.3d 781, 786 (9th Cir.2001)). Under the alternative test for granting injunctive relief, the Court examines whether "serious questions are raised and the balance of hardships tips sharply in favor of the moving party." Stuhlbarg Intern. Sales Co. v. John D. Brush & Co., 240 F.3d 832, 840 (9th Cir.2001) (citing Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1397 n. 1 (9th Cir.1997)). Under either measure, this Plaintiff is not entitled to injunctive relief.
As the Defendants correctly observe, Easter's remedies are limited by the Prison Litigation Reform Act. (Mot. Dismiss Attach. # 2 Mem. P. & A. 7.) Section 3626(a)(1) of the Act states, "Prospective relief in any civil action with respect to prison conditions shall extend no further than necessary to correct the violation of the Federal right of a particular plaintiff or plaintiffs." 18 U.S.C.A. § 3626(a) (West 2000). This statutory restriction limits available relief.
Plaintiff requests an injunction preventing Defendants "from any future supervision or control over [his] safety/and or [sic] well being or lack thereof." (Compl. 7.) The Court does not have jurisdiction to issue wide-reaching injunctions to remedy inadequacies in prison administration that extend beyond any actual injury suffered by a plaintiff. Lewis, 518 U.S. at 357, 116 S. Ct. 2174. "The remedy must of course be limited to the inadequacy that produced the injury in fact that the plaintiff has established." Id. (citing Missouri v. Jenkins, 515 U.S. 70, 88, 89, 115 S. Ct. 2038, 132 L. Ed. 2d 63 (1995)).
Easter has also failed to demonstrate that he may suffer an imminent injury. In City of Los Angeles v. Lyons, 461 U.S. at 101-02, 103 S. Ct. 1660, the Court explained that "[t]he plaintiff must show that he `has sustained or is immediately in danger of sustaining some direct injury' as a result of the challenged official conduct and the injury or threat of injury must be both `real and immediate,' not `conjectural' or `hypothetical.'" Plaintiff is no longer housed at R.J. Donovan Correctional Facility, the location where the Defendants are employed and Easter's inmate enemies are housed. (Compl. 2-5.) Thus, he has failed to demonstrate an imminent injury.
*1190 Plaintiff is not entitled to injunctive relief unless he can show that he will suffer substantial and immediate irreparable injury for which there is an inadequate remedy at law. Easyriders Freedom F.I.G.H.T. v. Hannigan, 92 F.3d 1486, 1495 (9th Cir.1996). "Under any formulation of the test [for injunctive relief], plaintiff must demonstrate that there exists a significant threat of irreparable injury." Oakland Tribune, Inc. v. Chronicle Publ'g Co., 762 F.2d 1374, 1376 (9th Cir.1985). Easter has made no showing of irreparable harm. In addition, because he is no longer housed at R.J. Donovan, Plaintiff lacks standing to seek injunctive relief directed at these Defendants.
For all these reasons, Easter's request for an injunction is moot and should be stricken.
F. Legal Access
In his Opposition, Easter asserts that he had legal materials in his possession on October 27, 2009; but, due to a transfer, those documents were removed and have not been returned to him. (Opp' n Mot. Dismiss 2-3 [doc. no. 24]; Opp' n Mem. P. & A. 1 [doc. no. 26].) He asks that his Complaint not be dismissed because he has had difficulty doing legal research to support his Opposition. (Opp' n Mot. Dismiss 3 [doc. no. 24]; Opp' n Mem. P. & A. 1-2 [doc. no. 26].)
As stated previously, "The focus of any Rule 12(b)(6) dismissal ... is the complaint." Schneider, 151 F.3d at 1197 n. 1. Resolution of a motion to dismiss for failure to state a claim should be limited to the pleadings. Id.; Jacobellis, 120 F.3d at 172; Allarcom Pay Television Ltd., 69 F.3d at 385.
Even if the Court were to consider Easter's allegations that he experienced complications in opposing the Motion to Dismiss, the result would not change. Easter contends that he had trouble completing his Opposition to the Motion to Dismiss. (Opp'n Mot. Dismiss 2-3 [doc. no. 24]; Opp' n Mem. P. & A. 1-2 [doc. no. 26].) In preparing these recommendations, the Court has considered Plaintiffs assertion. The Motion to Dismiss is based on the insufficiency of the Complaint, which the Court has liberally construed. In addition, Easter was given more time to prepare his Opposition and provide the Court with evidence of any tort claim provided to the Victim Compensation and Government Claims Board. In the second Opposition, filed nunc pro tunc to December 28, 2009, Easter cites relevant case authority, presumably the result of time Plaintiff spent in the law library. His dissatisfaction with the handling of his legal papers when Easter was transferred to a new facility and with the law library access there does not change the Court's conclusions.
The Court will consider, however, whether Plaintiff should be given leave to amend to raise a First Amendment access to the courts claim. In Bounds v. Smith, 430 U.S. 817, 97 S. Ct. 1491, 52 L. Ed. 2d 72 (1977), the Supreme Court held that "the fundamental constitutional right of access to the courts requires prison authorities to assist inmates in the preparation and filing of meaningful legal papers by providing prisoners with adequate law libraries or adequate assistance from persons trained in the law." Id. at 828, 97 S. Ct. 1491. The Court revisited and significantly limited Bounds in Lewis v. Casey, 518 U.S. 343, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996).
In Lewis, the Court reshaped the right of access to the courts in two respects: (1) by clarifying that every access to courts claim must be founded upon actual injury, and (2) by restricting the scope of the right. Id. at 3496, 351, 354-55, 116 S. Ct. 2174. The right of access is only guaranteed for direct and collateral attacks upon a conviction or sentence and *1191 civil rights actions challenging the conditions of confinement. Id. at 355, 116 S. Ct. 2174. Even among these claims, actual injury will exist only if "a nonfrivolous legal claim had been frustrated or was being impeded." Id. at 353, 116 S. Ct. 2174 (footnote omitted) (emphasis added).
In Christopher v. Harbury, 536 U.S. 403, 122 S. Ct. 2179, 153 L. Ed. 2d 413 (2002), the Supreme Court held that to state a claim for deprivation of the constitutional right to access the courts a plaintiff must allege (1) a lost past, existing, or prospective litigating opportunity and (2) specific actions by government officials that caused the denial of access. Id. at 414-15, 122 S. Ct. 2179. To satisfy the "actual injury" requirement found in Lewis, it is not enough simply to state that a "nonfrivolous" claim has been dismissed or impeded due to the action of some government official. Id. at 415-16, 122 S. Ct. 2179. Instead, a complaint must contain allegations "sufficient to give fair notice to a defendant[,]" and the complaint should "state the underlying claim in accordance with Federal Rule of Civil Procedure 8(a), just as if it were being independently pursued...." Id. at 416-17, 122 S. Ct. 2179 (footnote omitted).
Here, it is not clear that Plaintiff can allege an actual injury that is sufficient to state an access to the courts claim. Furthermore, the events underlying this suit center on Easter's November 2006 placement in a prison yard with his known enemies. In contrast, an access to the courts claim would focus on library access in 2009 at the California Institution for Men (CIM) at Chino, California, where Easter is currently housed. The different location, time period, and defendants all suggest that instead of attempting to amend the pending Complaint, a separate action may be more appropriate. See Fed. R.Civ.P. 18(a), 20(a)(2); George v. Smith, 507 F.3d 605, 607 (7th Cir.2007) (stating that "[u]nrelated claims against different defendants belong in different suits"). For these reasons, Plaintiffs request for injunctive relief should be stricken, and to the extent that Easter is suggesting that he may have a viable access to courts claim, he should not be given leave to amend this Complaint to add that claim here.
IV. CONCLUSION
Defendants' Motion to Dismiss the monetary claims against Defendants Morris, Panichello, and Perez in their official capacities should be GRANTED without leave to amend. Easter may only proceed against Defendants in their individual capacities when seeking compensatory and punitive damages. The Motion to Dismiss supplemental state claims against Defendants in their official capacities should also be GRANTED without leave to amend. Plaintiff may only proceed against Defendants in their individual capacities when asserting state law claims. Defendants' Motion to Dismiss Easter's claim under the Fourteenth Amendment should be GRANTED without leave to amend because the allegations are preempted by the Eighth Amendment. The Motion to Dismiss Plaintiffs Fifth Amendment claim should be GRANTED with leave to amend his claim involving placement in administrative segregation, but GRANTED without leave to amend his claim for violation of the prohibition against double jeopardy. Finally, Easter's claim for injunctive relief is moot and should be STRICKEN. Under the circumstances of this case, that remedy is not available to him.
This Report and Recommendation will be submitted to the United States District Court judge assigned to this case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Any party may file written objections with the Court and serve a copy *1192 on all parties on or before February 26, 2010. The document should be captioned "Objections to Report and Recommendation." Any reply to the objections shall be served and filed on or before March 8, 2010. The parties are advised that failure to file objections within the specified time may waive the right to appeal the district court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir.1991).
NOTES
[1] Although the Complaint names Lieutenant Panichello, in the Motion to Dismiss, Defendant corrects his name to L. Panichello. (Compl. 1-2, 4; Mot. Dismiss Attach. # 2 Mem. P. & A. 1-2.)
[2] Easter asks the Court to take notice that Cruz v. Beto, 405 U.S. 319, 92 S. Ct. 1079, 31 L. Ed. 2d 263 (1972), provides that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would [e]ntitle him to relief." (Opp'n Mem. P. & A. 5 [doc. no. 26] (citing Cruz, 405 U.S. at 322, 92 S. Ct. 1079).) Cruz, however, was also modified by the holding in Bell Atlantic. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567629/ | 694 F. Supp. 2d 668 (2010)
Yousef ATIFAH, Plaintiff,
v.
UNION SECURITY INSURANCE COMPANY, formerly known as Fortis Benefits Insurance Company, Defendant.
Case No. 08-10042.
United States District Court, E.D. Michigan, Southern Division.
March 3, 2010.
*669 Ernest J. Essad, Jr., Esq., Williams, Williams, Rattner & Plunkett, P.C., Birmingham, MI, Samir W. Mashni, Esq., Redford, MI, for Plaintiff.
Walter D. Willson, Esq., Wells Marble & Hurst, PLLC, Ridgeland, MS, Noel F. Beck, Esq., Bloomfield Hills, MI, for Defendant.
OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND DISMISSING AS MOOT PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S EXPERT WITNESSES
MARIANNE O. BATTANI, District Judge.
Before the Court is Plaintiff Yousef Atifah's Motion for Summary Judgment (Doc. No. 54), Defendant Union Security Insurance Company's ("USIC") Motion for Summary Judgment (Doc. No. 56), and Plaintiff's Motion to Strike Defendant's Expert Witnesses and to Preclude their Testimony at Trial (Doc. No. 68). The Court heard oral argument on January 6, 2010, and for the reasons that follow, the Court DENIES Plaintiff's Motion for Summary Judgment, GRANTS Defendant's Motion for Summary Judgment, and DISMISSES as moot, Plaintiff's Motion to Strike Defendant's Expert Witnesses.
I. STATEMENT OF FACTS
Plaintiff filed this action to recover accidental death benefits for the death of his mother, insured Husn Henaibar, under policy, # 210119A694F9, which named Plaintiff as beneficiary. See Pl.'s Ex. A. USIC issued the policy approximately four months before Henaibar's death on or about December 1, 2004, as a result of an accident. The policy provided a $50,000 benefit for an accidental death, a $100,000 benefit for death in a motor vehicle accident, and a $1 million benefit for death in a licensed common carrier.
*670 Defendant paid Plaintiff $100,000 pursuant to the policy. Plaintiff filed suit, asserting that Henaibar's death falls within the common carrier coverage, and he is entitled to the $1,000,000 benefit.
II. STANDARD OF REVIEW
A trilogy of United States Supreme Court casesMatsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)set the standards for deciding whether to grant a motion for summary judgment. The Court of Appeals for the Sixth Circuit, in turn, has created guidelines in administering the principles set forth in the three Supreme Court cases above.
The movant bears the burden of demonstrating the absence of all genuine issues of material fact. See Hager v. Pike County Bd. of Educ., 286 F.3d 366, 370 (6th Cir.2002).
Once the moving party discharges that burden, the burden shifts to the nonmoving party to set forth specific facts showing a genuine triable issue. FED. R. CIV. P. 56(e); Chao v. Hall Holding Co., 285 F.3d 415, 424 (6th Cir.2002). However, the court must view the evidence in a light most favorable to the nonmovant as well as draw all reasonable inferences in the nonmovant's favor. See Hunt v. Cromartie, 526 U.S. 541, 549, 119 S. Ct. 1545, 143 L. Ed. 2d 731 (1999); Sagan v. U.S., 342 F.3d 493, 497 (6th Cir.2003).
"A fact is `material' and precludes a grant of summary judgment if proof of that fact would have [the] effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect [the] application of appropriate principle[s] of law to the rights and obligations of the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984) (citation omitted) (quoting Black's Law Dictionary 881 (6th ed. 1979)). To create a genuine issue of material fact, the nonmovant must do more than present some evidence on a disputed issue.
There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the [nonmovant's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted.
Anderson, 477 U.S. at 249-50, 106 S. Ct. 2505.
However, the evidence itself need not be the sort admissible at trial, with the exception that it must be more than the nonmovant's own pleadings and affidavits. Tinsley v. General Motors Corp., 227 F.3d 700, 703 (6th Cir.2000). The mere existence of a scintilla of evidence in support of the nonmovant is not sufficient; there must be sufficient evidence upon which a jury could reasonably find for the nonmovant. Anderson, 477 U.S. at 252, 106 S. Ct. 2505.
III. ANALYSIS
The Court's jurisdiction over this dispute is based upon diversity of citizenship. The parties agree that Michigan substantive law governs the outcome. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). Two issues are raised in the motions: entitlement as a matter of law to the $1,000,000 benefit under the common carrier coverage, and the scope and propriety of Defendant's experts' testimony at trial.
The first issue to be resolved is whether the policy language governing benefits for injury while traveling by common carrier is ambiguous. The common carrier coverage provision reads as follows:
*671 Travel by Common Carrier. The policy provides benefits for a Covered Person if he suffers a loss or is injured while occupying, as a fare-paying passenger, a public conveyance provided and operated by a duly licensed common carrier for a regular passenger service by land, water, or air.
Pl.'s Ex. A.
The Accidental Death and Dismemberment Benefits Certificate No. 210119A694F9 ("Certificate") defines a common carrier as "an air, land, water conveyance operated under a license for regularly scheduled fare paying passenger service." Def.'s Ex. 3, p 1. The term "regularly scheduled" is not defined. According to Plaintiff, the omission creates an ambiguity.
In resolving whether an ambiguity exists, the Court is mindful of its duty to ascertain the intent of the parties, which is discerned from the agreement itself.
[W]hen the language of an agreement leaves no doubt as to its meaning ... it must be considered without regard to its extraneous facts. The intention of the parties is to be deduced from the language employed by them. The question is not what intention existed in the minds of the parties, but what intention was expressed in the language used; and where unambiguous, the terms of the [agreement] are conclusive.
Moore v. Kimball, 289 N.W. 213, 215 (1939), see also Quality Prods. & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 666 N.W.2d 251, 259 (2003).
In contrast, when a contract is ambiguous, its meaning becomes a question of fact with the fact-finder trying to discern the parties' intent. UAW-GM Human Res. Ctr. v. KSL Recreation Corp., 228 Mich.App. 486, 579 N.W.2d 411, 414 (1998) (quoting Raska v. Farm Bureau Ins. Co., 412 Mich. 355, 314 N.W.2d 440, 441 (1982)). If any ambiguity exists in the contract, the Court may refer to extrinsic evidence to determine the intent of the parties, but any ambiguity in the language of the contract must be construed against its drafter. United Rentals (N.A.), Inc. v. Keizer, 355 F.3d 399, 409 (6th Cir.2004).
Here, Plaintiff contends that the policy is ambiguous for several reasons: the variance between the dictionary definition and the policy definition of common carrier, the omission of a definition of "regularly scheduled," and the representations of the telemarketer. The Court discusses each contention below.
1. Policy Terms
Plaintiff asserts that the policy is ambiguous as a matter of law, and therefore, the policy must be enforced in favor of Plaintiff. The policy contains the same definition of common carrier and the same "travel by Common Carrier" coverage provisions as those contained in the Certification. Def.'s Ex. 3 and 15. Therefore, there is no contradiction between the written documents.
Instead, Plaintiff attempts to create ambiguity by directing the Court's attention to a dictionary definition of common carrier rather than the definition included in the policy. For example, Atifah references Merriam Webster's Online Dictionary, which defines a common carrier as "a business or agency that is available to the public for transportation of persons, goods, or messages." Pl.'s Motion for Summary Judgment and Brief in Support at p. 13 (citation omitted). This definition is broader than the definition set forth in the contract, and seemingly would encompass the facts of Henaibar's accident.
When a contact defines a term, however, a court must follow the policy's definitions. Amerisure Mut. Ins. Co. v. Carey Transp., Inc., 578 F. Supp. 2d 888 (W.D.Mich.2008) (citations omitted). The *672 Court is not free to rewrite definitions and declines to find an ambiguity exists based on the difference between the policy language and a dictionary definition.
Next, Plaintiff asserts that the lack of a definition of the term "regularly scheduled" renders the contract ambiguous. Case law undermines his assertion. Specifically, the omission of a definition of a term in a policy that has a common usage does not create an ambiguity. Jervis Webb Co. v. Everest Nat'l Ins., Co., 251 Mich.App. 692, 650 N.W.2d 722, 725 (2002) (citation omitted).
Here, the plain terms of the policy require Plaintiff to show that his decedent was traveling by a common carrier duly licensed to provide regularly scheduled service at the time of her death. Despite Defendant's failure to include a definition of "regularly scheduled," the term is not ambiguous.
In Smith v. Am. Family Life Assurance Co. of Columbus, 584 F.3d 212 (5th Cir. 2009), the court addressed policy coverage for a helicopter accident under a common carrier provision. The policy required common-carrier vehicles to "operate on a regularly scheduled basis between predetermined points or cities." Id. at 217. The court held that the policy's regularly scheduled requirement was not ambiguous. Id.
In analyzing the issue, the appellate court noted other decisions that reached the same conclusion and found the reasoning persuasive.
Several courts in other jurisdictions have found that language similar to the "regularly scheduled" requirement in Mrs. Smith's policy does not include on-demand flights or air taxi services. See Fosse v. Allianz Life Ins. Co., No. CIV. A. 93-1110, 1994 WL 139413, at *2-3 (E.D.Pa. Apr. 20, 1994) (mem.op.) (holding that a "regular scheduled" trip within the meaning of the insurance policy at issue is one that the air carrier conducts "pursuant to a set schedule with fixed times," not a flight operated on-demand or as an air taxi); Frizzell v. Stonebridge Life Ins. Co., No. A03-155 CV JWS, 2004 WL 2786140, at *3 (D.Alaska Oct. 25, 2004) (holding that, "Because the helicopter was operated on-demand, with the departure date [and] time determined `on an as needed basis,' the helicopter was not operated with a definite regular schedule of departures and arrivals, and consequently does not qualify as a `Common Carrier' under the Policy"); McBride v. Prudential Ins. Co., 147 Ohio St. 461, 72 N.E.2d 98, 99-100 (1947) (holding that a commercial airplane chartered for hire to transport a passenger on a hunting trip was not a "regularly scheduled passenger flight" within the meaning of the insurance policy at issue, because "regularly scheduled passenger flight" meant "trips regularly scheduled as to [the] time of departure and arrival by commercial airlines operating between definitely established airports").
Id. at 218-19.
In contrast, Plaintiff fails to cite any case law finding the term "regularly scheduled" ambiguous. Since the December 1, 2004, accident there has been no evidence produced by Plaintiff to show that the vehicle was regularly scheduled. This is fatal to Plaintiff's claim because he has the burden of proving coverage.
2. Representations/omissions during the sales call
Plaintiff asks the Court to consider additional extrinsic evidence in order to disclose the ambiguity. Specifically, Henaibar was told during the telemarketing phone call that the policy covered her travels overseas. He argues that the representation, even when read with the policy, creates ambiguity because there the policy *673 contains no definition of a regularly scheduled. Plaintiff concludes that the insured would not know whether a taxi would qualify as a common carrier, particularly in light of the fact that the definition of a private passenger vehicle did not reference taxis.
Even if the Court were to look to extrinsic evidence, its conclusion would not change. During the sales presentation, before Henaibar agreed to purchase the policy, she asked some questions about coverage. Specifically, she inquired whether the coverage applied if she was traveling overseas in a plane, automobile, or by bus. The telemarketer stated that anything for which she paid a fare would trigger the million dollar provision. Pl.'s Ex. D. Plaintiff asserts that the statement made by the agent did not put the insured on notice that death in a licensed taxi would not be covered as death in a common carrier. Plaintiff has advanced evidence that the decedent paid a fare for the taxi in which she was traveling when she was in a fatal accident. Pl.'s Ex. E. Consequently, Plaintiff concludes that Henaibar's accident falls within the common carrier coverage.
Plaintiff's reliance on the fact that the telemarketer did not mention any requirement that the carrier have a regular schedule is misplaced. There is no dispute that during the telemarketer phone call, Henaibar is encouraged to read the Certificate. Further, Plaintiff admits that Henaibar received the Certificate and cover letter. The August 5, 2004, letter advises that "the enclosed materials include important information about your coverage and its benefits." Def.'s Ex. 18. Despite Plaintiff's argument that the certificate is ambiguous, the certificate states that "the Policy, any attachment and [Henaibar's] enrollment form are the entire contract of insurance.... No agent has authority to change the Policy or to waive any of its provisions." Def.'s Ex. 3. It also notified Henaibar that she could cancel her insurance if she was not satisfied. Id.
Therefore, Plaintiff is not entitled to a favorable interpretation based on the sales conversation. Plaintiff is only entitled to summary judgment if it is clear and unambiguous under the terms of the insurance policy that Henaibar's accident is a covered loss. The policy terms dictate that Plaintiff's loss is not covered because the taxi cannot be considered a common carrier under the policy.
Although the parties also dispute whether the facts of this case meet the "duly licensed" requirement and whether Henaibar was a "fare-paying passenger," the Court finds that the "regularly scheduled" requirement is dispositive. In light of the Court decision on the merits, Plaintiff's motion to strike is moot.
IV. CONCLUSION
For the reasons stated above, Defendant's Motion for Summary Judgment is GRANTED, Plaintiff's Motion for Summary Judgment is DENIED, and Plaintiff's Motion to Strike Defendant's Expert Witnesses and to Preclude Their Testimony at Trial is MOOT.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2564049/ | 298 F. Supp. 2d 994 (2002)
The UPPER DECK COMPANY, LLC, a Delaware limited liability company, Plaintiff,
v.
FEDERAL INSURANCE COMPANY, an Indiana corporation; and Does 1 through 10, inclusive, Defendant.
No. CIV. 01CV1413-B(CGA).
United States District Court, S.D. California.
May 21, 2002.
*995 Gary Wayne Osborne, Osborne and Nesbitt, San Diego, CA, for The Upper Deck Company (Plaintiff).
Henry Brian LaTorraca, LaTorraca and Goettsch, Long Beach, CA, for Federal Insurance Company (Defendant).
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
BREWSTER, Senior District Judge.
This case requires the Court to determine whether Federal Insurance Company ("Federal") has a duty to defend three separate lawsuits filed against The Upper Deck Company ("Upper Deck"). Upper Deck sells packs of sports and entertainment *996 trading cards, some of which contain randomly inserted "chase" cards of substantial value.[1]
I. Introduction and Factual Background
The litigation against Upper Deck
On July 30, 1996, Marty Schwartz and others sued Upper Deck, claiming that Upper Deck violated RICO and California law by marketing its cards through methods that amounted to illegal gambling ("Schwartz litigation"). Defendant's Statements of Facts ("DSUF") ¶ 7. Two other plaintiffs, Chaset and Dumas, sued Upper Deck on September 13, 1999 and August 21, 2000, respectively, on allegations substantially similar to those in the Schwartz litigation. Id. ¶ 15-16. The Schwartz and Chaset causes of action were filed in the Southern District of California; the Dumas litigation was filed in San Diego Superior Court. Defendant's Motion, at 2.
The Insurance Policy
At all relevant times, Federal insured Upper Deck on a general commercial liability policy ("policy") and an umbrella policy. The primary policy said:
We will pay the damages the insured becomes legally obligated to pay by reason of liability imposed by law or assumed under an insured contract because of: bodily injury or property damage caused by an occurrence; or personal injury or advertising injury to which this insurance applies.
This insurance applies:
1. to bodily injury or property damage which occurs during the policy period; and
2. to personal injury or advertising injury only if caused by an offense committed during the policy period.
We will defend any claim or suit against the insured seeking such damages. We will pay in addition to the applicable limit of insurance the defense expense.
DSUF, ¶ 55. The policy defined occurrence as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions which results in bodily injury or property damage." Id. ¶ 57. Bodily injury was defined as "bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time." Plaintiff, Statements of Facts ("PSUF"), ¶ 2. The primary policy allowed for coverage up to 1 million dollars on each occurrence; the umbrella policy provided up to 10 million dollars additional coverage for each occurrence. Plaintiff's Motion, at 3-4. The umbrella policy allowed for similar coverage and contained similar definitions except the umbrella policy defined bodily injury as "injury to the body, sickness or disease, disability or shock, mental anguish or mental injury sustained by any person." Id. at 4.
Defense Tender and Subsequent History
On or about August 21, 1996, Upper Deck tendered the Schwartz litigation to Federal. DSUF, ¶ 12. On December 4, 1996, Federal refused to defend the Schwartz complaint, contending that the Schwartz lawsuit did not involve an occurrence or bodily injury and, thus, was not covered under the insurance policy. Id. ¶ 13. On May 27, 1999, Upper Deck requested that Federal reconsider; on July *997 28, 1999, Federal again refused to defend the Schwartz litigation. The Dumas action was tendered to Federal on September 23, 1999 and denied on December 8, 1999. Defendant, Motion, at 5. The Chaset complaint was tendered to Federal on September 6, 2000 and denied on September 28, 2000. Id.
On August 1, 2001, Upper Deck filed the instant complaint against Federal for breach of contract of its duty to defend and for declaratory relief. Upper Deck now files a motion for summary judgment that Federal has a duty to defend the Schwartz litigation only. Federal files a cross-motion for summary judgment, asking the court to rule that it does not have to defend the Schwartz, Chaset, and Dumas lawsuits.
II. Summary of the Law
A. Summary Judgment
Federal Rule of Civil Procedure 56(c) provides that summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." In considering a motion for summary judgment, the court must examine all the evidence in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
Summary judgment must be granted if the party responding to the motion fails "to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The evidence offered need not be in a form admissible at trial to avoid summary judgment. Id. at 324, 106 S. Ct. 2548. When the moving party does not bear the burden of proof, summary judgment is warranted by demonstration of an absence of facts to support the non-moving party's case. Id. at 325, 106 S. Ct. 2548.
The Court must determine whether evidence has been presented that would enable a reasonable jury to find for the nonmoving party. Liberty Lobby, Inc., 477 U.S. at 249-252, 106 S. Ct. 2505. If the Court finds that no reasonable fact-finder could, considering the evidence presented by the non-moving party and the inferences therefrom, find in favor of that party, summary judgment is warranted.
If the Court is unable to render summary judgment upon an entire case and finds that a trial is necessary, it shall if practicable grant summary adjudication for any issues as to which, standing alone, summary judgment would be appropriate. See FED. R. CIV. P. 56(d); see also California v. Campbell, 138 F.3d 772, 780 (9th Cir.), cert. denied, 525 U.S. 874, 119 S. Ct. 173, 142 L. Ed. 2d 141 (1998).
B. Duty to Defend
According to California law, the duty to defend is extremely broad. If the insured can show even a potential for indemnity, then the insurer must defend the action. Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 54 Cal. Rptr. 104, 419 P.2d 168 (1966). Unlike the obligation to indemnify, which is only determined when the insured's underlying liability is established, the duty to defend is assessed at the onset of litigation. The insured has the burden of proof to show the policy covers the underlying lawsuit; the insurer carries the burden to show the underlying action falls within an exclusion to the policy. Montrose Chemical Corp. v. Superior Court of Los Angeles County, 6 Cal. 4th 287, 300, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (1993). Courts make *998 the decision whether the insurer owes a duty to defend by comparing (1) the allegations of the underlying complaint, (2) extrinsic evidence known to the insured, and (3) the terms of the policy. Id. An insurer may have a duty to defend although it has no duty to indemnify, "either because no damages are awarded in the underlying action against the insured or because the actual judgment is for damages not covered under the policy." Borg v. Transamerica Ins. Co., 47 Cal. App. 4th 448, 454, 54 Cal. Rptr. 2d 811 (1996).
Based on this broad duty to defend, the California Supreme Court has defined the respective burdens of the parties on summary judgment motions:
To prevail, the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within the policy coverage; the insurer must prove it cannot. Facts merely tending to show that the claim is not covered, or may not be covered, but are insufficient to eliminate the possibility that resultant damages (or the nature of the action) may fall within the scope of coverage, therefore add no weight to the scales. Any seeming disparity in the respective burdens merely reflects the substantive law.
Montrose, 6 Cal.4th at 300, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (emphasis in the original). No duty to defend exists if the insurer can show that the complaint and extrinsic facts known to the insurer "can by no conceivable theory raise a single issue which would bring it within the policy coverage." Gray, 65 Cal. 2d 263, 276 n. 15, 54 Cal. Rptr. 104, 419 P.2d 168 (1966). If, however, the duty to defend depends on the resolution of a factual dispute, the insurer must defend the action. Ringler Associates Inc. v. Maryland Casualty Co., 80 Cal. App. 4th 1165, 1186, 96 Cal. Rptr. 2d 136 (2000) ("[W]here there is any doubt as to whether the duty to defend exists, the doubt must be resolved in favor of the insured and against the insurer."); Amato v. Mercury Casualty Co., 18 Cal. App. 4th 1784, 1790, 23 Cal. Rptr. 2d 73 (1993) ("[T]he existence of a disputed fact determinative of coverage establishes the duty to defend.").
III. Analysis
Upper Deck argues that when one compares the facts alleged in the complaint, the extrinsic evidence known to Federal, and the terms of the policy, a possibility of coverage exists. In other words, based on these factors, Upper Deck could potentially be held liable for damages incurred by the underlying plaintiffs for bodily injury caused by an occurrence.
A. Occurrence
The insurance policy requires Federal to defend Upper Deck in any legal action that seeks damages as a result of bodily injury caused by an occurrence. The policy defined occurrence as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions which results in bodily injury or property damage." DSUF, ¶ 55. The Court needs to decide whether a possibility exists that the underlying injuries were caused by an occurrence or, more specifically, an accident.
1. Definition of an Accident
The California courts have spent considerable time defining the term "accident" as it is used in Comprehensive General Liability ("CGL") policies. Generally, an intentional act cannot constitute an accident, even if it causes unintended harm. Chatton v. National Union Fire *999 Ins. Co., 10 Cal. App. 4th 846, 861, 13 Cal. Rptr. 2d 318 (1992) ("It is well settled that intentional or fraudulent acts are deemed purposeful rather than accidental and, therefore, are not covered under a CGL policy.") Although an accident usually refers to an unintended act, an exception exists so that an accident can flow from a deliberate act "if some additional, unexpected, independent and unforeseen happening occurs that produces the damage." Merced Mut. Ins. Co. v. Mendez, 213 Cal. App. 3d 41, 50, 261 Cal. Rptr. 273 (1989) (emphasis added). Or, put another way, an accident will exist "when any aspect in the causal series of events leading to the injury was unintended by the insured and a matter of fortuity." Id.[2]
Upper Deck relies on two cases, Geddes & Smith, Inc. v. St. Paul Mercury Indemnity, Co., 51 Cal. 2d 558, 334 P.2d 881 (1959), and Hogan v. Midland Nat. Ins. Co., 3 Cal. 3d 553, 91 Cal. Rptr. 153, 476 P.2d 825 (1970), to argue that an "accident" is not only an unexpected "happening," but also any unexpected consequence from an intentional act. In Geddes, 51 Cal.2d at 563-64, 334 P.2d 881 the court said, "[n]o all-inclusive definition of the word `accident' can be given .... Accident, as a source and cause of damage to property, within the terms of an accident policy, is an unexpected, unforeseen, or undesigned happening or consequence from a known or unknown cause." See also Hogan, 3 Cal.3d at 559, 91 Cal. Rptr. 153, 476 P.2d 825 (citing to the same quote in a property damage case).
Upper Deck's reliance on Geddes and Hogan is misplaced. The court in Geddes said the definition of accident that includes unexpected consequences applied to sources of property damage, not causes of bodily injury. 51 Cal.2d at 563-64, 334 P.2d 881 (noting, after citing to many different definitions of the term "accident," that this definition applied "as a source and cause of damage to property"). In our case, the underlying plaintiffs do not assert property damage.
Second, the appellate court in Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal. App. 4th 715, 750, 15 Cal. Rptr. 2d 815 (1993), specifically rejected the insured's reliance on Geddes to argue that any "unexpected or unintended result is an `accident,' even if caused by intended conduct." The court held:
Although Geddes referred to an `accident' as a `consequence,' the reference played no part in the reasoning of the decision. Instead, the court concluded that the door failures involved in that case were accidents because they were unexpected, undesigned, and sudden. The property damage that resulted from the door failures was therefore `caused by accident,' as the policy language required.
For the same reason, the logic and grammar of the post-1974 policies preclude our interpreting an accident as a `consequence.' Those policies, which define an occurrence as `an accident, including ...,' cover property damage caused by an `occurrence.' Therefore, an `occurrence' is a causal event, defined as an `accident.' In this context, an `accident' cannot mean unintended damage because the causal event also would be the result. Logically, a consequence cannot cause itself.
Id.
Accordingly, to show an accident from an intentional act, Upper Deck must show *1000 that the underlying plaintiffs' injury occurred because of a happening, or something that breaks the normal and expected causal chain of events.
2. Arguments
Federal argues Upper Deck purposefully inserted chase cards into its decks that it sold to its customers. According to Federal, it has no duty to defend because any possible injury to Schwartz, Dumas, and/or Chaset was not caused by an "accident," but by the deliberate actions of Upper Deck. See Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532, 537, 226 Cal. Rptr. 435 (1986) ("[A]n intentional act is not an `accident' within the plain meaning of the word.").
Upper Deck responds that a potential exists that any bodily injury to the underlying plaintiffs was caused by an accident. According to Upper Deck, customers, in an effort to obtain the valuable chase cards, became unexpectedly "hooked" on buying the decks. Plaintiff, Motion, 16-18; Reply, 3. Upper Deck contends it provided evidence to Federal of a possible addiction by its customers, which included the underlying plaintiffs' allegations of a "habit," the deposition testimony from plaintiffs regarding a "gambling process" and becoming "very distressed" and "frenzied" by their obsession with chase cards, and detailed scientific studies and other medical authority that discuss the relationship between chase cards and pathological gambling. Plaintiff, Motion, 5-10. Upper Deck continues to note that although it purposefully inserted the chase cards and intended the sale of its decks, it did not foresee the additional, unexpected, and independent happening of the underlying plaintiffs developing a "habit" which, in turn, may have led to their bodily injury. Id. at 16-18; Reply, 3. Based on this analysis, Upper Deck contends the injuries potentially suffered by the plaintiffs may have resulted from an "accident" and thus an "occurrence" within the meaning of Federal's policy.
3. Analysis
The Court finds Upper Deck's arguments unpersuasive and rules that Federal has no duty to defend the Schwartz, Chaset, and Dumas lawsuits. Upper Deck, who has the burden to show the policy covers any legal action, has failed to provide facts that show a possibility that the underlying plaintiffs' injuries were caused by an occurrence (or accident).
Not Unexpected
First, Upper Deck has failed to provide any evidence (i.e., declarations by Upper Deck management, deposition testimony, etc.) that if its customers became "hooked" on buying playing cards, that this was unforeseeable or unexpected.[3] Any argument to this effect would defy common sense; the whole point of marketing a business is to get customers "hooked" or in the "habit" of buying the seller's goods. This applies whether the company is selling hamburgers, ice cream, or trading cards. In fact, one of the pieces of evidence given to Federal when the insured tendered its defense specifically states how *1001 sportcard manufacturers attempt to "hook" its customers:
Sportcard manufacturers have devised marketing schemes which prey upon the public, and, more specifically, are directed at youngsters. Kids are "hooked" on chase cards, inserts, refractors and the like ....
Gregory Chapin, Decl. ¶ 17.
An insured cannot defeat an insurer's motion for summary judgment on its duty to defend by merely asserting, without any evidentiary support, that it did not expect the particular happening or consequence. The California Supreme Court, noting this potential problem, made this clear:
[The insurer] raises the specter of intransigent insureds being empowered to block summary judgment, to which insurers are otherwise entitled, with mere assertions that coverage may exist. The prospect is apparent rather than real. This is because, as in summary judgment proceedings generally, an insured cannot manufacture a dispute on summary judgment ... without some evidentiary support for its position.
Based on the evidence provided to the Court, no reasonable juror could conclude that Upper Deck has met its burden to show that it possibly did not expect or intend that its customers would become "hooked" or in the "habit" of buying its deck of cards.[4]
Not a happening
In the alternative, even if the insured were able to show a possibility that the underlying plaintiffs unexpectedly became hooked on buying playing cards, and this habit led to their injuries, this would still not constitute an accident as the term has been defined by the California courts. The courts have made clear that an intentional act can constitute an accident only if this purposeful act is coupled with an independent, additional, and unforeseen happening. The insureds have not provided any evidence that the injury to the underlying plaintiffs was caused by an unforeseen and independent "happening."
Three cases, Merced Mut. Ins. Co. v. Mendez, 213 Cal. App. 3d 41, 261 Cal. Rptr. 273 (1989), Quan v. Truck Ins. Exch., 67 Cal. App. 4th 583, 79 Cal. Rptr. 2d 134 (1998), and St. Paul Fire and Marine Ins. Co., v. Superior Court, 161 Cal. App. 3d 1199, 208 Cal. Rptr. 5 (1984), help delineate what constitutes an unforeseen happening. In Merced and Quan, the courts considered whether injuries to the underlying plaintiffs caused by forced sexual acts were caused by accidents and, thus, covered under the insureds' insurance policies. In both cases, although women accused the insured of forcing them to engage in oral copulation (Mendez) and sexual intercourse (Quan), the insureds argued that any possible injury to the underlying plaintiffs were caused by accidents because they believed the women had consented to the sexual acts. Merced, 213 Cal.App.3d at 50, 261 Cal. Rptr. 273; Quan, 67 Cal. App.4th at 600, 79 Cal. Rptr. 2d 134.
Both courts, however, rejected the insureds' arguments and held that there was no possibility that an accident or an unexpected "happening" had caused the underlying plaintiffs' injuries. In Merced, 213 Cal.App.3d at 50, 261 Cal. Rptr. 273 (citations omitted), the court concluded:
This sexual activity, which Ms. Peery alleges occurred against her will, forms the basis of her action against Mendez. All of the acts, the manner in which they *1002 were done, and the objective accomplished occurred exactly as appellant intended. No additional, unexpected, independent, or unforeseen act occurred. `Whatever the motivation,' because Mendez's conduct was `calculated and deliberate', it was not an `accident' and thus not an occurrence within the meaning of the policy provision. Because the conduct was not an occurrence, the insurer has no duty to defend an action arising out of this conduct.
In Quan, 67 Cal.App.4th at 600-601, 79 Cal. Rptr. 2d 134, the court, similarly, held "the acts asserted to give rise to the underlying claimant's injuries were deliberate, regardless of whether any harm was intended or expected to come of them. No additional, unexpected, independent and unforeseen happening" produced the alleged injuries. See also St. Paul Fire and Marine Ins. Co., 161 Cal.App.3d at 1202, 1203, 208 Cal. Rptr. 5 (holding that an insurer had no duty to defend the insured for damages caused by a termination of employment because firing an employee was not "an unintentional, unexpected, chance occurrence and, thus, there is no potential for liability").
These cases emphasize that an accident is not simply an "unexpected consequence," but rather an independent and unexpected happening. Although the courts have not clearly defined the term "happening," it is used in these cases to mean some sort of intervening event that breaks the normal and expected causal chain from intentional act to injury. In our case, forming a "habit" is not an unexpected happening or act, but, at best, an unexpected reaction to Upper Deck's intentional act of inserting chase cards into its decks. The courts, however, in Quan, Merced, and St. Paul, rejected the argument that an unexpected reaction by the underlying plaintiffs to an intentional act constituted an accident. In this case, Upper Deck has not provided any evidence of a third-party action or intervening force; at best, all it has shown is that it did not expect how the underlying plaintiffs would react to the intentional act of selling chase cards. This is not enough to trigger the Federal's duty to defend. See Dyer v. Northbrook Property & Casualty Ins. Co., 210 Cal. App. 3d 1540, 1547, 259 Cal. Rptr. 298 (1989) ("Where the scope of basic coverage creates no potential liability under the policy, the courts may not use a strained construction to impose a liability upon an insurer that it has not assumed.")
Furthermore, even if an accident were defined simply as an unintended consequence (which it is not), the court in Geddes, 51 Cal.2d at 564, 334 P.2d 881, made clear that the accident had to be sudden. The court said, "it bears emphasis that we are concerned, not with a series of imperceptible events that finally culminated in a single tangible harm, but with series of specific events each of which manifested itself at an identifiable time and each of which caused identifiable harm at the time it occurred." Id. Upper Deck has failed to provide any evidence that the alleged accident in this casebecoming "hooked" on playing cardswas a sudden event rather than a "series of imperceptible events" which culminated in a single harm.[5]
The court grants Federal's summary judgment motion because Upper Deck has *1003 failed to show any possibility of an accident or occurrence. Specifically, the insured has failed to show any potential (1) that any happening or consequence was unexpected and (2) that the underlying plaintiffs' injuries were caused by an independent happening that broke the normal causal chain between the intentional act and injury.
B. Damages
Federal also argues that coverage does not exist because the underlying plaintiffs did not seek "damages," which the insurance policy covers. Because the Court has already ruled in favor of Federal, it declines to reach this issue.
III. Conclusion
If the Court decides the insurer has a duty to defend in this case, it is hard to imagine a situation where the insurer's duty to defend would not be triggered. Although the duty to defend is extremely broad, it is not unlimited. As a matter of law, two reasons exist why Upper Deck has failed to show that any bodily injury was caused by an occurrence. First, the insured has failed to meet its burden of proof that it potentially did not expect that its customers would become "hooked" on buying decks of cards. Second, Upper Deck has not shown that any unexpected "happening" caused the injury. The Court grants Federal's motion for summary judgment and denies Upper Deck's summary judgment motion.
IT IS SO ORDERED.
NOTES
[1] The Court takes judicial notice of the DIAGNOSTIC AND STATISTICAL MANUAL OF MENTAL DISORDERS (4th ed.) ("DSM-IV"), the complaint of Schwartz v. The Upper Deck Company, 96CV3408-B (AJB), and the declaration of Kent B. Goss. The Court takes judicial notice of these documents, not for the truth of the averments, but that the averments were made.
[2] Upper Deck argues that the definition of Merced does not apply to product liability cases. Plaintiff, Motion, 17-18; Opp. Motion, 12-13. Upper Deck, however, has failed to cite, and the Court has not found, any cases that distinguish between an "occurrence" as it is used in product liability cases and other cases. Id.
[3] Although Upper Deck says it provided evidence to Federal of "evidence of gambling addiction," it argues in its briefs that the unexpected consequence or happening was becoming "hooked" on buying trading cards, not becoming "addicted." Plaintiff, Motion, 16-18; Reply 3. Even if Upper Deck argued that the plaintiffs became "addicted" to gambling, rather than merely "hooked", the Court would still grant Federal's motion for summary judgment. Upper Deck has failed to provide one iota of evidence that its customers became "addicted."
[4] For this reason, even if the Court did apply the Geddes definition, that an accident is an unintentional and unexpected consequence, the Court should still grant the insurer's motion for summary judgment.
[5] Upper Deck also argues that the primary and umbrella policy insure it for "products-completed operations hazard," and therefore Federal has a duty to defend. Plaintiff, Reply, 3-4. This argument, however, fails. The Products-Completed Operations Hazard portion of the policy relied on by Upper Deck is a definition that is used to limit the scope of certain exclusions, not a definition that independently grants coverage. See Federal, Ex. P000289. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567534/ | 694 F. Supp. 2d 610 (2010)
Clayton SMITH, et al.
v.
TARRANT COUNTY COLLEGE DISTRICT, et al.
Civil Action No. 4:09-CV-658-Y.
United States District Court, N.D. Texas, Fort Worth Division.
March 15, 2010.
*613 Karin Knowles Cagle, Kirkley & Berryman LLP, Fort Worth, TX, Fleming Terrell, Lisa Graybill, ACLU Foundation of Texas, Austin, TX, David Broiles, Law Offices of David Broiles, Fort Worth, TX, for Clayton Smith, et al.
Angela H. Robinson, Law Snakard & Gambill, Fort Worth, TX, for Tarrant County College District, et al.
OPINION AND ORDER
TERRY R. MEANS, District Judge.
This case was tried to the Court on January 13 through 15, 2010. At the conclusion of the trial, rather than hear oral arguments, the Court ordered the parties to submit their final arguments by way of briefs. Those briefs have been received and, after considering them, the Court enters the following opinion and order.
I. Background
Plaintiffs Clayton Smith and John Schwertz Jr. are members of Students for Concealed Carry on Campus ("SCCC"), a national organization created in the wake of the shootings at Virginia Tech. (Tr. Trans. Vol. I. at 102, 136.) SCCC seeks generally to inform the public about the status of the law on carrying concealed firearms. More specifically, SCCC seeks to have state and college authorities allow students who are licensed to carry a concealed firearm to do so on college campuses. (Pl.'s Tr. Ex. 27, p. 2.) SCCC's members advocate for the repeal or amendment of laws and college rules and regulations that are contrary to this goal. As part of this advocacy, SCCC members engage in "empty-holster protests." (Id.) In an empty-holster protest, SCCC members wear empty holsters during their normal campus activities to symbolize the fact that they are unarmed and potentially defenseless against a gunman such as the one at Virginia Tech. (Id.; Tr. Trans. Vol. I. at 102.)
During the spring semester of 2009, plaintiff Smith became SCCC's "campus leader" for TCC's northeast campus. (Tr. Trans. Vol. I. at 105.) In that role, Smith assisted with organizing an empty-holster protest to be conducted on the northeast campus in April 2009 in conjunction with SCCC protests to be held on several other college campuses across the nation. (Id. at 105-06.) Smith and Schwertz each planned to wear an empty holster and a t-shirt bearing the SCCC logoa mortarboard atop a revolverand hand out leaflets detailing SCCC's viewpoints in between classes. (Id. at 106-07, 141-42.)
This was not SCCC's first attempt at an empty-holster protest on TCC's campuses. In the spring of 2008, another SCCC member, Brett Poulos, had requested that SCCC members be allowed to wear empty *614 holsters on TCC's campuses as part of a protest. TCC informed Poulos that empty holsters would not be allowed on campus.
Prior to the April 2009 protest, Smith sent an email to certain TCC officials notifying them of his intended protest on the northeast campus. Magdalena de la Teja, TCC's vice president for student development, and Paula Vastine, TCC's director of student development services, each responded to Smith's email, informing Smith that SCCC members would not be allowed to wear empty holsters on campus and that, per TCC policy, SCCC could not engage students and hand out leaflets throughout the campus, but instead could only pass out fliers and speak to students regarding SCCC's views in the campus's "free speech zone." (Pl.'s Tr. Ex. 27, p. A224-25.) Vastine and de la Teja also informed Smith that he would have to complete a request to use the free-speech zone at least twenty-four hours in advance of the protest. (Id.) Smith chose not to apply for use of the free-speech zone. (Tr. Trans. Vol. I, p. 107.) And, concerned that he might be deemed in violation of TCC policy, he chose not to have the protest at all. (Id. at 108.)
In October 2009, SCCC announced that it planned to conduct empty-holster protests on several college campuses in November 2009. (Id. at 109.) Smith and Schwertz intended to participate in the protest on TCC's northeast campus, so by email Smith notified TCC's interim chancellor, Dr. Erma Hadley, of the protest. (Id. at 110, 143; Pl.'s Tr. Ex. 31, p. 4.) As part of the notice, Smith inquired of Hadley whether TCC's policies had changed since his attempt at holding a protest in the spring. (Pl.'s Tr. Ex. 31, p. 4.) Hadley responded by informing Smith that each TCC campus has "specific requirements for those who wish to protest on campus" without addressing whether the policies that limited the spring protest remained in place. (Id.) Smith and Schwertz took Hadley's response as indicating that the same policies that worked to prevent protestors from wearing empty holsters on campus and from engaging in speech activities outside of the campus free-speech zone remained in place. (Tr. Trans. Vol. I, at 111.)
Smith and Schwertz then filed this lawsuit under 42 U.S.C. § 1983 on November 3, 2009, against TCC and Hadley in her official capacity alleging that TCC's rules and regulations regarding speech are unconstitutional on their faces and as applied to them and seeking declaratory and injunctive relief (doc. # 1). According to Smith and Schwertz, the school's rules and regulations impermissibly deprived them of their right to engage in speech by denying them the ability to wear empty holsters on campus and by restricting their other effortshanding out leaflets and engaging students in conversationto a designated free-speech zone. Additionally, Smith and Schwertz allege that TCC's requirement that students apply for use of the free-speech zone twenty-four hours in advance of their intended speech activity is an impermissible prior restraint on speech.
Smith and Schwertz filed a motion for a temporary restraining order to allow them to conduct a protest during November 2009 (doc. # 10). This Court granted that motion in part (doc. # 14). As for the free-speech zone and the permit system, the Court concluded that it amounted to an impermissible prior restraint because the relevant rules and regulations granted too much discretion to the officials charged with deciding whether to grant a request to use the zone. Further, the Court concluded that by employing a permit system that allowed access only to a designated free-speech zone, TCC was denying Smith and Schwertz access to various areas that are traditionally public forums, such as *615 streets, sidewalks, and open common areas. But because classrooms are not regarded as public forums, and because, as a result, speech in classrooms may be subjected to greater regulation, the Court denied Smith and Schwertz's motion for a temporary restraining order to the extent that it requested that they be allowed to wear empty holsters in classrooms.
TCC and Hadley then filed motions to dismiss, arguing that Smith and Schwertz never applied for a permit to use the free-speech zone and, therefore, Smith and Schwertz's complaint did not present a justiciable controversy. The Court denied the motion, noting that a justiciable injury is suffered when a regulation on speech has the effect of chilling speech, see Meese v. Keene, 481 U.S. 465, 473, 107 S. Ct. 1862, 95 L. Ed. 2d 415 (1987), and that facial challenges are allowed to a speech regulation that incorporates a permit or licensing system because the mere existence of excessive discretion to issue a permit in such a system is unconstitutional. See Beckerman v. Tupelo, 664 F.2d 502, 506 (former 5th Cir.1981). Moreover, a party need not expose himself to punishment under a speech regulation in order to challenge it; rather, a party who has reached the point of needing a permit to engage in speech has standing to challenge the permit scheme. See Steffel v. Thompson, 415 U.S. 452, 459, 94 S. Ct. 1209, 39 L. Ed. 2d 505 (1974); Basiardanes v. Galveston, 682 F.2d 1203, 1218 n. 17 (5th Cir.1982) (collecting cases).
In apparent response to the temporary restraining order and denial of the motions to dismiss, TCC and its officials undertook a series of revisions to the student handbook and TCC's policy and regulations manual ("the PRM"). These revisions dispensed with the permit system and the free-speech zone. Smith and Schwertz filed an amended complaint alleging that the revised handbook and PRM continue to infringe their First Amendment rights. Smith and Schwertz also argue that the revisions were adopted contrary to Texas law and TCC's internal procedures.
II. Legal Discussion
A. Article III Case or Controversy
Before turning to the merits of the challenges made by Smith and Schwertz, the Court must first address which of those challenges it has jurisdiction to entertain. A federal court must assure itself of its jurisdiction over a case before presiding over it, even if the issue of subject-matter jurisdiction is not raised by the parties. See Save the Bay, Inc. v. U.S. Army, 639 F.2d 1100, 1102 (5th Cir.1981). "Article III of the Constitution confines the federal courts to adjudicating actual `cases' and `controversies.'" Allen v. Wright, 468 U.S. 737, 750, 104 S. Ct. 3315, 82 L. Ed. 2d 556 (1984). Several doctrines have developed to "elaborate" the case orcontroversy requirement, including standing, ripeness, mootness, and avoidance of political questions. Id.
Under Article III, the plaintiff before a federal court must have standing to pursue his claims in order for those claims to fall within the court's subject-matter jurisdiction. See Massachusetts v. E.P.A., 549 U.S. 497, 516, 127 S. Ct. 1438, 167 L. Ed. 2d 248 (2007) (stating that the case-or-controversy requirement of Article III "confine[s] the business of federal courts"); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992) (stating that "the core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III").
One element of "the irreducible constitutional minimum of standing" is that the plaintiff must have suffered an "injury in fact." See Lujan, 504 U.S. at 560, 112 S. Ct. 2130. An injury in fact is "an invasion *616 of a legally protected interest which is (a) concrete and particularized, and (b) `actual or imminent, not `conjectural' or `hypothetical'. . . .'" Id. (citations omitted). Unless the plaintiff has suffered such an injury he is without standing to invoke the jurisdiction of a federal court. See Sierra Club v. Morton, 405 U.S. 727, 735, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972).
The United States Supreme Court has recognized that, under certain circumstances, a provision regulating speech may be challenged as overly broad even by one whose own First Amendment rights are not violated. See Secy. of Md. v. Joseph H. Munson Co., 467 U.S. 947, 956, 104 S. Ct. 2839, 81 L. Ed. 2d 786 (1984). This is "because of a judicial prediction or assumption that the statute's very existence may cause others not before the court to refrain from constitutionally protected speech or expression" Id. at 956-57, 104 S. Ct. 2839. Yet a federal court allows litigation to proceed under this variant of "third-party standing" with "hesitation" and "only as a last resort." New York v. Ferber, 458 U.S. 747, 769, 102 S. Ct. 3348, 73 L. Ed. 2d 1113 (1982). And even this standing to make an overbreadth challenge requires the plaintiff to have suffered an injury in fact as a result of the regulation. See Joseph H. Munson Co., 467 U.S. at 958, 104 S. Ct. 2839.
Ripeness is another doctrine that has developed in elaboration of Article III's case-or-controversy requirement. See Allen, 468 U.S. at 750, 104 S. Ct. 3315 (discussing the several "doctrines that cluster around Article III") (quoting Vander Jagt v. O'Neill, 699 F.2d 1166, 1178-1179 (D.C.Cir.1983)). The doctrine of ripeness requires that, to fall within the federal jurisdiction defined by Article III, the harm asserted by the plaintiff must have "matured sufficiently to warrant judicial intervention." Warth v. Seldin, 422 U.S. 490, 499 n. 10, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). "A court should dismiss a case for lack of `ripeness' when the case is abstract or hypothetical." Monk v. Huston, 340 F.3d 279, 282 (5th Cir.2003) (quoting New Orleans Pub. Serv., Inc. v. Council of New Orleans, 833 F.2d 583, 586 (5th Cir.1987)). The doctrines of ripeness and standing are related and often overlap, in that both require the plaintiff to have suffered an injury or to be faced with an imminent injury in order to present a justiciable controversy. See Miss. State Democratic Party v. Barbour, 529 F.3d 538, 545 (5th Cir.2008) (quoting Brooklyn Legal Servs. Corp. v. Legal Servs. Corp., 462 F.3d 219, 225 (2nd Cir.2006)).
The doctrine of mootness also serves to limit the federal judiciary's jurisdiction to actual cases and controversies. Where the doctrine of standing requires the plaintiff to have a personal interest in the suit by having suffered an injury in fact, the doctrine of mootness requires that the controversy created by the injury exist throughout the litigation. See U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 397, 100 S. Ct. 1202, 63 L. Ed. 2d 479 (1980). "Generally, any set of circumstances that eliminates actual controversy after the commencement of a lawsuit renders that action moot," which eliminates federal jurisdiction over the case. Ctr. for Individual Freedom v. Carmouche, 449 F.3d 655, 661 (5th Cir.2006); see Ex parte Baez, 177 U.S. 378, 390, 20 S. Ct. 673, 44 L. Ed. 813 (1900) (stating that when the case is moot "there is no subject matter on which the judgment of the court's order can operate"). But "[m]ere voluntary cessation of allegedly illegal conduct does not moot a case." City of Mesquite v. Aladdin's Castle, 455 U.S. 283, 289 n. 10, 102 S. Ct. 1070, 71 L. Ed. 2d 152 (1982). Rather, "[a] case might become moot if subsequent events [make] it absolutely clear that the allegedly *617 wrongful behavior could not reasonably be expected to recur." Id.
Beyond the constraints imposed by Article III, other considerations counsel that this Court be circumspect in exercising its jurisdiction to address issues of constitutional import. For instance, the doctrine of standing also embodies certain prudential considerations of judicial self-restraint. Federal courts are to be cautious in addressing cases that call for an interpretation of the Constitution. See Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11, 124 S. Ct. 2301, 159 L. Ed. 2d 98 (2004) (noting the standing doctrine's "command to guard jealously and exercise rarely our power to make constitutional pronouncements"). Even in cases that fall within the federal jurisdiction announced in Article III, a federal court may use prudential considerations to decline to pass on a constitutional question "unless adjudication of the constitutional issues is necessary." Id. And, more precisely, "`the determination of what manner of speech in the classroom or in school assembly is inappropriate properly rests with the school board,' rather than with the federal courts." Hazelwood Sch. Dist. v. Kuhlmeier, 484 U.S. 260, 267, 108 S. Ct. 562, 98 L. Ed. 2d 592 (1988) (internal citation omitted) (quoting Bethel Sch. Dist. No. 403 v. Fraser, 478 U.S. 675, 682, 106 S. Ct. 3159, 92 L. Ed. 2d 549 (1986)). That is, "[c]ourts do not and cannot intervene in the resolution of conflicts which arise in the daily operation of school systems and which do not directly and sharply implicate basic constitutional values." Epperson v. Arkansas, 393 U.S. 97, 104, 89 S. Ct. 266, 21 L. Ed. 2d 228 (1968).
With the foregoing principles in mind, the Court has reviewed the pleadings, the evidence presented at trial, and the arguments in the briefing and concludes that many of the challenges to TCC's rules and regulations brought by Smith and Schwertz are not justiciable.
1. Ripeness and Standing
Smith and Schwertz seek to challenge the portion of the student handbook entitled "General Rule on Signs." This provision states, in relevant part, that "[s]ubject to the rules in this Section VI [of the student handbook], a College District person or organization may display a sign by holding or carrying it, by displaying it at a table, or by posting it on a bulletin board or other designated location." (Pl.'s Tr. Ex. 7, p. 14.) A "sign" according to the handbook is "any method of displaying a visual message to others except that transfer of a copy of the message is distribution of literature and not a sign." (Id.) The student handbook defines "College District person or organization" as "includ[ing] academic and administrative units, registered student and faculty/staff organizations, and individual students and faculty/staff members." (Id. at p. 8.)
Smith and Schwertz challenge other provisions dealing with the use of signs, particularly by visitors or those who do not fall within the handbook's definition of College District person or organization. A provision of the handbook, entitled "Hand-Held Signs," states that "[s]tudents and faculty/staff members may display a sign on campus by holding or carrying it by hand or otherwise attaching it to their person." (Pl.'s Tr. Ex. 7, p. 14.) The handbook also contains a section entitled "Campus Visitor Rules" which lists certain acts that TCC considers a violation of school policy and state or local law. (Id. at 2.) Among the enumerated acts is a visitor's "[p]osting or carrying unauthorized signs, posters, leaflets, etc." (Id.) According to Smith and Schwertz, under these provisions visitors, or non-students, cannot use signs as a form of speech on TCC campuses.
*618 The challenges made by Smith and Schwertz to the bulk of these provisions regulating the use of signs falls outside of this Court's jurisdiction most manifestly due to the fact that there was no evidence at trial that either Smith or Schwertz had been denied the ability to use a sign or desired to use a sign as part of their protests. Of course, to challenge a provision as being unconstitutional as applied, the plaintiffs must show that the provision was, in fact, applied to them and deprived them of their First Amendment rights. "To prove standing to raise a First Amendment facial challenge, a plaintiff must produce evidence of an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by [the regulation on speech]. Specifically, plaintiffs must demonstrate a serious interest in acting contrary to a [regulation on speech]." Miss. State Democratic Party v. Barbour, 529 F.3d at 545. Smith testified that the protest conducted in November 2009 did not involve poster-style signs, that his "vision" of SCCC protests on TCC's campuses did not include such signs, and that he was unaware if signs were used as part of SCCC protests on other college campuses. (Tr. Trans. Vol. I at 134.)
Both Smith and Schwertz testified that they passed out leaflets as part of the November 2009 protest. (Id. at 136, 144.) Smith and Schwertz also wore shirts bearing the SCCC logoa mortarboard atop a revolverduring the November 2009 protest. (Id. at 113, 141.) T-shirts depicting a logo and leaflets might arguably fall within the handbook's broad definition of "sign""any method of displaying a visual message to others." (Pl.'s Tr. Ex. 7, p. 14.) Leaflets, however, would seem to be excluded from the definition of "sign" based on the definition's clause "except[ing] transfer of a copy of [a] message [a]s distribution of literature and not a sign." (Id.) Moreover, the handbook's "General Rule on Signs" speaks of signs in terms of "posting"; leaflets and shirts are not posted.
More fundamentally, even to the extent that Smith and Schwertz's use of leaflets and shirts might fall within the definition of signs, they still lack standing to challenge the foregoing provisions and have not presented a ripe controversy regarding the provisions. Whatever mediumbe it poster-style signs, leaflets, or shirtsfalls within the handbook's definition of "signs," unquestionably, the foregoing provisions allow students to make use of signs on campus. The handbook's "General Rule on Signs" and section on hand-held signs both allow students to display signs on campus and the section on "Campus Visitor Rules" limits the use of signs by visitors, not students. As students, Smith and Schwertz have not suffered, and are not imminently likely to suffer, an injury in fact due to the student handbook's provisions prohibiting non-students' use of signs on TCC campuses.
Smith argues that he is not a student and, therefore, has standing to challenge the provisions prohibiting the use of signs by visitors on TCC campuses. But the student handbook defines "student," in relevant part, as "a person who . . . has been enrolled at the College District in a prior semester or summer session and is eligible to continue enrollment in the semester or summer session that immediately follows." (Pl.'s Tr. Ex. 7, p. 8.) Smith acknowledges that he was attending TCC in the fall semester of 2009. (Tr. Trans. Vol. I at 108.) And although Smith testified that he would not be attending TCC in the spring semester of 2010 but would, instead, be attending the University of Texas at Arlington, Smith presented no evidence that he was ineligible to enroll at TCC for the spring semester. (Id. at 117.) Indeed, Smith's testimony was that he has received *619 nothing from TCC to indicate that he was ineligible for the spring semester (id. at 117). Dr. William Lace, TCC's interim vice-chancellor for administrative and community services, testified that Smith would be considered a student through the end of the spring semester. (Tr. Trans. Vol. II at 131-32.) Thus, Smith will be a student for purposes of TCC's provisions regulating speech in April 2010, when SCCC plans to hold its next demonstration in which Smith intends to participate. (Tr. Trans. Vol. I at 115.) Hence, Smith is without standing to challenge the provisions regulating visitors' use of signs and has not presented a ripe controversy regarding such provisions.
This conclusion applies to several of the other challenges to TCC's rules and regulations made by Smith and Schwertz. Smith and Schwertz challenge other portions of the handbook's "Campus Visitor Rules." Specifically, Smith and Schwertz challenge the part of those rules that state that a visitor will be considered to have violated college policy or state and local law by "[d]isrupting classes or campus activities;" "[d]isturbing the peace (inside or outside of buildings);" "[a]ttempting to organize or promote any unauthorized organization or activities;" and "[v]iolating any TCC regulation." (Pl.'s Tr. Ex. 7, p. 2-3.)
Smith and Schwertz also challenge the section of the student handbook entitled "General Rule on Public Assemblies," which states that "College District persons and organizations may publicly assemble on campus in any place where, at the time of the assembly, the person assembling are permitted to be. This right to assemble is subject to the rules in this Section VI." (Pl.'s Tr. Ex. 7, p. 20.) The student handbook defines "College District person or organization" as "includ[ing] academic and administrative units, registered student and faculty/staff organizations, and individual students and faculty/staff members. . . ." (Id. at p. 8.) Smith and Schwertz argue that in light of the limiting definition of "College District person," the permissive language of the general rule on public assemblies implicitly prohibits non-students from participating in on-campus assemblies.
Additionally, Smith and Schwertz challenge the portion of the student handbook under the title "Guest Speakers" and subtitled "Location and Form of Presentations" that states "[a] guest speaker may present a speech or performance or lead a discussion of specified duration, at a time announced in advance, in a fixed indoor location or in a fixed outdoor location approved by the vice president for student development services. A guest speaker may distribute literature only immediately before, during, and immediately after the normal course of his or her speech, presentation, or performance, and only to persons in attendance. Only literature that complies with this Section VI [of the student handbook] may be distributed." The provision goes on to provide that a guest speaker may not "distribute literature to persons who have not chosen to attend the speech, performance, or discussion, or help staff a table or exhibit set up under this Section VI." (Pl.'s Tr. Ex. 7, p. 21.) Smith and Schwertz argue that this provision prevents guest speakers from engaging in speech on campus without prior approval and impermissibly limits a guest speaker's ability to disseminate literature.
But again, both Smith and Schwertz are considered studentsnot guests or visitorsunder TCC's handbook. Neither has shown that his speech has or will be restricted under the campus-visitor rules, the general rule on public assemblies, or the foregoing limitations on guest speakers. Thus, Smith and Schwertz have no standing to challenge these provisions and *620 have not presented a ripe controversy regarding them.
Similarly, Smith and Schwertz cannot challenge the portion of the student handbook under the title "Guest Speakers" and subtitled "Who May Present," that states "[r]egistered students, faculty/staff members, registered student or faculty/staff organizations, and academic and administrative units may present guest speakers on College District property. In the case of registered student organizations, advance permission from the vice president for student development services is required. Individuals may not present a guest speaker." (Pl.'s Tr. Ex. 7, p. 20.) Smith and Schwertz challenge these provisions on three grounds: they impermissibly limit the ability of guests to speak on campus; they impermissibly limit the ability of students to present a guest speaker; and they impermissibly limit the ability of a registered student organization to present a guest speaker.
As has been established, both Smith and Schwertz are students under TCC's rules and regulations. Consequently, to the extent that the guest-speaker provisions limit speech on campus by guest speakers, neither Smith nor Schwertz is personally subject to such limitation. There was no evidence at trial that either Smith or Schwertz attempted to present a guest speaker as part of past demonstrations or intends to present one during the April 2010 demonstration. Thus, even assuming a student might have a free-speech right to present a guest speaker to further the student's views, Smith and Schwertz cannot challenge TCC's rules and regulations restricting speech by visitors and guest speakers. As for the limitation on an organization's ability to present a guest speaker, the guest-speaker provisions address registered student organizations. SCCC is not a registered student organization.
Some of the portions of the handbook and TCC's rules and regulations of which Smith and Schwertz complain are simply not restraints on speech and, therefore, Smith and Schwertz's attempt to challenge them does not give rise to a justiciable controversy. The portion of the student handbook entitled "Other Offenses" states "[t]he College may initiate disciplinary proceedings against a student who" engages in certain enumerated forms of conduct, including a "violat[ion of] College policies or regulations regarding parking, registration of student organizations, use of College facilities, or the time, place, and manner of public expression." (Pl.'s Tr. Ex. 7, p. 6.) Smith and Schwertz have shown no imminent injury as a direct consequence of this provision. This provision only infringes Smith and Schwertz's First Amendment rights to the extent that the referenced policies or regulations impermissibly restrict their freedom of speech or association. The referenced policies and regulations can be analyzed in their own right.
Smith and Schwertz also challenge the section of the PRM entitled "General Guidelines" that states "[f]acilities and equipment at the College District are generally available for use by internal and external groups on a priority basis with the following conditions: (1) The event must be related to the College District mission and philosophy [and] (2) All events other than those that are part of regularly scheduled classes must have reserved the facility and/or equipment through the campus president or designee." (Pl.'s Tr. Ex. 3, p. 1.) Smith and Schwertz complain that this section vests unfettered discretion in the president or his designee in deciding whether to grant a reservation of equipment or a facility because the provision contains no guidelines to direct or inform the decision. But the provision does not even grant the president or his designee *621 the authority to deny a reservation; it merely says that a reservation must be made. On its face, this provision is merely a statement of policy that notice to TCC is required to use its facilities or equipment.
The policies and regulations manual (again, "the PRM") also contains a section entitled "Permissible Activity" that states "[i]n compliance with reasonable and nondiscriminatory regulations of the College District, students, faculty, or staff or their registered or non-registered organizations, may petition, post signs, distribute literature, set up tables and exhibits, []or peaceably demonstrate on property owned or controlled by the College District, provided that the posting of signs and setting up of tables and exhibits may require prior authorization." (Pl.'s Tr. Ex. 3, p. 2.) Again, Smith and Schwertz argue that this provision grantsunconstitutionallyunfettered discretion because it requires students to seek authorization to engage in speech activities but does not provide guidance for the TCC official charged with granting such authorization. But again, the provision says only that authorization may be required. It does not address the power of any TCC official to deny a student the ability to engage in speech activity and, indeed, does of itself require authorization.
Smith and Schwertz argued during trial that TCC had an unwritten policy to "deny freedom of expression on campus when the expression raises an expectation of disruption or the potential for fear in an observer, even if the observer's perception is mistaken." (Pl.'s Tr. Am., doc. # 77, at 1.). Further, Smith and Schwertz insist that TCC's position that they could not wear empty holsters on campus and could not pass out leaflets anywhere except the free-speech zone was not based on one of the provisions of the PRM or of the student handbook, but was based on TCC's "predisposition to disagree with the message the plaintiffs are communicating that there should be concealed weapons on campus." (Tr. Trans. Vol. I, p. 176.) But during his testimony, Lace thoroughly explained his understanding of the rationale behind TCC's position and stated that it was based on the school's rules and regulations on disruptive activity, which are discussed in more detail below. And Smith and Schwertz presented no evidence of an unwritten policy.
Moreover, although the current provision on disruptive behavior is part of the revisions that occurred after this lawsuit was filed, Plaintiffs concede in their amended complaint there was a provision on disruptive behavior, entitled "Student Conduct Disruptions" in the "FLBH (LEGAL)" portion of the PRM. It appears that TCC based its decision to disallow empty holsters in April and November 2009 on this provision. And Plaintiffs have presented no evidence that TCC's administration singled out the content of their speech or their viewpoint on the subject for regulation.
The Court hastens to clarify that its conclusions on standing and ripeness are not an indication that none of the foregoing provisions challenged by Smith and Schwertz are constitutionally suspect. To the contrary, some seem quite broad and potentially susceptible to challenge for overbreadth or vagueness. But Smith and Schwertz have not shown how they have been injured by these provisions. Thus, they have not presented a ripe controversy that they have standing to litigate.
2. Mootness
In their trial brief, TCC and Hadley argue that the challenges to the free-speech zone and the permit system have been mooted by the revisions to the handbook and the PRM that did away with these limitations. Smith and Schwertz respond that the defendants' voluntary cessation *622 of the allegedly unconstitutional conduct does not moot their claims. While this is the general rule, see City of Mesquite, 455 U.S. at 289 n. 10, 102 S. Ct. 1070, when the allegedly illegal conduct is not likely to recur, the plaintiff's claim might become moot. See id.; see also Roberts v. Haragan, 346 F. Supp. 2d 853, 858 n. 5 (N.D.Tex.2004) (concluding that student's facial challenge to university's regulations on speech were mooted because university adopted new policy and there was no indication the university intended to revert to the previous, allegedly unconstitutional policy).
Smith and Schwertz argue that the new policies were adopted in a manner that did not comport with Texas law governing community colleges and that did not comport with TCC's own regulations. Smith and Schwertz do not limit this argument to a response to the defendants' mootness argument. Instead, they assert TCC's failure to comply with applicable state law and TCC regulations in revising the handbook and the PRM as a basis for this Court to invalidate the revised provisions.
Texas law, according to Smith and Schwertz, does not allow a community college to regulate the conduct of non-students. But as discussed above, Smith and Schwertz do not have standing to challenge TCC rules and regulations on the conduct of non-students, and have not presented a ripe controversy regarding such regulations.
As for TCC's authority to regulate the conduct of students, Texas Education Code section 51.202 authorizes "[t]he governing board of [a] public junior college [to] promulgate rules and regulations for the safety and welfare of students, employees, and property . . . ." Tex. Educ. Code. § 51.202 (emphasis added). Smith and Schwertz point out that, under the Texas Education Code, the board of a community college "shall act and proceed by and through resolutions or orders adopted or passed by the board and the affirmative vote of a majority of all members of the board shall be required to adopt or pass a resolution or order . . . ." Id. at § 130.082(d) (emphasis added). Moreover, it is "[t]he governing board of an institution of higher education [that] shall provide the policy direction for each institution of higher education under its management and control." Id. at § 51.352(b) (emphasis added).
Smith and Schwertz insist that, despite these provisions, TCC's board did not promulgate the purported revisions to its regulations. Nor did the board promulgate certain portions of the student handbook, which Smith and Schwertz argue TCC enforces as regulations. Instead, they allege, in the portion of the PRM entitled "FLAA (LOCAL)," TCC improperly attempts to delegate to administrators who write the handbook, such as the chancellor and vice chancellor, the authority to "stipulate" what is prohibited disruptive expressive conduct. This is improper, Smith and Schwertz contend, because it allows administrators to add to the substance of the TCC's board-promulgated regulations in the PRM. Citing various provisions of Texas law, Smith and Schwertz argue that administrators do not have the authority to promulgate regulations or policies. See Tex. Educ.Code § 51.210 (granting officers of a community college the authority "to enforce rules and regulations promulgated by the board"); see also Tex. Educ.Code § 130.084 (governing board of community college is subject to state law regulating independent school districts); id. at § 11.201 (defining authority of superintendent as "chief executive officer" of school district). Similarly, Smith and Schwertz point to TCC regulations that seem to limit the authority of the chancellor to enforcing regulations and policies established by the board. Despite the state law *623 cited by Smith and Schwertz and the constraints imposed by TCC's own regulations, Lace assisted in re-writing the student handbook, including the portions that Smith and Schwertz argue impermissibly function as regulations, and Hadley approved the revisions to the handbook, as well as revisions to the PRM, which embodies the school's regulations. And, Smith and Schwertz insist, even Hadley has not approved some of the revisions to the handbook's provisions on speech activities.
But Smith and Schwertz do not explain how far they would have the Court proceed with this argument or its effect on their case as a whole. Smith and Schwertz complain that the most recent revisions to the handbook and the PRM were not promulgated in accordance with Texas law or TCC's own regulations. Assuming this is true, it is unclear where this leaves Smith and Schwertz in challenging TCC's rules and regulations on speech. There was evidence and argument from TCC during the bench trial that TCC has always delegated regulation-making authority, as well as the authority to revise the student handbook, to the chancellor. As TCC's attorney explained during the trial, "if the plaintiff[s] want[] to take the position that the student handbook is not valid because it's not appropriately passed, then the one [that was in place before this lawsuit] wasn't appropriately passed . . . . [Thus, there has never been] a handbook that had restrictions [on speech] in place." (Tr. Trans. Vol. I, p. 91.) Smith and Schwertz do not address whether, in the event that the Court declares the most recent revisions to the PRM and handbook null or void, they would persist in their challenges to the version of the PRM and handbook that existed when they filed this suit. Nor have they addressed whether they could persist with such challenges given that, as argued by TCC, if the most recent revisions are null or void the prior version is equally ineffective. To take Smith and Schwertz's argument this far would seem to call into question whether a justiciable controversy exists in this case at all in that, if the effect of Smith and Schwertz's argument is that there are no valid rules or regulations of speech for TCC to enforce, there could be no controversy regarding their enforcement.
The case and the controversy, however, lies not in the validity of the rules and regulations but in TCC's intention to enforce its rules and regulations to limit speech and expressive conduct on TCC's campuses, regardless of the legitimacy of their adoption, and in the fact that Smith and Schwertz have manifested a serious interest in acting contrary to those rules by engaging in empty-holster protests. See Miss. State Democratic Party v. Barbour, 529 F.3d at 545 (discussing ripeness and standing to make facial challenge to regulation restricting speech). Indeed, TCC's rules and regulations have effectively been applied to Smith and Schwertz to prevent them from engaging in the empty-holster protest they intended for April and Nonmember 2009 and the protest they intend to conduct in April 2010. See Citizen Action Fund v. City of Morgan City, 154 F.3d 211, 216 (5th Cir.1998) withdrawn on other grounds by 172 F.3d 923 (5th Cir.1999) (concluding that threatened enforcement of a regulation restricting speech can chill speech and thus, gives rise to an as-applied challenge to the regulation); see also Houston Chronicle Publ. Co. v. City of League City, 488 F.3d 613, 618-19 (5th Cir.2007) (concluding a defendant had standing to make as-applied and overbreadth challenge to a city ordinance based on the city's threat to enforce the ordinance); 754 Orange Ave., Inc. v. West Haven, 761 F.2d 105, 111 (2d Cir.1985) (concluding a city's threat to enforce a zoning ordinance was an unconstitutional prior restraint). And the validity of current *624 and prior versions of the handbook and the PRM aside, according to the evidence at trial, TCC's administration intends to enforce the most recent revisions of the handbook and PRM from the point of their adoption onward. Any determination by TCC that Smith and Schwertz's intended April 2010 protest is in violation of school rules and regulations will be made under the most recent version of these documents.
Ultimately, Smith and Schwertz's complaint must be that regardless of the process by which the rules and regulations were adopted, the adoption process culminated in rules and regulations that violate the First Amendment. Otherwise, their complaint is simply that the attempted adoption by TCC of revised rules and regulations was contrary to state law and TCC's internal procedures. Such a controversy, lacking any issue of federal law, would not be proper for determination by this Court. But Smith and Schwertz have clearly raised First Amendment issues, and these issues can be addressed without addressing the validity, under state law and TCC's internal procedures, of the revised handbook and PRM. If Smith and Schwertz wish to have the alleged violations of state law decided, they may seek such relief in state court.
Beyond the questions raised by Smith and Schwertz regarding the promulgation of the most recent versions of the PRM and student handbook, there is no indication that TCC intends to revert to the rules and regulations in place when this suit was filed. Consequently, Smith and Schwertz's challenge to the provisions imposing a permit system on students seeking to engage in expressive conduct on TCC's campuses and limiting students to a free-speech zone are moot.
B. The Merits
With the foregoing analysis of the doctrines of standing, ripeness, and mootness, it is clear that a large part of the case initially presented by Smith and Schwertz is not justiciable. Their ability to speak on campus was constrained to a free-speech zone and their access to that zone was restricted by a permit system. Both of these aspects of TCC's rules and regulations have been abrogated. Even so, Smith and Schwertz were previously denied the ability to wear empty holsters on campus under a provision regulating disruptive activity by students. A similar provision exists even under the revised handbook. Hadley and Lace testified that this provision would continue to be applied to prevent SCCC members from wearing empty holsters on campus, as well as from passing out leaflets in classrooms and adjacent hallways. (Tr. Trans. Vol. II., p. 74, 131.) TCC has also adopted a provision in the student handbook that, to paraphrase, prohibits students from engaging in speech on campus that is cosponsored by an non-student or off-campus organization. (Pl.'s Tr. Ex., p. 12.) Smith and Schwertz testified that, in affiliation with SCCC, they intend to engage in an empty-holster protest on TCC's northeast campus in April 2010 and that, as part of this protest, they each wish to wear an empty holster on campus, including into classroom, and to speak to students and handout leaflets as they walk from class to class. Thus, the constitutionality of TCC's attempt to restrict this activity remains at issue and is justiciable.
1. Forum Analysis and Level of Scrutiny
As the United States Court of Appeals for the Fifth Circuit has explained, a college campus is government-owned property and "[t]he standards by which regulations of speech on government property *625 must be evaluated `differ depending on the character of the property at issue.'" Justice for All v. Faulkner, 410 F.3d 760, 766 (5th Cir.2005) (quoting Perry Ed. Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 44, 103 S. Ct. 948, 74 L. Ed. 2d 794 (1983)). That is, the plaintiff's right to engage in speech and the standard applied in reviewing restrictions on that right depend on the nature of the forum. See Perry Ed. Ass'n, 460 U.S. at 44-46, 103 S. Ct. 948. "Broadly speaking, there are three types of forum for purposes of First Amendment scrutiny: traditional, nonpublic, and designated." Justice for All, 410 F.3d at 765. Typically, at least for the students of a college or university, the school's campus is a designated public forum. See id.; see also Roberts, 346 F.Supp.2d at 861-73; see Pro-Life Cougars v. Univ. of Houston, 259 F. Supp. 2d 575, 582 (S.D.Tex.2003).
The category of designated public forum is further divided into true designated forums and limited forums. See id. To determine whether a designated public forum is a true designated forum or a limited forum, a court must perform a two-factor analysis. See id. at 766. A court must "look to `(1) the government's intent with respect to the forum, and (2) the nature of the forum and its compatibility with the speech at issue.'" Id. (quoting Chiu v. Plano Indep. Sch. Dist., 260 F.3d 330, 346 n. 10 (5th Cir.2001)). This analysis does not force upon the Court an "all-or-nothing proposition" in which the Court must "choose between the polar extremes of treating an entire university campus as a forum designated for all types of speech by all speakers, or, alternatively, as a limited forum where any reasonable restriction on speech must be upheld." Id. Rather, the Court may evaluate as a forum a natural subdivision of the campus, such as generally accessible open areas or class-rooms. See id. at 767 & n. 8 (noting that the "limited/designated dichotomy" need not be applied at the campus-wide level and that, in Justice for All, the forum at issue was the "outdoor open areas of the University's campus, accessible to the students generally"); see also Bowman v. White, 444 F.3d 967, 976 (8th Cir.2006) ("A modern university contains a variety of fora.").
Smith and Schwertz's complaints deal with two distinct forums: the generally accessible outdoor open areas on TCC's campuses that resemble traditional public forums, and the classrooms and adjacent hallways. TCC's intent with regard to both forums can be found in the section of the PRM entitled "GF (Regulation)" and the subsection entitled "Category of Facility." (Pl.'s Tr. Ex. 3, p. 1.) This provision, which is almost identical to the University of Texas Regents Rule addressed by the Fifth Circuit in Justice for All, states "[t]he property or buildings owned or controlled by the College District are not open for assembly, speech, or other activities as are the public streets, sidewalks, and parks. The responsibility of the College District to operate and maintain an effective and efficient system of an institution of higher education requires that time, place, and manner of assembly, speech, and other activities on the grounds and in the campuses be regulated." (Pl.'s Tr. Ex. 3, p. 1.) TCC concedes that the effect of this and other of its policies and regulations is, at a minimum, to create for its students a designated public forum in its campus's outdoor areas. (Br. On Closing Argument at 10.) Thus, regulations of student speech in these areas is subject to strict scrutiny. See Justice for All, 410 F.3d at 765.
The forum-classification issue with regard to the outdoor areas on TCC's campuses is one of the instances in which Smith and Schwertz rely on their argument that TCC's latest revisions to the student handbook and the PRM were not *626 properly promulgated. According to Smith and Schwertz, "Category of Facility" is one of the regulations impermissibly added to the PRM. And with "Category of Facility" set aside as void, the Court should address the open areas on campus, including streets and sidewalks, as traditional public forums. But for reasons already discussed, the Court need not address this argument. Smith and Schwertz seek to have the these areas on campus analyzed as traditional public forums in support of their challenge to TCC's provisions limiting the ability of nonstudents to engage in expressive activity on campus. Neither Smith nor Schwertz has standing to make such a challenge.
As for classrooms and adjacent hallways, generally speaking, these areas are considered nonpublic forums. See Bowman, 444 F.3d at 977; see also Linnemeir v. Bd. of Trs., 260 F.3d 757, 760 (7th Cir.2001) ("Classrooms are not public forums. . . ."); Axson-Flynn v. Johnson, 356 F.3d 1277, 1285 (10th Cir.2004) (concluding, under Hazelwood School District and Perry Education Association that a university classroom is a non-public forum); Bishop v. Aronov, 926 F.2d 1066, 1071 (11th Cir.1991) (stating that although a university may open its classrooms for other purposes, they are generally dedicated to the university's teaching purposes); also cf. M.A.L. v. Kinsland, 543 F.3d 841, 847 (6th Cir.2008) (concluding hallways of a public school are a nonpublic forum) (citing Muller v. Jefferson Lighthouse Sch., 98 F.3d 1530, 1543 (7th Cir.1996)). And Smith and Schwertz have not pointed to any provision of TCC's rules and regulations or any practice by the school regarding the use of classrooms and hallways that would indicate that these areas have been opened up for speech activities. See Widmar v. Vincent, 454 U.S. 263, 267, 102 S. Ct. 269, 70 L. Ed. 2d 440 (1981) (noting that a university, through its policy and practice, had "created a forum generally open for use by student groups" in its facilities); see also Axson-Flynn, 356 F.3d at 1285 (concluding that because there was no indication that "school authorities have `by policy or by practice' opened [the classroom]" for use by "student organizations" the classrooms were not public forums) (quoting Perry Ed. Ass'n, 460 U.S. at 46 n. 7, 103 S. Ct. 948) (alteration in Axson-Flynn); cf. Hazelwood Sch. Dist., 484 U.S. at 267, 108 S. Ct. 562 (stating that public-school facilities are not designated forums for student speech unless opened up for such use "by policy or practice").
Several times in their amended complaint, Smith and Schwertz allege that TCC's restrictions on student speech are content based and, specifically, that the TCC administration seeks to suppress Smith and Schwertz's message because it advocates for the right to carry concealed handguns on campus; a viewpoint that TCC's administration allegedly disagrees with. But Smith and Schwertz presented no evidence that TCC's rules and regulations applied differently to them than to other speakers with other messages or viewpoints. To the contrary, just as it had apparently done with other student speakers, after being informed of the proposed April 2009 and November 2009 protests, TCC was prepared to allow Smith and Schwertz to engage in speech activities in the free-speech zone. And TCC's decision to prohibit Smith and Schwertz from wearing empty holsters was based on its administration's good-faith interpretation of the school's rules and regulations on disruptive behavior. Thus, under the law in the Fifth Circuit, TCC's viewpoint-neutral restriction on speech in the classroom will be upheld so long as it furthers an important or substantial governmental interestand that interest is unrelated to the suppression of student expressionand if the incidental restrictions on First Amendment activities are no more than is necessary to *627 facilitate that interest. See Canady v. Bossier Parish Sch. Bd., 240 F.3d 437, 441-43 (5th Cir.2001) (discussing the various categories of regulations of student speech and the standards applied to each).
2. The Classrooms and Hallways
According to the testimony of vice chancellor Lace, TCC's revised policies will be applied to deny them the ability, as part of their intended protest in April 2010, to wear holsters on campus and to pass out leaflets in class and in the hallways. Specifically, Lace testified that wearing holsters and passing out leaflets in classroom would be considered a prohibited disruptive activity under the revised student handbook. The portion of the student handbook entitled "Disruptive Activities" states "[t]he College may initiate disciplinary action against any student involved in disruptive activities. Any activity that interrupts scheduled activities or the process of education may be classified as disruptive." (Pl.'s Tr. Ex. 7, p. 5.) The provision goes on to state that, among other things, "[c]onducting an activity which causes College officials to interrupt their scheduled duties to intervene, supervise, or observe activities in the interest of maintaining order at the College" will be considered disruptive activity. (Id.) During the trial, Smith and Schwertz identified this as one of the provisions that they sought to challenge. As noted above, prior to this lawsuit TCC maintained a similar provision in the FLBH(LEGAL) portion of the PRM.
Unfortunately, Smith and Schwertz do not provide an analysis of the constitutionality of this provision in either their trial brief or written closing arguments. Instead, their focus is on the portions of TCC's policies and regulations limiting speech on campus by non-students. Even so, Smith and Schwertz alleged that enforcement of this provision to deny them the ability to wear empty holsters in the classroom was unreasonable, and that this provision as written is overly broad and vests unfettered discretion in administrators to assess what amounts to a disruption.
TCC and Hadley argue that preventing students from wearing empty holsters in the classroom and hallways serves the important government interest of ensuring student safety and providing for a disruption-free environment conducive to learning. TCC and Hadley argue that preventing students from wearing holsters indoors, as well as preventing handing out leaflets in classrooms and hallways, prevents disturbances and disruptions to the school's educational goals. Of course, these are important interests. "A university's mission is education. . . ." Widmar v. Vincent, 454 U.S. at 268 n. 5, 102 S. Ct. 269. Thus, the federal judiciary "has never denied a university's authority to impose reasonable regulations compatible with that mission upon the use of its campus and facilities." Id. Maintaining student safety on campus and order generally are substantial interests as well. See Bd. of Trs. v. Fox, 492 U.S. 469, 475, 109 S. Ct. 3028, 106 L. Ed. 2d 388 (1989) (stating that student safety was a substantial interest justifying a university's restriction on commercial speech); see also Healy v. James, 408 U.S. 169, 180, 92 S. Ct. 2338, 33 L. Ed. 2d 266 (1972) (noting the "acknowledged need for order" on campus). And TCC's interest in ensuring the safety of its students and order on its campuses to facilitate its educational mission is unrelated to speech.
Hence, the issue becomes whether the disruptive activities provision furthers these interests and does so in a way that imposes no more incidental restrictions on speech than is necessary. Prohibiting students from passing out leaflets inside classrooms and adjacent hallways furthers TCC's interest in carrying out its educational *628 mission. It is axiomatic that a student cannot disrupt the school's efforts in the classroom to instruct students nor undermine his classmates' right to learn in order to spread his personal message. See Burnside v. Byars, 363 F.2d 744, 748 (5th Cir.1966) (characterizing speechmaking and the scattering of leaflets in class as among "those activities which inherently distract students and break down the regimentation of the classroom"); cf. Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 511-13, 89 S. Ct. 733, 21 L. Ed. 2d 731 (1969) ("[C]onduct by the student, in class or out of it [that] materially disrupts classwork or involves substantial disorder or invasion of the rights of others is, of course, not immunized by the constitutional guarantee of freedom of speech"). And Smith and Schwertz have not shown how the disruptive activities provision, applied to prevent leafletting in classes and adjacent hallways, imposes any greater incidental restriction on speech than is necessary to facilitate in-class work. Nor is any apparent.
But Smith and Schwertz's desire to wear empty holsters in classrooms is another matter. As the United States Supreme Court has explained, its precedents "leave no room for the view that, because of the acknowledged need for order, First Amendment protections should apply with less force on college campuses than in the community at large. Quite to the contrary, the vigilant protection of constitutional freedoms is nowhere more vital than in the community of American schools." Healy, 408 U.S. at 180, 92 S. Ct. 2338 (internal quotations omitted). The Fifth Circuit has further explained that "[a]lthough school officials may prohibit speech based on a forecast that the prohibited speech will lead to a material disruption, the proscription cannot be based on the officials' mere expectation that the speech will cause such a disruption." A.M. v. Cash, 585 F.3d 214, 221 (5th Cir.2009).
While this statement came in the context of the Fifth Circuit's elaborating on Tinker's heightened-review standard, rather than the standard announced in Canady for viewpoint-neutral regulations of personal expression that happen to occur on campus, the observation seems equally applicable to the scenario addressed in Canady. Even a viewpoint-neutral restriction on speech must further the claimed important interest that purportedly justifies the restriction. See Canady, 240 F.3d at 443; also cf. IllusionsDallas Private Club, Inc. v. Steen, 482 F.3d 299, 312 (5th Cir. 2007) (noting, under the test announced in United States v. O'Brien, 391 U.S. 367, 88 S. Ct. 1673, 20 L. Ed. 2d 672 (1968), that there must be a substantial government interest and that the restriction on speech "must further that interest" and that both issues must be supported by evidence).
In this case, TCC insists that it is authorized to prohibit certain symbolic speech activitythe wearing of an empty holsterpursuant to a rule prohibiting disruptive behavior with the rationale being that such activity could result in a disruption of TCC's educational and disciplinary goals. This rationale rests on the opinion of TCC administration that the presence of an empty holster on campus, and particularly in the classroom, could engender fear in other students and make it easier for someone to carry a firearm onto campus. Thus, the test of the constitutionality of the disruptive-activities provision becomes whether the provision actually serves to prevent these events or TCC's apprehension of such events is "mere expectation."
Admittedly, even under Tinker's heightened standard, the burden of school officials to justify their regulations is not a "difficult [one]." Cash, 585 F.3d at 222 (citing Shanley v. Northeast Indep. Sch. Dist., 462 F.2d 960, 970 (5th Cir.1972). School officials' "`decisions will govern' if *629 they are `within the range where reasonable minds will differ.'" Id. (quoting Butts v. Dallas Indep. Sch. Dist., 436 F.2d 728, 732 (5th Cir.1971). Nevertheless, under Tinker's standard, "[o]fficials must base their decisions `on fact, not intuition.'" Id. at 221-22 (quoting Butts, 436 F.2d at 731.) A school's administration "cannot rely on ipse dixit to demonstrate. . . interference with school discipline," Shanley, 462 F.2d at 970, but must instead make "some inquiry, and establish[] substantial fact, to buttress the determination." Butts, 436 F.2d at 732. Even under the less-exacting standard announced in Canady, the fact that the regulation on speech does, in fact, further the school's claimed interest must be supported by evidence, not supposition. See Canady, 240 F.3d at 443-44 (upholding school's requirement that students wear uniforms when school's claimed interest was discipline and improved test scores and the school provided statistics showing that discipline problems decreased and test scores improved after the uniform requirement was imposed).
But all TCC offered at trial to justify its decision to disallow empty-holsters in classrooms was the speculation of its officials. At trial, Lace and Hadley testified that the concern of TCC's administration, with regard to the wearing of holsters in the classroom, was that a student may mistake an empty holster as containing a gun and react with fear or panic and cause a disturbance to classroom activities. Also, according to Hadley and Lace, a student might see an empty holster and believe a gun is nearby; for instance, in the backpack of the student wearing the empty holster. In either case, the student seeing the empty holster might report the matter to the police. Campus police might then respond to the classroom and enter to determine whether a gun was actually present. TCC's chief of police Frank Buchanan testified that if a gun were reported on a TCC campus all officers present on that campus would likely be sent to investigate. Buchanan stated that the responding officers would undertake tactical maneuvers to enter the building where the gun is reported to be, account for the students and faculty present, to position themselves to verify whether a gun was actually present, and, if necessary, confiscate the gun. Hadley opined that, in light of the large size of TCC's campuses, such a response would leave the campus police unable to respond to other calls. Hadley further testified that TCC feared that someone could use an empty-holster protest as a cover to wear a holster actually containing a gun.
The overarching theme of TCC's justification is that disruption to classroom activities could be caused by either students' immediate reaction to the empty holsters or in the police response to reports of firearms on campus caused by the empty holsters. As for the potential for increased reports of firearms on campus, Buchanan acknowledged during his testimony that he had no objective basis for believing that additional reports of firearms on campus would be caused by empty-holster protests. (Tr. Trans. Vol. III, p. 116.) Even to the extent such a conclusion might be based on Buchanan's experience as a law enforcement officer or common sense, this is not evidence on which a decision to deny free speech may be based. See A.M., 585 F.3d at 222 (stating officials may not base their decision on "intuition"); also cf. Steen, 482 F.3d at 315 (where state bore the burden of proving link between speech activity and the purported negative effects of that speech used to justify regulation, common-sense link was not enough).
And Rather than buttress Lace and Hadley's concerns that empty holsters would cause other students to fear for their safety, Buchanan's concern seemed *630 to be that the debate over the right to carry concealed handguns on campus might get too heated, noting that an empty-holster protest would involve "different people with different thoughts . . . who might not agree with the empty-holster protest" (Tr. Trans., Vol. III, p. 114.) Buchanan also seemed concerned with the protest's logistics, stating that he was concerned with "where it was going to be held [and keeping] the students and everybody. . . safe." (Id.) But Buchanan's concerns about the reaction of the student body to Smith and Schwertz's message is not a sufficient basis to suppress their symbolic speech. "The existence of a hostile audience, standing alone, has never been sufficient to sustain a denial of or punishment for the exercise of First Amendment rights." Beckerman v. Tupelo, 664 F.2d 502, 510 (former 5th Cir.1981) (discussing the "hecklers' veto"); also cf. Cohen v. California, 403 U.S. 15, 22, 91 S. Ct. 1780, 29 L. Ed. 2d 284 (1971) (concluding conviction under state law banning disruption of the peace by offensive conduct violated the First Amendment because, inter alia, there was no showing that the defendant's speech would actually cause a violent reaction by viewers). And although, with regard to Buchanan's logistical concerns, maintaining order and student safety are important interests, the issue presently under analysis is whether TCC policies and enforcement of such policies actually furthers those interests. Buchanan offered no elaboration or factual support for his logistical concerns.
Buchanan's testimony did allude to other concerns about student safety. Buchanan apparently received an email from a colleague discussing threats written on bathroom stalls at the University of Oakland and at St. Xavier University. (Def.'s Tr. Ex. 24.) There was a similar incident at TCC in April 2008. A student scrawled on the wall of a bathroom stall at the northeast campus that "there will be a shooting here on April 19." (Def.'s Tr. Ex. 10; Tr. Trans. Vol. III, p. 56-60) Buchanan testified that he made his concerns based on these events known to TCC's administration.
But the email was not received by Buchanan until April 14 and the incident at TCC's northeast campus was not reported until April 4. (Def.'s Tr. Exs. 10, 24.) Hadley and TCC's administration had made their decision to deny Poulos and other SCCC members the ability to wear empty holsters by April 2. (Tr. Trans. Vol. III, p. 56-60; Def.'s Tr. Ex. 19.) Thus, TCC had made the decision that its policies and regulations would not allow for the wearing of empty holsters on campus by the time this information was available.
In any event, there was no evidence linking empty-holster protests to an increased likelihood of a shooting on campus. Hadley testified that she feared that "some student [would] show up on campus with a gun in the holster." (Tr. Trans. Vol. III, p. 30.) But if anything, that would be the exact opposite effect of the empty-holster protest. SCCC members wear empty holsters to highlight the fact that they are not armed. And there is simply no logical force behind such a fear; if a person wished to bring a firearm onto campus undetected, he likely would not wear it in a holster, exposed for all to see.
Buchanan also stated in his testimony that April is the month that many notable acts of violence took place, particularly with regard to school campuses. As Smith acknowledged in his testimony, April is the month in which the shootings at Columbine High School and Virginia Tech occurred, as well as the month in which the Alfred P. Murrah Federal Building in Oklahoma City was bombed. But neither Buchanan, nor Hadley or Lace, explain how this coincidence makes it any more likely that students wearing empty holsters *631 as part of a protest will cause a disruption.
Aside from the writing on the bathroom wall, TCC presented evidence of only one other incident that purportedly justifies its decision. In April 2008, a TCC instructor reported to TCC police that a student had been engaging in threatening activity. (Def.'s Tr. Ex. 11) According to the instructor's report, a student had drawn a skull and dagger on the classroom chalkboard, had spoken of bringing weapons to class, had threatened classmates, and had reenacted the Virginia Tech shootings during a class discussion of school shootings. (Id.) But again, other than showing there was some incident vaguely related to the issue on which Smith and Schwertz wanted to speakthe prohibition against firearms on college campusescreating some general sense of fear or apprehension, TCC fails to explain how this incident bears on the request to wear empty holsters or how this isolated threat of violence could be exacerbated by an empty-holster protest.
This is where TCC's argument fails. TCC's decision to prohibit students from protesting the status of the law and school policy on concealed firearms by wearing empty holsters to class rests on an "undifferentiated fear or apprehension of disturbance." See Tinker, 393 U.S. at 508, 89 S. Ct. 733. This, of course, "is not enough to overcome the right to freedom of expression." Id. "Much nondisruptive speechsuch as the wearing of a T-shirt or button that contains a political message... is still protected speech even in a nonpublic forum." Bd. of Airport Comm'rs v. Jews for Jesus, Inc., 482 U.S. 569, 576, 107 S. Ct. 2568, 96 L. Ed. 2d 500 (1987). Controversial symbolic speech, with the potential to evoke a strong and possibly violent emotional response from those who see it has time and again been held protected, even in nonpublic forums, including the classroom. See Tinker, 393 U.S. at 508-09, 89 S. Ct. 733 (concluding that school's prohibition against students' wearing black armbands in protest of the Vietnam war violated the First Amendment); Cohen v. Cal., 403 U.S. at 18-26, 91 S. Ct. 1780 (concluding jacket, worn in a state courthouse, with the message "Fuck the Draft" in protest of the Vietnam war was protected); Burnside v. Byars, 363 F.2d 744, 748 (5th Cir.1966) (concluding that students' wearing "freedom buttons," meant to draw attention to race relations and encourage black citizens to exercise their civil rights, did not disrupt class and was therefore protected speech). As noted above, whether under the standard announced in Canady or the heightened standard announced in Tinker, where, as here, the potential for disruption is the justification for the restriction on speech, the constitutionality of the restriction turns on whether it actually serves to prevent disruption. When restrictions on potentially disruptive speech have been upheld, it has been based on evidence that the nature of the speech and the environment in which it is to occur are such that a disturbance is more than a mere expectation.
The treatment of a student's right to display the confederate flag is instructive. For instance, in A.M. v. Cash, the Fifth Circuit dealt with students who wished to wear purses to school that prominently displayed the confederate flag. The court noted that the confederate flag has, at least in some circumstances, taken on a meaning of racism and intolerance. Cash, 585 F.3d at 222. The court then cited extensive evidence that there had been a great deal of racial tension and hostilities on the campus of the school that promulgated the challenged regulations. See id. at 222 (noting ongoing racial hostility, racially hostile vandalism and epithets, discipline issues involving the use of racial epithets, racially motivated confrontations, a *632 simulated lynching, and use of the confederate flag to taunt black students in upholding school's prohibition on displaying confederate flag). In light of this evidence, the court concluded that the school had a sufficient factual basis to forecast that further display of the confederate flag would lead to disruption. See id. Other courts to address the display of the confederate flag have similarly cited evidence of a factual basis upon which school administrators could forecast that a disruption would occur if the flag were displayed. See Scott v. Sch. Bd., 324 F.3d 1246, 1249 (11th Cir.2003) (concluding a public school could ban display of the confederate flag because of evidence of racial tension and evidence of racially-motivated fights on campus); West v. Derby Unified Sch. Dist. No. 260, 206 F.3d 1358, 1366-1367 (10th Cir.2000) (concluding that school's ban on display of the confederate flag was proper under Tinker because of a series of incidents, some of which involved the flag, including hostile confrontations between black and white students and at least one fight); Melton v. Young, 465 F.2d 1332, 1335 (6th Cir.1972) (concluding that a ban on the display of the confederate flag was permissible in light of racially motivated confrontations and disruptions).
TCC's administration, on the other hand, opines, without supporting evidence, that students might be placed in fear by the potential that a handgun is present upon seeing an empty holster and that such a student might report the incident to police whose investigation might disrupt classwork. They further speculate that a student might use an empty-holster protest as a cover for actually bringing a handgun on campus. Thus, TCC and Hadley have failed to show that the disruptive-activities provision of the student hand-book furthers the important interests on which they rely to justify it. Consequently, both the current provision on disruptive activities and its predecessor previously found in the FLBH (LEGAL) portion of the PRM, as applied to prevent Smith and Schwertz from wearing empty holsters to class as part of their protests in April 2009, November 2009, and April 2010, violate the First Amendment. See Citizen Action Fund, 154 F.3d at 216 (concluding threatened enforcement of regulation restricting speech gives rise to as applied challenge).
Smith and Schwertz also challenge the provision as overly broad. Smith and Schwertz have shown that TCC intends to invoke this provision as a basis for prohibiting them from wearing empty holsters in class as part of their protest in April 2010. It might be argued that from this showing it can be extrapolated that Smith and Schwertz have made the broader showing that TCC's administration understands this provision to allow it to prohibit expressive activity based on the mere expectation of a disruption.
And admittedly, nothing in the provision requires administrators, as part of their decision to prohibit expressive activity as disruptive, to base their decision on facts determined as a result of an inquiry into the activity's potential for disruption. But the doctrine of constitutional avoidance counsels against this Court's making a pronouncement regarding the overbreadth of a regulation on speech when the regulation can be construed so as to avoid facial unconstitutionality. See Hersh v. United States, 553 F.3d 743, 753 (5th Cir.2008). "Facial challenges to the constitutionality of statutes should be granted `sparingly; and only as a last resort,' so as-applied challenges are preferred." Id. at 762-63 (quoting Broadrick v. Oklahoma, 413 U.S. 601, 93 S. Ct. 2908, 37 L. Ed. 2d 830 (1973)). As the Fifth Circuit has explained regarding the availability of a facial challenge:
"According to our First Amendment overbreadth doctrine, a statute is facially *633 invalid if it prohibits a substantial amount of protected speech." Such facial challenges can succeed only when this overbreadth is substantial in relation to the statute's legitimate reach. There must be a "significant imbalance between the protected speech the statute should not punish and the unprotected speech it legitimately reaches." The party challenging the statute must demonstrate "a realistic danger that the statute itself will significantly compromise recognized First Amendment protections of parties not before the [c]ourt before a statute will be struck down as facially overbroad."
Id. at 762 (quoting United States v. Williams, 553 U.S. 285, 128 S. Ct. 1830, 1838, 170 L. Ed. 2d 650 (2008) and Shackelford v. Shirley, 948 F.2d 935, 940 (5th Cir.1991)).
On its face, the disruptive-activities provision authorizes TCC's administration to discipline students "involved in disruptive activities," with "disruptive activity" defined as activity that "interrupts scheduled activities or the process of education." (Pl.'s Tr. Ex. 7, p. 5.) School officials clearly have the authority to discipline students and to prohibit activities that are actually disruptive or that they believe will cause a disruption after inquiry and development of substantial evidence in support of such belief. See Canady, 240 F.3d at 443-44 (concluding that school's requirement that students wear uniforms did not violate students' First Amendment rights because of evidence that the requirement reduced discipline problems); also cf. Tinker, 393 U.S. at 513, 89 S. Ct. 733 (stating that conduct by a student that causes disruption, disorder, or infringes the rights of others is not protected by the First Amendment); Cash, 585 F.3d at 221-22 (stating a school may prohibit student speech based on the speech's potential for disruption after inquiry into the potential for disruption and development of substantial supporting evidence). Smith and Schwertz have not shown that there is a realistic danger that the disruptive-activities provision significantly compromises protected speech beyond their particular circumstances. Cf. Hersh, 553 F.3d at 762. Rather, they have shown that the provision, as interpreted and applied to them by TCC's administration, violated their First Amendment rights. Thus, the Court concludes that the provision is unconstitutional as applied to Smith and Schwertz but is not facially overbroad.
3. The Outdoor Open Areas on Campus
TCC has conceded that the public-forum-type areas on its campuses, such as streets, sidewalks, and outdoor common areas (such as lawns and plazas) are designated public forums for students. As such, rules or regulations restricting speech in these areas must withstand strict scrutiny. See Justice for All, 410 F.3d at 766-67. "In order to survive First Amendment strict scrutiny, a content neutral restriction on speech must be narrowly tailored to a significant state interest and must leave open ample alternative channels of communication." Id. at 769. Maintaining student safety and order on campus to facilitate the school's educational efforts is a significant interest. But the disruptive-activities provision does not serve these significant interests.
The above discussion under the standard announced in Canady regarding TCC's use of the disruptive-activities provision to prevent Smith and Schwertz from wearing empty holsters in classrooms applies with even greater force to TCC's prohibition on empty holsters in public-forum type areas, which is reviewed under the heightened strict-scrutiny standard. Colleges and universities are, of course, authorized to adopt rules to ensure discipline and prevent disruptions to foster the *634 learning process. But TCC has not shown how its prohibition of empty-holster protests based on the mere undifferentiated apprehension of a disturbance furthers its interest in ensuring student safety and maintaining an environment conducive to learning. Cf. id. at 768 n. 10 (noting that, under strict scrutiny, a time, place, and manner regulation of speech must be "narrowly tailored to serve a significant government interest") (emphasis added). To the contrary, Smith, Schwertz, and other members of SCCC participated in an empty-holster protest in the common areas of TCC's northeast campus in November 2009 after this Court issued a temporary restraining order requiring TCC to allow them to do so. TCC presented no evidence of any disruption caused by the protest. To the contrary, according to Smith and Schwertz's testimony, they each wore an empty holster, spoke to a number of students on the issue of concealed firearms on campus, and handed out leaflets as they walked outside from class to class throughout the week of November 9. Smith and Schwertz's protest was peaceful and even those with whom they spoke that disagreed with SCCC's views seemed to appreciate the fact that Smith and Schwertz were exercising their right to speech. (Tr. Trans., Vol. I, p. 114, 145.) As a result, the Court concludes that the disruptive-activities provision is unconstitutional as applied to prevent SCCC members from wearing, as part of their protest, empty holsters in public-forum-type areas.
Smith and Schwertz also challenge the student handbook's provision entitled "Cosponsorship," which provides:
(a) Neither registered student, faculty/staff organizations, nor individual students or faculty/staff members, may cosponsor any event on campus with an off-campus person or organization. Only academic or administrative units with authority delegated from the Chancellor of the College District may cosponsor events with an off-campus person or organization.
(b) An event is a prohibited cosponsorship if an individual or student or faculty/staff organization:
(1) depends on an off-campus person or organization for planning, staffing, or management of the event; or
(2) advertises the event as cosponsored by an off-campus person or organization; or
(3) operates the event as an agent of, of for the benefit of, an off-campus person or organization, except for solicitation of charitable contributions; or
(4) reserves a room or space for the use of an off-campus person or organization; or
(5) engages in any other behavior that persuades the vice president for student development services that an off-campus person or organization is in fact responsible for the event, in full or in substantial part.
(Pl.'s Tr. Ex. 7, p. 12.) Smith and Schwertz complain that the cosponsorship provision impermissibly prohibits students from engaging in speech activities on campus when that speech is cosponsored by an off-campus person or organization. Smith and Schwertz have made no claim that either they or SCCC has sought to reserve a classroom under this provision, and, therefore, the Court will not address the constitutionality of this provision to prohibit any of Smith and Schwertz's intended speech in classrooms or similar facilities. And TCC has not relied on this provision in concluding that empty holsters are not allowed on campus and in particular the classrooms. But Smith and Schwertz have standing to challenge this provision regarding the use of public-forum type areas *635 because SCCC is an off-campus organization, (Tr. Trans., Vol. II, p. 51), and both Smith and Schwertz intend to participate in an empty-holster protest cosponsored by SCCC in April 2010 in which they will wear empty holsters, and speak to students and pass out literature in the public-forum type areas of TCC's northeast campus.
The provision gives its own statement of the interest it is meant to serve. "The purpose of this rule is to preserve the limited space on campus for the use of students and faculty/staff members, and the rule will be interpreted to serve that purpose." (Id.) In the abstract, preservation of college facilities for their intended use is a significant interest. A school, "like the private owner of property, may legally preserve the property under its control for the use to which it is dedicated." Lamb's Chapel v. Ctr. Moriches Union Free Sch. Dist., 508 U.S. 384, 390, 113 S. Ct. 2141, 124 L. Ed. 2d 352 (1993). But TCC has not shown that its interest in preserving campus facilities for use by students and faculty and staff members is, in reality, so significant as to warrant a regulation restricting speech. Indeed, when asked, Lace admitted that he was "not aware" of any pressure as to space on campus that would necessitate such a restriction. (Tr. Trans., Vol. II, p. 55.)
And the cosponsorship provision is not narrowly tailored to serve this interest. A regulation on speech "is narrowly tailored if it targets and eliminates no more than the exact source of the `evil' it seeks to remedy." See Frisby v. Schultz, 487 U.S. 474, 485, 108 S. Ct. 2495, 101 L. Ed. 2d 420 (1988). Conversely, "[a] regulation is not `narrowly tailored' ... where ... `a substantial portion of the burden on speech does not serve to advance [the government's content-neutral] goals.'" Simon & Schuster, Inc. v. Members of the New York State Crime Victims Bd., 502 U.S. 105, 122, 112 S. Ct. 501, 116 L. Ed. 2d 476 (1991). Rather than target and eliminate the evil that TCC claims justifies the cosponsorship provisionpreserving limited space on campus for use by students, faculty, and staffthe provision broadly prohibits any speech by students that involves an off-campus organization in almost any conceivable way. Indeed, with its subpart (b)(5), which allows the vice president to prohibit student speech based on any behavior that persuades the vice president that an off-campus organization is responsible for the event in substantial part, the Court cannot imagine how the provision could have been written more broadly.
The sweeping breadth of the cosponsorship provision becomes even more apparent when reference is made to the handbook's definition of event. An "event," as defined by the handbook and used in the cosponsorship provision, includes but is not limited to the use of exhibits, signs, or tables; distribution of literature; and assembly. (Pl.'s Tr. Ex. 7, p. 8.) When read in light of this definition, the cosponsorship provision prohibits students from the most basic forms of expressive activitydistribution of literature, use of signs, and even assemblybased on no more than the fact that the expression might depend on an off-campus organization for planning or management, is advertised as cosponsored by an off-campus organization, or otherwise substantially involves an off-campus organization. (Id. at p. 12, "Cosponsorship" provision, subparts (b)(1), (2), and (5).) In fact, TCC would allow itself to deprive students of these most basic forms of speech, in areas that it concedes are designated public forums for students, based on as little as the fact that the speech will inure to the benefit of an off-campus person or organization or the fact that the speech will involve reservation of a room or other space on campus. (Id. subparts (b)(3) and (4).) Thus, even when all of the activity that occurs on campus *636 involves only students, TCC could apply this provision to prevent those students from engaging in speech activities merely based on the happenstance that off-campus persons were involved with, or would benefit from, the speech. This, of course would not serve TCC's claimed purpose of reserving for students, faculty, and staff use of campus facilities.
And even beyond this, there are narrower methods of ensuring the availability of campus facilities for students, faculty, and staff, than a blanket prohibition on student speech that involves off-campus persons or organizations. To the extent that students begin to compete for particular spaces on campus in which to engage in expressive activity, the college could implement a reservation system. Or if cosponsored speech events results in crowding and the exclusion of students from certain parts of campus, the college could impose reasonable restrictions on the areas in which large events may be held, on the presence of non-students on campus for speech activities, or on the duration of speech events. But prohibiting outright student speech based on its mere affiliation with an off-campus person or organization is too broad.
Nor does it leave open ample alternative channels of communication. The provision prohibits any speech that involves or benefits an off-campus person or organization. This effectively encompasses all speech. Under TCC's present rules, neither the College Republicans nor College Democrats could address the upcoming campaign for governor of Texas on campus. After all, such speech would work to the benefit of a candidate (an off-campus person) and would likely involve the support of the candidates' party (an off-campus organization). Any on-campus speech by students regarding religious views will likely involve the support off-campus persons (members of the religion) and an off-campus organization (the religion's organized body) and will necessarily work to the benefit of both. The same is true of any issue that has achieved an appreciable level of social importance and, thus, is likely to be the subject of speech. It is telling that at no point during the trial did TCC even attempt to provide an example of a topic that is likely to be debated by students that would not involve or benefit some off-campus person or group.
It is the fact that members of the public have a stake in how certain issues are resolved and that the interest of some is not consistent with, or even adverse to, the interest of others, that make such issues likely topics for public debate. Any speech on such issues will necessarily work to benefit off-campus persons whose views align with that of the speaking students. And it is the very nature of free speech that like-minded people will assemble together to more forcefully express their viewpoint on an issue. Issues that are important enough to impel a student to speak are the issues that most likely have resulted in the formation of an organization whose purpose is to express its members' views. But a TCC student who reaches out to such an organization for assistance in communicating his views, which is in accordance with the very nature of free speech, would be prohibited from speaking on TCC's campus under the cosponsorship provision. Rather than recognizing that its campus "is peculiarly the marketplace of ideas," Healy, 408 U.S. at 180, 92 S. Ct. 2338, and nurturing the free speech of its students, TCC has largely deprived students of any organized assistance in expressing their views or, indeed, in learning the very process of self expression. The cosponsorship provision, effectively, prohibits TCC's students from speaking on campus on issues of any social importance and, therefore, cannot stand. See Members of City Council v. Taxpayers *637 for Vincent, 466 U.S. 789, 812, 104 S. Ct. 2118, 80 L. Ed. 2d 772 (1984) (noting regulation of speech may be invalidated under strict scrutiny if the alternative "modes of communication are inadequate").
And unlike the disruptive-activities provision, the sweeping breadth of the cosponsorship provision causes the Court to conclude that it is overly broad and, consequently, unconstitutional on its face. Smith and Schwertz have done more than present hypothetical situations in which the provision will impact protected speech. Cf. Hersh, 553 F.3d at 762. To the contrary, it is difficult to conceive of any speech by a student on an issue of social importance that would not involve some affiliation of an off-campus group or person or work to such person or group's benefit and, therefore, be subject to prohibition under the cosponsorship provision. Hence, the provision "prohibits a substantial amount of protected speech." Id. Relatedly, TCC has not pointed out any legitimate applications of the provision. Thus, even granting that TCC has an important interest in ensuring its students, faculty, and staff have access to its campus and facilities, any legitimate applications of the cosponsorship provision to serve this end are significantly outweighed by the substantial number of unconstitutional applications of the provision.
III. Conclusion
With the foregoing, the Court concludes that many of the challenges mounted by Smith and Schwertz to TCC's rules and regulations on speech are not justiciable. However, the disruptive-activities provision, as applied to student SCCC members to prevent them from wearing empty holsters on campus or in the classroom, violates such students' First Amendment right to free speech. Additionally, the cosponsorship provision is overly broad and thus, violates the First Amendment on its face.
Accordingly, it is hereby ORDERED that Erma Johnson Hadley and Tarrant County College District, its officials, employees, and agents, be and they are hereby PERMANENTLY ENJOINED from prohibiting Clayton Smith, John Schwertz Jr., and any other Tarrant County College District student from wearing empty holsters in TCC's classrooms, on the TCC campuses' streets and sidewalks, and in the TCC campuses' outdoor common areas, such as lawns and plazas. Additionally, it is hereby ORDERED that Erma Johnson Hadley and Tarrant County College District, its officials, employees, and agents, be and they are hereby PERMANENTLY ENJOINED from enforcing the student handbook's provision entitled "Cosponsorship" to prohibit student speech on the campus streets or sidewalks, or in the campus common areas, such as lawns and plazas. Any other declaratory or injunctive relief sought by Smith and Schwertz not specifically granted is DENIED.
Smith and Schwertz also request attorney's fees. Smith and Schwertz must submit a brief, no later than fourteen days after the date of the entry of this order, setting forth the legal authority by which the Court may award attorneys' fees in this case, establishing (with relevant supporting evidence) the amount of fees requested, and discussing the reasonableness of the amount of fees requested under the "lodestar" analysis and the factors discussed in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir.1974). See Fed.R.Civ.P. 54(d)(2) (discussing handling of a request for attorneys' fees). A response brief and a reply brief on the issue of attorneys' fees may be submitted according to the local rules. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2566293/ | (2008)
UNITED STATES of America,
v.
Mario Anthony TYNES, Defendant.
Criminal No. 4:02cr28.
United States District Court, E.D. Virginia, Newport News Division.
April 28, 2008.
ORDER
ROBERT G. DOUMAR, District Judge.
This matter comes before the Court upon Mario Anthony Tynes' ("Defendant") April 7, 2008, "Emergency Motion to Correct Sentence," and upon the Court's own March 5, 2008, motion to reduce the Defendant's sentence pursuant to 18 U.S.C. § 3582(c)(2). For the reasons set forth below, the Court hereby DENIES the Defendant's motion, GRANTS the Court's own motion, and REDUCES the Defendant's sentence to 106 months imprisonment, as set forth in more detail below.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 20, 2002, the Defendant appeared before the Court and pled guilty to Count Four and Count Five of a Six-Count Indictment. Count Four charged the Defendant with distribution of cocaine base in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B). Count Five charged the Defendant with possession of a firearm in furtherance of a drug trafficking crime in violation of 18 U.S.C. § 924(c)(1). The Defendant had an offense level of 27, a criminal history category of V, and a guideline range of 120 to 150 months on Count Four plus 84 months, consecutive, on Count Five. On August 8, 2002, the Court imposed a sentence of 219 months imprisonment on the Defendant. This sentence consisted of 135 months on Count Four and 84 months, consecutive, on Count Five. On February 18, 2004, the Court issued an order on the Government's Fed. R.Crim.P. 35(b) motion reducing the Defendant's sentence to a term of 110 months imprisonment. The sentence consisted of 26 months on Count Four and 84 months, consecutive, on Count Five.
On March 5, 2008, the Court notified the parties of its intent to consider reducing the Defendant's sentence on its own motion pursuant to 18 U.S.C. § 3582(c)(2) and U.S.S.G. Amendments 706, 711, and 715 ("Crack Cocaine Amendments"). After application of the Crack Cocaine Amendments, the Defendant has an offense level of 25, a criminal history category of V, and a guideline range of 100 to 125 months on Count Four plus 84 months, consecutive, on Count Five.[1] On April 2, 2008, the Government filed a response recommending that the court reduce the Defendant's sentence from 110 months to 106 months, consisting of 22 months on Count Four and 84 months, consecutive, on Count Five. On April 4, 2008, the Court issued an order adopting the Government's recommendation and reducing the Defendant's sentence to 106 months. However, on April 7, 2008, the Defendant filed an "Emergency Motion to Correct Sentence" objecting to the Government's recommendation and claiming that the Defendant's sentence should have been reduced to 98 months, consisting of 14 months on Count Four and 84 months, consecutive, on Count Five. On April 8, 2008, the Court issued an order: (1) vacating the order reducing the Defendant's sentence to 106 months; (2) appointing Walter B. Dalton, Assistant Federal Public Defender, to serve as counsel for the Defendant; and (3) ordering the parties to appear at a hearing on the Defendant's motion. On April 22, 2008, the parties appeared at the hearing and presented argument with respect to the Defendant's motion.
II. LEGAL ANALYSIS
The Defendant's motion presents "the Court with two subtle issues regarding the retroactive application of the Crack Cocaine Amendments. As a threshold matter, both the Government and the Defendant agree that: (1) the Crack Cocaine Amendments apply to the Defendant; and (2) that the Crack Cocaine Amendments have the effect of lowering the Defendant's guideline range. See U.S.S.G. § 1B1.10(a)(2). Therefore, the Court must only determine the amount of reduction (if any) to which the Defendant is entitled pursuant to 18 U.S.C. § 3582(c)(2).[2] U.S.S.G. § 1B1.10, which governs the retroactive application of the Crack Cocaine Amendments, states, in relevant part:
Limitations and Prohibitions on Extent of Reduction.
(A) In General. Except as provided in subdivision (B), the court shall not reduce the defendant's term of imprisonment under 18 U.S.C. § 3582(c)(2) and this policy statement to a term that is less than the minimum of the amended guideline range determined under subdivision (1) of this subsection.
(B) Exception. If the original term of imprisonment imposed was less than the term of imprisonment provided by the guideline range applicable to the defendant at the time of sentencing, a reduction comparably less than the amended guideline range determined under subdivision (1) of * this subsection may be appropriate. However, if the original term of imprisonment constituted a non-guideline sentence determined pursuant to 18 U.S.C. § 3553(a) and United States v. Booker, 543 U.S. 220 [125 S. Ct. 738, 160 L. Ed. 2d 621] (2005), a further reduction generally would not be appropriate.
U.S.S.G. § 1B1.10(b)(2) (emphasis added). Two issues are therefore squarely presented before the Court. First, whether a Court may further reduce a Defendant's sentence pursuant to 18 U.S.C. § 3582(c)(2) where the Defendant's sentence has already been reduced pursuant to Fed.R.Crim.P. 35(b)[3] and 18 U.S.C. §§ 3553(e)[4] and 3582(c)(1)(B)[5]. Second, if so, whether a Court should subsequently apply the 35(b) reduction proportionally to the Defendant's entire sentence or proportionally only to the Defendant's sentence for the count that was originally subject to the 35(b) reduction. Each issue will be discussed in turn.
The first issue is whether a Court may further reduce a Defendant's sentence pursuant to 18 U.S.C. § 3582(c)(2) where the Defendant's sentence has already been reduced pursuant to Fed.R.Crim.P. 35(b) and 18 U.S.C. §§ 3553(e) and 3582(c)(1)(B). Although the parties did not dispute the issue at the hearing, the Court must resolve it in order to determine whether the Court may reduce the Defendant's sentence. Generally, Courts may not reduce a Defendant's sentence pursuant to 18 U.S.C. § 3582(c)(2) to a term that is less than the minimum of the guideline range after application of the Crack Cocaine Amendments. U.S.S.G. § 1B1.10(b)(2)(A). In this case, the Defendant's guideline range for Count Four after application of the Crack Cocaine Amendments is 100 to 125 months. The Defendant's current sentence on Count Four is 26 months. Therefore any further reduction would necessarily be less than the minimum of the guideline range after application of the Crack Cocaine Amendments.
However, the guidelines provide an exception to this general rule for situations in which the original sentence was not a "non-guideline sentence determined pursuant to 18 U.S.C. § 3553(a) and United States v. Booker, 543 U.S. 220 [125 S. Ct. 738, 160 L. Ed. 2d 621] (2005)." U.S.S.G. § 1B1.10(b)(2)(B). Although the double negative inherent in the guideline provision is awkward and renders the provision somewhat ambiguous, this Court reads the guideline as permitting a further reduction both for guideline sentences and for nonguideline sentences "determined pursuant to" provisions of the United States Code other than 18 U.S.C. § 3553(a). As discussed below, a 35(b) reduced sentence must fall into one of these two categories.
An original guideline sentence, modified by a 35(b) reduction, is still a guideline sentence (or at least the."functional equivalent" of a guideline sentence), and therefore falls within the exception to the general rule prohibiting reductions below the guideline range after application of the Crack Cocaine Amendments. When a court reduces a guideline sentence by a certain percentage to reflect the degree of the defendant's assistance to the government pursuant to Fed.R.Crim.P. 35(b) (or otherwise calculates a 35(b) reduction based on the original guideline range), the reduced sentence incorporates (rather than abandons) the United States Sentencing Guidelines' guidance regarding the appropriate sentence for the court to impose on that particular defendant for that particular offense. In this context, the 35(b) reduced sentence would only constitute a non-guideline sentence if the original sentence itself was a non-guideline sentence. Therefore, even though a 35(b) reduction is not explicitly contemplated by the guidelines, a percentage reduction from those guidelines pursuant to Fed.R.Crim.P. 35(b) is still the "functional equivalent" of a guideline sentence.
This position appears to be in accord with several other district courts who have recently considered the issue in the context of applying the Crack Cocaine Amendments. See, e.g., United States v. Lucas, 2008 WL 936850, at *2 (W.D.Va. April 7, 2008) (reasoning that "in sentencing this defendant, the court relied heavily on the advisory guidelines in establishing a starting point for determining a fair and just sentence"); United States v. Benjamin, 2008 WL 972698, at *2 (E.D.Tenn. April 7, 2008) (reasoning that "[i]f the new guideline range had been considered by the government and the court at the time of the defendant's original sentencing, there is no reason to believe that the proportionate amount of departure would not have been the same"); United States v. Diaz, 2008 WL 789885, at *3 (E.D.N.Y. March 20, 2008) (reasoning that the "original sentence was the functional equivalent of a guideline sentence"); see also United States v. Scheffler, 2008 WL 619369 (D.N.H. March 4, 2008); United States v. Donaldson, 2008 WL 818609 (M.D.Fla. March 25, 2008); United States v. Gallman, 2008 WL 948294 (D.S.C. April 4, 2008); United States v. Ali, 2008 WL 1746039 (S.D.W.Va. April 14, 2008).
Although the guidelines do not provide any guidance with respect to a defendant's post-sentence substantial assistance in the form of a 35(b) reduction, the guidelines do provide guidance with respect to a defendant's pre-sentence substantial assistance in the form of a U.S.S.G. § 5K1.1 downward departure. If a 5K1.1 downward departure is considered a guideline sentence subject to further 3582(c)(2) reduction, then certainly a 35(b) reduction should be considered a guideline sentence as well. To permit a further 3582(c)(2) reduction after a 5K1.1 downward departure but not after a 35(b) reduction would potentially result in inconsistent sentences among defendants who have rendered similar assistance to the Government. Failure to permit a further 3582(c)(2) reduction would also run counter to well-established public policy favoring the creation of incentives for defendants to cooperate with the Government[6] because it would deny certain Defendants the complete benefit of their assistance simply due to the fact that they happened to be sentenced before the United States Sentencing Commission retroactively corrected an error in the guidelines.
Even if an original guideline sentence, modified by a 35(b) reduction, is not a guideline sentence, the reduced sentence was "determined pursuant to" Fed. R.Crim.P. 35(b) and 18 U.S.C. §§ 3553(e) and 3582(c)(1)(B), not pursuant to 18 U.S.C. § 3553(a) and Booker. See Wade v. United States, 504 U.S. 181, 182, 112 S. Ct. 1840, 118 L. Ed. 2d 524 (1992) (finding that 18 U.S.C. § 3553(e) is the provision which "empowers" district courts to impose a sentence below the statutory minimum to reflect a defendant's substantial assistance). By its terms, U.S.S.G. § 1B1.10(b)(2)(B) generally prohibits a further 3582(c)(2) reduction if the defendant's original sentence was based on the application of the 3553(a) factors alone as authorized by the United States Supreme Court in Booker and its progeny and not based on the sentencing guidelines. However, Fed.R.Crim.P. 35(b) and 18 U.S.C. §§ 3553(e) and 3582(c)(1)(B) permit sentence reductions below the guideline range without consideration of the 3553(a) factors. Indeed, the United States Court of Appeals for the Fourth Circuit has indicated that a district court is, in fact, prohibited from considering any factor other than the defendant's substantial assistance in the similar context of a U.S.S.G. § 5K1.1 motion. United States v. Pearce, 191 F.3d 488, 492-93 (4th Cir.1999) ("[A]ny factor considered by the district court on a § 5K1.1 motion must relate to the `nature, extent, and significance' of the defendant's assistance.") (citation omitted). While other cases have indicated that a district court may consider other factors when deciding to limit a 35(b) reduction, the cases clearly hold that the district court may only consider the defendant's substantial assistance when deciding to grant or augment a 35(b) reduction. See, e.g., United States v. Woodward, 245 Fed.Appx. 320, 323 (4th Cir.2007); United States v. Lindsay, 254 Fed.Appx. 168, 169-70 (4th Cir.2007).
Additional support for this position can be found by a closer examination of the text of the applicable guidelines and statutes. First, 18 U.S.C. § 3582(c), which concerns a court's "modification of an imposed term of imprisonment," explicitly instructs district courts to consider the 3553(a) factors for sentence modifications based on a motion by the Bureau of Prisons or on a retroactive change in the sentencing guidelines. 18 U.S.C. §§ 3582(c)(1)(A) and 3582(c)(2). However, the statute ominously omits this instruction for sentence modifications based on Fed.R.Crim.P. 35 the only other basis for sentence modification contained in the statute. 18 U.S.C. § 3582(c)(1)(B). Second, if the prohibition contained in U.S.S.G. § 1B1.10(b)(2)(A) and (B) was truly intended to apply to all non-guideline sentences, much of the language in the provision would be rendered superfluous. The United States Sentencing Commission could have much more easily instructed that guideline sentences are eligible for 3582(c)(2) reductions below the guideline range after application of the Crack Cocaine Amendments, whereas non-guidelines sentences are not so eligible. The fact that the Commission chose not do adopt this much simpler blanket rule implies that they intended the "exception" to cover certain non-guideline sentences as well.
Furthermore, the fact that a district court might consider the 3553(a) factors when deciding to limit a 35(b) reduction does not somehow change the 35(b) reduced sentence into a sentence based on 18 U.S.C. § 3553(a) and Booker. A district court's consideration of the 3553(a) factors when deciding to limit a 35(b) reduction is no different than a district court's consideration of those same 3553(a) factors when deciding an appropriate guideline sentence. The later case is still a sentence pursuant to the guidelines just like the former case is still a sentence pursuant to Fed.R.Crim.P. 35(b) and 18 U.S.C. §§ 3553(e) and 3582(c)(1)(B). Consideration of the 3553(a) factors does not alter the basis of the court's decision in either case, and each of these cases are clearly distinguishable from a sentence based only on 3553(a) and Booker the "non-guideline sentence" scenario with which U.S.S.G. § 1B1.10(b)(2)(B) appears to be explicitly concerned. If mere consideration of the 3553(a) factors when imposing a sentence makes the sentence a non-guideline sentence "determined pursuant to" 18 U.S.C. § 3553(a) and Booker according to U.S.S.G. § 1B1.10(b)(2)(B), then the exception would be rendered meaningless because even pure guideline sentences (without 35(b) reductions) would be ineligible for the exception.
The Court also notes that, significantly, the "prohibition" and "exception" contained in U.S.S.G. § 1B1.10(b)(2)(A) and (B) do not eliminate a district court's discretion when determining whether to make a further 3582(c)(2) reduction below the guideline range after application of the Crack Cocaine Amendments. For nonguideline sentences "determined pursuant to" 18 U.S.C. § 3553(a) and Booker, a further 3582(c)(2) reduction "generally would not be appropriate." U.S.S.G. § 1B1.10(b)(2)(B) (emphasis added). For all other sentences, a further 3582(c)(2) "may be appropriate." U.S.S.G. § 1B1.10(b)(2)(A) (emphasis added). Therefore, district courts clearly have the discretion to determine whether factors such as the defendant's substantial assistance and the various 3553(a) factors warrant a further reduction below the defendant's original 35(b) reduced sentence. However, as the above analysis demonstrates, a 35(b) reduced sentence certainly does not fall under the category of cases in which a further 3582(c)(2) reduction is "generally" inappropriate.
Given that this Court may further reduce the Defendant's 35(b) reduced sentence pursuant to 18 U.S.C. § 3582(c)(2) and U.S.S.G. § 1B1.10(b), the Court must now consider what reduction to impose. Pursuant to these provisions, the Court must consider the Defendant's guideline range after application of the Crack Cocaine Amendments, the various 3553(a) factors, and any other applicable policy statements or guidelines issued by the Sentencing Commission. In this case, the Defendant's guideline range was reduced from a range of 120 to 150 months to a range of 100 to 125 months on Count Four after application of the Crack Cocaine Amendments. The guideline range of 84 months, consecutive, for Count Five was unaffected by the Crack Cocaine Amendments. Given that the Defendant's pre-35(b) sentence on Count Four was originally 135 months, the Defendant's proportional pre-35(b) sentence on Count Four after application of the Crack Cocaine Amendments is 113 months. This results in a total pre-35(b) sentence after application of the Crack Cocaine Amendments of 197 months.
The central issue disputed by the parties in this case is how the Court should apply its original 35(b) reduction to this guideline sentence after application of the Crack Cocaine Amendments. The Defendant argues that this Court's order on the Government's 35(b) motion reduced the Defendant's overall sentence by 50 percent (from 219 months to 110 months), and that therefore the Court should similarly reduce the Defendant's overall sentence by 50 percent after application of the Crack Cocaine Amendments (from 197 months to 98 months). The Government, on the other hand, argues that this Court's order on the Government's 35(b) motion only reduced the Defendant's sentence on Count Four by 81 percent (from 135 months to 26 months), and that therefore the Court should similarly only reduce the Defendant's sentence on Count Four by 81 percent after application of the Crack Cocaine Amendments (from 113 months to 22 months). Therefore the Government recommends a total 3582(c)(2) reduced sentence of 106 months whereas the Defendant recommends a total 3582(c)(2) reduced sentence of 98 months, after application of the Crack Cocaine Amendments. The Court must therefore determine whether the 35(b) reduction should be applied proportionally to the Defendant's entire sentence or proportionally only to the Defendant's sentence for the count that was originally subject to the 35(b) reduction.
The Court's February 18, 2004, order on the Government's 35(b) motion reduced the Defendant's sentence on Count Four from 135 to 26 months and left Count Five entirely unaffected. The sentencing guidelines provide limited guidance on what would constitute a sentence "comparably less" than this sentence under U.S.S.G. § 1B1.10(b)(2)(B). However, Note 3 in the Commentary to this provision states:
For example, in a case in which: (A) the guideline range applicable to the defendant at the time of sentencing was 70 to 87 months; (B) the defendant's original term of imprisonment imposed was 56 months (representing a downward departure of 20 percent below the minimum term of imprisonment provided by the guideline range applicable to the defendant at the time of sentencing); and (C) the amended guideline range determined under subsection (b)(1) is 57 to 71 months, a reduction to a term of imprisonment of 46 months (representing a reduction of approximately 20 percent below the minimum term of imprisonment provided by the amended guideline range determined under subsection (b)(1)) would amount to a comparable reduction and may be appropriate.
This provision clearly indicates that a proportional reduction should be made to the Defendant's sentence based on the original reduction percentage.[7] However, it does not explicitly specify whether the percentage reduction should be applied proportionally to the Defendant's entire sentence (reducing the total sentence to 98 months) or proportionally only to the Defendant's sentence for Count Four (reducing the total sentence to 106 months).
The parties' arguments boil down to an issue of the Court's intent: whether, in its order on the Government's 35(b) motion, the Court intended to reduce the overall sentence by 50 percent or to reduce the sentence on Count Four by 81 percent. The best evidence of the Court's intent is the text of the Court's order itself and the rest of the record currently before the Court. Yet there is no evidence whatsoever that the Court intended to reduce the Defendant's overall sentence by 50 percent other than, of course, the Defendant's own mathematical calculation. Contrary to the Defendant's claim, the text of the Court's order clearly indicates that the Court intended to reduce only the Defendant's sentence on Count Four. Given that this Court's practice is to make a 35(b) reduction as a percentage of the original guideline range for a given count (or counts), the Court's 35(b) reduction was linked proportionally to the Defendant's sentence on Count Four and not to the Defendant's overall sentence. A contrary intent would have been manifested by a reduction in the Defendant's sentence on both Count Four and Count Five. Furthermore, adopting the Defendant's position with respect to the Court's intent in this case would impose far too great a burden on subsequent courts attempting to proportionally link a 35(b) reduction to one count rather than to the overall sentence. Simply reducing a particular count (rather than the overall sentence) should serve as sufficient evidence of the court's intent. Any further explanation that the court intended only to reduce the particular count should not be necessary to prove that the court has, in fact, done so.
Even if the Court intended to reduce the overall sentence by 50 percent, the Court's order on the Government's 35(b) motion precludes the adjustment the Defendant seeks. The Court did not reduce the Defendant's sentence on Count Five in the order, and therefore any reduction must be applied to Count Four. Applying any reduction to Count Five would be tantamount to the Court making a "new" 35(b) reduction without the required 35(b) motion by the Government, and would also be inappropriate given that Count Five is completely unaffected by the Crack Cocaine Amendments. In the alternative, the Defendant's position would therefore necessarily require the Court to reduce the Defendant's sentence on Count Four approximately 88 percent from 113 months to 14 months in order to reach the desired 50 percent reduction in the Defendant's overall sentence. However, applying an 88 percent reduction to Count Four (rather than the 81 percent reduction originally imposed) would also be tantamount to the Court making a "new" 35(b) reduction without the required 35(b) motion by the Government. The Court may not revisit its initial order on the Government's 35(b) motion in this manner and thereby "resentence" the Defendant. See U.S.S.G. § 1B1.10(a)(3). Therefore, the proportional sentence suggested by U.S.S.G. § 1B1.10(b)(2) and its Commentary is the Government-recommended sentence of 22 months on Count Four plus 84 months, consecutive, on Count Five.
The Court must still determine whether consideration of any 3553(a) factors warrants a limitation on the 4 month reduction in the Defendant's sentence suggested by the guidelines. The Defendant's pre-sentence record reveals no facts that warrant limiting the 3582(c)(2) reduction pursuant to the 3553(a) factors. The Defendant's original sentence within the guideline range accurately reflected the need for the sentence imposed: (1) to reflect the nature and circumstances of the offense and the history and characteristics of the Defendant; (2) to reflect the seriousness of the offense; (3) to promote respect for the law; (4) to provide just punishment for the offense; (5) to afford adequate deterrence to criminal conduct; (6) to protect the public from further crimes of the defendant; (7) to provide the Defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner; (8) to avoid unwarranted sentence disparities; and (9) to provide restitution to any victims of the offense. A total reduced sentence of 106 months (from 110 months) remains a reasonable sentence in light of the Court's consideration of these factors with respect to the Defendant's pre-sentence record.
Similarly, the Defendant's post-sentence record also reveals no facts that warrant limiting the 3582(c)(2) reduction pursuant to the 3553(a) factors. Records obtained from the Federal Bureau of Prisons indicate that the Defendant's adjustment to incarceration has been positive. He has obtained his GED, completed numerous work assignments, and participated in numerous educational and vocational programs. He has also had no disciplinary infractions. Therefore, the total reduced sentence of 106 months suggested by the Government and U.S.S.G. § 1B1.10(b)(2) is a reasonable sentence that complies with this Court's obligation under 18 U.S.C. § 3553(a) and Booker and its progeny.
III. CONCLUSION
The Court has carefully considered the parties' arguments at the April 22, 2008, hearing; the Government's April 2, 2008, response; the Defendant's April 7, 2008, "Emergency Motion to Correct Sentence;" the Probation Office's recalculation; the Sentencing Commission's relevant policy statements and guidelines; and the factors set forth in 18 U.S.C. § 3553(a). For the foregoing reasons, the defendant's "Emergency Motion to Correct Sentence" is hereby DENIED and the Court's own motion to reduce the Defendant's sentence pursuant to 18 U.S.C. § 3582(c)(2) is hereby GRANTED.
Therefore, the sentence imposed by this Court's last judgment is hereby MODIFIED, and the Defendant's sentence is hereby REDUCED to the greater of either 106 months imprisonment or "time served." This sentence consists of 22 months imprisonment on Count Four and 84 months imprisonment consecutive on Count Five. This term of imprisonment is not within the guideline range after application of the Crack Cocaine Amendment. However, the modified sentence is proportional to the sentence imposed by this Court's order on the Government's Rule 35(b) motion.
In no event should this order be construed to violate the prohibition contained in U.S.S.G. § 1B1.10(b)(2)(C). Except as provided above, all other provisions of the Court's last judgment imposed on the Defendant on August 8, 2002, shall remain in effect.
The Clerk is DIRECTED to deliver a copy of this order to the Defendant, to counsel for the Defendant, to the United States Attorney, to the United States Probation Officer, and to the Federal Bureau of Prisons.
It is so ORDERED.
NOTES
[1] See U.S.S.G. § 1B1.10(b)(1). The Defendant's offense level, criminal history category, and guideline ranges are the same under both Amendment 706, as modified by Amendment 711, (retroactive on March 3, 2008) and Amendment 715 (retroactive on May 1, 2008). Therefore it is unnecessary for the Court to wait until May 1, 2008, to rule on the Defendant's motion.
[2] 18 U.S.C. § 3582(c)(2) states, in relevant part: "[I]n the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission pursuant to 28 U.S.C. 994(o), upon motion of the defendant or the Director of the Bureau of Prisons, or on its own motion, the court may reduce the term of imprisonment, after considering the factors set forth in section 3553(a) to the extent that they are applicable, if such a reduction is consistent with applicable policy statements issued by the Sentencing Commission."
[3] Fed.R.Crim.P. 35(b) states, in relevant part:
(1) In General. Upon the government's motion made within one year of sentencing, the court may reduce a sentence if the defendant, after sentencing, provided substantial assistance in investigating or prosecuting another person.
(2) Later Motion. Upon the government's motion made more than one year after sentencing, the court may reduce a sentence if the defendant's substantial assistance involved:
(A) information not known to the defendant until one year or more after sentencing;
(B) information provided by the defendant to the government within one year of sentencing, but which did not become useful to the government until more than one year after sentencing; or
(C) information the usefulness of which could not reasonably have been anticipated by the defendant until more than one year after sentencing and which was promptly provided to the government after its usefulness was reasonably apparent to the defendant.
[4] 18 U.S.C. § 3553(e) states, in relevant part; "Upon motion of the Government, the court shall have the authority to impose a sentence below a level established by statute as a minimum sentence so as to reflect a defendant's substantial assistance in the investigation or prosecution of another person who has committed an offense."
[5] 18 U.S.C. § 3582(c)(1)(B) states, in relevant part: "[T]he court may modify an imposed term of imprisonment to the extent otherwise expressly permitted by statute or by Rule 35 of the Federal Rules of Criminal Procedure."
[6] Evidence of this public policy can be found in U.S.S.G. § 5K1.1, Fed.R.Crim.P. 35(b), and 18 U.S.C. §§ 3553(e) and 3582(c)(1)(B).
[7] A court may encounter an additional problem not contemplated by the guidelines in situations where the court has imposed a 35(b) reduction based on a quantity other than a percentage of the original guideline range. For example, a court could reduce a defendant's sentence pursuant to Fed. R.Crim.P. 35(b) by a fixed quantity of 5 months rather than by a variable quantity of 10 percent. In this situation, a proportional, "comparably less" reduction advised by the guidelines may be inappropriate. Because this Court makes 35(b) reductions based on a percentage of the original guideline range, this situation is not presented by the facts of this case, and therefore the Court does not decide the issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562152/ | 111 F. Supp. 2d 1326 (2000)
William TENNANT, Plaintiff,
v.
State of FLORIDA, Florida Department of Law Enforcement, and City of Miami Beach, a political subdivision of the State of Florida, Defendants.
No. 98-1043-CIV-GOLD.
United States District Court, S.D. Florida.
January 13, 2000.
*1327 Arthur Tifford, Miami, FL, for plaintiff.
Elizabeth Rodriguez, Peter J. Oppenheimer, Kubicki Draper, Miami, FL, for *1328 the State of Florida and Fla. Dept. of Law Enforcement.
Mark Goldstein, City Attorney's Office, Miami Beach, FL, for the City of Miami Beach.
ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT ON THE FEDERAL CIVIL RIGHTS CLAIM AND REMANDING PLAINTIFF'S STATE LAW CLAIMS
GOLD, District Judge.
This action arises out of a series of events surrounding the arrest of plaintiff William Tennant on August 17, 1994. Special Agent Eugenio Figueroa and Special Agent Jesus Rodriguez, acting as law enforcement officers with the Florida Department of Law Enforcement ("FDLE"), obtained a warrant from Marion County to arrest the plaintiff for probation violation. See Joint Pretrial Stipulation at 4 Statement of Uncontested Facts ["Facts"]. The FDLE agents requested backup from the Miami Beach Police Department in part because the agents were in plain clothes. The FDLE agents met up with Miami Beach police officers Glenn Hodges and Bruce Songdahl at the Days Inn Hotel, in Miami Beach. The four police officers found Tennant at the bar in the hotel. Agent Figueroa approached Tennant, asked him his name, and told him he was under arrest. Tennant claims that before he was handcuffed, he told the officers he had recently had open heart surgery[1], he pulled down his shirt, showed them his scar, and asked if he could be handcuffed with his hands in front. The officers ignored his request and one of the Miami Beach officers proceeded to search him and then handcuff him with his hands behind his back.
Tennant was escorted out of the bar by the police officers and taken to an unmarked FDLE two door car. At that point, the handcuffs were switched and agent Figueroa's handcuffs were placed on Tennant, again with his hands behind his back. Tennant claims he continued to complain of pain and continued to request that he be handcuffed in front. Tennant was placed in the front seat of the car and seatbelted into place. The two Miami Beach police officers left the scene and Figueroa drove Tennant to the Dade County Jail. Tennant claims Figueroa took a long time to reach the jail, taking a circuitous route and making a lot of rapid turns that made his chest hurt. Tennant claims he complained about his chest hurting.
When they arrived at the Dade County Jail, the jail refused to accept Tennant and directed Figueroa to take him to the emergency room. Tennant was observed and treated by Dr. David Paz. Tennant complained about severe pain in the sternum area of his chest following a "pop" which he felt when he was handcuffed with his hands behind his back. An x-ray confirmed Tennant had suffered a ruptured sternal wire. After being treated by Dr. Paz, Tennant was returned to the FDLE agent and taken back to the jail. Tennant was returned to the emergency room later that evening for more treatment before being returned to the jail again.
Tennant's primary claim against the defendants is for a violation of § 1983 for having a policy or custom of inadequate training on how to handcuff a person who was recovering from cardiac surgery or was disabled. Tennant also complains that the FDLE and Miami Beach Police Department ("MBPD") covered up the fact that he was injured and the officers did not write up the use of force reports and injury to persons reports that the procedures require. The MBPD had no record of Tennant's arrest or of the Miami Beach officers that arrested him. Officer Hodges had no recollection of arresting Tennant.
This case was removed from the Circuit Court of the Eleventh Judicial Circuit of Dade County, Florida based on federal question jurisdiction arising out of plaintiff's § 1983 claim against the defendants. *1329 Plaintiff has voluntarily withdrawn his claims for false arrest (Count III) and false imprisonment (Count IV) against all the defendants. See Plaintiff Response at 2 n. 1. What remains is a federal § 1983 civil rights claim against the defendants (Count I), a state law claim for excessive use of force against the defendants (Count II)[2], and a state law claim for battery against the defendants (Count V). The defendants now move for summary judgment on all counts.[3]
I. Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure authorizes summary judgment where the pleadings and supporting materials show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). The court's focus in reviewing a motion for summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. Sept.1997). The moving party has the burden to establish the absence of a genuine issue as to any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970); Tyson Foods, Inc., 121 F.3d at 646. Once the moving party has established the absence of a genuine issue of material fact, to which the non-moving party bears the burden at trial, it is up to the nonmoving party to go beyond the pleadings and designate "specific facts showing that there is a genuine issue for trial." Celotex v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Issues of fact are genuine only if a reasonable jury, considering the evidence presented could find for the nonmoving party. Anderson, 477 U.S. at 247-51, 106 S. Ct. at 2510-11. In determining whether to grant summary judgment, the district court must remember that, "credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Id. 477 U.S. at 255, 106 S. Ct. at 2513.
II. Count I Plaintiff's § 1983 Claim Against State of Florida and the Florida Department of Law Enforcement is Barred by the Eleventh Amendment
A. Application of the Eleventh Amendment
The Eleventh Amendment to the United States Constitution states: "The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. Amend. XI. The Amendment also equally bars suits against a state commenced by that state's own citizens. See Edelman v. Jordan, 415 U.S. 651, 663, 94 *1330 S.Ct. 1347, 39 L. Ed. 2d 662 (1974); Hans v. Louisiana, 134 U.S. 1, 13-15, 10 S. Ct. 504, 33 L. Ed. 842 (1890). Further, the Amendment bans suits against state officials where the state, in fact, is the real party in interest. See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101, 104 S. Ct. 900, 79 L. Ed. 2d 67 (1984). In general, these bans prohibit federal courts from exercising subject matter jurisdiction over private party suits filed against a state or state officials.
However, three exceptions to this constitutional bar have been recognized by the Supreme Court. First, individual suits may proceed directly against a state if a state waives its sovereign immunity. See Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 238, 105 S. Ct. 3142, 87 L. Ed. 2d 171 (1985). Second, individual suits against a state also may be adjudicated it Congress, pursuant to a valid exercise of congressional power, abrogates a state's immunity through a clear statement of its intent to abrogate. See Seminole Tribe of Florida v. Florida, 517 U.S. 44, 55, 116 S. Ct. 1114, 134 L. Ed. 2d 252 (1996). Finally, individual suits that seek prospective relief for ongoing violations of federal law also may be levied against state officials. See Ex parte Young, 209 U.S. 123, 159-60, 28 S. Ct. 441, 52 L. Ed. 714 (1908). Plaintiff does not seek prospective relief for any ongoing violations. Additionally, Congress has not abrogated Florida's immunity through § 1983. See Carr v. City of Florence, Alabama, 916 F.2d 1521, 1525 (11th Cir.1990) ("Congress has not abrogated Eleventh Amendment immunity in section 1983 cases."); see also Will v. Michigan, 491 U.S. 58, 71, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989) ("We hold that neither a State nor its officials acting in their official capacities are `persons' under § 1983."). Therefore, only two questions remain: 1) whether the Florida Department of Law Enforcement covered by the State of Florida's immunity, and 2) whether Florida waived its immunity through § 768.28, Florida Statutes.
B. The FDLE is a State Agency Entitled to Eleventh Amendment Protection
Whether the Florida Department of Law Enforcement "is an arm of the state partaking of the state's Eleventh Amendment immunity turns on its function and characteristics as determined by state law." Sessions v. Rusk State Hospital, 648 F.2d 1066, 1069 (5th Cir.1981).[4] The Florida Department of law Enforcement is an agency of the state of Florida. Fla. Stat. §§ 20.04, 20.20.[5] The FDLE is therefore covered by the Florida's Eleventh Amendment immunity.
C. Section 768.28, Florida Statutes, Does Not Waive Florida's Sovereign Immunity
Plaintiff "concedes that the established law as prescribed by the United States Supreme Court is that unless a state consents to being sued a suit by a private party seeking to impose a liability payable from public funds in the state's treasury is foreclosed by the Eleventh Amendment." Plaintiff Response at 22. Plaintiff only argument is that the "language of the Florida Sovereign Immunity Statute codified at, Florida Statutes, § 768.28, is sufficiently clear as to render the State of Florida as a `natural person,' for purposes of suit monetary damages, and, as such, constitutes a waiver of the state's Eleventh *1331 Amendment immunity...." Id. at 22-23. Plaintiff suggest in footnote seven that his "argument on this point presents a question of first impression to this Court." A review of Eleventh Circuit case law, however, shows that this issue has been adequately dealt with before.
In Schopler v. Bliss, 903 F.2d 1373, 1379 (11th Cir.1990), the Eleventh Circuit held that a district court erred in interpreting § 768.28 as a statutory waiver of Florida's Eleventh Amendment sovereign immunity. The court noted its previous decisions holding that § 768.28 does not waive Florida's Eleventh Amendment immunity specifically citing Hamm v. Powell, 874 F.2d 766, 770 n. 3 (11th Cir.1989) and Gamble v. Fla. Dept. of Health and Rehabilitative Services, 779 F.2d 1509 (11th Cir.1986). The court also noted that subsection 768.28(16) (which is now 768.28(17)) expressly "declares the legislature's intention that Florida Statutes not be construed to waive Eleventh Amendment immunity unless they explicitly waive immunity from suit in federal court." Id. at 1379. Section 768.28(17) reads as follows:
No provision of this section, or of any other section of the Florida Statutes, whether read separately or in conjunction with any other provision, shall be construed to waive the immunity of the state or any of its agencies from suit in federal court, as such immunity is guaranteed by the Eleventh Amendment to the Constitution of the United States, unless such waiver is explicitly and definitely stated to be a waiver of the immunity of the state and its agencies from suit in federal court. This subsection shall not be construed to mean that the state has at anytime previously waived, by implication, its immunity, or that of any of its agencies, from suit in federal court through any statute in existence prior to June 24, 1984.
Because plaintiff fails to point to any evidence or legal support that would indicate the state has consented to be sued in federal court or has in any way waived its immunity, the court hereby dismisses plaintiff's § 1983 claims against the State of Florida and the Florida Department of Law Enforcement. Will, 491 U.S. at 71, 109 S. Ct. 2304; see also Rindley v. Gallagher, 890 F. Supp. 1540, 1553 (S.D.Fla. 1995) ("[T]he DPR as a state agency is immune from suit under the Eleventh Amendment.").
III. Count IPlaintiff's § 1983 Claim Against the City of Miami Beach
A. Municipal Policy Requirement
Plaintiff asserts a § 1983 claim against the City for having a policy or pattern of deliberate indifference in that it failed to train or supervise its officers on how to handcuff disabled arrestees and cardiac patients. See Amend. Complaint at ¶¶ 9-10. The Supreme Court has placed strict limitations on municipal liability under § 1983. First, there is no respondeat superior liability making a municipality liable for the wrongful actions of its police officers. See Monell v. Department of Social Servs., 436 U.S. 658, 691, 694, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). Instead, a municipality may be held liable for the actions of a police officer only when municipal "official policy" causes a constitutional violation. See id. at 694-95, 98 S. Ct. 2018. Plaintiff must therefore "identify a municipal `policy' or `custom' that caused [has] injury," Board of County Com'rs v. Brown, 520 U.S. 397, 117 S. Ct. 1382, 1388, 137 L. Ed. 2d 626. 520 U.S. 397, 117 S. Ct. 1382, 137 L. Ed. 2d 626 (1997) (citing Monell, 436 U.S. at 694, 98 S. Ct. 2018); "It is only when the `execution of the government's policy or custom ... inflicts the injury' that the municipality may be held liable under § 1983." City of Canton v. Harris, 489 U.S. 378, 385, 109 S. Ct. 1197, 103 L. Ed. 2d 412 (1989).
Thus, the City is not automatically liable under § 1983 even if it inadequately *1332 trained or supervised its police officers and those officers violated plaintiff's constitutional rights. Instead, the Supreme Court has explained that there are only "limited circumstances" in which an allegation of a failure to train or supervise can be the basis for liability under § 1983. See City of Canton, 489 U.S. at 387, 109 S. Ct. 1197. The Supreme Court has instructed that these "limited circumstances" occur only where the municipality inadequately trains or supervises its employees, this failure to train or supervise is a city policy, and that city policy causes the employees to violate a citizen's constitutional rights. Id. at 389-91, 489 U.S. 378, 109 S. Ct. 1197, 103 L. Ed. 2d 412; see also Kerr v. City of West Palm Beach, 875 F.2d 1546, 1555 (11th Cir.1989); Brown, at 402-03, 407-08, 117 S. Ct. at 1388, 1390.
Since a municipality rarely will have an express written or oral policy of inadequately training or supervising its employees, the Supreme Court has further explained that a plaintiff may prove a city policy by showing that the municipality's failure to train evidenced a "deliberate indifference" to the rights of its inhabitants, as follows:
We hold today that the inadequacy of police training may serve as the basis for § 1983 liability only where the failure to train amounts to deliberate indifference to the rights of persons with whom the police come into contact. This rule is most consistent with our admonition ... that a municipality can be liable under § 1983 only where its policies are the "moving force [behind] the constitutional violation." Only where a municipality's failure to train its employees in a relevant respect evidences a "deliberate indifference" to the rights of its inhabitants can such a shortcoming be properly thought of as a city "policy or custom" that is actionable under § 1983.... "[M]unicipal liability under § 1983 attaches where and only where a deliberate choice to follow a course of action is made from among various alternatives" by city policymakers. Only where a failure to train reflects a "deliberate" or "conscious" choice by a municipality a "policy" as defined by our prior cases can a city be liable for such a failure under § 1983.
City of Canton, 489 U.S. at 388-89, 109 S. Ct. 1197 (internal citations omitted).
To establish a "deliberate or conscious choice" or such "deliberate indifference," a plaintiff must present some evidence that the municipality knew or should have known of a need to train and/or supervise in a particular area and the municipality made a deliberate choice not to take any action. See Board of County Com'rs v. Brown, 520 U.S. 397, 401-11, 117 S. Ct. 1382, 1390-91, 137 L. Ed. 2d 626 (1997); Young v. City of Augusta, Georgia, 59 F.3d 1160, 1171-72 (11th Cir.1995); Church v. City of Huntsville, 30 F.3d 1332, 1342-46 (11th Cir.1994); Wright v. Sheppard, 919 F.2d 665, 674 (11th Cir.1990); Kerr v. City of West Palm Beach, 875 F.2d 1546, 1556-57 (11th Cir.1989).[6]
The Eleventh Circuit repeatedly has held that without notice of a need to train or supervise in a particular area, a *1333 municipality is not liable as a matter of law for any failure to train and supervise. For example, in Wright v. Sheppard, 919 F.2d 665 (11th Cir.1990), the court held that a sheriff's department was not liable for a deputy's acts when "no evidence of a history of widespread prior abuse ... put the sheriff on notice of the need for improved training or supervision." Id. at 674. Similarly, in Church v. City of Huntsville, 30 F.3d 1332 (11th Cir.1994), the court reversed a district court's preliminary injunction against the City of Huntsville, holding that the plaintiffs were not likely to succeed on the merits of their failure-to-train claim without proof that the City was aware of a prior incident in which constitutional rights were similarly violated. Id. at 1342-46. See also Popham v. City of Talladega, 908 F.2d 1561, 1564-65 (11th Cir.1990) (finding no liability for failure to train when no pattern of incidents put the City on notice of a need to train). More importantly, in Brooks v. Scheib, 813 F.2d 1191 (11th Cir.1987), even though there had been ten citizen complaints about police officer Scheib, the court held that the City did not have any notice of past police misconduct because the plaintiff "never demonstrated that past complaints of police misconduct had any merit." Id. at 1193. The court noted, "Indeed, the number of complaints bears no relation to their validity." Id.
B. Plaintiff Presented No Evidence of Prior Incidents
Plaintiff failed to show that the city knew or should have known that its alleged "policy" of failing to train or supervise its officers on how to properly handcuff disabled arrestees and arrestees recuperating from cardiac surgery was causing constitutional violations. Specifically, plaintiff has not pointed to a single other incident, aside from his own, where the police were alleged to have injured a disabled person or a person recovering from cardiac surgery by handcuffing them improperly. Richard Barreto, the Chief of the Miami Beach Police Department, states in a sworn affidavit, "[e]xcept for the incident alleged in William Tennant's amended complaint, I do not know of any other disabled arrestee or any arrestee recuperating from cardiac surgery who has been injured or who alleged that he was injured because of being handcuffed by any member of the Miami Beach Police Department." City Mot. for SJ Attached Affidavit at ¶ 7 [Barreto Aff.]. Barreto has worked continuously with the Miami Beach Police Department since October 19, 1970. See id. at ¶ 7.
In his response to the City's motion for summary judgment, plaintiff completely fails to argue that the city had any notice[7] of the constitutional violations its "policies" were causing. Plaintiff instead responds with two arguments: 1) the constitutional violations caused by the City's "policies" were a "plainly obvious consequence," and 2) the reason plaintiff could not find any other incidents of injuries to disabled people *1334 or people who have had cardiac operations is because the City did not report these incidents.
i. No Obvious Need
Plaintiff's first argument is that the need to train and supervise in the area of alternatives to handcuffing behind the back was obvious and the likelihood of constitutional violations was highly predictable so that liability attaches for this single incident. In City of Canton v. Harris, 489 U.S. 378, 109 S. Ct. 1197, 103 L. Ed. 2d 412 (1989), the Supreme Court in dictum left open the possibility that a need to train could be "so obvious," resulting in a City being liable without a pattern of prior constitutional violations. Id. at 390, 109 S. Ct. 1197. As an example, the Supreme Court in City of Canton referenced the obvious need to train police officers on the constitutional limitations on the use of deadly force, when the city provides the officers with firearms and knows the officers will be required to arrest fleeing felons. Id. at 390 n. 10, 489 U.S. 378, 109 S. Ct. 1197, 103 L. Ed. 2d 412.
Subsequently, in Board of County Commissioners v. Brown, 520 U.S. 397, 117 S. Ct. 1382, 137 L. Ed. 2d 626 (1997), the Supreme Court characterized the language in City of Canton leaving open such a possibility as simply hypothesizing in a narrow range of circumstances that a plaintiff might succeed without showing a pattern of constitutional violations, as follows:
In leaving open in Canton the possibility that a plaintiff might succeed in carrying a failure-to-train claim without showing a pattern of constitutional violations, we simply hypothesized that, in a narrow range of circumstances, a violation of federal rights may be a highly predictable consequence of a failure to equip law enforcement officers with specific tools to handle recurring situations.
Brown, at 410-11, 117 S. Ct. at 1391 (emphasis added) (holding isolated incident of sheriff's inadequate screening of deputy did not create such an obvious risk that it alone established the municipality's deliberate indifference to the risk that the deputy would use excessive force). In short, to date, the Supreme Court has given only a hypothetical example of a need to train being "so obvious" without prior constitutional violations: the use of deadly force where firearms are provided to police officers.
See City of Canton, 489 U.S. at 390 n. 10, 109 S. Ct. 1197.
In any event, plaintiff's contentions that the police officers were inadequately trained and/or supervised regarding the City's written policies and the alternatives to handcuffing behind the back "fall[ ] far short of the kind of `obvious' need for training that would support a finding of deliberate indifference to constitutional rights on the part of the city." City of Canton, 489 U.S. at 396-97, 109 S. Ct. 1197 (finding no obvious need for police officers to be trained in diagnosing mental illness) (O'Connor, J., concurring in part and dissenting in part); Young v. City of Augusta, Georgia, 59 F.3d 1160, 1171-72 (11th Cir.1995) (finding no obvious need to train jail employees "to recognize the need to remove a mentally ill inmate to a hospital or to dispense medication as prescribed"). "Unlike the risk from a particular glaring omission in a training regimen," the risk from these possible imperfections, if any, in the City police officers' training and supervision here "is not obvious in the abstract." Brown, at 410-11, 117 S. Ct. at 1391.[8] Finally, other than making the conclusory *1335 legal assertion that the need to train was "obvious," plaintiff failed to cite to or analogize to any cases which would suggest that the failure to train in this case was "obvious." Indeed, plaintiff's own expert, Robert Lacey, conceded that an arrest of a cardiac operation patient is uncommon; Lacey himself had never arrested or participated in the arrest of someone who had open heart surgery. See Lacey Depo. at 29. The court concludes that this case is like Gold, where the Eleventh Circuit concluded that the need to train police in the proper response to handcuff complaints is not so obvious that it would support a finding of deliberate indifference without proof of prior incidents. Gold, 151 F.3d at 1352.
ii. The City's Record Keeping
Plaintiff argues that the City's lack of a record of plaintiffs arrest is evidence of poor record-keeping by the City and suggests that other incidents of injuries and circumstances similar to that of the plaintiff are being covered up by the City:
The integrity of the City's reporting complaints of injury having been so challenged by the particular facts developed in this case so as to allow the Plaintiff to urge that any reference to "this being the first instance of a recent-surgery arrestee making complaint of injuries resulting from excessive force during handcuffing" should be totally disregarded by this Court. This is because the City's MBPD, by failing to report, controls and creates the very "absence of prior incidents" which it urges the Court to consider in its favor. The City's officials can implicitly ratify a custom which resulted in Tennant's injuries."
Pl. Response at 20 n. 4.
Plaintiff, however, overstates the significance of a lack of a report of plaintiff's arrest in this case because the record shows that this was not the City's arrest.
The record shows that the two Miami Beach police officers were called as backup by Florida Department of Law Enforcement agent Figueroa because the FDLE agent was in plainclothes and required backup. FDLE agent Figueroa approached plaintiff first, asked him his name, and told him he was under arrest. See Tennant Depo. at 61-62. While this was going on the Miami Beach police officers were standing behind FDLE officers. See id. at 62. Plaintiff states that a Miami Beach officer told him to turn around and put his hands on the bar, searched him, took out the contents of his pockets, and began handcuffing him behind his back. See id. at 62-63. Plaintiff told the officer not to handcuff him from behind and showed the officer the scar from the operation. See id. at 63-64. Plaintiff did not resist being handcuffed. See id. at 63. The Miami Beach officers escorted the plaintiff out of the hotel by the arms and when they got to agent Figueroa's car, they switched handcuffs. See id. at 54-55. The Miami Beach police officers said their good-byes, left the scene, and had nothing further to do with the plaintiff. See Figueroa Depo. at 21-22.
Plaintiff was not struck by anyone and did not have bruises on his body after the incident. See Tennant Depo. II at 6. He was never bleeding from his chest at any time during this incident. See id. at 7. He requested medical treatment for the first time when FDLE Agent Figueroa arrived with him at the Dade County jail. See id. at 9.
Chief Barreto said in his deposition that under the circumstances of this case, the arrest was the FDLE's arrest and the Miami Beach police officers did not have to *1336 write an arrest report. See Barreto Depo. at 24. The plaintiff was sought by the FDLE, not the City. See id. FDLE agent Figueroa said he had a conversation with the Miami Beach police officers where he told them that he had the warrant, he was going to transport the plaintiff, and he would write the arrest report. See Figueroa Depo. at 21-22. Figueroa said in his opinion the Miami Beach officers did not have to write a report unless they were required to by their department. See id. at 22. Figueroa was the arresting officer. See id. at 22. Plaintiff has not presented any evidence to contradict the truthfulness of Chief Barreto's statements or the statements of Figueroa.[9]
Plaintiff also finds fault with the fact that the Miami Beach officers did not write a use of force report or an injury to persons report. It is fairly obvious that no use of force report was written because no force was used. As described above, plaintiff says he did not resist arrest, was not struck by anyone, and had no bruises on his body. The Miami Beach officers did not write an injury to persons report because they did not know plaintiff was injured while he was with them. The first time plaintiff requested medical attention was when he was at the Dade County Jail with the FDLE agent the Miami Beach police officers were not involved in plaintiff's transport. Plaintiff also has not shown that the Miami Beach police officers were ever made aware that the plaintiff was taken to the hospital, that they ever spoke to agent Figueroa again, or that policy required that they speak again. Plaintiff therefore fails to raise all inference of a cover up in this case that would lead to an inference of a widespread cover up that would explain why there have been no reported incidents of injuries to people recovering from cardiac operations or disabled people from improper handcuffing.
C. The City Did Have a Policy of Training Officers in Proper Handcuffing Techniques
The court addressed the plaintiff's arguments above on the assumption that the City had a policy or custom of not providing any training on handcuffing from the front or handcuffing disabled persons. The Miami Beach Police Department, however, did have a policy relating to the proper method of handcuffing disabled persons. The relevant portion of the policy manual states: "Except when the health, physical condition, or circumstances of arrest dictate otherwise, all arrested persons shall be handcuffed behind their back." MBPD Manual at 3-17-3. Despite the City's clearly stated policy, plaintiff argues that the officers are trained to ignore the policy and only handcuff behind the back. For example, plaintiff claims that Chief Barreto "admitted that the only training MBPD officers receive regarding the handcuffing of arrestee's is to cuff behind the back and that no training is provided as to when not to cuff behind the back...." Plaintiff Resp. at 11. Plaintiff fails to cite to the court where Barreto makes this statement. Upon an exhaustive examination of Barreto's deposition, the court found that Barreto's testimony is that the training officers receive is consistent with the written policy.[10] While Barreto *1337 did concede that no training was given regarding the specific situation of arresting a person recovering from cardiac surgery, plaintiff's expert, Robert T. Lacey, states that it would not have been practical to list every possible problem an arrestee could have, such as "broken finger, broken everything." Lacey Depo. at 66. Lacey states that ultimately it is up to the agent to determine whether the arrestee will be handcuffed in the front or the back. See id. Additionally, one of the Miami Beach Officers who helped arrest plaintiff, Glenn Hodges, said that in the police academy he was taught "to handcuff people behind their back. If there was something that was an exception to that, then they would go in front of them you have to use your own judgment whether circumstances are going to warrant it, not handcuffing the person behind their back." Hodges Depo. at 11. Hodges was also aware of the policy manual statement on handcuffing techniques and exceptions. See id. at 16-17.
Based on the existence of a written policy and the uncontradicted testimony of Chief Barreto, the court concludes that municipal liability cannot attach in this case. Even if the Miami Beach Officers did ignore the written policies and the training, without further evidence that the City has adopted an unofficial policy of always handcuffing behind the back, the City cannot be held liable. See Brown, 117 S.Ct. at 1389 ("That a plaintiff has suffered a deprivation of federal rights at the hands of a municipal employee will not alone permit an inference of municipal culpability and causation; the plaintiff will simply have shown that the employee acted culpably.") (emphasis in the original). Accordingly, the court grants summary judgment in favor of the City as to Count I, plaintiffs § 1983 claim of municipal liability.
IV. Plaintiff's State Law Claims Against the State of Florida, the Florida Department of Law Enforcement and the City of Miami Beach
The dismissal of plaintiff's only federal claim against all the defendants leaves only state law claims. As the Eleventh Circuit made clear in Palmer v. Hospital Authority of Randolph County, 22 F.3d 1559, 1567 (11th Cir.1994), once a court decides that it has power to exercise supplemental jurisdiction under § 1367(a), then the court should exercise that jurisdiction, unless § 1367(b) or (c) applies to limit the exercise. In this case, § 1367(c) applies because the Court "has dismissed all claims over which it has original jurisdiction;" namely, plaintiff's § 1983 claim against the defendants. While § 1367(c) permits a court to dismiss any state law claims where the court has dismissed all the claims over which it had original jurisdiction, the court also can consider other factors. Where § 1367(c) applies, considerations of judicial economy, convenience, fairness, and comity may influence the court's discretion to exercise supplemental jurisdiction. See Palmer, 22 F.3d at 1569; Executive Software N. Am. v. United States Dist. Court, 15 F.3d 1484, 1493 (9th Cir.1994); New England Co. v. Bank of Gwinnett County, 891 F. Supp. 1569, 1578 (N.D.Ga.1995); Fallin v. Mindis Metals, Inc., 865 F. Supp. 834, 841 (N.D.Ga.1994).
Resolution of Plaintiffs' state law claims depends on determinations of state law. State courts, not federal courts, should be the final arbiters of state law. Hardy v. Birmingham Bd. of Educ., 954 F.2d 1546, 1553 (11th Cir.1992). When coupled with *1338 the court's discretion to exercise supplemental jurisdiction under § 1367(c), the court finds that the state law claims remaining in this action are best resolved by the Florida courts. This is especially true here where the court is dismissing Plaintiffs' federal law claim prior to trial. See United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966) (dismissal of state law claims strongly encouraged when federal law claims are dismissed prior to trial); Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S. Ct. 614, 619 n. 7, 98 L. Ed. 2d 720 (1988) ("When federal law claims have dropped out of the lawsuit in its early stages and only state-law claims remain, the federal court should decline the exercise of jurisdiction by dismissing the case without prejudice."); Eubanks v. Gerwen, 40 F.3d 1157 (11th Cir.1994) (remanding case to district court to dismiss plaintiff's state law claims where court had granted summary judgment on plaintiff's federal law claims). The court finds that judicial economy, fairness, convenience, and comity dictate having these state law claims decided by the state courts. Accordingly, plaintiff's remaining state law claims are dismissed without prejudice and remanded to the state court.
WHEREFORE, IT IS ORDERED THAT:
1) City of Miami Beach's motion for summary judgment (DE # 84) is GRANTED as to Count I, plaintiff's § 1983 claim;
2) State of Florida and Florida Department of Law Enforcement's motion for summary judgment (DE # 97) is GRANTED as to Count I, plaintiff's § 1983 claim;
3) Plaintiff's voluntarily withdrawn claims for false arrest (Count III) and false imprisonment (Count IV) against all the defendants are DISMISSED WITH PREJUDICE;
4) The court shall refrain from exercising supplemental jurisdiction over plaintiff's remaining state law claims;
5) Plaintiff's remaining state law claims are DISMISSED WITHOUT PREJUDICE;
6) This case is hereby REMANDED to the Circuit Court for the Eleventh Judicial Circuit of Dade County, Florida.
7) All pending motions as of the date of this order, including DE #'s 84, 135, and 138, are DENIED as MOOT; and
8) This case is hereby CLOSED.
NOTES
[1] Tennant had open heart surgery on May 18, 1994.
[2] Plaintiff's only federal claim was Count I. In writing its motion for summary judgment, the City of Miami Beach apparently thought that Count II (excessive force) was also a federal claim. The amended complaint did not state that it was a federal claim. Additionally, in plaintiff's response, plaintiff states, "The first of Mr. Tennant's state law claims is for excessive use of force, currently denominated as Count II."
[3] The court's task in evaluating the City of Miami Beach's motion for summary judgment was made much more difficult because of the City's failure to abide by Local Rule 7.5 which requires it to submit a concise statement of material facts to which there is no genuine issue to be tried. The City's one paragraph "Concise Statement of Material Facts" was inadequate, but plaintiff did not object to it. In the interests of deciding the motion on the merits, however, the court did examine the entire record submitted by the parties.
[4] In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.1981) (en banc), the Eleventh Circuit adopted as binding precedent all the decisions of the former Fifth Circuit rendered prior to October 1, 1981.
[5] See also Joint Pretrial Stipulation at 4 Statement of Uncontested Facts ("At all relevant times, the State of Florida was a sovereign state and the FDLE a law enforcement agency of the state.").
[6] The Eleventh Circuit in Gold v. City of Miami, 151 F.3d 1346, 1351 n. 10 (11th Cir.1998) noted the burden this standard imposes on the plaintiff: "This high standard of proof is intentionally onerous for plaintiffs; imposing liability on a municipality without proof that a specific policy caused a particular violation would equate to subjecting the municipality to respondeat superior liability a result never intended by section 1983. As the Supreme Court has explained, `[t]o adopt lesser standards of fault and causation would open municipalities to unprecedented liability under § 1983. In virtually every instance where a person has had his or her constitutional rights violated by a city employee, a § 1983 plaintiff will be able to point to something the city "could have done" to prevent the unfortunate incident. Thus, permitting cases against cities for their "failure to train" employees to go forward under § 1983 on a lesser standard of fault would result in de facto respondeat superior liability on municipalities ....'" (citing City of Canton, 109 S.Ct. at 1206); see also Brown, at 415-16, 117 S. Ct. at 1394 ("Where a court fails to adhere to rigorous requirements of culpability and causation, municipal liability collapses into respondeat superior liability.").
[7] In Young v. City of Augusta, Georgia, 59 F.3d 1160, 1172 (11th Cir.1995), the Eleventh Circuit explained the notice requirement as follows:
Before it may be said that a municipality has made a deliberate choice among alternative courses of action, its policymakers must have had "actual or constructive notice that the particular omission is substantially certain to result in the violation of the constitutional rights of their citizens." This may be demonstrated in one of two ways. First, the need for a particular type of training may be obvious where jailers face clear constitutional duties in recurrent situations. Alternatively, the need for more or better training may be obvious where a pattern of constitutional violations exists such that the municipality knows or should know that corrective measures are needed.
Id. at 1172 (internal citations and parentheticals omitted).
[8] Plaintiff presented expert testimony that the need for training and/or supervision should have been obvious to the City and that the City was deliberately indifferent in not responding. See Aff. of Robert T. Lacey, J.D. However, an expert's conclusory testimony does not control the court's legal analysis of whether any need to train and/or supervise was obvious enough to trigger municipal liability without any evidence of prior incidents putting the municipality on notice of that need. See Gold, 151 F.3d at 1352 n. 13.
[9] Plaintiff does present the affidavit of his expert, Robert Lacey, who says the Miami Beach police officers should have filed a report. The affidavit, however, is insufficient to create a disputed issue. The affidavit merely recites the facts of the case and makes conclusory legal statements without providing any support for the conclusions.
[10] Q: What is your knowledge of what your department taught its officers, at least, 1993 forward, meaning, to now concerning the handling of intended arrestee who announces that he's been a recent surgery patient, open heart surgery patient?
BARRETO: I don't know what the specific curriculum was but my recollection is that we were teaching that the officers had several alternatives, and, certainly, one of those is ... they could handcuff him in front. They could order him by a police officer on each side which requires more resources, but if that was the case, then that's what you'd have to do ... so there were a number of alternatives. They can leg restrain him. A number of different things.
Barreto Depo. at 32. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2578475/ | 64 F. Supp. 2d 801 (1999)
UNITED STATES of America, Plaintiff,
v.
AMOCO OIL COMPANY, Defendant.
No. 2:96-CV-95-RL.
United States District Court, N.D. Indiana, Hammond Division.
July 21, 1999.
*802 Carol A. Davilo, United States Attorneys Office, Dyer, IN, Frances M. Zizila, U.S. Department of Justice, Environmental Enforcement Section, Environmental and Natural Resources Division, Washington, DC, for United States of America, plaintiff.
Robert M. Olian, Sidley and Austin, Chicago, IL, James Nolan, Office of the General Counsel, Amoco Oil Company, Chicago, IL, Angus Macbeth, Sidley and Austin, Washington, DC, for Amoco Oil Company, defendant.
ORDER
LOZANO, District Judge.
This matter is before the Court on (1) The United States' Motion for Partial Summary Judgment on Liability on Its Eighth, Ninth, and Eleventh Causes of Action, filed on October 7, 1998; (2) Motion of Defendant, Amoco Oil Company, for Summary Judgment on Counts Eight, Nine, and Eleven of the Complaint, filed on October 8, 1998; and (3) Request for Oral Argument on Amoco's Motion for Summary Judgment, filed by Defendant, Amoco Oil Company, on November 23, 1998. For the reasons set forth below, the United States' summary judgment motion is GRANTED IN PART and TAKEN UNDER ADVISEMENT IN PART; Amoco Oil Company's summary judgment motion is DENIED IN PART and TAKEN UNDER ADVISEMENT IN PART; and the request for oral argument is DENIED.
BACKGROUND
The United States of America, through the Environmental Protection Agency ("EPA"), has filed a suit claiming that Amoco Oil Company ("Amoco") has violated environmental laws. The parties have filed cross-motions for summary judgment on three of EPA's claims, which involve the Clean Air Act, 42 U.S.C. § 7401, et seq. and regulations promulgated thereunder.
Amoco operates a petroleum refinery in Whiting, Indiana. The summary judgment motions focus on sulphur recovery operations at the refinery, and Amoco's briefs, fact statement, and exhibits portray those operations as follows: The refinery has a "sulphur recovery unit" which recovers sulphur from process gases, and is referred to by Amoco as "No. 2 SRU" (even though apparently there is only one sulphur recovery unit at the refinery). No. 2 SRU (hereinafter "the SRU" for brevity) consists of two amine strippers; two sour water strippers; three Claus trains, called "A-train," "B-train," and "C-train"; a tail gas unit; a standby tail gas incinerator (hereinafter "the incinerator" for brevity); and an emergency flare.
The Claus trains are of particular importance to the summary judgment motions. According to Amoco's materials, each Claus train consists of a thermal reactor and three catalytic reactors. The Claus trains oxidize hydrogen sulfide to sulphur dioxide, which reacts with the hydrogen sulfide in the presence of a catalyst to form elemental sulphur and water. The elemental sulphur is collected and sold. All three Claus trains normally operate simultaneously, but two can operate while one is down for repairs. Regarding input, acid gas from the amine strippers is fed to all three Claus trains. Gas from the sour *803 water strippers is fed only to B-train and C-train. Regarding output, tail gas is fed from the Claus trains to the tail gas unit and the incinerator. The tail gas unit converts sulphur compounds in the gas exhausted from the Claus trains to elemental sulphur. Unlike the incinerator, the tail gas unit serves as a pollution control device and has a continuous emissions monitor.
As portrayed in Amoco's materials, the operations of the SRU have changed over time. A-train and B-train were constructed in 1971, with C-train constructed later during 1979-81. At about the same time C-train was built, Amoco added the tail gas unit. Before the additions of C-train and the tail gas unit, tail gas from A and B-trains was routed into the atmosphere through only one outlet, the incinerator. Since the additions, Amoco has used the tail gas unit as the primary outlet for all three Claus trains. However, when the tail gas unit is temporarily inoperable, Amoco routes tail gas from A and B-trains to the incinerator, thus bypassing the pollution control feature and continuous emissions monitor on the tail gas unit. Amoco also sends what it considers negligible amounts of tail gas from C-train through the incinerator for brief periods when the tail gas unit cannot be used because of equipment startup, shutdown, or malfunction. See Amoco Summ.J.Br., pp. 4-5; Amoco Stmt. of Undisputed Material Fact; Amoco Summ.J.Ex. 5; Amoco Summ.J.Ex. 13 at Bates 933 (describing Claus trains as one of the "four basic processing sections" that make up the SRU); Amoco Summ. J.Ex. 11 at Bates 228.
EPA asserts that Amoco's routing tail gas through the incinerator and other procedures it has followed or not followed since adding C-train have violated regulations that were promulgated after A and B-trains were constructed, but before C-train was constructed. Amoco denies this.
DISCUSSION
Summary judgment motions often turn on the strength of evidence, but interpreting regulatory language is actually more central to resolving the summary judgment motions before the Court now. Some ground rules apply:
[A court should] give deference to the views of the agency charged with administering [a] statute, so long as the agency's suggested interpretation is reasonable. Similarly, when the question at hand involves an administrative agency's interpretation of its own regulation, and the meaning of the regulation is in doubt, the courts will defer to the agency's interpretation if that interpretation is reasonable. In both circumstances, deference to an agency's interpretation is appropriate only because the intent of the drafter or drafters whether Congress or the agency itself is in doubt. Intent is, of course, at the heart of the judicial inquiry because the courts endeavor to give effect to the designs of Congress and the agencies to which the legislature has delegated authority. In discerning intent, courts traditionally focus on the language of statutes and regulations because we presume that legislatures and agencies mean what they say; most of the time, the "plain language" of a statute or regulation will be the best indicator of the enacting body's will, and thus, only when the text is silent or ambiguous will [a court] defer to an administrative agency's interpretation.
Marlowe v. Bottarelli, 938 F.2d 807, 811-12 (7th Cir.1991) (citations omitted).
The issues here arise out of Amoco's use of the incinerator since adding C-train. EPA concedes that before C-train and the tail gas unit were added in 1981, Amoco could legally route tail gas from A and B-trains to the atmosphere by way of the incinerator. However, EPA claims that under new regulations in effect by 1981, adding C-train meant that gas from all three trains had to pass into the atmosphere through a continuous emissions monitor, something the tail gas unit has but the incinerator lacks. According to EPA, the three trains form a single "Claus sulphur recovery plant" subject to the new regulations. Amoco concedes that C-train *804 falls under the regulations, but it argues that the individual trains are separate plants, so adding C-train did not put A and B-trains under the regulations. Thus, Amoco says, it may continue to freely direct tail gas from A and B-trains to the incinerator, bypassing the pollution control feature and continuous emissions monitor on the tail gas unit. Amoco also alleges that it may direct small amounts of tail gas from C-train through the incinerator when the tail gas unit cannot be used because of equipment start-up, shutdown, or malfunction.
With this background, we turn to the regulatory language. Part 60 of Title 40 of the Code of Federal Regulations contains "Standards of Performance For New Stationary Sources" under the Clean Air Act. It applies to "any stationary source which contains an affected facility, the ... modification of which is commenced after publication ... of any standard ... applicable to that facility." 40 C.F.R. § 60.1(a). Subpart J of Part 60 prescribes specific standards for petroleum refineries and designates "Claus sulphur recovery plants" as "affected facilities" (with an exception for low-capacity plants that Amoco does not meet). 40 C.F.R. § 60.100(a). "`Modification' means any physical change in, or change in the method of operation of, an existing facility which increases the amount of any air pollutant ... emitted into the atmosphere by that facility...." 40 C.F.R. § 60.2. "`Existing facility' means ... any apparatus of the type for which a standard is promulgated in [Part 60], and the construction or modification of which was commenced before the date of proposal of that standard." 40 C.F.R. § 60.2.
So, a "change that increases the amount of any air pollutant ... emitted into the atmosphere by" an existing "Claus sulphur recovery plant" constitutes a "modification" of an "affected facility" that subjects the plant to Part 60 and its Subpart J. EPA argues that this is exactly what happened when Amoco added C-train, thus requiring Amoco to route all tail gas from all three of its Claus trains to the tail gas unit. Amoco takes issue with this proposition in several ways.
First, Amoco argues that three separate Claus trains cannot form a single Claus sulphur recovery plant, but rather that its individual trains are individual plants. Thus, it maintains, adding C-train did not amount to modifying an existing facility, but rather amounted to adding a third and separate plant. So, the question becomes: What's a "Claus sulphur recovery plant"? A regulation defines one as "a process unit which recovers sulphur from hydrogen sulfide by vapor-phase catalytic reaction of sulphur dioxide and hydrogen sulfide." 40 C.F.R. § 60.101(i). There is no question that Amoco's Claus trains recover sulphur in the way this regulation describes, so we need to know what a "process unit" is.
Subpart J does not provide a definition of "process unit" so we can look to the dictionary. See Auer v. Robbins, 519 U.S. 452, 117 S. Ct. 905, 911, 137 L. Ed. 2d 79 (1997) (consulting a dictionary to determine that a "critical phrase ... comfortably bears the meaning" assigned by an agency).[1] It says "unit" includes "a piece *805 or complex of apparatus serving to perform one particular function." Webster's Third New International Dictionary (Unabridged) 2500 (1971). The term "process" includes a "particular method or system of doing something, producing something, or accomplishing a specific result; esp: a particular method or system used in a manufacturing ... or other technical operation." Id. at 1808. Amoco's own summary judgment materials show that its three Claus trains (1) are all part of the same sulphur recovery unit, and together form one of four basis process sections in the SRU, (2) are all used simultaneously to recover sulphur, (3) share common gas sources (although A-train receives no gas from the sour water strippers); and (4) all emit gas into the atmosphere through two common outlets, the tail gas unit and the incinerator. See Amoco Summ.J.Br., pp. 4-5; Amoco Stmt. of Undisputed Material Fact; Amoco Summ.J.Ex. 5; Amoco Summ.J.Ex. 13 at Bates 933 (describing Claus trains as one of the "four basic processing sections" that make up the SRU); Amoco Summ. J.Ex. 11 at Bates 228. These common features qualify the trains as a "complex of apparatus serving to perform one particular function," i.e., the "process" of recovering sulphur, which is used in the "technical operation" of refining petroleum.
Amoco points out that "process unit" is defined in other subparts of Part 60 besides Subpart J. 40 C.F.R. §§ 60.561, 60.591, 60.631. Those subparts do not deal with Claus sulphur recovery plants. See id. Definitions they set out govern those subparts only. Id. Moreover, Amoco quotes the definitions out of context and without conscientiously explaining how they support its position. Amoco Reply Br., pp. 7-8. The definitions of "process unit" contained in the other subparts do not change the analysis here.
Working from another angle, Amoco asserts that the definition of "Claus sulphur recovery plant" is not what controls at all. It maintains that "affected facility" has its own definition in Subpart A, which trumps Subpart J's designation of Claus sulphur recovery plants as affected facilities. True, Subpart A contains general language that purports to inform all other subparts of Part 60, including Subpart J, the one that directly deals with petroleum refineries and contains the definition of "Clause sulphur recovery plant." See 40 C.F.R. § 60.1(a). Amoco stresses that under Subpart A, an "affected facility" is "any apparatus to which a standard is applicable," § 60.2, and urges that "apparatus" denotes singular items, not multiple items devoted to a similar purpose like its three Claus trains. (The definition of "existing facility" similarly employs the term "apparatus." 40 C.F.R. § 60.2.) Amoco says that Subpart J's purporting to designate Claus sulphur recovery plants as affected facilities conflicts with and must be subordinated to "apparatus" as used in Subpart A.
The two provisions, however, do not conflict. Again, Subpart A says that an "affected facility" is generally "any apparatus to which a standard is applicable." 40 C.F.R. § 60.2. The more specific Subpart J deems Claus sulphur recovery plants affected facilities. Its first section is captioned in part, "Applicability, designation of affected facility," and it prescribes makes "applicable" standards for "the following affected facilities ... Claus sulphur recovery plants." 40 C.F.R. § 60.100(a) (emphasis added); see also E.P.A. Reply Ex. 1 (listing "Sulphur Recovery Plants" and "Petroleum Refineries" as new "Affected facilities"); Potomac Elec. Power Co. v. EPA, 650 F.2d 509, 515-16 (4th Cir.1981) (applying a similar analysis to other Part 60 regulations). So, Subpart J identifies a specific example of what Subpart A generally defines. Subpart J then goes on to define "Claus sulphur recovery plant," specifying that the *806 definition controls for that subpart. 40 C.F.R. §§ 60.100(a) & 60.101(i).
Even assuming that "apparatus" somehow controls does not mean Amoco wins. The term is not defined in the regulations, so back to the dictionary, according to which "apparatus" is not limited to singular items as Amoco contends, but includes "a collection or set of materials, instruments, appliances, or machinery designed for particular use." Webster's Third New International Dictionary (Unabridged) 102 (1971). Three Claus trains devoted to sulphur recovery form a collection or set of machinery or instruments designed for a particular use. Indeed, elsewhere Subpart 60 recognizes multiple identical items as an affected facility, and does not thereby contort the meaning of "apparatus." 40 C.F.R. § 60.500(a) (designating the "total of all loading racks at a bulk gasoline terminal" an "affected facility").
The above interpretation of the regulations is based on their plain language, which the Court finds unambiguous. The parties debate vigorously whether EPA has issued its own full-fledged interpretation of the regulation, an interpretation of the type that deserves deference if reasonable. Yet the Court need not rely on EPA's gloss to reach the result herein. "Only when the [regulatory] text is silent or ambiguous will [a court] defer to an administrative agency's interpretation" of a regulation. Marlowe, 938 F.2d at 812. The regulatory language here speaks clearly, and this ruling as been reached without granting EPA any deference.
The issues regarding the role and meaning of "Claus sulphur recovery plant" covered above are no doubt essential to the summary judgment motions. In addition to those issues, the parties present a myriad of others. Some of the arguments appear to be alternative ones that fall away in light of the ground covered already in this ruling, some appear to have marginal if any importance to EPA's claims, and some may be premature because they touch on damages while the present motions nominally deal with liability only. The parties' briefs suggest that their dispute over the role and meaning of "Claus sulphur recovery plant" has created something of a log jam in otherwise productive negotiations, and the Court has now resolved the dispute. In light of these circumstances, the Court will take the remainder of the issues presented in the summary judgment motions under advisement. Within sixty days, the parties should inform the Court in writing whether they would like a ruling on the remaining issues. If the parties can agree to pursue some issues and withdraw others, they are free to do so.
Amoco has requested oral argument on the summary judgment motions. Amoco's stated reasons for needing oral argument are rather terse and not compelling. The Court does not believe that oral argument would be helpful to resolve the issues addressed in this order. Either party may request oral argument on any remaining issues to be resolved on summary judgment, and the Court will consider the request.
CONCLUSION
For the foregoing reasons the United States' summary judgment motion is GRANTED IN PART and TAKEN UNDER ADVISEMENT IN PART; Amoco Oil Company's summary judgment motion is DENIED IN PART and TAKEN UNDER ADVISEMENT IN PART; and the request for oral argument is DENIED.
NOTES
[1] EPA points to a provision in Subpart J defining "refinery process unit," § 60.101(f), and says that definition covers "process unit." Yet "refinery" is not necessarily superfluous, as both the precise terms "refinery process unit" and "process unit" appear in close proximity in the same section of Subpart J. See 40 C.F.R. § 60.101(f), (i) & (m). Indeed, the presence or absence of "refinery" takes on possible significance when one considers that a "refinery process unit" means a "segment of a petroleum refinery," 40 C.F.R. § 60.101(f), while a "Claus sulphur recovery plant," defined in part as a "process unit," § 60.101(i), "need not be physically located within the boundaries of the petroleum refinery to be an affected facility," § 60.100(a).
In any event, the definition states that "`refinery process unit' means any segment of the petroleum refinery in which a specific processing operation is conducted." 40 C.F.R. § 60.101(f). The specific processing operation of sulphur recovery is conducted in the SRU and all three of Amoco's Claus trains. The regulations do not define "segment" but the dictionary says it means "a piece or fragment of something ... PORTION ... one of the constituent parts into which a body, entity, or quantity is or may be divided." Webster's Third New International Dictionary (Unabridged) 2056 (1971). By Amoco's own description, one of the constituent parts of Amoco's refinery is the SRU, which includes the three Claus trains, which form one of four basic process sections in the SRU. Amoco Summ.J.Ex. 13, at Bates 933. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568142/ | 458 F. Supp. 2d 857 (2006)
Matthew G. KODREA, Plaintiff,
v.
CITY OF KOKOMO, INDIANA, and Matthew McKillip, individually and as Mayor of the City of Kokomo, Dan Smith, in his individual capacity, and Jack Dodd, in his individual capacity, Defendants.
No. 1:04-CV-1843-LJM-WTL.
United States District Court, S.D. Indiana, Indianapolis Division.
June 22, 2006.
*860 Lawren K. Mills, McMains Morse P.C., Mary Jane LaPointe, McMains LaPointe, Indianapolis, IN, for Plaintiff.
Andrew P. Wirick, Hume Smith Geddes Green & Simmons, Indianapolis, IN, for Defendants.
ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
McKINNEY, Chief Judge.
This cause is before the Court on Defendants', City of Kokomo, Indiana (the "City"), Matthew McKillip (the "Mayor"), Dan Smith ("Smith"), and Jack Dodd ("Dodd") (all four defendants collectively, "Defendants"), Motion for Summary Judgment. In his Amended Complaint, Plaintiff, Matthew G. Kodrea ("Kodrea") raises claims under 42 U.S.C. § 1983 and Indiana Code § 36-1-8-8, a state "whistleblower" statute. More specifically, Kodrea contends that Defendants unlawfully terminated him in retaliation for his reports of two situations of alleged abuse within City government. As a result, Kodrea claims that Defendants violated his rights guaranteed by the First Amendment and the state statute. The parties have fully briefed the matter and it is now ripe for ruling.
For the reasons stated herein, Defendants' motion is GRANTED in part and DENIED in part.
I. PRELIMINARY EVIDENTIARY CONSIDERATIONS
Defendants requested in their reply brief that the Court strike several items that Kodrea submitted with his designated materials in opposition to the motion for summary judgment. Defendants also filed a Motion to Strike Affidavits that were submitted with Kodrea's sur-reply. The list of items that Defendants seek to strike are as follows: (1) letters from Alan Warner ("Warner") and Joe Hawkins ("Hawkins"), as well as their affidavits submitted with the sur-reply; (2) affidavits of Patsy Liali ("Liali") and David McKinney ("McKinney"); (3) the affidavit of James Trobaugh ("Trobaugh"), former Mayor of Kokomo; (4) Findings of Fact, Conclusions *861 of Law, and Order entered by the Howard Circuit Court in the case styled Kern v. City of Kokomo, Cause No. 34C01-0507-PL-0632 ("Kern Order"); and (5) deposition exhibits labeled 12(B), 12(C), and 12(F)[1] and the affidavit of Jesse A. Dixon ("Dixon"). The Court addresses each of these five groups of items in turn.
First, with respect to the Warner and Hawkins letters, Defendants argue that the letters contain inadmissible hearsay and that they not self-authenticating and contain no foundation for their consideration. Defendants also seek to strike the affidavits, which are duplicative of the information in the letters. As an initial matter, the Court notes that evidence offered during a summary judgment proceeding need only be admissible in content, not in form. See Juarez v. Menard, Inc., 366 F.3d 479, 484 n. 4 (7th Cir.2004). Kodrea identified the letters as ones he had received from Warner and Hawkins and attached them to his own affidavit. Kodrea Aff., ¶ 13. Warner and Hawkins' affidavits simply restate the same information contained in the letters and were offered in response to Defendants' authentication and foundation concerns, i.e., the form of the letters. To the extent the letters and affidavits contain hearsay, the Court will disregard such information; however, the Court declines to strike these materials in their entirety at this stage of the proceedings on merely technical grounds.
Next, the Court considers the affidavits of Liali and McKinney. Defendants first contend that the affidavits should be struck because they improperly contradict Kodrea's testimony. Defendants do not explain the basis for this objection, and they fail to make any citation to that portion or portions of Kodrea's testimony that they believe is contradictory. The Court declines to scour the record and make Defendants' argument for them. Defendants next raise a hearsay objection to paragraphs 4 through 7 of Liali's affidavit and paragraphs 6 through 8 of McKinney's affidavit. Portions of those paragraphs relate to things that Kodrea indicated were said or done by Smith. To the extent that these statements are offered to prove what Smith may have said, they are hearsay and will be disregarded. However, the Court declines to strike the affidavits in their entirety.
Third, Defendants seek to strike Trobaugh's affidavit on the basis that it is irrelevant under Federal Rule of Evidence ("FRE") 402. "Relevant evidence" is that evidence which has a tendency to make the existence of any fact of consequence to the determination of the action more or less probable. FRE 401. Kodrea argues in his surreply that the affidavit is relevant to demonstrate that Defendants should reasonably have known that employees could not be retaliated against for exercising their First Amendment right to speak out on matters of public concern. Thus, the affidavit is relevant to the issue of qualified immunity. The Court concludes that Trobaugh's affidavit has some relevance to that issue and therefore denies Defendants' request to strike Trobaugh's affidavit.
Fourth, Defendants seek to strike the Kern Order on the basis that it is irrelevant. Kodrea claims that the Kern Order is relevant to showing a municipal pattern *862 and practice of violating First Amendment rights of City employees. The Court does have some concerns about the relevancy of the Kern Order. Though the parties do not discuss it in detail, Kern (unlike Kodrea) presumably was a merit-based employee and decisions regarding his employment fell under a merit-based system. Further, it appears that Kern vocalized his particular concerns directly to the public via the media. Based on these distinctions, the probative value of the Kern Order is slight, and when considering the potential prejudice under FRE 403 the Kern Order might well be excluded. The Court is hesitant, however, to strike the Kern Order prematurely at this stage of the proceedings. In any event, the Court concludes that the Kern Order is not necessary for disposition of Defendants' Motion for Summary Judgment and need not even be considered.
Finally, Defendants seek to strike deposition exhibits 12(B), 12(C), and 12(F) and the Dixon affidavit. Kodrea identified the deposition exhibits in his own affidavit and attached the Dixon affidavit to his surreply. Kodrea Aff., ¶ 6; Surreply. The deposition exhibits contain various e-mails, letters, cards, a list of achievements and community activities, and newspaper articles about Kodrea's community involvement and work on behalf of the Parks Department. Deposition exhibit 12(F) in particular appears to be a letter that Dixon wrote and the information contained therein is duplicative of that in the Dixon affidavit. Defendants's arguments regarding the deposition exhibits are broad and do not specifically discuss each particular document of the numerous documents submitted, but they seek to strike the deposition exhibits on the basis of inadmissible hearsay and improper character evidence under FRE 404. Defendants' Motion to Strike seeks to exclude the Dixon affidavit pursuant to Local Rule 56.1(d).
With respect to the deposition exhibits, the Court finds that the newspaper articles, to the extent that they are being offered for the truth of the matters asserted therein, are inadmissible hearsay and cannot be relied upon for summary judgment proceedings. See Chi. Firefighters Local 2 v. City of Chicago, 249 F.3d 649, 654 (7th Cir.2001); Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir.1997). To the extent that the newspaper articles discuss Kodrea's community involvement, they are also irrelevant and will be struck. Likewise, the items that relate to Kodrea's character and go beyond his capacity for truthfulness are improper character evidence under FRE 404 and are inadmissible. The Court will further disregard as irrelevant the unsigned note about child labor laws, Kodrea's list of community activities that are unrelated to his job, and various recommendation letters from the fire chief, Delphi supervisor, Howard County Sheriff, and a City councilman, all which appear to pre-date the beginning of Kodrea's employment with the Parks Department. However, any remaining items that relate to Kodrea's work performance or suggest the level of involvement by each individual defendant in the employment actions against Kodrea will be considered for the limited purposes of refuting Defendants' evidence to the contrary. Finally, with respect to deposition exhibit 12(F) and the Dixon affidavit, the Court declines to strike those matters for the same reasons discussed above for the Warner and Hawkins items.
II. BACKGROUND
Kodrea was hired as the recreational programmer for the City's Parks Department on July 28, 2003. Kodrea Dep. at 47. Although he had some sports-related experience from participation in athletics during high school and college, Kodrea did not have any particular work experience as a *863 recreational programmer. Kodrea Dep. at 10, 28-29. Kodrea's immediate supervisor was Smith, Superintendent of the Parks Department. Kodrea Dep. at 47. Smith was supervised by the Mayor. Kodrea Dep. at 47. Dodd was Director of Human Resources. Dodd Dep. at 12-13.
As a new employee, Kodrea was supposed to receive a 30-day, a 60-day, and a 90-day evaluation. Smith Dep. at 67. Kodrea claims that he did not actually receive a 30-day evaluation, but he contends that Smith verbally informed him that he was doing fine. Kodrea Dep. at 108. Kodrea's subsequent 60-day and 90-day evaluations were favorable for the most part, as was his "end of the year" evaluation in January 2004. Kodrea Dep. at 107; Dep. Ex. 12(D).
Kodrea's job responsibilities included supervising and coordinating recreational programs and supervising the seasonal staff for concession stands. Kodrea Dep. at 29, 71-72. Kodrea was also encouraged to work as the district commissioner for the American Softball Association ("ASA"). Kodrea Dep. at 84-86. However, nothing in Kodrea's job description required him to monitor or report misconduct. Dep. Ex. 13; Kodrea Dep. at 29. In addition, Kodrea was not responsible for signing and approving or otherwise completing employee time sheets. Metz Dep. at 16-18; Reed Dep. at 32, 35, 41; Kodrea Dep. at 144; Kodrea Aff., ¶ 5. Further, with respect to the ASA, Kodrea was not responsible for determining the amount of the ASA fees. Reed Dep. at 17; Kodrea Dep. at 87. Beyond keeping track of the teams and collecting the registration fees for teams, Kodrea was not responsible for handling ASA money. Kodrea Dep. at 88-91; Metz Dep. at 12-13; Reed Dep. at 17, 25.
Sometime in the fall of 2003, Kodrea noticed a discrepancy with the time for one of the seasonal employees, Jim Campbell ("Campbell"). Kodrea Dep. at 77-78, 130-31. Kodrea also noted that Campbell had not completed the closing procedures for one of the concession stands. Kodrea Dep. at 130. Kodrea reported the problem to Smith. Kodrea Dep. at 135, 138. Smith told Kodrea to take care of the problem, so Kodrea ordered that Campbell's checks be stopped and finished closing the concession stands himself. Kodrea Dep. at 130, 135.
In May of 2004, Kodrea again noted a discrepancy with Campbell's time and claims that he once again notified Smith to voice his concerns that Campbell was being paid for hours that he had not worked. Kodrea Dep. at 140-42. Kodrea also told Smith that Campbell was working for another company and not working his actual hours. Kodrea Dep. at 142. Smith allegedly told Kodrea that Campbell kept Smith from being audited and that Campbell's time was not an issue and not to worry about it. Kodrea Dep. at 140, 142-43. More specifically, Kodrea claims that Smith stated, "That's never been a problem, it's not a problem now, and it's never going to be a problem." Kodrea Dep. at 143.
Shortly thereafter, in June of 2004, Kodrea was contacted by Wayne Meyer ("Meyer"), the State ASA Commissioner. Kodrea Dep. at 89-90. Meyer asked Kodrea where the "refund check" for overpayment of ASA fees for that year should be sent because the prior recreational programmer was no longer employed at the City. Kodrea Dep. at 90. When Kodrea questioned Smith about the ASA refund, Smith told Kodrea not to worry about it and that he would take care of it. Kodrea Dep. at 94. Kodrea claims that Smith was very abrupt and direct with his response. Kodrea Dep. at 96.
Kodrea claims that shortly after he brought the ASA refund issue to Smith's *864 attention he received a problem employee performance appraisal. Kodrea Dep. at 96; Dep. Ex. 12(E). Kodrea claims that he had never received any indication of a problem with his work nor any counseling on performance issues prior to receiving the appraisal, a point disputed by Defendants. Kodrea Dep. at 70, 118; McKillip Dep. at 43, 54-55; Dodd Dep. at 43; Smith Dep. at 51, 63-64, 74-75, 78-79. Kodrea claims that Smith called him into Smith's office and informed him that no one had seen the appraisal yet and that Kodrea's next evaluation in thirty days was already prepared with the same information and that Kodrea would be terminated at that point. Kodrea Dep. at 120-21; Dep. Ex. 26. Kodrea also claims that Smith gave him an ultimatum to either resign by noon the following workday and no one would see the appraisal or Kodrea would be terminated with the appraisal on his record and Smith would make sure that he did not get another City job. Kodrea Dep. at 120; Dep. Ex. 26.
Rather than resign, Kodrea alleges that he reported the meeting to Dodd and expressed his belief that he was being retaliated against for reporting Campbell and the ASA refund issue. Kodrea Dep. at 146-49; Kodrea's Answers to Interrogatories at 3. Kodrea claims that Dodd stated he would investigate. Kodrea Dep. at 146-49; Kodrea's Answers to Interrogatories at 3. Kodrea also submitted a written response to the appraisal and alleged that he was being retaliated against for bringing Campbell's work hours and the ASA refund to Smith's attention. Kodrea Dep. at 100, 126; Dep. Ex. 12(E). Thereafter, Smith removed the concession staff from Kodrea's supervision and removed all ASA contacts from Kodrea's responsibility. Kodrea Dep. at 221; Kodrea's Answers to Interrogatories at 12.
A week after receiving the problem employee performance appraisal, Dodd informed Kodrea that he was being placed on probation for thirty days. Kodrea Dep. at 146; Dodd Dep. at 98. Kodrea was required to undergo counseling sessions with Smith, which were attended by Dodd. Kodrea Dep. at 147, 153; Dodd Dep. at 41, 53. Kodrea continued to raise concerns about what he considered Campbell's time abuse and the misuse of public funds and complained that he felt he was being retaliated against for reporting these instances. In fact, he submitted a written report to Dodd about the two instances of alleged misconduct. Kodrea Dep. at 172. Kodrea also sought a transfer to another department, but his request was denied. Kodrea Dep. at 206; Dodd Dep. at 88.
Kodrea claims that he completed the probationary period satisfactorily. Kodrea Dep. at 154, 156. In fact, both Smith and Kodrea signed a list entitled "Goals and Objectives" which indicated completion of the probationary period. Dep. Ex. 33. In contrast, the Defendants claim that the probation period was extended for an additional thirty days, though there is nothing in writing to indicate that this is the case. Dodd Dep. at 71; Smith Dep. at 65. Rather, Defendants claim that Kodrea was verbally advised of the extension of the probationary period. Dodd Dep. at 71, 90; Smith Dep. at 65, 87, 89, 148-49. On September 9, 2004, prior to the completion of this disputed second probationary period, Kodrea was terminated based on Smith's recommendation. Kodrea Dep. at 157; Dodd Dep. at 13; Smith Dep. at 49. Kodrea sought reinstatement via the City's grievance process, but he was unsuccessful. McKillip Dep. at 59.
III. SUMMARY JUDGMENT STANDARD
As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral *865 part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. Celotex Corp. v. Catrett,477 U.S. 317, 327, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). See also United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir.1990), cert. denied, 499 U.S. 923, 111 S. Ct. 1317, 113 L. Ed. 2d 250 (1991). Motions for summary judgment are governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Summary judgment is the "put up or shut up" moment in a lawsuit. Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 901 (7th Cir.2003), reh'g denied. Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials that "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir.1996), cert. denied, 520 U.S. 1116, 117 S. Ct. 1246, 137 L. Ed. 2d 328 (1997). It is not the duty of the Court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying the evidence upon which he relies. See Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir.1996). When the moving party has met the standard of Rule 56, summary judgment is mandatory. Celotex, 477 U.S. at 322-23, 106 S. Ct. 2548; Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir.1992).
In evaluating a motion for summary judgment, a court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir.1996), cert. denied 519 U.S. 1109, 117 S. Ct. 945, 136 L. Ed. 2d 834 (1997). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at 248, 106 S. Ct. 2505; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir.1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir.1992). "If the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial, summary judgment must be granted to the moving party." Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir.1996), cert. denied, 519 U.S. 1115, 117 S. Ct. 957, 136 L. Ed. 2d 843 (1997).
IV. DISCUSSION
A. RETALIATION CLAIM UNDER § 1983
Kodrea claims that he was terminated in retaliation for questioning Campbell's *866 work hours and questioning how the ASA refund was handled. His claim rests on an alleged violation of his First Amendment right to free speech.[2]
Generally speaking, public employment cannot be conditioned on a basis that infringes on an employee's constitutionally protected interest in freedom of expression. See Connick v. Myers, 461 U.S. 138, 142, 103 S. Ct. 1684, 75 L. Ed. 2d 708 (1983). While the government enjoys greater latitude in regulating the speech of its employees than that of the general public, a citizen does not surrender all First Amendment protection by accepting a job with a governmental entity. See Carreon v. Ill. Dep't of Human Servs., 395 F.3cl 786, 790-91 (7th Cir.2005) (citing Pickering v. Bd. of Educ. of Township High Sch. Dist. 205, 391 U.S. 563, 568, 88 S. Ct. 1731, 20 L. Ed. 2d 811 (1968)). The Court must apply a three-part analysis in evaluating Kodrea's First Amendment retaliation claim under 42 U.S.C. § 1983: 1) Was his speech constitutionally protected? 2) If so, were Defendants' actions motivated by Kodrea's constitutionally protected speech? 3) If Kodrea can show that his constitutionally protected speech was a substantial or motivating factor in his termination, can Defendants show that they would have taken the same action in the absence of Kodrea's exercise of his rights under the First Amendment? See Kuchenreuther v. City of Milwaukee, 221 F.3d 967, 973 (7th Cir.2000). If Kodrea can establish the first two prongs, the burden shifts to Defendants to prove that Kodrea would have been terminated regardless of his protected speech. See Garrett v. Barnes, 961 F.2d 629, 632 (7th Cir.1992). If Defendants carry that burden, Kodrea bears the burden of persuasion to show that Defendants' proffered reasons were pretextual and that discrimination was the real reason Defendants fired him. See King v. Preferred Tech. Group, 166 F.3d 887, 893 (7th Cir.1999). In the summary judgment context, this means that Kodrea must show that a rational factfinder could infer that Defendants' stated reasons for firing him were lies. See Alexander v. Wis. Dep't of Health & Family Servs., 263 F.3d 673, 683 (7th Cir.2001).
1. Constitutionally Protected Speech
Whether Kodrea's speech is protected under the First Amendment is normally a question of law for the Court to determine. See Kokkinis v. Ivkovich, 185 F.3d 840, 843 (7th Cir.1999). In addressing this question, the Court must determine whether Kodrea spoke as a citizen on a matter of public concern. See Connick, 461 U.S. at 147, 103 S. Ct. 1684. However, to the extent that there are factual issues that must be addressed by a jury first, the Court will be unable to make a conclusive determination.
The main thrust of Defendants' argument is that Kodrea's speech was not done in his capacity as a citizen but in the context of his employment. The Supreme *867 Court just recently addressed the issue of whether the First Amendment protects a government employee from discipline based on speech made pursuant to the employee's official duties in Garcetti et al. v. Ceballos, 547 U.S.___, 126 S. Ct. 1951, 164 L. Ed. 2d 689 (2006). The plaintiff in Garcetti Ceballos, was a deputy district attorney employed as a calendar deputy with supervisory responsibilities. See Garcetti __ U.S. ___,___, 126 S. Ct. 1951, 1954-55, 164 L. Ed. 2d 689. Pursuant to his duties, he investigated a complaint from a defense attorney regarding inaccuracies in an affidavit used to obtain a search warrant. See id. Following his investigation, Ceballos prepared a memo outlining his concerns with the affidavit and recommending that the case be dismissed. See id. Ceballos' memo prompted a meeting with his supervisors and members of the sheriffs department that allegedly became very heated. See id. at 126 S.Ct. at 1956. In spite of Ceballos' concerns, the district attorney's office decided to proceed with prosecution. See id. Thereafter, during a hearing on a motion challenging the warrant, Ceballos was called by the defense to testify about his observations, but the trial court upheld the warrant. See id. Ceballos claimed that he was subsequently subjected to retaliation, including a transfer and denial of a promotion. See id.
The Supreme Court found that the controlling factor in answering the question of whether Ceballos' speech was protected was that his expressions were made pursuant to his official duties. See id. at 126 S.Ct. at 1960. Indeed, part of Ceballos' responsibilities were to investigate concerns and advise his supervisors regarding pending cases, a fact that was not disputed by the parties. See id. Under these circumstances the Supreme Court concluded that Ceballos was not acting as a citizen but as a government employee, doing what he was employed to do, and so his speech did not qualify for First Amendment protection. See id.[3]
In reaching this decision, the Supreme Court made several observations applicable to this case. First, because the parties did not dispute that Ceballos' memo was done pursuant to his duties, the Supreme Court observed that it did not have occasion to articulate a framework for defining the scope of an employee's duties in cases where there is room for serious debate. See id. at 126 S.Ct. at 1961-62. It did reject, however, the suggestion that an employer can restrict an employee's rights simply by creating broad job descriptions. See id. In addition, the Court was not persuaded that Ceballos' speech was unprotected merely because he had expressed his views in the office and they concerned the subject matter of his employment, explicitly noting that in some cases employees may still receive First Amendment protection for expressions made at work or related to the employee's job. See id. at 126 S.Ct. at 1959.
Garcetti reveals that an important factor in addressing whether or not Kodrea's speech was protected is his job responsibilities. Unlike the situation in Garcetti however, there is a factual dispute in this case concerning whether Kodrea's complaints about Campbell's hours and the ASA refund were made pursuant to his ordinary duties. As Kodrea notes, nothing in his job description required him to monitor or report misconduct. Dep. Ex. 13; Kodrea Dep. at 29. Further, Kodrea was not responsible for signing and approving or otherwise completing Campbell's time *868 sheets; that responsibility was handled by Smith and the Parks Department secretaries. Metz Dep. at 16-18; Reed Dep. at 32, 35, 41; Kodrea Dep. at 144; Kodrea Aff., ¶ 5. Indeed, it is not clear how much oversight Kodrea even had over Campbell's hours because Smith apparently authorized Campbell to work from home, authorization that should have come from Campbell's supervisor and which Kodrea knew nothing about. Smith Dep. at 15; Dodd Dep. at 28; Kodrea Aff., ¶ 5. Finally, Kodrea claim that Smith explicitly told him not to worry about Campbell's hours and that it was not a problem, which suggests that it was Smith's responsibility to oversee Campbell's hours rather than Kodrea's. Kodrea Dep. at 140,142-43.
With respect to the ASA and refunds, the evidence and testimony favorable to Kodrea demonstrates that he did not determine the amount of the initial ASA fees; that amount had been the same for years. Reed Dep. at 17; Kodrea Dep. at 87. Further, beyond keeping track of the teams and collecting the registration fees for teams, Kodrea was not responsible for handling money. Kodrea Dep. at 91. Specifically, he was not responsible for depositing the collected fees in the bank or with the controller or with handling any paperwork related to these activities. Metz Dep. at 12-13; Reed Dep. at 17, 25; Kodrea Dep. at 88-89. Finally, there is no evidence that Kodrea had any oversight of the refunds. To the contrary, he claims that Smith said he would take care of this issue, which suggests that the refund process was not part of Kodrea's job at all. Kodrea Dep. at 94.
Simply put, there are factual issues about whether Kodrea's ordinary job responsibilities included overseeing Campbell's hours of work and the ASA refunds. Neither activity appears to have been Kodrea's core function as a recreational program director. The Court is unable to conclude that Kodrea's complaints were made simply as an employee rather than a concerned citizen. Accordingly, the Court must resolve any doubt in favor of Kodrea for purposes of summary judgment and conclude at this stage of the proceedings that Kodrea may have acted as a concerned citizen. Therefore, from the record before the Court, Defendants are not entitled to summary judgment on the question of whether Kodrea acted as a concerned citizen and Garcetti does not preclude Kodrea from presenting his claims to a jury for consideration.
Having concluded that there is a factual dispute about whether Kodrea acted as a citizen that precludes entry of summary judgment, the Court must next address whether Kodrea's speech was a matter of public concern. To answer this question, the Court must look at "`the precise content, form, and context of the speech that admittedly may be of some interest to the public'" Kokkinis, 185 F.3d at 844 (quoting Cliff v. Bd. of Sch. Comm'rs of City of Indianapolis, 42 F.3d 403, 410 (7th Cir.1994)). Relevant questions include whether the point of the speech was to raise issues of public concern or to further a purely private interest. See id. (internal citations omitted). The content of the speech is the most important factor in the inquiry. See Kuchenreuther, 221 F.3d at 974. Unlike the question of whether not Kodrea acted as a citizen, the Court finds that it is able to make the legal determination of whether Kodrea's speech was on a matter of public concern.
First, the content of the speech in question supports a conclusion that the speech is a matter of public concern. Kodrea's speech concerned a situation where an employee was allegedly not working the hours for which he was being paid and a situation of potential misappropriation of *869 funds. Numerous cases from the Seventh Circuit have discussed complaints regarding potential breaches of public trust in situations of time abuse and misuse of funds and concluded that the speech is on a matter of public concern. See, e.g., Gazarkiewicz v. Town of Kingsford Heights, 359 F.3d 933, 941 (7th Cir.2004); Marshall v. Porter County Plan Comm'n, 32 F.3d 1215, 1219-20 (7th Cir.1994); Breuer v. Hart, 909 F.2d 1035, 1038 (7th Cir.1990); Ohse v. Hughes, 816 F.2d 1144, 1150-51 (7th Cir.1987), vacated and remanded, 485 U.S. 902, 108 S. Ct. 1070, 99 L. Ed. 2d 230 (1988), reinstated in relevant part, 863 F.2d 22 (1988). Indeed, "[s]peech that seeks to expose improper operations of the government or questions the integrity of governmental officials clearly concerns vital public interests." Gazarkiewicz, 359 F.3d at 941 (quoting Conaway v. Smith, 853 F.2d 789, 797 (10th Cir.1988)). The Court concludes that the content of Kodrea's speech is comfortably on the socially valuable side of the constitutional line.
The Court next considers the form of Kodrea's speech. Kodrea initially conveyed his concerns internally to Smith, his supervisor. Defendants contend that Kodrea's speech was not a matter of public concern because he did not seek a form of communication to air his concerns publically. However, First Amendment protection of speech is not limited to only those instances where the speech is broadcast to the world. See Givhan v. W. Line Consol. Sch. Dist, 439 U.S. 410, 415-16, 99 S. Ct. 693, 58 L. Ed. 2d 619 (1979). The fact that Kodrea may have spoken privately with Smith does not make his speech less a matter of public concern. See Delgado v. Jones, 282 F.3d 511, 518 (7th Cir.2002) (citing Givhan, 439 U.S. at 415-16, 99 S. Ct. 693). Indeed, as the Seventh Circuit has recognized, "an employee who attempts to follow internal mechanisms to resolve important issues should not be automatically treated less favorably than the individual who immediately turns to the press or public forum." Spiegla v. Hull, 371 F.3d 928, 937-38 (7th Cir.2004). To accept Defendants' argument would be to disregard these principles and place a burden on plaintiffs to become public champions of potential wrongdoing in order to be afforded First Amendment protection, a result not required by the law. Moreover, the Court notes that Kodrea has presented evidence suggesting that he did not simply report his concerns to his supervisors but also consulted other City employees for advice on the matters. Kodrea Dep. at 126, 129, 139; Liali Aff., ¶ ¶ 4-5; McKinney Aff., ¶¶ 4-8. Under the circumstances, the Court is unable to find that the form of Kodrea's speech renders it unworthy of constitutional protection.
Finally, the Court considers the context of Kodrea's speech. At this stage, the Court considers Kodrea's motive for speaking as a "relevant, though not dispositive, factor." Spiegla, 371 F.3d at 938 (citing Sullivan v. Ramirez, 360 F.3d 692, 700 (7th Cir.2004)). "Motive matters to the extent that even speech on a subject that would otherwise be of interest to the public will not be protected if the expression addresses only the personal effect upon the employee." Gustafson v. Jones, 290 F.3d 895, 908 (7th Cir.2002) (internal quotations and citations omitted). In considering the context of speech, "it is necessary to look at the point of the speech in question: was it the employee's point to bring wrongdoing to light?" Kokkinis, 185 F.3d at 844 (internal quotations omitted). The fact that an employee has a personal stake in the subject matter of the speech does not necessarily remove it from the scope of public concern. Cliff, 42 F.3d at 410. To find otherwise would permit motive to supplant content in terms of overall importance. Id.
*870 Here, the Court disagrees with Defendants' contention that the evidence shows that Kodrea's only motivation for speaking was to protect his job. Kodrea claims that he began expressing concerns related to Campbell's work hours in the fall of 2003 and expressed concerns again in May 2004, both before he received the problem employee performance appraisal form dated June 25, 2004. Kodrea Dep. at 130-31, 135, 138, 140-43; Dep. Ex. 12(E). Kodrea also spoke with Smith about the ASA refunds prior to receiving the problem employee performance appraisal form. Kodrea Dep. at 89-90, 93-96; Kodrea's Answers to Interrogatories at 3; Dep. Ex. 12(E). Kodrea claims that the first time he heard about any problems with his performance was the problem employee performance appraisal. Kodrea Dep. at 118. After receiving the appraisal, Kodrea began to question it as retaliation for raising his concerns with Smith. Kodrea Dep. at 100. While Kodrea's motivation from that point on in part may have been a desire to protect his job, the Court cannot conclude from the timing of Kodrea's speech that Kodrea's sole motivation in voicing his concerns was for personal reasons. Therefore, the Court finds that the context of Kodrea's speech supports a conclusion that Kodrea's speech was on a matter of public concern.
Considering the content, form, and context of Kodrea's speech, with the overriding consideration given to the speech's content as required by precedent, the Court concludes that Kodrea's speech was on a matter of public concern. As a final matter then, the Court must consider the Connick-Pickering balance test.[4] Even if speech relates to a matter of public concern, it is not constitutionally protected unless the speaker's First Amendment interests outweigh the public employer's interests in providing services efficiently. The parties have not presented any meaningful argument with regard to the Connick-Pickering balance test; however, there is nothing in the record to suggest that Kodrea's speech was sufficiently disruptive that the government's interest in promoting efficiency outweighed Kodrea's First Amendment rights. Indeed, it appears that Kodrea voiced his concerns to his immediate supervisors in a non-disruptive manner through the appropriate chain of command. Accordingly, and assuming without deciding that Kodrea spoke as a citizen, the Court must conclude at this stage that Kodrea's speech is protected. Defendants are therefore not entitled to summary judgment on this issue.
2. Substantial or Motivating Factor/Pretext
The Court must next address whether retaliation was the substantial or motivating factor in Defendants' decision to terminate Kodrea. See Carreon, 395 F.3d at 791. In order to prove retaliation, it is not enough to show that a defendant "welcomed" the end of the protected activity "or even that such activity played some minor role in the [adverse employment] decision." Rakovich v. Wade, 850 F.2d *871 1180, 1189 (7th Cir.1988) (citations omitted). See also O'Connor v. Chi. Transit Autk, 985 F.2d 1362, 1369 (7th Cir.1993). A plaintiff must demonstrate a causal link between the protected speech and the adverse employment action. See Healy v. City of Chicago, 450 F.3d 732, 738-39 (7th Cir.2006). However, a plaintiff also does not have the onerous burden of showing that retaliatory motive was the sole reason for the defendant's actions. Rakovich, 850 F.2d at 1190. Instead, a plaintiffs burden is to show that "had it not been for the violation, the injury of which he complains would not have occurred." Id. (citations omitted) (emphasis in original). Additionally, a plaintiff may show improper motivation based on the timing of the adverse employment action, i.e., by showing that the action "took place on the heels of protected activity." Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1458 (7th Cir.1994).
Defendants claim that Kodrea was terminated for a legitimate reason, i.e., poor performance. However, Kodrea has presented sufficient evidence to place that rationale in dispute. Prior to the problem employee performance appraisal, Kodrea received numerous compliments on the work that he was doing. Dep. Ex. 12(B). Further, his previous performance evaluation had been, for the most part, favorable. Dep. Exs. 12(D), 15. Indeed, Kodrea claims that the first time that Defendants made any mention of poor performance was when he received the problem employee performance appraisal, and Smith verified that Kodrea had not received any written communication expressing poor performance prior to that time. Kodrea Dep. at 70, 118; Smith Dep. at 109. Kodrea claims that the appraisal surfaced right after he spoke with Smith about the ASA refunds. Kodrea Dep. at 89-90, 93-96; Kodrea's Answers to Interrogatories at 3; Dep. Ex. 12(E). Kodrea also claims that when he received the appraisal he was given the ultimatum to resign or be fired, but chose to file a response and questioned the action as retaliation. Kodrea Dep. at 100; 120-21, 126.
Further, following the problem employee performance appraisal, Kodrea was placed on probation for thirty days. Kodrea Dep. at 145-46. Defendants contend that the probation period was extended an additional thirty days; however, like the lack of written communication on alleged poor performance, there is a lack of anything in writing to document such an extension. Indeed, Kodrea claims that he was informed that he had completed probation and believed that he had completed probation satisfactorily. Kodrea Dep. at 154,156; Dep. Ex. 33.
Here, the timing of Defendants' employment actions is suspect. The first time that Kodrea received a written communication regarding alleged poor performance was shortly after he expressed concerns about the ASA refunds. Moreover, once Kodrea persisted in voicing his concerns and claimed retaliation, he was ultimately terminated. Finally, Kodrea testified that he was awarded unemployment benefits, which if true suggests that the Indiana Department of Workforce Development found no just cause for the termination. Kodrea Dep. at 171. Under the circumstances, the Court concludes that a jury could reasonably find that Kodrea's speech was a substantial or motivating factor for the poor performance appraisal and, ultimately, termination and that Defendants' stated reasons for their actions are mere pretext.
3. Qualified Immunity and Individual Liability
Defendants contend that even if Kodrea's speech is protected, they are entitled to qualified immunity. Defendants Smith and the Mayor further claim that they cannot be individually liable for any violation that may have occurred because *872 they did not personally participate in Kodrea's termination. The Court addresses each argument in turn.
Government officials enjoy qualified immunity and are shielded from civil liability, "as long as their actions could reasonably have been thought consistent with the rights they are alleged to have violated." Anderson v. Creighton, 483 U.S. 635, 638, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). To determine whether an official is entitled to qualified immunity requires a two part inquiry, as follows: (1) whether the facts alleged, taken in the light most favorable to the party asserting the injury, demonstrate that the official's conduct violated a constitutional right; and (2) whether the right was "clearly established" such that it would have been clear to a reasonable official "that his conduct was unlawful in the situation he confronted." Saucier v. Katz, 533 U.S. 194, 201-02, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001).
The Court has already concluded that the facts as alleged and in the light most favorable to Kodrea reveal that Kodrea's First Amendment right may have been violated. Therefore, if Kodrea's right was "clearly established," then Defendants do not have qualified immunity.
The Court concludes that the right was clearly established. As the Court has already noted, numerous cases demonstrate that complaints by public employees regarding time abuse or the misuse of funds are matters of public concern. Further, Connick has been the law for over twenty years. In addition, former Mayor Trobaugh was certainly aware of an employee's First Amendment rights to speak out on such matters Troubaugh Aff., ¶¶ 8-9. Dodd was likewise aware that an employee could not be retaliated against for voicing his concerns. Dodd Dep. at 65. Finally, Defendants were apparently aware that Kodrea's complaints touched on a matter of public concern as they purport to have investigated the allegations. Under the circumstances, any reasonable individual in Defendants' positions would have recognized that Kodrea could not be terminated for expressing concerns about Campbell's work hours or the ASA refunds. Defendants are therefore not entitled to qualified immunity.
The Court must next consider the question of individual liability for the Mayor and Smith. To establish liability under § 1983, it is necessary to show some causal connection between the action complained of and the official sued. See Wolf-Lillie v. Sonquist, 699 F.2d 864, 869 (7th Cir.1983). However, direct participation by a defendant is not necessary. See Conner v. Reinhard, 847 F.2d 384, 396 (7th Cir.1988). Instead, any official who "causes" a citizen to be deprived of her constitutional rights can be held liable. Id. at 396-97. "The requisite causal connection is satisfied if the defendant set in motion a series of events that the defendant knew or should reasonably have known would cause others to deprive the plaintiff of [his] constitutional rights." Id. at 397.
Here, the Court concludes that a jury could reasonably find that both the Mayor and Smith participated in the adverse employment actions against Kodrea. With respect to the Mayor, Dodd testified that the Mayor is ultimately responsible for decisions on employment issues. Dodd Dep. at 12, 15. The Mayor likewise testified that in most cases he is part of the termination process. McKillip Dep. at 54. Further, the Mayor was kept apprised of the employment issue with Kodrea and tacitly approved of Dodd's decision to terminate Kodrea when Dodd notified the Mayor of that decision. Dodd Dep. at 42-43. It also appears that the Mayor was the individual responsible for recommending the use of the problem employee performance appraisal form (the first instance, *873 according to Kodrea, of anyone noting a problem with his performance), and the Mayor approved all employment policies that were drafted by Human Resources. McKillip Dep. at 43; Kodrea Dep. at 118; Dodd Dep. at 19. Finally, the Mayor was involved in Kodrea's grievance process, ultimately denying the grievance and upholding the decision to terminate. McKillip Dep. at 59. Based on these circumstances, the Court finds that a jury reasonably could conclude that the Mayor helped to set in motion the events that led to the alleged retaliation.
Likewise, the Court finds that a jury reasonably could conclude that Smith is individually liable. Smith recommended Kodrea's termination, a recommendation upon which the jury could reasonably infer that Dodd relied. Smith Dep. at 49. Smith also completed the problem employee performance appraisal, and he apparently worked with Dodd on drafting that form. Smith Dep. at 73; Dep. Exs. 12(E), 24. Further, Smith was involved with discussions with the Mayor and Dodd about Kodrea's employment, and he was in charge of the counseling sessions with Kodrea that followed the problem employee performance appraisal. Dodd Dep. at 41, 53-54; Kodrea Dep. at 153. Finally, Kodrea claims that one of the volunteers for Softball told him that Smith was going to fire him, and Kodrea claims that when Smith provided him with a copy of the problem employee performance appraisal Smith gave Kodrea the ultimatum to resign or be fired. Kodrea Dep. at 120-21, 244. Taking the circumstances in the light most favorable to Kodrea, the Court finds that Smith, like the Mayor, could be found to have participated in the adverse employment actions. Accordingly, the Court denies summary judgment on the question of individual liability for both the Mayor and Smith.
4. Municipal Liability
As a final matter, the Court must address the question of municipal liability. A government entity is only liable under § 1983 when execution of a government policy or custom "by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy" inflicts the injury of which a plaintiff complains. See Monell v. N.Y. City Dep't of Soc. Servs., 436 U.S. 658, 694, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). Unconstitutional policies or customs can take three forms: (1) an express policy that causes a constitutional deprivation when enforced; (2) a widespread practice that, although unauthorized, is so permanent and well-settled that it constitutes a "custom or usage" with the force of law; or (3) an allegation that a person with final policymaking authority caused the injury. See Rasche v. Vill. of Beecher, 336 F.3d 588, 597 (7th Cir.2003). Defendants contend that summary judgment is appropriate because there is no evidence of any policy or custom. The Court, however, disagrees and finds that summary judgment is inappropriate.
A single constitutional violation by a person with final policymaking authority may trigger liability under § 1983. See Kujawski v. Bd. of Comm'rs, 183 F.3d 734, 737 (7th Cir.1999). Here, the Mayor had the ultimate responsibility for decisions related to employment issues, and he testified that in most cases he is part of the termination process. Dodd Dep. at 12, 15; McKillip Dep. at 54. In fact, the evidence favorable to Kodrea reveals that the Mayor participated in and approved of the decision to terminate Kodrea. Dodd Dep. at 43; McKillip Dep. at 43, 59.
Defendants nonetheless contend that there can be no municipal liability because Dodd fired Kodrea. Even if the Mayor played no part in Kodrea's termination, *874 and in spite of the evidence to the contrary suggesting the Mayor's involvement, Defendants cannot escape municipal liability by claiming that Dodd made the termination decision on his own. Final policymaking authority may be delegated or ratified by an official having policymaking authority. See Kujawski, 183 F.3d at 737; Waters v. City of Chicago, 416 F. Supp. 2d 628, 630 (N.D.Ill.2006). In this case, there is evidence that when Dodd made the decision to terminate Kodrea the Mayor approved of the decision. Dodd Dep. at 12-13, 42-43; Smith Dep. at 49; McKillip Dep. at 59. As Dodd acknowledged, the Mayor had the ultimate responsibility for decisions related to employment issues, including approval of employment policies (Dodd Dep. at 12, 15, 19), and his approval of Dodd's decision means that municipal liability can be imposed.
Moreover, municipal liability could be imposed even if the Mayor and Dodd deny any motive for retaliation against Kodrea. A jury could reasonably infer that the decision to terminate Kodrea was based on Smith's recommendation, and a jury could certainly conclude that Smith had a reason for retaliating against Kodrea. As the Northern District of Illinois recently noted, "a tainted input" may be sufficient to establish liability. Waters, 416 F.Supp.2d at 630-31. See also Dey, 28 F.3d at 1459.
For all of these reasons, the Court concludes that Defendants are not entitled to summary judgment on the question of municipal liability.
B.STATE WHISTLEBLOWER CLAIM
While Defendants offer several rationales for why they are entitled to summary judgment on Kodrea's state whistleblower claim, the Court finds one dispositive: whether Kodrea has a private right of action under Indiana Code § 36-1-8-8. This statute provides in relevant part that a public employer may not terminate an employee for reporting in writing a violation of law or misuse of public resources. An employer who violates this statute commits a Class A infraction. See Ind.Code § 36-1-8-8(d). Whether or not Defendants may have violated the state statute, the Court concludes that the state statute does not provide Kodrea with a private right of action.
The parties have not directed the Court to any Indiana appellate decisions addressing this particular statute, and the Court's own research found none. Therefore, the Court must look to the language of the statute itself to determine whether the General Assembly intended to provide for a private right of action. The Court concludes that the plain language of the statute clearly limits Kodrea's remedy to appealing any disciplinary action pursuant to the procedures set forth by personnel policy or collective bargaining agreement, a remedy which Kodrea apparently employed via the grievance process in which the termination decision was upheld. See Ind.Code § 36-1-8-8(c). Thus, on its face, the statute does not grant Kodrea a private right of action.
This conclusion is strengthened by a comparison of this statute with Indiana Code § 22-5-3-3, a "companion" statute passed in the same piece of legislation. See 1987 Ind. Acts, Pub.L. No. 32, §§ 3-1 at 938-40.[5] Indiana Code § 22-5-3-3 provides protection for employees of private employers under public contract and is virtually identical to § 36-1-8-8 in all material respects except for the remedy in subsection (c).Specifically, § 22-5-3-3(c) *875 provides that an employee of a private employer under public contract may "process an appeal of [any] disciplinary action as a civil action." This difference in language reveals that the General Assembly can and does provide for a civil remedy when it chooses to do so.[6] Further, unlike § 36-1-8-8, § 22-5-3-3 has been addressed by Indiana's appellate courts. The Indiana Court of Appeals agreed that where an employee of a private employer under public contract brings a whistleblower claim, the cause of action arises under § 22-5-3-3 rather than common law. See Coutee v. Lafayette Neighborhood Hous. Servs., Inc., 792 N.E.2d 907, 911-12 (Ind. Ct.App.2003), reh'g and trans. denied. Based on Coutee, this Court concludes that in order for Kodrea to have a cause of action, it must arise under Indiana Code § 36-1-8-8 itself. Again, however, the statute explicitly limits Kodrea's remedy and does not provide for a private right of action.
Finally, the Court notes that its conclusion that Kodrea does not have a private right of action is consistent with Indiana's employment-at-will doctrine, which provides that where there is no definite term of employment that the employment is atwill and is presumptively terminable at any time, with or without cause. See Coutee, 792 N.E.2d at 911. One exception to this doctrine is the public policy exception, which is applicable when an employee is discharged for exercising a statutory or constitutional right or for refusing to commit an illegal act for which he would be personally liable.See, e.g., McGarrity v. Berlin Metals, Inc., 774 N.E.2d 71, 76 (Ind.Ct.App.2002); Pepsi-Cola Gen. Bottlers, Inc. v. Woods, 440 N.E.2d 696, 697 (Ind.Ct.App.1982). However, the Indiana Supreme Court has been reluctant to broaden the exceptions to the employmentat-will doctrine in the absence of clear statutory expression, and so the public policy exception has been construed narrowly by Indiana courts. See, e.g., Dale v. J.G. Bowers, Inc., 709 N.E.2d 366, 368 (Ind.Ct. App.1999); Wior v. Anchor Indus., Inc., 669 N.E.2d 172, 177 n. 5 (Ind.1996). Thus, where the General Assembly has explicitly provided a remedy for a violation in a statute itself, courts have found the public policy exception inapplicable. See Groce v. Eli Lilly & Co., 193 F.3d 496, 502-04 (7th Cir.1999) (discussing Indiana state law claim of retaliatory discharge for reporting violations of the Indiana Occupational Safety and Health Act); Coutee, 792 N.E.2d at 911. In this case, the statute in question provides a specific remedy, i.e., the right to appeal a disciplinary action pursuant to internal personnel policies, and so under Indiana law the public policy exception would not assist Kodrea. He is therefore limited to the remedy provided in the statute.[7] Given the plain language of the statute and its explicit limitation on a remedy, a comparison of the statute to similar statutory provisions, and the employment-at-will doctrine, Kodrea's argument that a private right of action may be implied is unavailing. Accordingly, the Court concludes that Indiana Code § 36-1-8-8 does not provide Kodrea with a private *876 of right of action. Kodrea's state law claim must therefore be dismissed.
V. CONCLUSION
For the foregoing reasons, Defendants', City of Kokomo, Matthew McKillip, Dan Smith, and Jack Dodd, Motion for Summary Judgment is GRANTED in part and DENIED in part. Plaintiff's, Matthew G. Kodrea, state law claim is dismissed with prejudice.
The Court also dismisses the claims against Defendant Matthew McKillip in his official capacity as Mayor. Any individual claims against Defendant Matthew McKillip remain pending.[8]
NOTES
[1] Apparently the exhibits were numbered at the various depositions that have been taken in this case on an ongoing basis rather than separately numbered for the particular deposition in which they were identified. Rather than re-label these exhibits when he filed his designated materials, Kodrea simply used the original designated numbers. For clarity, the Court will refer to those exhibits as they were designated at the depositions and cite to them as "Dep. Ex.___" in this Order.
[2] The Court notes that Kodrea has sued the Mayor in both his official and individual capacities. An official capacity suit against government employees is treated in all respects as one suit against the municipality. See Leahy v. Bd. of Tr's of Cmty. Coll. Dist. No. 508, 912 F.2d 917, 922 (7th Cir.1990). In addition, courts have emphasized that civil rights claims against individual defendants in their official capacities are redundant of the claims brought against a governmental entity; therefore, there exists no additional claims against the Mayor in his official capacity. See Kentucky v. Graham, 473 U.S. 159, 167 n. 14, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985); Rascon v. Hardiman, 803 F.2d 269, 274 (7th Cir.1986). Kodrea concedes this point in his response to the motion for summary judgment. Resp. in Opp. to Summ. J. at 39. Accordingly, the Court DISMISSES the claims against the Mayor in his official capacity.
[3] Prior to this ruling, the Seventh Circuit had found no constitutional protection for speech made under similar circumstances. See, e.g., Schad v. Jones, 415 F.3d 671 (7th Cir.2005); Gonzalez v. City of Chicago, 239 F.3d 939 (7th Cir.2001).
[4] Factors to be considered when balancing an employee's and employer's relative interests include: "(1) whether the statement would create problems in maintaining discipline by immediate supervisors or harmony among coworkers; (2) whether the employment relationship is one in which personal loyalty and confidence are necessary; (3) whether the speech impeded the employee's ability to perform her daily responsibilities; (4) the time, place, and manner of the speech; (5) the context in which the underlying dispute arose; (6) whether the matter was one on which debate was vital to informed decisionmaking; and (7) whether the speaker should be regarded as a member of the general public." Kokkinis, 185 F.3d at 845 (citation omitted).
[5] The two statutes were also later amended at the same time. See 1990 Ind. Acts, Pub.L. No. 9, §§ 14, 16 at 482-85.
[6] In fact, the General Assembly recently provided for such a remedy in legislation protecting employees who report that false claims for payment have been made to the State. See 2005 Ind. Acts, Pub.L. No. 222, § 23 at 3591 (codified as Indiana Code § 5-11-5.5-8(c)).
[7] The Court notes that Judge Lozano of the Northern District of Indiana, relying on an analysis of the employment-at-will doctrine, recently reached a similar conclusion when he dismissed a plaintiff's state law claim brought pursuant to Indiana Code § 36-1-8-8. See Jennings v. Warren County Comm'rs, No. 4:04-cv-094, 2006 WL 694742, *7-8 (N.D.Ind. March 14, 2006).
[8] For the reasons stated herein, the Court also DENIES Defendants' Motion to Strike (Doc #77). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1402192/ | 604 F. Supp. 1268 (1984)
AKRON CENTER FOR REPRODUCTIVE HEALTH, et al., Plaintiffs,
v.
CITY OF AKRON, et al., Defendants,
Francois Seguin, M.D. et al., Intervening Party Defendants.
No. C78-155A.
United States District Court, N.D. Ohio, E.D.
June 18, 1984.
*1269 *1270 Louis Jacobs, American Civil Liberties Union, Columbus, Ohio, for plaintiffs.
Steven Bell, Patricia C. Ambrose, Akron, Ohio, for defendant City of Akron.
Alan Segedy, Akron, Ohio, for defendant intervenors.
ORDER
DOWD, District Judge.
The Court has before it the motion of plaintiffs' counsel for an award of attorney's fees following plaintiffs' successful prosecution of this § 1983 action.
Plaintiffs' counsel first sought an award of attorneys' fees in October, 1979. By an order dated February 22, 1980, Judge Contie deferred decision on that fee application pending the resolution of the appeal of the case on the merits. The Supreme Court affirmed the judgment on the merits in favor of the plaintiffs on June 15, 1983. See City of Akron v. Akron Center for Reproductive Health, Inc., 462 U.S. 406, 103 S. Ct. 2481, 76 L. Ed. 2d 687 (1983) affirming in part and reversing in part 651 F.2d 1198 (6 Cir.1981) affirming in part and reversing in part 479 F. Supp. 1172.
Following the Supreme Court's decision, plaintiffs renewed their application for attorneys' fees on July 15, 1983. The Court conducted an evidentiary hearing on the application on August 22, 1983.[1]
Upon review of the arguments and briefs of counsel, the Court finds that the issues raised fall into three broad categories. Initially, the parties seek a determination of whether plaintiffs' counsel shall receive any award of fees. If the Court determines that a fee award is appropriate, the parties raise a number of issues surrounding the legal standards which the Court will apply in determining the reasonableness of the fee application. Finally, once these legal issues are resolved, the parties raise factual challenges to the reasonableness of the fee applications. This opinion will focus on the first category of issues whether a fee award is appropriate in this case.
I.
Plaintiffs' claim for attorneys' fee in this case is governed by the Civil Rights Attorney's Fees Awards Act, 42 U.S.C. § 1988. In relevant part, that statute provides that:
The Court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorneys' fee as part of the costs.
Id. Under the terms of this statute, the appropriateness of an attorneys' fee award is left to the discretion of the trial court. While the award of attorneys' fees is discretionary, Congress and the appellate courts have provided significant guidance on the standards which a trial court should use in exercising its discretion on this issue.
As noted by one recent trial court, the legislative history and judicial interpretation of the statute demonstrate that the Court's discretion to deny fees is narrow. The Senate report states:
... A party seeking to enforce the rights protected by the statute's covered by [§ 1988], if successful, "should ordinarily recover an attorneys' fee unless special circumstances would render such an award unjust."
1976 U.S.Code Cong. and Ad.News 5908 at 5912. The report cited the Supreme Court decision in Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S. Ct. 964, 966, 19 L. Ed. 2d 1263 (1968) with approval as stating the standard for "special circumstances." Since enactment of the statute, *1271 the Supreme Court has once again affirmed the "special circumstances" standard. See New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 100 S. Ct. 2024, 64 L. Ed. 2d 723 (1980). In that case, the Court stated that:
The court's discretion to deny a fee award to a prevailing plaintiff is narrow. Absent "special circumstances", ... fees should be awarded.
Id. at 68, 100 S.Ct. at 2033. (citations omitted). In view of this standard, the Court must find "special circumstances" to justify a denial of an attorney fee award.
II.
Both the city-defendants[2] and the intervenor-defendants[3] have raised legal arguments that special circumstances render an award of attorneys' fees inappropriate in this case. The city-defendants argue that the arrangement between plaintiffs, Mr. Landsman, and Cleveland State University (CSU)Mr. Landsman's employerviolates state law. The City, therefore, contends that special circumstances preclude an award of attorneys' fees in this case because this arrangement violates public policy. Even if the Court rejects this argument and makes an award of attorneys' fees, the intervenor-defendants argue that their status as intervenors constitutes special circumstances, and that they should not be held responsible for the fee award.
A.
The city-defendants first argue that plaintiff's representation arrangement violates the state constitutional prohibition of the use of public funds for private purposes. In relevant part, Ohio's constitution provides that
The credit of the state shall not, in any manner, be given or loaned to, or in aid of, any individual association or corporation whatever....
Ohio Constitution, Article VIII, § 4. In the City's view, the plaintiffs, which include private corporations, have not paid for their representation in this action, and therefore, have received "credit" from CSU and the State of Ohio. The city-defendants have not provided any case authority in which an Ohio state court has found such a relationship to violate the state constitution. In the absence of such authority, and in view of the Court's finding that the alleged misuse of state funds is, at best, attenuated, the Court will not conclude that the fee arrangement in this case violates the state constitution.
The city-defendants also argue that Mr. Landsman's participation in this action violated the CSU by-laws regulating extramural employment by professors. Under the CSU by-laws, certain procedural steps must be taken before a professor may provide his services or use university materials for extramural employment. Mr. Landsman's involvement in this case, however, was related to his duties in the law school's clinical program. While the city-defendants have presented a substantial argument that Mr. Landsman may have crossed the line between his participation in this matter as part of his clinical duties and participation as extramural employment, the Court believes that consideration of this matter is best left for the judgment of CSU and state auditing officials. The Court, therefore, will not declare that Mr. Landsman's activities violated the CSU bylaws.
Under these circumstances, the Court does not find a violation of either the state constitution or the university by-laws in Mr. Landsman's participation in this action. The Court, therefore, does not find that the arrangement between the ACLU, CSU, and Mr. Landsman is violative of public policy. Accordingly, the Court does not find that the representation arrangement constitutes *1272 "special circumstances" justifying a denial of attorneys' fees.
B.
Consideration of the intervenor-defendants' argument that they should not be required to contribute to an attorneys' fees award must begin with an analysis of their participation in the underlying law suit giving rise to this fee dispute. On April 26, 1978, seven days after the filing of the complaint in this action, intervenor-defendants filed their petition to intervene in this action. In their petition, intervenor-defendants sought leave to represent a number of groups of allegedly interested parties.[4] Plaintiffs opposed the motion. Judge Contie ultimately granted the motion in part and denied the motion in part in an order filed on May 16, 1978. In that order, Judge Contie allowed the intervenor-defendants to intervene "solely in their individual capacity as parents of unmarried minor daughters of child-bearing age." Order at 2. Judge Contie went on to limit intervenor-defendants' participation in this action "to the issues directly effecting the scope of their intervention. By way of example, participation at trial, either by way of direct evidence or cross-examination, shall be limited solely to their claims as parents of unmarried minor daughters of child-bearing age." Id. With regard to any other issues, intervenor-defendants' participation was limited to submission of amicus curiae briefs.
Despite this limited scope of intervention, intervenor-defendants litigated their claims vigorously. They filed nearly 40 documents in the case, including at least 14 to which plaintiffs had to independently respond. Intervenor-defendants took an active role at trial, occasionally requiring the Court to stop their inquiry into areas beyond the permitted scope of intervention. On appeal, intervenor-defendants challenged the district court decision, and fully participated in the proceedings at the Court of Appeals. They also unsuccessfully petitioned the United States Supreme Court for a writ of certiorari and filed briefs in the consolidated appeals of the other parties. Counsel for the intervenor-defendants ultimately argued this case before the Supreme Court on behalf of the city-defendants. While the parties dispute the extent to which the plaintiffs ultimately prevailed, it is undisputed that plaintiffs prevailed on at least some of the issues on which intervenor-defendants participated in the lawsuit.
Based on this record, intervenor-defendants argue that the Court should not require them to contribute to an award of attorneys' fees. Intervenor-defendants argue initially that their status as intervenor-defendants, standing alone, constitutes special circumstances justifying denial of the award. Alternatively, intervenor-defendants argue that there are other special circumstances which support a denial of the application in this case.
Intervenor-defendants initially seek a blanket statement that intervenor-defendants are not liable for attorneys' fees in civil rights actions. The Sixth Circuit, however, has previously approved an award of attorneys' fees against an intervenor-defendant in Haycraft v. Hollenbach, 606 F.2d 128 (6th Cir.1979). In that case, the Court awarded attorneys' fees against an intervenor-defendant who advocated an alternative desegregation plan for a local *1273 school district. In another unpublished decision, the U.S. District Court for the Northern District of Illinois reduced a successful plaintiffs' award of attorneys' fees because they failed to name an intervenor-defendant in the application. Wynn v. Scott, No. 75 C 3975 (N.D.Ill. Jan. 11, 1980). None of the cases cited by intervenor-defendants' directly contradict this position.[5]
In this case, the Court is of the view that the intervenors voluntarily chose to align themselves with the city-defendants in opposing the relief sought by the plaintiff in this action. As such, they acted in concert with the city-defendants and contributed to the effort required of the plaintiffs to substantiate their position in Court. Under these circumstances, the Court concludes that the intervenor-defendants' status does not preclude an award of attorneys' fees.
Regardless of this conclusion, intervenor-defendants urge this Court to find special circumstances and to deny an award of attorneys' fees in this case. The issue for determination in this case, therefore, is whether intervenor-defendants have presented appropriate special circumstances to support denial of an award of attorney's fees. Intervenor-defendants have raised four arguments which they urge the Court to accept as special circumstances sufficient to deny an award of attorneys' fees.
Intervenor-defendants argue that they are not liable for attorneys' fees under § 1988 because they took no actions which violated plaintiffs' constitutional rights; the City, the entity which adopted and enforced the ordinance, was the only party in a position to provide the relief sought by plaintiffs.[6] A number of courts have rejected this argument. In Haycraft, the Court rejected this argument characterizing the intervenor-defendants' participation in the lawsuit as presenting a "substantial barrier to the realization of the full constitutional rights of [the plaintiffs.]" Haycraft v. Hollenbach, 606 F.2d 128, 132 (6th Cir.1979). This position was developed in more depth in Vulcan Society of West Chester County v. Fire Department, 533 F. Supp. 1054, 1062 (S.D.N.Y.1982). In that case, the Court stated that the intervenors'
efforts imposed substantial costs upon plaintiffs, and plaintiffs prevailed over the unions' opposition on most of the issues involved.... Having chosen to participate as defendants, the unions must be treated as defendants, both to achieve the purposes of the law granting attorneys' fees to prevailing litigants in civil rights litigation, and in order to avoid unfairly imposing upon the other defendants more than their fair share of plaintiffs' fees.
Id. at 1062. In view of these authorities, the Court concludes that the intervenor-defendants' inability to provide the relief sought by the plaintiffs in this action does not constitute special circumstances which would support a denial of an award of attorneys' fees.
Intervenor-defendants have also argued that they should not be held liable for an award of attorneys' fees because their actions were taken in good faith. They *1274 argue that the issues raised by this litigation were matters of first impression and that they acted in good faith in urging the adoption of their particular views on those issues. While the Kirkland court accepted the intervenors' good faith as a basis for finding circumstances, 524 F.Supp. at 1217-19, the Sixth Circuit has taken an opposing view. In Haycraft, the Court stated:
An award of attorneys' fees under § 1617[7] is not based on a defendant's intent or purposes, nor does the prevailing party need to demonstrate "bad faith" on the part of his opponent under this section....
606 F.2d at 132. In view of this authority, the Court rejects intervenor-defendants' argument that their good faith represents special circumstances.
Intervenor-defendants next argue that their beneficial service in framing the issue before the Court in the § 1983 claim provides the special circumstances justifying the denial of an award of attorneys' fees. This argument was recently considered in May v. Cooperman, 578 F. Supp. 1308 (D.N.J.1984). In that case, the district court awarded attorneys' fees against a state legislature which had intervened as a defendant in support of the constitutionality of a "minute of silence" statute. In that case, the court stated that while intervenors:
defense of the statute assisted in the development of the facts and law, thereby serving what I considered a valuable public function, the same could be said for the defendants in many § 1983 cases. The fee statute contemplates fee assessment against defendants notwithstanding that type of contribution. Having intervened, the Legislature stands in the same position as any other defendant who has defended an unconstitutional statute.
Id. at 1317. The Court finds this reasoning persuasive and, therefore, rejects intervenor-defendants' argument that this argument constitutes special circumstances.
The final argument raised by intervenor-defendants in favor of a finding of special circumstances is the position that liability for an award of attorneys' fees will have a chilling effect on intervenors' efforts to promote constitutional values. In Planned Parenthood of Memphis v. Alexander, No. 78-2310 (W.D.Tenn. Dec. 24, 1981), Judge Wellford stated that:
To allow the plaintiffs' claim for very substantial fees and costs in these circumstances against intervenors could well choke or, as a practical matter, even preclude the opportunity of persons and groups legitimately concerned about enforcement of, or challenge to, controversial laws relating to important, delicate and sensitive personal rights, to express their positions or become involved before the courts.
Slip. Op. at 8 (citation omitted). Upon review of this decision, the Court will not follow the Alexander court's reasoning. Intervenor-defendants could have expressed their legitimate concerns regarding the constitutionality of the challenged ordinance by appearing as amicus curiae before the Court. Instead, intervenor-defendants elected to become parties to this action and align themselves with the city-defendants. Having done so, intervenor-defendants cannot be heard to argue that they sought only an amicus curiae role in this case. Under this analysis, the Court rejects this proposed claim of exceptional circumstances.[8]
C.
In view of this analysis, the Court concludes that there are no special circumstances justifying the denial of an attorneys' *1275 fee award in this case. Accordingly, the Court will make an award of attorneys' fees in this case.
III.
Having concluded that an award of attorneys' fees is appropriate in this case, the Court next turns to a consideration of the second category of issues raised by the fee applicationthe legal standards which the Court will apply in determining the reasonableness of the fee application. Upon review of the parties' briefs, the Court believes that further briefing is appropriate on the following questions:
1. Should the Court make an apportionment of liability for attorneys' fees between the city-defendants and the intervenor-defendants?[9]
2. Does the Sixth Circuit's failure to tax costs to the defendants in this action preclude an award of attorneys' fees for work before the Sixth Circuit? See Buian v. Baughard, 687 F.2d 859, 862 (6th Cir.1982).
3. Is plaintiffs' counsel entitled to an award of attorneys' fees for work before the United States Supreme Court?
4. Is the relevant market for determining hourly rates different for work before District Court, Court of Appeals, and the Supreme Court?
5. If the Court concludes that the relevant community for determining any portion of the prevailing market rates to be used in calculating the award is Akron, does the Court have the authority to call members of the Akron legal community as its own witnesses to testify regarding prevailing market rates?
6. Pursuant to the analysis set forth in Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), should this Court exclude any elements of plaintiffs' application for attorneys' fees?
7. How have other courts analyzed the reasonableness applications for attorneys' fees (a) for multiple moot court exercises in preparation for Supreme Court argument? and (b) for the work of multiple consultants who assist in preparing Supreme Court briefs?
8. Under the standards set out in Blum v. Stenson, ___ U.S. ___, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984), should plaintiffs' counsel receive an upward adjustment from lodestar?
Counsel are to file their briefs discussing these issues on or before July 16, 1984. Upon resolution of these issues, the Court will schedule a second evidentiary hearing regarding the reasonableness of the individual items of the attorneys' fees application.
If counsel desires to conduct any further discovery in this matter, counsel shall file proposed discovery requests with the Court. All discovery, with the exception of a deposition of Mr. Landsman, must be complete by August 1, 1984.
IT IS SO ORDERED.
NOTES
[1] The hearing was conducted on an expedited basis at the request of Stephan Landsman, chief counsel for the plaintiffs, in view of the impending departure of Mr. Landsman to begin a one-year appointment as a visiting professor of law in England. The parties have filed a series of briefs relating to the fee application since the hearing.
[2] The city-defendants include the City of Akron, Mayor John S. Ballard, Director of Public Health, Dr. C. William Keck, and Police Prosecutor Peter Oldham. As Ballard, Keck, and Oldham have been sued in both their individual and official capacities, their successors have been automatically substituted as defendants in their official capacities pursuant to Fed.R.Civ.P. 25(d).
[3] The intervenor-defendants are Dr. Francois Seguin and Ms. Patricia K. Black.
[4] Dr. Seguin sought leave to intervene on the following basis:
(a) As guardian ad litem for unborn children, previable and viable, whose lives, health, rights, and interests are protected through Akron Ordinance No. 160-1978.
(b) As guardian ad litem for infants born alive as the result of legal abortion whose lives, health, rights, and interests are protected through Akron Ordinance No. 160-1978.
Dr. Seguin and Ms. Black together sought leave to intervene on the following basis:
(a) On behalf of themselves, each of whom as parents of minor daughters of child-bearing age, who are not now married and have never been married, and whose rights as parents are protected by Akron Ordinance No. 160-1978.
(b) On behalf of the class of parents of minor daughters of child-bearing age who are not now married and have never been married, and whose right as parents are protected by Akron Ordinance No. 160-1978.
Petition to Intervene at 1.
[5] The cases cited by intervenor-defendants do not support the proposition that an award of attorneys' fees against intervenor-defendants is barred. In Planned Parenthood of Memphis v. Alexander, No. 78-2310 (W.D.Tenn. Dec. 24, 1981), the district court found that other special circumstances in the case barred an award of attorneys' fees against the intervenor-defendants. In Kirkland v. New York State Department of Correctional Services, 524 F. Supp. 1214 (S.D.N.Y.1981), the Court relied on other special circumstances to justify a denial of attorneys' fees against intervenor-defendants. In Chance v. Board of Examiners, 70 F.R.D. 334 (S.D.N.Y. 1976), the intervenor-defendants participated as parties in only a very limited portion of the case, serving as amicus curiae for the remainder of the action. In none of these cases, did any of the courts even suggest that an award of attorneys' fees against intervenor-defendants would never be appropriate.
[6] In some ways, intervenor-defendants now appear to be arguing that they never were an appropriate party to this lawsuit. Having voluntarily petitioned the Court to intervene in this action, and having fully participated in the action throughout its procedural history, intervenor-defendants cannot now be heard to argue that they were an improper party to the lawsuit.
[7] Haycraft involved an award of attorneys fees under 20 U.S.C. § 1617, a provision dealing with the award of attorneys' fees in school desegregation cases. That statute, and the cases decided under it, are applicable to cases decided under 42 U.S.C. § 1988.
[8] Another basis for rejecting the Alexander court's analysis is a consideration of the Alexander court's discussion of the intervenor-defendant's "good faith." Despite the Haycraft court's ruling that intent is irrelevant, the Alexander court relied upon the "good faith" of the intervenors in denying an award of attorneys' fees. Slip Op. at 7. The Court, however, recognizes that subsequent appellate rulings on the "chilling effect" argument may require the Court to reexamine its ruling on this issue.
[9] The Court's research indicates that a number of courts in the Seventh Circuit have addressed this problem. See Decker v. United States Dept. of Labor, 564 F. Supp. 1273, 1281-82 (E.D.Wisc. 1983). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2563408/ | 304 F.Supp.2d 678 (2003)
Patrick C. RYAN, Plaintiff,
v.
UNITED STATES of America, et al., Defendants.
No. CIV. AMD 02-2335.
United States District Court, D. Maryland.
May 12, 2003.
*679 Robert M. Schwartzman, Lord and Whip PA, Baltimore, MD, for Plaintiff.
*680 Robert B. Hetherington, McCarthy Wilson, Rockville, MD, Robert H. Bouse, Jr., Anderson Coe and King LLP, David W. Skeen, Stephen F. White, Wright, Constable and Skeen LLP, Baltimore, MD, for Defendant.
MEMORANDUM
DAVIS, District Judge.
Plaintiff, Patrick C. Ryan, an employee of a firm working on a government contract at the United States Naval Air Station in Southern Maryland, was severely injured in an on-the-job accident. He filed this one count action for damages against the following parties: (1) the United States of America and the Department of the Navy ("the government"); (2) his employer, Chesapeake Bay Diving, Inc. ("Chesapeake"); (3) Noesis, Inc.; (4) General Dynamics Corporation ("General Dynamics"); and (5)American Systems Corporation ("ASC"). Ryan relies on a plethora of statutory and common law theories sounding in negligence under the Suits in Admiralty Act ("SAA"), 46 App. U.S.C. §§ 741-52; the Public Vessels Act ("PVA"), 46 App. U.S.C. §§ 781-90; the Jones Act, 46 U.S.C. § 688; the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 905(b) and 933; the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346, 2671-80; and state law.
Now pending are the government's motions to dismiss, or in the alternative, for summary judgment, seeking dismissal of Ryan's amended complaint (and other defendants' cross-claims against the government) for lack of subject matter jurisdiction. I conducted a hearing on May 9, 2003, and I have fully considered all of the parties' arguments and evidentiary materials. For the reasons set forth herein, I find that the United States has not waived its sovereign immunity as to any claim asserted against it in this case and thus I shall grant the government's motion to dismiss.
I.
At the time of his accident, on July 15, 2000, Ryan was a seaman who was employed by Chesapeake as a diver and member of the crew of a diving boat owned and/or operated by Chesapeake. Ryan, who also claims to be a "borrowed servant" of Noesis and perhaps of other defendants, alleges that the pier on which he was injured while performing duties within the scope of his employment was "owned, operated, leased, and/or controlled by the [government]."
At all times relevant to the events in suit, the General Services Administration ("GSA") had a contract with ASC pursuant to which ASC undertook to provide maintenance and technical engineering support for federal government agencies, including the Patuxent River Naval Air Station (through the Department of the Navy), for a period of five years from 1997 to 2002. It seems to be largely undisputed that, in respect to its contractual duties, ASC was an independent contractor and not "an agent or employee of the Government." According to the contract, ASC agreed to "guarantee[ ] the satisfactory completion of the IT [(information technology)] Professional Services performed under the task order and that all contract personnel utilized in the performance of IT Professional Services under the task order shall have the education, experience, and expertise as stated in the task order."
In early 2000, the Navy requested ASC's services for "information technology (IT) test and evaluation (T & E) support" under the GSA contract. The delivery order contained a "Statement of Work" that required ASC "to maintain the government facilities, including the pier and *681 synchrolift,[1] at the Patuxent River Naval Air Station for the period of time from January 24, 2000, through September 30, 2000." Under the order, ASC was required to provide "integrated logistics support including oversight and coordination related to the operation, maintenance, and access of government facilities, ... and grounds; custodial duties; and as required, use government vehicles, forklift, overhead crane, and synchrolift." ASC was also required to report emergency situations involving the facilities and property. The government alleges that the "delivery order [further] delegated to [ASC] the manner of accomplishing the maintenance and technical assistance." ASC had a separate contract with the government to serve as a "property manager" with responsibilities to maintain the Naval Station site. At around this same time, defendant General Dynamics had a separate contract with the government in respect to a new amphibious assault vehicle. In turn, apparently, General Dynamics had subcontracts with Chesapeake and/or with Noesis for the performance of certain tasks.
Ryan was employed by Chesapeake as a diver, however, on the day of his accident, he was not performing tasks as a diver for Chesapeake. Rather, he alleges that on the day of his accident, he "had been directed to use a tow tractor [weighing more than ten thousand pounds] to assist in cleaning the pier area in preparation for a visit by the Commandant of the United States Marine Corps." In other words, it appears, Noesis, who had the responsibility to clean up the pier for a visit by a high-ranking military officer, was utilizing Ryan as an alleged "borrowed servant" (i.e., borrowed from Chesapeake) at the time of Ryan's accident. Ryan attests generally that he "was performing work on orders from above, which apparently came from the Marine Corps, to clean the pier for a visit by a high-ranking officer in the Marine Corps." Ryan further alleges that the "pier's wooden decks collapsed under the tractor's weight" when he attempted to drive the tractor onto the syncrolift to turn around on the pier. When the wooden deck collapsed, the tractor fell through an opening of in the pier into the water and Ryan's lower leg was partially amputated. Ryan has received substantial benefits under worker's compensation laws, and seeks in this action to fasten liability for his accident upon such parties as may be amenable to the imposition of liability in this third party tort action.
II.
The determination of jurisdiction is a threshold issue; the plaintiff in an action has the burden of proving that subject matter jurisdiction exists. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ("Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.") (internal quotations omitted) (quoting Ex parte McCardle, 7 Wall. 506, 514, 19 L.Ed. 264 (1868)); Williams v. United States, 50 F.3d 299, 304 (4th Cir.1995); Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir.1991); McKeel v. United States, 178 F.Supp.2d 493, 496 (D.Md.2001). When the government challenges the court's subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), "the plaintiff bears the burden of persuasion and must demonstrate an unequivocal waiver *682 of sovereign immunity." McKeel, 178 F.Supp.2d at 496 (citing Williams, 50 F.3d at 304). In ruling on a rule 12(b)(1) motion, "the court is free to consider and to weigh evidence outside of the pleadings to determine its power to hear the case." Id. A district court should grant a Rule 12(b)(1) motion to dismiss "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Richmond, Fredericksburg & Potomac R. Co., 945 F.2d at 768 (citing Trentacosta v. Frontier Pac. Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir.1987)).
Moreover, "a waiver of the Government's sovereign immunity will be strictly construed, in terms of scope, in favor of the sovereign." Williams v. United States, 242 F.3d 169, 172 (4th Cir.2001) (quoting Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996)); see Ammer v. United States, 881 F.Supp. 1007, 1010 (D.Md.1994) ("[T]he terms of [the government's] consent to be sued in any court define that court's jurisdiction to entertain the suit.") (citing United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941)). Specifically, Ryan alleges federal jurisdiction under the FTCA, SAA, and PVA. Although the FTCA usually provides a waiver of sovereign immunity in tort actions against the government, the FTCA is expressly inapplicable as to an admiralty claim. 28 U.S.C. § 2680(d). Admiralty claims against the United States are cognizable under the SAA, 46 App. U.S.C. §§ 741-52, and the PVA, 46 App. U.S.C. §§ 781-90.
III.
"The authority of federal courts to hear cases in admiralty stems directly from the [United States] Constitution, which extends federal judicial power `to all Cases of admiralty and maritime Jurisdiction.'" White v. United States, 53 F.3d 43, 45 (4th Cir.1995) (quoting U.S. Const. art. III, § 2); see Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 531, 115 S.Ct. 1043, 130 L.Ed.2d 1024 (1995). "Congress has codified this power, vesting in the federal district courts original and exclusive jurisdiction over `[a]ny civil case of admiralty or maritime jurisdiction.'" White, 53 F.3d at 45 (quoting 28 U.S.C. § 1333(1)).
The applicable test as to whether a tort claim lies within the admiralty jurisdiction is two-pronged, that is, the plaintiff must satisfy two conditions, namely, (1) location and (2) "connection with maritime activity." Grubart, 513 U.S. at 532, 115 S.Ct. 1043; Sisson v. Ruby, 497 U.S. 358, 362, 110 S.Ct. 2892, 111 L.Ed.2d 292 (1990); David Wright Charter Serv., Inc. v. Wright, 925 F.2d 783, 784 (4th Cir.1991); Foster v. Peddicord, 826 F.2d 1370, 1374 (4th Cir.1987), cert. denied, 484 U.S. 1027, 108 S.Ct. 753, 98 L.Ed.2d 766 (1988). To satisfy the location test, the tort must occur on navigable waters, or, if the injury is suffered on land, at least be caused by a vessel on navigable water. White, 53 F.3d at 45 (citing Grubart, 513 U.S. at 527, 532, 115 S.Ct. 1043 (citing Sisson, 497 U.S. at 362-63, 110 S.Ct. 2892)); 46 App. U.S.C. § 740. To satisfy the connection with maritime activity test, "the facts giving rise to the wrong must bear a sufficient connection to maritime activity." White, 53 F.3d at 46. This inquiry requires that the "court first determine whether `the general features of the type of incident involve' have `a potentially disruptive impact on maritime commerce,' and second, `whether the general character of the activity giving rise to the incident shows a substantial relationship to traditional maritime activity.'" Id. (quoting Grubart, 513 U.S. at 534, 115 S.Ct. 1043).
In this case, to satisfy the locality prong, Ryan must first establish that the injuries he suffered either were incurred *683 on navigable waters, or, if suffered on land, were caused by a vessel on navigable water. Grubart, 513 U.S. at 527, 532, 115 S.Ct. 1043. The government argues, and I agree, however, that Ryan cannot meet the locality prong because his injuries were suffered on a pier (considered an extension of land), but they were not caused by a vessel on navigable water. Grubart, 513 U.S. at 527, 532, 115 S.Ct. 1043. Ryan correctly recognizes that, "although the courts, at one time, treated piers as an extension of the land, Martin v. West, 222 U.S. 191, 197, 32 S.Ct. 42, 56 L.Ed. 159 (1911), this rule was changed in 1948, when Congress passed the Extension of Admiralty Jurisdiction Act." Ryan incorrectly assumes, however, that injuries suffered on a pier without the involvement of a "vessel on navigable water" fall within the purview of this court's admiralty jurisdiction.
The Fourth Circuit has held that courts should look to "the place where the accident which ultimately gave rise to the cause of action was `initiated.'" White, 53 F.3d at 47 (locality satisfied where a subcontracted security guard disembarked a vessel from the gangway to the dock) (citing Whittington v. Sewer Const. Co., 541 F.2d 427, 432 (4th Cir.1976)). In this instance, Ryan was operating a tow tractor on a pier when the pier's wooden planks collapsed and his leg was partially amputated as the tractor fell on him and into the water. Based on the undisputed manner in which the accident occurred, it is clear that the injury was "initiated" on the pier and was not caused by a "ship or vessel on navigable water." 46 App. U.S.C. § 740; Grubart, 513 U.S. at 532, 115 S.Ct. 1043; White, 53 F.3d at 47.
As Ryan cannot establish the locality prong for admiralty jurisdiction, I need not reach the issue whether Ryan can demonstrate that his claims have a "connection with maritime activity;" both prongs of the jurisdictional test must be satisfied to invoke this court's admiralty jurisdiction. Grubart, 513 U.S. at 532, 534, 115 S.Ct. 1043; see, e.g., Executive Jet Aviation, Inc. v. Cleveland, 409 U.S. 249, 266-68, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972) (declining to determine whether locality existed where a plane struck sea gulls over land but actually fell in Lake Erie's navigable waters, and instead finding that a "connection with maritime activity" did not exist). Because Ryan in unable to allege facts sufficient to satisfy the locality inquiry, his attempt to invoke this court's admiralty jurisdiction fails. Grubart, 513 U.S. at 532, 115 S.Ct. 1043. Accordingly, because I find that this court does not have admiralty jurisdiction in this case, Ryan's claims alleged under 46 App. U.S.C. §§ 741-52, and 46 App. U.S.C. §§ 781-90, against the government fail.
IV.
Ryan also alleges that he has a claim against the government under the Jones Act. See 46 App.U.S.C. § 688. The Jones Act provides a cause of action against the employer of a seaman injured in the course of his employment. Id.; Wheatley v. Gladden, 660 F.2d 1024, 1026 (4th Cir.1981). Jones Act actions may only be brought against a seaman's employer, but a plaintiff can only assert a Jones Act claim against one employer. See Mitola v. Johns Hopkins Univ. Applied Physics Lab., 839 F.Supp. 351, 354-55 (D.Md.1993) ("[A] `seaman' is entitled to sue his employer, and only the single entity determined to be his employer, for negligence pursuant to the Jones Act."); see also Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 791, 69 S.Ct. 1317, 93 L.Ed. 1692 (1949).
The record leaves no doubt that any claim Ryan purports to allege against the government under the Jones Act must fail because Ryan cannot establish that he *684 was a federal employee, whether or not he might have a Jones Act claim against Noesis, Inc., or one of the other defendants under the "borrowed servant" doctrine. See White v. Bethlehem Steel Corp., 222 F.3d 146, 149 (4th Cir.2000) (citing Standard Oil Co. v. Anderson, 212 U.S. 215, 221-22, 29 S.Ct. 252, 53 L.Ed. 480 (1909)). Certainly, Ryan's generalized assertions in his affidavit regarding his work assignment that are based solely on his "beliefs" are insufficient to generate a dispute of fact as to whether he was under the control of the government.[2]
V.
Ryan alleges that, because he has "rightfully alleged a cause of action under LHWCA[3] against his employer" (presumably Chesapeake Bay or Noesis), he has preserved a separate negligence cause of action against "any responsible third party for which he might be owed compensation" for purposes of this motion, the government. A plaintiff can bring a tort action under the LHWCA against a third party that does not sound in admiralty as long as he establishes a separate jurisdictional basis for the action. See Anuszewski v. Dynamic Mariners Corp., Panama, 540 F.2d 757, 758 (4th Cir.1976) (stating that amendments to LHWCA were designed to place an employee injured aboard a vessel in the same position he would be in if he were injured in non-maritime employment ashore, insofar as bringing a third party damage action is concerned); Ward v. Norfolk Shipbuilding and Drydock Corp., 770 F.Supp. 1118, 1121-22 (E.D.Va.1991) (determining that, even in the absence of a federal statutory cause of action for negligence against a non-vessel third party, a federal maritime negligence cause of action does exist for a harbor worker against a non-vessel third party; but, harbor worker was injured while performing traditional maritime activity).
Because this action does not sound in admiralty, however, Ryan must establish a jurisdictional basis for bringing suit against the government that also establishes a waiver of the government's sovereign immunity. Ryan argues that his jurisdictional basis is established through the FTCA. See Hyman v. United States, 796 F.Supp. 905, 906 (E.D.Va.1992) ("The Federal Tort Claims Act does not create a separate cause of action; it simply waives sovereign immunity and allows the United States to be sued in the same manner as a private person under the law of the place of the tort.") (citing 28 U.S.C. § 1346(b)). For the reasons addressed in the following section, however, I find that the government has not waived its sovereign immunity under the FTCA.
*685 VI.
The United States cannot be held liable for tortious conduct unless it has waived its sovereign immunity by the express terms of the FTCA. 28 U.S.C. §§ 1346(b), 2671-2680; Williams v. United States, 50 F.3d 299, 305 (4th Cir.1995) (explaining how the FTCA grants a limited waiver of the government's sovereign immunity and permits recovery against the United States for the tortious acts or omissions of government agents or employees). The FTCA mandates that the 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)(1). The government's liability under the FTCA does not, however, extend to the negligence of independent contractors. See Logue v. United States, 412 U.S. 521, 529-30, 532, 93 S.Ct. 2215, 37 L.Ed.2d 121 (1973); Williams, 50 F.3d at 305-06. Thus, if ASC (whose "negligence" in maintaining or repairing or inspecting the pier allegedly caused Ryan's injuries) is an "independent contractor," the government has not waived its sovereign immunity under the FTCA and the case must be dismissed for lack of subject-matter jurisdiction. 28 U.S.C. § 1346(b); Williams, 50 F.3d at 304.
The government's liability under the FTCA can also be limited by the "discretionary function" exception to the FTCA's waiver of sovereign immunity. 28 U.S.C. § 2680(a). Section 2680(a) exempts the United States from liability under the FTCA for acts of its employees "based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the government, whether or not the discretion involved be abused." Id.
A.
The language of the FTCA protects the government from liability arising out of tortious conduct by independent contractors. McKeel, 178 F.Supp.2d at 497; 28 U.S.C. § 1346(b). Whether an entity is an independent contractor is a question of federal law. Id.; Logue, 412 U.S. at 528, 93 S.Ct. 2215. When courts determine whether an entity is an independent contractor, "the critical inquiry is whether the government has the power to control the detailed physical performance of the contractor, United States v. Orleans, 425 U.S. 807, 814, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976) (quoting Logue, 412 U.S. at 528, 93 S.Ct. 2215), or whether the government supervises the `day-to-day' operations of the project." McKeel, 178 F.Supp.2d at 497 (internal quotations omitted); see Logue, 412 U.S. at 530, 93 S.Ct. 2215. In short, to overcome the independent contractor exception, a claimant must establish that the "government `managed the details' or ran the `daily routine' of the activities constituting the alleged tortious conduct." McKeel, 178 F.Supp.2d at 497; see Williams, 50 F.3d at 306-07 (citations omitted).
The government argues that it contracted with ASC to "maintain the property at Patuxent River Naval Air Station, including the pier and synchrolift."[4] Further, *686 the government states that the requirements of the work that ASC was to perform are specified in the "Order for Supplies or Services," but the "control of the actual work was the responsibility of ASC." ASC is identified as a "contractor" on the "Order for Supplies or Services" dated March 1, 2000, and the order does not specify any "day-to-day" operations or routine that must be performed. ASC is also identified as an "independent contractor" on its "Information Technology Professional Services Authorized Schedule Pricelist."
In the "Information Technology (IT)/Test and Evaluation (T & E) Support for Combatant Craft" statement of work, the scope of work to be performed by ASC includes "provid[ing] technical engineering support primarily at U.S. Naval Air Station, Patuxent River, MD ...." The description of work in this same document states that the:
specific requirements of this task include, but is not limited to, facility integrated logistics support including oversight and coordination related to the operation, maintenance, and access of government facilities, combatant craft, vessels, buildings, spaces, and grounds; custodial duties; updating and validating the inventory data base and integrated logistics support, inventory, shipping, and receiving, screening and disposal of government property ... and as required use government vehicles, forklift, overhead crane, synchrolift, combatant craft, boats, and launch operations.
(emphasis added). ASC was also responsible for complying with "all laws, ordinances and regulations covering their work" and reporting emergency situations "involving the facilities and property."
In the face of this overwhelming evidence, I find Ryan's arguments that the federal defendants cannot avoid liability under the FTCA based on the independent contractor exception unconvincing. Ryan identifies seven factors[5] that "[d]istrict *687 courts look to ... when making a determination that the federal government has exercised a sufficient degree of control and supervision" such that immunity is waived under the independent contractor exception, see Curry, 97 F.3d at 414 (citing Lilly, 876 F.2d at 857), but makes no attempt to apply the factors to the facts of this case. Furthermore, as mentioned above, the conclusory statements in Ryan's affidavit do not support his contentions. Ryan does not identify any federal employee who specifically instructed him to clean the pier on July 15, 2000, or what federal employees were instructed to work "side-by-side" with him. Along the same lines, the statement of work does not (1) detail specific custodial duties, (2) discuss how ASC should maintain and provide access to the Naval Air Station, or (3) describe the specific equipment that must be used to accomplish each aspect of the task(s). Thus, I am persuaded that the government's activities, if any, on the day of the accident (or at any other time) vitiated the application of the independent contractor exception under the FTCA.
ASC advances a slightly different argument in an attempt to avoid the independent contractor exception, but to no avail. ASC explains that, "while [it] did contract to perform certain support services at Patuxent River, it was not responsible for monitoring or maintaining the structural safety of the government property in question the pier that collapsed on July 15, 2000." The gravamen of ASC's argument seems to be that the government cannot avoid liability for Ryan's injuries under the independent contractor exception because ASC was not required to "monitor and evaluate [the] structural integrity or deterioration" of the pier, and all "significant repair or maintenance work done to the facilities at Patuxent River was undertaken at the request and direction of the Government."
There are four separate statements of work directing ASC to perform the tasks under the general GSA contract for specific overlapping periods of time.[6] Each statement includes the task of providing "facility-integrated logistics support including oversight and coordination related to the operation, maintenance and access of government facilities." ASC takes issue with this specific task description because, it argues, it does not and was not intended to include the responsibility of structural maintenance of the pier. The statements of work, however, describe the task instructions as including maintenance and access to "vessels, buildings, spaces, and grounds," custodial duties, and identifies the equipment that may be used to accomplish these tasks, and the federal defendants interpret these instructions as requiring structural pier maintenance.
ASC relies heavily on the July 1999 memorandum from John Hoyt (a federal employee) acknowledging that some of the synchrolift platform planks were missing or were in a weakened and unsafe condition. It is clear as a matter of law, however, that the Hoyt memorandum must be read in conjunction with the declaration of James Lewis, and when so viewed, the record completely defeats ASC's argument. Neither ASC nor Ryan offer any evidence that the problem with the synchrolift planks was not corrected. To the contrary, the Lewis Declaration establishes that he received the Hoyt letter, *688 directed ASC to make all necessary repairs, and that the repairs were completed by the end of November 1999 (a date encompassed by the general GSA contract with ASC and one of the specific statements of work). Thus, the Lewis Declaration is direct evidence of ASC's responsibilities under the contract, regardless of how ASC actually received instructions to complete its tasks. See also Declaration of Charles "Buddy" Guy (stating that he was employed by ASC as a Building Facilitator for the Naval Station and was responsible for inspecting the grounds and subcontracting (with Johnson Controls) to complete building and pier repairs).
ASC does not shed its status as an independent contractor merely because the federal defendants may have specified the requirements of the work to be performed and assured that certain government standards were met. See Robb v. United States, 80 F.3d 884, 887 (4th Cir.1996) (acknowledging that the independent contractor exception to the waiver of sovereign immunity is broadly construed); see also, e.g., Yates v. United States, 365 F.2d 663, 666 (4th Cir.1966) (after hiring independent contractor to do heavy maintenance work on transport planes, Air Force did not retain sufficient control over premises to render it liable for injuries sustained by contracted employee who slipped on a dolly); Harris v. United States, 424 F.Supp. 627, 629, 631 (D.Mass.1976) (Department of Housing and Urban Development not liable for injuries sustained in a fall on a defective stairway in apartment building managed by a contracted management broker). Accordingly, I am not persuaded by ASC's arguments that maintaining the pier (structurally or otherwise) was beyond the scope of their contract, or that the federal defendants exercised significant control over their daily routine such that ASC was no longer an "independent" contractor.
Moreover, Ryan's argument that the government has a "non-delegable duty to provide a safe work place for [Ryan] and the other employees working in this area of [the Naval Station] ...," has no basis in law and must fail. McKeel, 178 F.Supp.2d at 499-500 (explaining that "the FTCA exception for independent contractors preempts state law nondelegable duties" in response to plaintiff's argument that the government had a nondelegable duty to warn invitees of dangers located on the premises) (citing Berkman v. United States, 957 F.2d 108, 112-13 (4th Cir.1992)); see also Roditis v. United States, 122 F.3d 108, 111 (2d Cir.1997) (stating that, "in adopting the independent contractor exception to liability, Congress did not simultaneously adopt the exceptions to that doctrine"); Norman v. United States, 111 F.3d 356 (3d Cir.1997) (adopting the Fourth Circuit's reasoning that a state nondelegable duty cannot override the sovereign immunity of the United States). For all of these reasons, the government is shielded from liability in respect to Ryan's unfortunate accident by the independent contractor exception, despite the fact that the accident occurred on premises under the general control of the government.
B.
In the alternative, even if I were to find that the independent contractor exception is not satisfied, the government is, nevertheless, protected from liability under the discretionary function exception to the FTCA. The Fourth Circuit has consistently held that the discretionary function exception provides broad protection for the United States and limits the liability of the government under the FTCA. McKeel, 178 F.Supp.2d at 500 (citing Bowman v. United States, 820 F.2d 1393 (4th Cir.1987)). By its explicit terms, the FTCA does not impose liability upon the United States for acts or omissions of government employees *689 "`based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the government, whether or not the discretion involved be abused.'" McKeel, 178 F.Supp.2d at 500 (citing 28 U.S.C. § 2680(a)). The exception does not apply, however, if "`a federal statute, regulation, or policy specifically prescribes a course of action for an employee to follow.'" Id. (citing Williams, 50 F.3d at 309 (quoting Berkovitz v. United States, 486 U.S. 531, 536, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988))); see, e.g., In re Sabin, 984 F.2d 124 (4th Cir.1993) (violation of standards regarding testing of polio vaccine); Musick v. United States, 768 F.Supp. 183 (W.D.Va.1991) (violation by Air Force pilot of mandatory squadron policy regarding minimum flying altitude).
The Supreme Court adopted a two-pronged test for determining the applicability of this exception in Berkovitz, 486 U.S. at 537, 108 S.Ct. 1954, and United States v. Gaubert, 499 U.S. 315, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991). McKeel, 178 F.Supp.2d at 500. The first prong involves determining whether the alleged acts or omissions are discretionary in nature, i.e., those involving judgment or choice. Id. (citing Williams, 50 F.3d at 309 (citing Gaubert, 499 U.S. at 324, 111 S.Ct. 1267)). This determination rests upon whether the government conduct is governed by a mandatory statute, regulation or policy. If a mandatory rule applies, then the conduct does not involve discretion and the claim is not barred by the discretionary function exception. Id. (citing Berkovitz, 486 U.S. at 546, 108 S.Ct. 1954). If no such mandatory statute, regulation or policy applies, then the second prong of the Berkovitz-Gaubert test must be examined. Id.
The second prong requires that the discretion be "based on considerations of public policy." McKeel, 178 F.Supp.2d at 500-01 (quoting Berkovitz, 486 U.S. at 531, 108 S.Ct. 1954); Gaubert, 499 U.S. at 316, 111 S.Ct. 1267. If the discretionary actions are determined to further a public policy or regulatory scheme then the exception applies. Id. When resolving this inquiry, court's focus on whether the government's discretion is "of the nature and quality that Congress intended to shield from liability." Williams, 50 F.3d at 309 (quoting United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 813, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984)). The Fourth Circuit has noted that this is not a fact-based inquiry; rather, the court should "look to the nature of the challenged decision in an objective, or general sense, and ask whether that decision is one which we would expect inherently to be grounded in considerations of policy." McKeel, 178 F.Supp.2d at 501 (quoting Baum v. United States, 986 F.2d 716, 721 (4th Cir.1993)). The Fourth Circuit further stated that the absence of a deliberative process is not relevant to an inquiry under the discretionary function exception. Id.; Baum, 986 F.2d at 721 ("[W]e find it largely irrelevant the presence or absence of evidence that involved government agents which did or did not engage in a deliberative process before exercising their judgment."). Thus, the focus of the inquiry is on "the nature of the actions taken and on whether they are susceptible to policy analysis." Id. (citing Gaubert, 499 U.S. at 325, 111 S.Ct. 1267).
Ryan argues that, "until there has been further discovery and investigation, it is not clear whether the [federal defendants'] actions were regulated by statute or agency policy." Ryan contends that, until additional discovery is completed to determine the work that was to be performed on the synchrolift under the contract and the condition of the pier on the day of the accident, the federal defendants' motion is *690 "premature." I disagree. The determination of jurisdiction is a threshold issue. See Steel Co., 523 U.S. at 94, 118 S.Ct. 1003; Richmond, Fredericksburg & Potomac R. Co., 945 F.2d at 768.
ASC argues that the federal defendants cannot satisfy the discretionary function exception because "the tortious conduct alleged by [Ryan] fell outside the scope of the [ASC'] contract," and that it is not within the federal defendants'"discretion" to "fail to act" with respect to maintaining the structural integrity of the pier. The Fourth Circuit has held, however, that engaging custodial and maintenance services falls within the discretionary function exception to the FTCA. Becker v. Dep't of the Army, 981 F.Supp. 905, 907-08 (D.Md.1997) (citing Williams, 50 F.3d at 309). The Williams court found that the discretionary exception applied, in part, because there was no prescribed course of conduct for hiring janitorial and maintenance services. Id. (citing Williams, 50 F.3d at 309) (finding government was not liable under both independent contractor and discretionary function exceptions when woman was injured after slipping on water and falling in the lobby of a building leased by the government but maintained by a contractor). The Williams court also concluded that the discretionary function exception applied because the "decision to hire such contractors requires the Government to engage in a policy decision to weigh the expense involved against the needs of the government premises." Id. (citing Williams, 50 F.3d at 310).
Case law has clearly established that "[t]he decision to hire an independent contractor to render services for the United States is precisely the type of decision that the exception is designed to shield from liability because it involves exercising judgment based on considerations of policy ...." McKeel, 178 F.Supp.2d at 503; Williams, 50 F.3d at 310 (citing Myers & Myers, Inc. v. United States Postal Serv., 527 F.2d 1252, 1256 (2d Cir.1975)); Scanwell Labs., Inc. v. Thomas, 521 F.2d 941, 948 (D.C.Cir.1975), cert. denied, 425 U.S. 910, 96 S.Ct. 1507, 47 L.Ed.2d 761 (1976); Gowdy v. United States, 412 F.2d 525, 529 (6th Cir.), cert. denied, 396 U.S. 960, 90 S.Ct. 437, 24 L.Ed.2d 425 (1969); Thompson v. Dilger, 696 F.Supp. 1071, 1077 n. 9 (E.D.Va.1988). Before deciding to engage a contractor the government has to weigh considerations such as expenses, payment, access to the premises, administration, and a "veritable plethora of factors." Williams, 50 F.3d at 310; McKeel, 178 F.Supp.2d at 503. Similarly, in the instant case, I find that the government's decision to hire ASC to "provide integrated logistics support including ... operation, maintenance, and access of government facilities, ... buildings, spaces, and grounds; [and] custodial duties" even without regard to structural pier maintenance still falls within the discretionary function exception because the decision requires considering, inter alia, expenses and the needs of government premises. Williams, 50 F.3d at 310. Moreover, neither ASC nor Ryan identifies a federal statute, regulation, or policy that actually prescribes a specific course of action for the federal defendants to follow relating to custodial duties and maintenance at the Naval Station. Williams, 50 F.3d at 309 (quoting Berkovitz, 486 U.S. at 536, 108 S.Ct. 1954).
VII.
For the reasons set forth herein, I shall grant the government's motions to dismiss the claims asserted against it for lack of subject matter jurisdiction. An order follows.
NOTES
[1] A synchrolift is a submersible mechanism, apparently operated hydraulically, that lifts small watercraft from the water to a rail assembly on the pier for further transport to a nearby building via the rails.
[2] I note that, by his own account, Ryan's duties on the day of his accident were solely confined to using a tow tractor to assist in cleaning the pier and he was not acting in the capacity of "seaman" when he was injured. McDermott Int'l, Inc., 498 U.S. at 355, 111 S.Ct. 807. As is required by the Jones Act to prove "seaman status," Ryan cannot establish that his duties "contribute[d] to the function of the vessel or to the accomplishment of its mission." Id. at 355, 356-57, 111 S.Ct. 807 (internal quotations omitted) (determining that "a paint foreman injured on an oil drilling platform in the Persian Gulf while assigned to a `paint boat' carrying his painting equipment qualified as a Jones Act seaman") (emphasis added). In short, Ryan was not "doing the ship's work" at the time of his injury. Id. at 355, 111 S.Ct. 807.
[3] The LHWCA provides a federal workers' compensation remedy for a broad category of shore-based maritime workers. 33 U.S.C. §§ 905(b), 933. The LHWCA, with some exceptions not relevant to this case, covers "any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker." 33 U.S.C. § 902(3) (defining "employee" under the LHWCA).
[4] The record includes a declaration from test engineer Louis Ferguson who attests that the Marine Corps Advanced Amphibious Assault Vehicle ("AAAV") was being tested in the waters in and around the Patuxent River Naval Station in July 2000. Several marines and civilian employees of the Marine Corps worked with General Dynamics employees to test the AAAV. The government had a contract with Noesis (who sub-contracted with Chesapeake Ryan's employer) to provide diver support for the AAAV team. Ferguson further states that the government contracted with ASC to provide daily logistic support to the AAAV team, and describes meetings that occurred where the AAAV team and contracted employees discussed daily plans but did not receive specific instruction about "how to perform its job" or "the manner and method of [ASC's] or the divers' work." Although Ryan was not working in his capacity as a diver when he was injured, Ferguson flatly refutes Ryan's implied assertion that a Marine Corps officer instructed Ryan to clean the pier on July 15, 2000. Ferguson's unrebutted declaration wholly supports the government's contention that ASC is, in fact, an independent contractor.
[5] The seven factors include (1) intent of the parties, (2) whether the United States controls the end result or the manner of reaching the result, (3) whether the contractor uses his own equipment, (4) who provides liability insurance, (5) who pays social security taxes, (6) whether federal regulations prohibit federal employees from performing the contract, and (7) whether the individual has authority to subcontract with others. See Curry v. United States, 97 F.3d 412, 414 (10th Cir.1996) (citing Lilly v. Fieldstone, 876 F.2d 857, 859 (10th Cir.1989)). Because this case is not controlling on this court, I will only note that Ryan provides no evidence to support three of the seven factors, and of the remaining four factors, I find that [as to factor (1)] the federal defendants intended to contract with ASC, [as to factor (2)] Ryan may have used government equipment, but no federal employee controlled or directed the precise manner in which the individual tasks were completed, and [as to factor (3)] ASC was authorized to subcontract, namely with Noesis and Chesapeake Bay. Thus, even under Curry, the government would retain the protection provided by the independent contractor exception.
[6] Although the parties have included four statements of work that ASC agreed to perform at the Patuxent River Naval Station and the three performance periods are slightly different, all include July 15, 2000, the date Ryan's injuries occurred. The scope or description of work in each of the four statements of work is substantially similar for purposes of this discussion. Further, each statement of work is encompassed under the general ASC contract with GSA. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2563377/ | 304 F.Supp.2d 541 (2004)
Anthony FIOTO, Jr., Plaintiff,
v.
MANHATTAN WOODS GOLF ENTERPRISES, LLC, Manhattan Woods Golf Club, LLC and Kang Lee a/k/a Ken Lee, Defendants.
No. 01 Civ. 5383(CM).
United States District Court, S.D. New York.
February 4, 2004.
*542 *543 Todd D. Muhlstock, Mergel, Tubman & Grossman, New York City, for Plaintiff.
Chris P. Termini, McCabe, Collins, McGeough & Fowler, L.L.P., Mineola, NY, for Defendants.
DECISION AND ORDER DENYING PLAINTIFF'S MOTION FOR A NEW TRIAL AS A MATTER OF DISCRETION, BUT CONDITIONALLY GRANTING PLAINTIFF'S MOTION FOR A NEW TRIAL PENDING THE OUTCOME OF APPELLATE REVIEW
McMAHON, District Judge.
On April 4, 2003, following a three-day trial, a jury returned a verdict in favor of plaintiff on two claims against defendants. Count I alleged that defendants violated the Family and Medical Leave Act (FMLA), 29 U.S.C. § 2612(a)(1)(C), by firing plaintiff from his job as sales manager at Manhattan Woods Golf Club after he took a day off work to be present while his dying mother underwent emergency brain surgery. Count II alleged a breach of contract growing out of the same conduct. The jury awarded plaintiff damages in the amount of $126,825 for defendants' violation of FMLA,[1] and in the amount of $74,375 for their breach of contract.
Defendants subsequently moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(b), on the ground that plaintiff failed to adduce any evidence that he qualified for FMLA leave. In the alternative, defendants sought reduction in the amount of FMLA damages awarded by the jury, arguing that the damages awarded to compensate plaintiff for the FMLA violation could not, as a matter of logic, be any greater than the damages awarded for defendants' breach of his employment contract. Defendants also asked the court to overturn the verdict in plaintiff's favor on his breach of contract claim.
On July 2, 2003, I granted defendant's motion on the FMLA claim, causing the motion to reduce damages to become moot. Fioto v. Manhattan Woods Golf Enterprises LLC, 270 F.Supp.2d 401, 403 (S.D.N.Y.2003). I denied the motion insofar as it addressed the breach of contract claim. Id., at 406. I also recognized, however, that one or both parties might move pursuant to Rule 50(c)(2) and Rule 59 for a post-JMOL new trial. Id., 406 n. 2. Judgment was entered on July 28, 2003. Familiarity with that opinion and order is assumed.
Plaintiff now seeks a new trial on the FMLA claim and on the damages portion of the breach of contract claim pursuant to Fed.R.Civ.P. 50(c)(2) and Fed.R.Civ.P. 59. Alternatively, plaintiff asks the Court to grant a new trial on its own initiative pursuant to Fed.R.Civ.P. 59(d). Failing that, plaintiff requests that the court grant a conditional ruling pursuant to Fed.R.Civ.P. 50(c)(1), providing for a new trial in the event that the Court of Appeals for the Second Circuit reverses this Court's determination on the FMLA claim.
I hereby deny plaintiff's motion for a new trial under Rules 50 and 59. I, however, conditionally grant plaintiff's motion for a new trial pending the outcome of appellate review.
Motion For a New Trial Under Federal Rules of Procedure 50(c)(2) and 59
Federal Rule of Civil Procedure 59(a) provides that "a new trial may be granted to all or any of the parties and on all or part of the issues in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States. Fed. R. Civ. *544 59(a)." Traditional reasons for granting new trials pursuant to Rule 59 include, "the verdict is too large or too small, damages are excessive ... or that there is newly discovered evidence." 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2805 (2d ed.1995). Federal Rule of Civil Procedure 50(c)(2) "regulates the verdict winner's opportunity to move for a new trial if the trial court has granted a Rule 50(b) motion for judgment n.o.v." Neely v. Martin K. Eby Construction, 386 U.S. 317, 324, 87 S.Ct. 1072, 18 L.Ed.2d 75 (1967). It provides that "any motion for a new trial under Rule 59 by a party against whom judgment as a matter of law is rendered shall be filed no later than 10 days after entry of the judgment." Finally, Federal Rule of Civil procedure 59(d) provides that "[n]o later than 10 days after entry of judgment the court, on its own, may order a new trial for any reason that would justify granting one on a party's motion."
The FMLA Claim
As I stated in my July 2 opinion, FMLA leave is available only to an employee who needs "to care for" a family member. Fioto, at 404. Mr. Fioto's FMLA claim failed as a matter of law because he presented no evidence from which a reasonable jury could have concluded that he provided physical or psychological care for his mother at the hospital. Id., at 404. Mr. Fioto requests a new trial so that he may introduce evidence to remedy that omission. Plaintiff now maintains that he is entitled to a new trial on the FMLA claim because: (1) the defect in the proof of the "to care for" element of the claim can be readily cured by a "token" amount of additional testimony from plaintiff and his father, Anthony Fioto, Sr.; (2) a new trial would comport with considerations of judicial economy; and (3) "substantial injustice" would otherwise occur. (Pl. Brief, at 6).
Plaintiff is indeed correct that a district court can, in an exercise of its discretion, order a new trial pursuant to Rule 50 and 59 "where justice would be served by it; where ... it is obvious that the defect in proof ... is a thing that may be remedied at a new trial without perjury." General William D. Mitchell, Chairman of Advisory Committee, in New York Symposium on Federal Rules, 1938, pp. 283-284 (emphasis added); see also Network Publications, Inc. v. Ellis Graphics Corp., 959 F.2d 212, 213-214 (11th Cir.1992).
But in this Circuit, a litigant seeking to reopen the proof must proffer evidence "which was not available, or by the use of reasonable diligence could have been available for use at the original trial." Mayer v. Higgins, 208 F.2d 781, 783 (2d Cir.1953). As another court in this district has noted, the policy for this rule is clear: "Litigation would be intolerably drawn out if parties failing to offer evidence readily available to them were permitted to reopen the proof if disappointed by the result." Granholm v. TFL Express, 576 F.Supp. 435, 456 (S.D.N.Y.1983). Thus, the policy permitting a party to "cure" a defect in proof must be balanced against the need for judicial economy. Plaintiff suggests that the policy permitting "cure" is favored here because the denial of a new trial would result in "substantial injustice."
The interests of justice would not be served by granting plaintiff a new trial on the FMLA claim.
Plaintiff suggests no reason why he failed to offer proof in support of his FMLA claim at trial. Mr. Fioto testified at trial, but did not present any evidence that he was "needed to care for" his mother on June 15, 2000. Plaintiff and his father now seek to introduce new affidavits showing that "it was [plaintiff's] intention to go to the hospital to assist his father in *545 making all medical decisions relating to his mother's surgery" and that plaintiff "comforted" and "reassured" his mother in the hours before surgery. [P. Brief, at 8-9]. There is nothing that prevented either plaintiff or his father from offering this testimony at trial. The affidavits attached to this motion therefore cannot constitute newly discovered evidence, thereby necessitating a new trial. See Shults v. Henderson, 110 F.R.D. 102, 105 (W.D.N.Y.1986) (new affidavits from witness who previously testified at trial not adequate basis for granting a new trial on damages).
Plaintiff argues that a more appropriate precedent for this Court to consider is Network Publications, Inc., 959 F.2d 212, 215 (11th Cir.1992), in which the Tenth Circuit reversed a trial court for denying a seller's motion for a new trial on a breach of warranty claim, where the buyer-plaintiff proved breach of warranty, but failed to present sufficient evidence of the amount of damages suffered. However, in Network Publications, there was at least some evidence in the record showing that buyer was damaged just not enough to calculate the damage award. Here, as I have already found, the record was completely barren of evidence to support the "to care for" element of Fioto's FMLA claim. Again, Fioto points to defendant Lee's use of the words "to take care of his mom" in describing why Fioto did not come to work on June 15, 2000. But as I stated in my prior opinion, Lee had no knowledge of what plaintiff was doing or was needed to do at the hospital. Certainly, there is no evidence that plaintiff ever communicated to Lee that he was needed to make medical decisions or comfort his ailing parent. For all Lee knew, plaintiff was simply present at the hospital which does not constitute "caring for" a FMLA-qualifying relative.
Finally, a new trial would not comport with the interests of judicial economy. I am in no position to reempanel the jury that heard the original evidence so they can listen to fifteen minutes of testimony. A new trial would be precisely that a new trial, requiring new jury selection, new testimony from all the witnesses and another week of this Court's time. Judicial economy is best served by having the plaintiff present all admissible evidence the first time around, not by having a "practice trial" or "moot court" and then starting over again to allow plaintiff to fill in evidentiary omissions.
The "Contract Damages" Claim
Plaintiff timely filed this motion seeking a new trial on the damages portion of its breach of contract claim on the grounds of jury error. Specifically, plaintiff alleges that the jury erred because "... they awarded different amounts [for the contract claim and the FMLA claim] for plaintiff's losses stemming from the same event, his termination." Fioto, at 406 n. 2. It is certainly strange that the jury awarded different damage awards for the breach of contract and FMLA claims. Nevertheless, those conflicting awards, in and of themselves, do not entitle plaintiff to a new trial under the circumstances of this case.
A district court does not have unfettered discretion to grant a new trial. In fact, the Second Circuit has instructed district courts to "abstain from interfering with [a jury] verdict unless it is quite clear that the jury has reached a seriously erroneous result" that would result in "a miscarriage of justice." Bevevino v. Saydjari, 574 F.2d 676, 684 (2d Cir.1978); Lang v. Birch Shipping Company, 523 F.Supp. 1112, 1115 (S.D.N.Y.1981). Thus, a verdict on damages "can be set aside as clearly excessive or inadequate only when `the verdict is so disproportionate to the injury and its consequences as to shock the conscience of the court.'" Simone v. Crans, 891 F.Supp. 112, 113 (S.D.N.Y.1994).
*546 There was no dispute among the parties that plaintiff had a written and oral Employment Agreement. [Joint Pretrial Order, Stipulated Facts, at 2]. The parties also agreed that plaintiff began his employment with defendant in April 1999 and left on June 16, 2000. [Id., at 1]. Plaintiff's yearly salary was $85,000. [Id., Plaintiff's Contentions, at 3]. Plaintiff contended that he was entitled to commission and bonuses in an amount between $678,125 and $1,220,625 in addition to his yearly salary. [Id.]. At the close of trial, I submitted the following charge, without objection, to the jury on the contract claim damages:
The measure of general damages for the breach of a contract is the amount which will compensate the injured party the Plaintiff for the economic loss he suffered as a result of the breach. The injured party should receive those damages naturally arising from the breach. As nearly as possible, the injured party should receive the equivalent of the benefits he would have received had the Defendant performed under the contract.
A party may only recover as damages amounts that both parties reasonably contemplated or foresaw at the time they made the contract. In determining whether a particular element of damages was foreseeable, you must look first and foremost to the terms of the contract itself, as well as to any negotiations or discussions leading up to the contract. The terms of a written contract that purports to be the full and complete agreement between two parties cannot be varied by oral understanding allegedly reached prior to the signing of the document. Here, the parties have stipulated that the parties were abiding by the unsigned Employment Agreement, which is PX 6.
Damages must be reasonable. Plaintiff cannot recover a greater amount in damages than he could have gained by the full performance of the contract.
It is your duty to determine what loss, if any, the Plaintiff suffered as a result of the Defendant's breach, and to award those reasonable damages that put the Plaintiff in the same economic position he would have been if the Defendant had not failed to perform under the contract.
In a contract like the one at issue here, loss to the Plaintiff is measured as the money he would have earned had he been permitted to complete anticipated but non-speculative sales, under the agreement without being prevented from doing so by Defendant.
For the breach of contract claim, the jury awarded plaintiff $74,375.
The Court's conscience is not shocked by the jury's finding of damages in the amount of $74,375 for defendant's breach of its employment contract with plaintiff. Plaintiff's Employment Agreement was for a salary of $85,000. In response to a special interrogatory, the jury found that plaintiff's employment would have terminated on April 30, 2001, had he not been fired by Defendant Lee on July 16, 2000. The jury charge required the jury to award damages for plaintiff's "anticipated non-speculative" future earnings under the Agreement. Based on this record, the jury could reasonably have concluded that the amount of expected losses for the breach of contract was the amount of salary plaintiff would have earned from July 16, 2000 through April 30, 2001 a period of nine and one-half months. The jury's verdict comports with a finding that Fioto would have received his salary during that period and would have made some money in addition, but would not have earned very much in the way of commissions.[2] I cannot say that *547 the jury reached an erroneous result or that its' decision resulted in a miscarriage of justice. U.S. Football League v. Nat'l Football League, 644 F.Supp. 1040, 1055 (S.D.N.Y.1986) (damages award not inadequate where award was supported by evidence in the record), aff'd, 842 F.2d 1335 (1988).
It certainly appears that the measure of damages for breach of contract and for FMLA should be congruent in plaintiff's case, since the court's charge on FMLA damages was substantially similar to the charge on breach of contract damages.[3] So it is in theory illogical for the jury to have come back with a different amount in damages on the FMLA claim. However, the FMLA verdict has been vacated vacated in a decision on a post-trial motion that was itself further argument on a motion for directed verdict as to which the court reserved decision. In effect, the court ultimately granted the motion for a directed verdict, which means the jury should never have deliberated on the claim. Their verdict is a nullity. Therefore, the fact that the damages awarded on the FMLA claim differ (inexplicably) from those awarded on the contract claim, while interesting, is irrelevant. What is relevant is that the contract damages awarded do not shock the conscience and are fully in accord with a reasonable view of the evidence and the court's charge. They are simply not, as plaintiff urges, inadequate.
A district court has "inherent authority to order a new trial in the face of verdicts which are wholly inconsistent." Id., at 1046. Yet, courts also have "a constitutional obligation to search for an interpretation of the case which reconciles the verdicts, and which respects the principle that juries are not bound by what seems inescapable logic to judges." Id. Assuming arguendo that it is proper to consider the vacated verdict where the award on the remaining claim is reasonable, the two awards, while not congruent, are also not "wholly inconsistent." Both are for amounts far less than plaintiff sought, and are in keeping with a view of the evidence that favored limiting plaintiff's recovery to his base compensation and modest commissions. This is not a case where one award is an unconscionable multiple of the other. See Wickham Contracting Co. v. Board of Education of the City of New York, 715 F.2d 21, 28 (2d Cir.1983) (reversing damage award and remanding for retrial where district court awarded approximately six times the amount of damages for a secondary boycott *548 claim as for an antitrust claim, even though liability under either theory was based on the same illegal acts such that the award amounts should have been identical). In the circumstance here presented i.e., where vacatur of the FMLA judgment means that, as a practical matter, there are no inconsistent verdicts to reconcile this analysis does not support the conclusion that a new trial is needed to redress some manifest injustice.
I will, however, grant plaintiff's motion for a conditional ruling on a new trial pending appellate review.
Plaintiff cites Rule 50(c)(1) as a basis for his motion for a new trial. Ordinarily, Rule 50(c)(1) requires the Court to make a conditional ruling on a motion for a new trial only where "a party joins a motion for a new trial with his motion for judgment n.o.v., or prays for a new trial in the alternative, and the motion for judgment n.o.v. is granted." Federal Rules of Civil Procedure, Advisory Committee Notes, 1963 Amendment. "The alternative motion ... is a remedy for the party who lost the verdict sheet initially and asks for judgment as a matter of law under Rule 50(b)." 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2539 (2d ed.1995). In this case, the defendants are governed by 50(c)(1), as they lost the verdict initially, but were granted post-verdict judgment as a matter of law. The new trial motion of Mr. Fioto, the verdict-winner in this case, is governed not by 50(c)(1), but by Rule 50(c)(2), which "states that the verdict-winner may apply to the trial court for a new trial pursuant to Rule 59 after the judgment n.o.v. has been entered against him." Federal Rules of Civil Procedure, Advisory Committee Notes, 1963 Amendment.
In rare circumstances, a Court may conditionally grant a new-trial motion pursuant to Rule 50(c)(2). Such a circumstance has been found to exist where the damages awarded by the jury were clearly inadequate. See Tribble v. Bruin, 279 F.2d 424 (4th Cir.1960). Here, the contract damages are not clearly inadequate. However, if the jury's verdict on the FMLA claim were to be reinstated by the Second Circuit, there would have to be a new trial on damages, if only because I could not determine the amount in which I should direct the Clerk to enter judgment without running afoul of the "no double recovery" rule. So this is one of those "rare circumstances" in which plaintiff is entitled to a conditional ruling granting him a new trial should he obtain reinstatement of the FMLA verdict on appeal.
This constitutes the decision and order of the Court.
NOTES
[1] The jury found FMLA damages in the amount of $78,631 for the year 2000, $48,194 for 2001, and no damages for either 2002 or 2003.
[2] $74,375 is more than 75% of an $85,000 annual salary ($63,750). So the jury obviously awarded some commission income. There was testimony at the trial about the fall-off in the economy at about the time plaintiff was terminated, which could well have caused the jury to conclude that plaintiff's forecast of his commissions' earnings potential during that nine-month period (some of which included the winter, non-golf playing months) was unduly rosy.
[3] In pertinent part, the FMLA damages charge read:
For FMLA purposes, you will need to identify how much money, in wages, salary, employment benefits or other compensation, if any, plaintiff would have earned in each year in which you find he would have been employed by the defendant, up to and including today. You will see on the verdict sheet a line for each year 2000, 2001, 2002 and 2003. As to each year, please insert the amount of money, if any, that you find plaintiff would have earned, less any amount in mitigation, which I will tell you about in just a minute. If you conclude based on the evidence that Mr. Fioto's employment with defendants would have ended at some point prior to today's date, then that date will be the cut off date for loss of income due to a FMLA violation. You will be asked to indicate on the verdict sheet the date which you find plaintiff's employment would have ended. If you conclude that defendant would still be employed at Manhattan Woods today, you will insert today's date on the verdict sheet. (Emphasis added). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2565872/ | (2008)
ABERCROMBIE & FITCH CO., Plaintiff,
v.
FEDERAL INSURANCE CO., Defendant.
Federal Insurance Co., Counterplaintiff/Third-Party Plaintiff,
v.
Abercrombie & Fitch Co., Counterdefendant, and
National Union Fire Company of Pittsburgh, Pa., Third-Party Defendant.
No. 2:06-CV-831.
United States District Court, S.D. Ohio, Eastern Division.
September 30, 2008.
OPINION AND ORDER
EDMUND A. SARGUS, JR., District Judge.
This matter is before the Court for consideration of Defendant Federal Insurance Company's ("Federal") Motion for Summary Judgment (Doc. # 84). For the reasons that follow, Federal's Motion is DENIED.[1]
I.
Plaintiff Abercrombie & Fitch, Inc. ("Abercrombie") brings this claim seeking a declaratory judgment of insurance coverage and damages for breach of the insurance policy issued to Abercrombie by Defendant Federal. Federal asserts a counterclaim for breach of contract, and seeks declaratory judgment "declaring that as a result of Abercrombie's material breach of its obligations under Section 16 of the 2004 Federal Policy, Federal has no obligation under the [Extended Reporting Period] to provide coverage for the Ross Litigation, the SEC Investigation, or any Related Claims." Counterclaim, at ¶ 53. Defendant/Counterclaimant Federal now moves for summary judgment as a matter of law on Counts One and Two of its Counterclaim and on Abercrombie's Amended Complaint.[2] The Court has jurisdiction under 28 U.S.C. § 1332.
II.
The material facts giving rise to this insurance coverage dispute are not in question. Federal issued Executive Protection Portfolio Policy No. 8159-6213 (the "Federal Policy") to Abercrombie for the Policy Period of September 1, 2004 to September 1, 2005. The Federal Policy includes an Executive Liability and Entity Securities Liability Coverage Section, which provides up to $10 million of coverage for Abercrombie, its officers and directors, for "loss ... on account of any Claim first made ... against [an insured] during the Policy Period or, if exercised, during the Extended Reporting Period, for a Wrongful Act committed, attempted or allegedly committed or attempted by [an insured] before or during the Policy Period." As the end of the Federal Policy Period approached, Abercrombie purchased a new claims-made policy from National Union Fire Insurance Company of Pittsburgh ("National Union"), with coverage effective from September 1, 2005 to September 1, 2006.
On September 2, 2005, one day after the expiration of the Federal Policy, Abercrombie was sued, along with several of its officers and directors, in a class action complaint alleging violations of federal securities laws. Certain Abercrombie shareholders subsequently filed several derivative suits, and the Securities and Exchange Commission commenced a formal investigation on November 30, 2005.
The Federal Policy permitted Abercrombie to purchase a one-year extended reporting period (the "ERP") that would cover claims arising after the end of the initial Policy Period, but involving conduct that occurred during the Policy Period. Abercrombie exercised the option to purchase the ERP and paid the $820,000 premium on September 30, 2005, within the 30-day window provided by the Federal Policy. Abercrombie formally notified Federal of the Ross Claims by letter dated October 5, 2005.
There is no dispute that after the Ross claims were filed, and before purchasing the ERP, Abercrombie renegotiated the National Union Policy, providing that the new coverage would be excess to Federal's primary coverage under the ERP.[3] The agreement between National Union and Abercrombie was later memorialized in an Endorsement to the National Union Policy. Endorsement No. 17 reads as follows:
In the event a Claim is made against an Insured under the policy and also under Policy No. 8159-6213 issued by Federal Insurance Company (hereinafter "Federal Policy"), alleging any Wrongful Act committed or allegedly committed prior to 9/01/2005, then such insurance as is provided by this policy shall apply only as excess over any Loss paid under such Federal Policy.
The parties agree that, had Abercrombie purchased the ERP and not written the National Union Policy to be excess, the National Union and Federal policies would both be primary. Federal maintains that, by shifting the burden of primary coverage to Federal, Abercrombie prejudiced Federal's right to recover from National Union, and that such conduct constitutes a material breach of the insurance contract and a bar to coverage. Specifically, Federal claims that Abercrombie breached Section 16(d) of the Policy, which states:
The Insureds agree to provide the Company [Federal] with all information, assistance and cooperation which the Company may reasonably require and agree that in the event of a Claim the Insureds will do nothing that could prejudice the Company's position or its potential or actual rights of recovery.
Abercrombie contends that the Federal Policy expressly permitted Abercrombie to structure additional or subsequent coverage as excess to Federal's primary coverage. Specifically, the Federal Policy states, in Section 18:
If any Loss under this coverage section is insured under any other valid insurance policy(ies), then this coverage section shall cover such Loss, subject to its limitations, conditions, provisions and other terms, only to the extent that the amount of such Loss is in excess of the applicable retention (or deductible) and limit of liability under such other insurance, whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided in this coverage section [the Executive Liability and Entity Securities Liability Coverage section].
(Federal Policy, Doc. # 85-2).
The parties differ over the meaning of this provision. Federal maintains that the provision applies only to coverage that is exclusively excess; Abercrombie contends that this section gives it the right to purchase primary coverage that would be excess only as to the Federal ERP.
Importantly, the parties do not disagree on several key facts relating to coverage. For example, there is no dispute that the Ross Claims fall within the coverage provided by the ERP, as they allege wrongful conduct occurring during the initial Policy Period. Also, Federal does not allege that Abercrombie failed to exercise the ERP option in accordance with Section 12 of the Policy, or to provide timely notice of the Ross Claims under Section 15.
Federal now seeks judgment as a matter of law and a declaration that the Federal Policy does not provide coverage to Abercrombie for the Ross Claims, based solely on Abercrombie's conduct in writing the National Union Policy to be excess to that of Federal, allegedly cutting off Federal's right of contribution in purported breach of Section 16(d) of the Federal Policy.
III.
Under Civil Rule 56(c), summary judgment should be entered "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c) (emphasis added). The absence of genuinely disputed facts is not enough to obtain summary judgment. Rather, the movant must also "demonstrate that the applicable controlling law requires a decision in the movant's favor. Conversely, to defeat summary judgment, the nonmovant must articulate a viable legal theory entitling it to relief should it prevail on the facts at trial." Moore's Federal Practice, Sec. 56.11[8] (3d ed.2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 245-46, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
IV.
The parties' dispute is primarily a result of the parties' different interpretations of Sections 16 and 18 of the Policy.[4] If Section 18 permits Abercrombie to obtain coverage that is excess only to that of the Federal Policy (and otherwise primary), then taking such a step cannot be considered a material breach of Section 16(d). If Section 16(d) is a standard "cooperation clause," requiring Abercrombie simply to cooperate with Federal in the defense and settlement of the Ross Claims, then Abercrombie's conduct in structuring its insurance in the method most beneficial to its needs does not constitute a breach of the Federal Policy.
A. Interpretation of the Federal Policy
The parties agree that Ohio law governs this dispute and applies to the interpretation of the Federal Policy. The Ohio Supreme Court stated many years ago that:
It is too well settled to require supporting authority that, since the insurer prepares the policy of insurance, it must be liberally construed in favor of the insured, and, likewise, if there is a real ambiguity that ambiguity must be construed in favor of the insured. However, a policy is a written contract, and its terms must be given a reasonable construction. An ambiguity which is created by giving a strained or unnatural meaning to phrases or by mere casuistry does not constitute an ambiguity at all.
Yeager v. Pacific Mut. Life Ins. Co., 166 Ohio St. 71, 78, 139 N.E.2d 48 (Ohio 1956).
The Ohio Supreme Court has also instructed that, in order to defeat coverage, "the insurer must establish not merely that the policy is capable of the construction it favors, but rather that such an interpretation is the only one that can fairly be placed on the language in question." Andersen v. Highland House Co., 93 Ohio St.3d 547, 549, 757 N.E.2d 329 (2001) (internal citations omitted) (citing Lane v. Grange Mut. Cos., 45 Ohio St.3d 63, 65, 543 N.E.2d 488, 490 (1989) ("Where provisions of a contract of insurance are reasonably susceptible of more than one interpretation, they will be construed strictly against the insurer and liberally in favor of the insured")).
Interpreting the Federal Policy in favor of the insured, the Court finds that Federal's positions with regards to Sections 16 and 18 are not the only reasonable interpretations of these positions. Rather, each Section can be reasonably interpreted in such a manner that requires Federal to provide coverage for the Ross Claims. See Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 220, 797 N.E.2d 1256 (2003) (quoting Morfoot v. Stake, 174 Ohio St. 506, 190 N.E.2d 573, paragraph one of the syllabus (1963) ("Although, as a rule, a policy of insurance that is reasonably open to different interpretations will be construed most favorably for the insured, that rule will not be applied so as to provide an unreasonable interpretation of the words of the policy."))
B. Federal Policy, Section 18: "Other Insurance"
Based on the plain language of the "other insurance clause" in the Federal Policy, Section 18, Federal anticipated that Abercrombie would have or could obtain insurance specifically excess to Federal's coverage. The Federal Policy provides that Federal's coverage would be excess to any other coverage "unless such other insurance is written only as specific excess insurance over the Limits of Liability provided in this coverage section." Federal Policy, at Sec. 18. The Policy does not state that such "other insurance" could not otherwise be primary coverage.
After the Ross Claims were filed, Abercrombie and National Union amended the National Union Policy "other insurance clause" by executing Endorsement No. 17 which reads, in part, "such insurance as is provided by this policy shall apply only as excess over any Loss paid under [the] Federal Policy."[5] Federal's argument, that the Policy language prohibited Abercrombie from executing this Endorsement making an otherwise primary policy to be excess only as to Federal's ERP coverage, is not supported by the plain language of the Policy. To the extent Section 18 is susceptible of more than one interpretation, the Court construes it in favor of the insured, Abercrombie.
C. Federal Policy, Section 16(d): "Defense and Settlement"
Federal's interpretation of Section 16(d) of the Policy is unreasonably broad. Federal would have the Court interpret Section 16(d) to impose affirmative duties on Abercrombie not only to cooperate and assist in the defense and settlement of litigation, but also to maximize Federal's potential rights of contribution as against other insurers. For example, although not the basis of its claim for breach of contract, Federal argues that its rights were impaired by Abercrombie's failure to exercise the ERP of a 2004 excess policy Abercrombie held with National Union. The plain language of the Federal Policy does not require such extraordinary effort (and expense) on the part of its insured. It is an unreasonable interpretation of Section 16(d) to find that it requires Abercrombie to structure its insurance needs based not on its own needs and in its own best interests, but rather to minimize its insurer's potential exposure.
The Court finds that Section 16(d) is limited by its context within the Federal Policy. The provision is the fourth part of a section dealing solely with the duty of the Insured in connection with the defense and settlement of a Claim, the selection of defense counsel, and the payment of defense costs. Meanwhile, the Terms and Conditions in the Federal Policy separately govern Federal's rights to recover "in the event of payment under this policy." (Federal Policy, Doc. # 85-2, Sec. 7, "Subrogation"). The Courts finds that Section 16(d) can reasonably be interpreted to require the cooperation of Abercrombie in connection with the defense of a Claim, and no more. See Storer v. Ocean Acci. & Guarantee Corp., 80 F.2d 470, 472 (6th Cir.1935) (Purposes of a cooperation clause are: "(1) To require the insured to aid in preparing the case for trial and in making proper defense; and (2) to prevent collusion between the insured and a friendly claimant."); Weller v. Erie Ins. Co., 125 Ohio App.3d 270, 275-76, 708 N.E.2d 271, 274 (1998).
In Weller, the Ohio Court of Appeals examined the issue of when the breach of a cooperation clause relieves an insurer of its coverage obligations. The insured's lack of cooperation was undisputed in Weller, at issue was whether Erie, the insurer, could establish the element of prejudice as a matter of law.
Whether the insured breached the cooperation clause is generally determined "in view of the facts and circumstances in each case"; however, the issue may be determined by the court as a matter of law "when a case presents undisputed facts." Gabor v. State Farm Mut. Auto. Ins. Co. (1990), 66 Ohio App.3d 141, 144, 583 N.E.2d 1041. Courts of other states have similarly held that prejudice resulting from an insured's failure to cooperate is an issue of fact. Anderson v. Kemper (1983), 128 Mich.App. 249, 253, 340 N.W.2d 87, 90; Ramos v. Northwestern Mut. Ins. Co. (Fla.1976), 336 So.2d 71, 75.
Prejudice has been described as involving material injury to the insurer's ability to contest the merits of the case, Anderson, 128 Mich.App. at 253-254, 340 N.W.2d at 90, or serious impairment in investigating the claim or defending the merits of the case. King v. Federal Ins. Co., 788 F.Supp. 506, 506 (D.Kan. 1992), affirmed 996 F.2d 311 (10th Cir. 1993); Darcy v. Hartford Ins. Co. (1990), 407 Mass. 481, 490, 554 N.E.2d 28, 34. Cf. Boone v. Lowry (1983), 8 Kan.App.2d 293, 302, 657 P.2d 64, 72 (requiring the insurer to show "at the very least that if the cooperation clause had not been breached there was a substantial likelihood that the trier of fact, in an action against the insured, would have found in the insured's favor.")
Weller, 125 Ohio App.3d at 276, 708 N.E.2d 271.
Federal does not allege that Abercrombie has prejudiced its ability to defend the Ross Claims on the merits, and therefore it has not established a breach of the cooperation clause as a matter of Ohio law.
Further, the Court does not interpret Section 16(d) as applying to Federal's potential rights of contribution against a subsequent insurer. As set out above, the plain language of the Federal Policy does not permit Federal's vast interpretation. Contrary to Federal's argument, the Policy does not prevent Abercrombie from taking "any action" as to "any party" that might be detrimental to Federal.[6]
Federal has not demonstrated that "applicable controlling law requires a decision in [its] favor" and is not entitled to summary judgment on Counts One through Five of Plaintiffs Amended Complaint, or on Counts One and Two of its Counterclaim.
C. Bad Faith
Regarding Abercrombie's claim for bad faith in connection with Federal's refusal to pay defense costs date, this Court has already found that "the Federal policy does not express the clear option as to whether to advance defense costs ... While the policy does not contain a duty to defend, Section 17(c) of the policy clearly contemplates the advance payment of defense costs, whether by agreement or by other determination." See March 11, 2008 Opinion and Order denying Federal's Motion to Dismiss Count VI of Plaintiffs Amended Complaint (Doc. # 87). Federal contends that, at the very least, its decision not to advance defense costs to Abercrombie was "reasonably justified" such that Abercrombie cannot maintain its claim of bad faith. See Romstadt v. Allstate Ins. Co., 59 F.3d 608, 611 (6th Cir. 1995) ("[U]nder Ohio law, the proper standard to be used to decide whether an insurer has breached its duty to its insured to act in good faith is the `reasonable justification' standard.")
The Court looks no further than the briefing on Abercrombie's Motion for Partial Summary Judgment[7] (Doc. ## 108, 114, 117) to find the material issues of fact preventing summary judgment on Abercrombie's bad faith claim. The parties dispute, for example, whether all or part of the SEC Investigation is a covered Claim. This material fact, among others, precludes a summary determination on whether Federal's refusal to advance defense costs is reasonably justified as a matter of law. Construing the facts in favor of Abercrombie, the record does not support summary judgment dismissing Abercrombie's claim for bad faith.
V.
For the foregoing reasons, Defendant Federal Insurance Company's Motion for Summary Judgment (Doc. # 84) is DENIED.
IT IS SO ORDERED.
NOTES
[1] Plaintiff's Motion for Leave to File Sur-Reply Brief in Opposition (Doc. # 101) is also pending. Although the Court finds the Sur-Reply unnecessary to a full consideration of the issues, the Court has considered all of the materials submitted by all of the parties in connection with the summary judgment briefing and the motion is therefore GRANTED.
[2] Federal also filed a Third-Party Complaint against National Union for declaratory relief and equitable contribution. Federal has not moved for judgment on those claims, and this Opinion and Order does not address the Third-Party Complaint.
[3] Primary insurance is that which covers the "first level of loss (after satisfaction of any deductible)," while excess insurance is that which is activated when a loss "exceeds the limits of applicable primary insurance." Couch on Insurance, § 1.4 (2006).
[4] Federal devotes a great deal of attention to Abercrombie's motives in structuring its coverage and to the timing of the Endorsements modifying the National Union Policy. Abercrombie does not appear to dispute that it purchased the ERP and renegotiated the National Union Policy in direct response to the Ross Claims. Federal's only substantive claim is that Abercrombie breached the Policy; the Court only considers the plain language of the Policy in determining whether that is the case. The parties' motives and the timing of each step in the process are largely undisputed and wholly irrelevant.
[5] Prior to the amendment of the National Union Policy with Endorsement No. 17, the two policies contained "mutually repugnant" "other insurance" clauses wherein both policies generally provide that its coverage is excess to any other available insurance. Federal maintains that, under such circumstances, the clauses would be disregarded and the insurers become mutually liable for an insured loss. Abercrombie contends that the "other insurance" clauses created a risk of finger pointing between insurers, with each asserting that the other's coverage should be primary.
[6] Presumably for this reason, Federal has not argued that Abercrombie's failure to exercise the ERP option on any other excess policy for the 2004-2005 period constitutes a breach of the Federal Policy.
[7] Abercrombie's Motion for Partial Summary Judgment is under advisement and will be decided by a separate Opinion and Order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2563865/ | 271 F.Supp.2d 402 (2003)
Shallicke McRAE,: a/k/a Yuhura McRae, Petitioner,
v.
PEOPLE of the State of New York, Respondent.
Nos. 00-CV-4238 (JBW), 03-MISC-0066 (JBW).
United States District Court, E.D. New York.
June 12, 2003.
*403 *404 Shallicke McRae, Malone, NY, Pro se.
Jodi A. Danzig, Nassau County District Attorney's Office, Mineola, NY, for Respondent.
JUDGMENT & ORDER
WEINSTEIN, Senior District Judge.
The petition for a writ of habeas corpus is denied for the reasons stated orally on the record at a hearing at which petitioner was present by telephone. This memorandum briefly addresses the claims raised in the petition.
Petitioner was charged primarily with assault and attempted murder of a police officer. Evidence at trial included testimony that a uniformed police officer in a marked car observed petitioner fleeing the scene of an assault. Petitioner was carrying an unlicensed, loaded semiautomatic pistol. When the police officer pulled his car within about thirty feet of petitioner, he aimed and fired the gun at the police car. Immediately after, he ran towards the garage of a nearby house, discarding the gun on the ground. After becoming entangled on a garden fence, the officer caught up with him and placed him under arrest.
Petitioner was acquitted of the attempted murder charge and of a charge of criminal use of a firearm in the first degree. He was convicted of aggravated assault upon a police officer, reckless endangerment, criminal possession of a weapon in the second degree, and criminal possession of a weapon in the first degree. He was sentenced to a total of 7-1/2 to 15 years in prison.
In his petition for a writ of habeas corpus, he claims (1) that the prosecution improperly exercised a peremptory challenge against a prospective juror in violation of Batson v. Kentucky; (2) that an Allen charge given to the jury in order to urge them to reach a verdict was coercive and deprived him of a fair trial; (3) that the prosecutor's summation was improper and deprived him of a fair trial; and (4) that his trial counsel was constitutionally ineffective, as evidenced by his "bizarre and inept tactics having no redeeming qualities."
I. AEDPA
Under the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), a federal court may grant a writ of habeas corpus to a state prisoner on a claim that *405 was "adjudicated on the merits" in state court only if it concludes that the adjudication of the claim "(1) resulted in a decision that was contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States; or (2) resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding." 28 U.S.C. § 2254(d).
An "adjudication on the merits" is a "substantive, rather than a procedural, resolution of a federal claim." Sellan v. Kuhlman, 261 F.3d 303, 313 (2d Cir.2001) (quoting Aycox v. Lytle, 196 F.3d 1174, 1178 (10th Cir.1999)). Under the "contrary to" clause, "a federal habeas court may grant the writ if the state court arrives at a conclusion opposite to that reached by [the Supreme Court] on a question of law or if the state court decides a case differently than this Court has on a set of materially indistinguishable facts." Williams v. Taylor, 529 U.S. 362, 412-13, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000) (O'Connor, J., concurring and writing for the majority in this part). Under the "unreasonable application" clause, "a federal habeas court may grant the writ if the state court identifies the correct governing legal principle from this Court's decisions but unreasonably applies that principle to the facts of the prisoner's case." Id. at 413, 120 S.Ct. 1495. "[F]ederal law, as determined by the Supreme Court, may as much be a generalized standard that must be followed, as a bright-line rule designed to effectuate such a standard in a particular context." Overton v. Newton, 295 F.3d 270, 278 (2d Cir.2002).
II. Exhaustion
A state prisoner's federal habeas petition must be dismissed if the prisoner has not exhausted available state remedies as to any of his federal claims. See Rose v. Lundy, 455 U.S. 509, 522, 102 S.Ct. 1198, 71 L.Ed.2d 379 (1982). "This exhaustion requirement is ... grounded in principles of comity; in a federal system, the States should have the first opportunity to address and correct alleged violations of [a] state prisoner's federal rights." Coleman v. Thompson, 501 U.S. 722, 731, 111 S.Ct. 2546, 115 L.Ed.2d 640 (1991). The exhaustion requirement requires the petitioner to have presented to the state court "both the factual and legal premises of the claim he asserts in federal court." Daye v. Attorney General, 696 F.2d 186, 191 (2d Cir.1982) (en banc).
A district court may, in its discretion, deny on the merits habeas petitions containing unexhausted claims so-called "mixed petitions." See 28 U.S.C. § 2254(b)(2) ("An application for a writ of habeas corpus may be denied on the merits, notwithstanding the failure of the applicant to exhaust the remedies available in the courts of the state."). In addition, the state may waive the exhaustion requirement, but a "State shall not be deemed to have waived the exhaustion requirement or be estopped from reliance upon the requirement unless the State, through counsel, expressly waives the requirement." Id. § 2254(b)(3); see also Ramos v. Keane, No. 98 CIV. 1604, 2000 WL 12142, **3-4, 2000 U.S. Dist. LEXIS 101, at *10 (S.D.N.Y.2000) (state's failure to raise exhaustion requirement does not waive the issue).
If a petitioner specifies only certain issues that he deems worthy of review in a letter seeking leave to appeal a conviction to the New York Court of Appeals, he will be deemed to have waived any remaining claims in the original appellate brief. Grey v. Hoke, 933 F.2d 117, 120 (2d Cir. 1991).
*406 III. Procedural Bar
A federal habeas court may not review a state prisoner's federal claims if those claims were defaulted in state court pursuant to an independent and adequate state procedural rule, "unless the prisoner can demonstrate cause for the default and actual prejudice as a result of the alleged violation of federal law, or demonstrate that failure to consider the claims will result in a fundamental miscarriage of justice." Coleman, 501 U.S. at 750, 111 S.Ct. 2546.
IV. Ineffective Assistance of Counsel
The Counsel Clause of the Sixth Amendment provides that a criminal defendant "shall enjoy the right ... to have the Assistance of Counsel for his defence." U.S. Const. amend. VI. This right to counsel is "the right to effective assistance of counsel." McMann v. Richardson, 397 U.S. 759, 771 n. 14, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970) (emphasis added). The Supreme Court has explained that in giving meaning to this requirement we must be guided by its purpose "to ensure a fair trial" and that therefore the "benchmark for judging any claim of ineffectiveness must be whether counsel's conduct so undermined the proper functioning of the adversarial process that the trial cannot be relied on as having produced a just result." Strickland v. Washington, 466 U.S. 668, 686, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). In order to prevail on a Sixth Amendment claim, a petitioner must prove both that counsel's representation "fell below an objective standard of reasonableness" measured under "prevailing professional norms," id. at 688, 104 S.Ct. 2052, and that "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different," id. at 694, 104 S.Ct. 2052. See also United States v. Eyman, 313 F.3d 741, 743 (2d Cir.2002). A "reasonable probability" is "a probability sufficient to undermine confidence in the outcome." Strickland, 466 U.S. at 694, 104 S.Ct. 2052.
The performance and prejudice prongs of Strickland may be addressed in either order, and "[i]f it is easier to dispose of an ineffectiveness claim on the ground of lack of sufficient prejudice ... that course should be followed." Id. at 697, 104 S.Ct. 2052. In evaluating the prejudice suffered by a petitioner as a result of counsel's deficient performance, the court looks to the "cumulative weight of error" in order to determine whether the prejudice "reache[s] the constitutional threshold." Lindstadt v. Keane, 239 F.3d 191, 202 (2d Cir.2001). The court must also keep in mind that "a verdict or conclusion only weakly supported by the record is more likely to have been affected by errors than one with overwhelming record support." Strickland, 466 U.S. at 696, 104 S.Ct. 2052. "The result of a [criminal] proceeding can be rendered unreliable, and hence the proceeding itself unfair, even if the errors of counsel cannot be shown by a preponderance of the evidence to have determined the outcome." Purdy v. Zeldes, 337 F.3d 253, 260 (2d Cir.2003) (quoting Strickland, 466 U.S. at 694, 104 S.Ct. 2052). Ineffective assistance may be demonstrated where counsel performs competently in some respects but not in others. See Eze v. Senkowski, 321 F.3d 110, 112 (2d Cir.2003).
IV. Claims
Petitioner first claims that the prosecution improperly exercised a peremptory, challenge against an "Oriental" prospective juror, in violation of Batson v. Kentucky. This claim was raised by petitioner on direct appeal and denied as being "either upreserved for appellate review ... or without merit." It was, however, not presented to the Court of Appeals when he sought leave to appeal the decision *407 of the Appellate Division. It has therefore not been exhausted. In addition, the claim would now be procedurally barred in the state courts, since collateral relief on a claim already decided on the merits by the Appellate Division is not available. See N.Y.Crim. Pro. L. §§ 440.10(2)(a). The claim is therefore deemed exhausted but procedurally barred, and may not be addressed by this court.
At any rate, the claim is a weak one. Defense counsel objected to the peremptory challenge of an "Oriental" juror. When the prosecutor began to explain his reasons for excluding her, the trial court interjected to say, "You don't have to. There is no law that says you have to give the reason on jurors of that ethnic background, and peremptory challenges are allowed." Trial Tr. at 59. Although this was an inaccurate statement of the law "Orientals" are arguably a cognizable racial group a fair reading of the record is that the trial court concluded that a prima facie case of discrimination had not been made out, since a defendant must show some circumstance that raises an inference that the prosecutor used a peremptory challenge to exclude a potential juror based on his or her race. Batson v. Kentucky, 476 U.S. 79, 96, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986).
Petitioner next claims that an Allen charge given to the jury in order to urge them to reach a verdict was coercive and deprived him of a fair trial. As an initial matter, the state urges that this court cannot reach the issue because it was deemed procedurally barred by the Appellate Division. In light of the recent decision of the Second Circuit court of appeals in Cotto v. Herbert, 331 F.3d 217, 238-48 (2d Cir.2003), this court concludes that the "contemporaneous objection" rule cited by the Appellate Division as cause for the procedural bar is not "adequate" under the circumstances of this case. Petitioner's counsel objected to the trial court's decision to give an Allen charge prior to its actual delivery to the jury. See Trial Tr. at 591 ("I oppose your giving an Allen charge, period, on this case at any time, now or tomorrow or any time while this jury is deliberating."). Although counsel did not renew his objection, the trial court was on notice that an objection had been lodged. As detailed in Cotto, many New York cases have held that "an issue of law is preserved even if it is not specifically raised by defendant so long as the trial court expressly rules on the issue following an earlier objection." Id. at .244. This court may therefore reach the merits of petitioner's argument, although review will proceed under the deferential standards of AEDPA since the Appellate Division ruled, that the Allen charge claim was meritless.
In determining whether a trial court's actions have improperly coerced a jury, the Supreme Court has held that a reviewing court must look at the supplemental charge given by the judge "in its context and under all the circumstances." Lowenfield v. Phelps, 484 U.S. 231, 237, 108 S.Ct. 546, 98 L.Ed.2d 568 (1988). The charge in the present case given after a note from the jury stated that "the jurors appear to be at an impasse" and that it was "unlikely that we will be able to reach a verdict" was not improper. The court instructed:
"It is eminently desireable that if you reasonably can, you agree upon a verdict as to each and every count of this indictment. For the parties involved, the case is an important one, and its presentation to you has involved expense to both sides. If you fail to agree upon a verdict, the case may have to be tried before another jury selected in the same manner and from the same source as you were chosen. There is no reason to *408 believe that the case will ever be submitted to a jury more competent to decide it. Of course, by pointing out to you the desirability of your reaching a verdict, the Court is not suggesting to any of you that you surrender conscientious convictions of what the truth is and of the weight and effect of all the evidence. It does, however, wish to call to your attention that in most cases absolute certainty cannot be expected and that while each of you must decide the case for yourself beyond a reasonable doubt and not merely acquiesce in the conclusion of your fellow jurors, you should examine the questions submitted to you with candor and frankness and with proper deference to and regard for the opinions of each other. It is your duty after full deliberation and consideration of all of the evidence to agree upon a verdict as to each and every count of this indictment if you can do so without violating your individual judgment and your conscience."
Trial Tr. at 592-94. (emphasis supplied). Although the brief references to the expense and efforts that a new trial would bring were arguably improper, taken as a whole the instruction was not coercive. Granting of the writ on this ground is not warranted.
Petitioner also claims that the prosecutor's summation was improper and deprived him of a fair trial. There can be dispute that the sarcastic and belittling tone employed by the prosecutor during his summation was inappropriate. Nonetheless, much of the summation was nothing more than commentary on the evidence. Where the prosecutor strayed from the four corners of the evidence objections were sustained by the trial court. As Justice Sutherland stated in Berger v. United States, in seeking to attain a conviction a prosecutor "may strike hard blows, [but] he is not at liberty to strike foul ones." 295 U.S. 78, 88, 55 S.Ct. 629, 79 L.Ed. 1314 (1935), overruled on other grounds by Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960). In the present case, the blows were not so foul as to have deprived petitioner of a fair trial or to merit the granting of the writ.
Finally, petitioner claims that his trial counsel was constitutionally ineffective, as evidenced by his "bizarre and inept tactics having no redeeming qualities." As a general matter, strategic choices made by counsel are "virtually unchallengeable." Strickland, 466 U.S. at 690-91, 104 S.Ct. 2052. Petitioner provided a plethora of examples of what he deems defense counsel's "bizarre" statements in his brief before the Appellate Division. See Defendant-Appellant's Br. at 36-44. Although counsel may have been less that brilliant at times for instance, in establishing on cross-examination of a police officer that his client had a criminal history a review of the record reveals that his representation was not constitutionally deficient and did not prejudice petitioner sufficiently so that there is a reasonable probability that, but for his poor performance, the result of the proceeding would have been different.
Petitioner at the hearing raised for the first time the issue that he had been denied his Miranda rights. This claim is utterly without merit. The transcript of the hearing shows that his counsel stipulated that petitioner was given his warnings. It shows as follows:
THE COURT: Mr. McRae, you just heard your attorney enter into a stipulation or an agreement that the statement that you made to the detective who was just on the stand was, in fact, made.
Do you agree with that?
THE DEFENDANT: Yes.
THE COURT: Do you agree that prior to your making that statement, that you *409 received your constitutional rights from that detective?
THE DEFENDANT: Yes.
THE COURT: Do you agree that you made that statement in a knowing, intelligent and voluntary manner?
THE DEFENDANT: Yes.
THE COURT: Do you agree that the prosecutor will be permitted by you to use that statement on his direct case, should he choose to do that?
THE DEFENDANT: Yes.
THE COURT: The stipulation is accepted.
Transcript of November 13, 1997 Hearing, at 28-29. This issue, while unexpected, is so meritless that it should be rejected.
Another claim petitioner now presents is that his sentence was excessive. His sentence was well within the statutory limits and is fully supported by the nature of his crime. His claim has no merit. A challenge to the term of a sentence is not a cognizable constitutional issue if the sentence falls within the statutory range. See White v. Keane, 969 F.2d 1381, 1383 (2d Cir.1992). No purpose would be served in having petitioner exhaust this claim in state court, because the matter is frivolous. Accordingly, this claim is also rejected.
V. Claims
The petition for a writ of habeas corpus is denied. A certificate of appealability is granted with respect to 1) the peremptory challenge of a person characterized by petitioner as "oriental", 2) inappropriateness of the summation, and 3) ineffectiveness of counsel, on the ground that these claims may be supported on appeal. Petitioner may apply to the Court of Appeals for the Second Circuit for a Certificate of Appealability.
There is no basis for an actual innocence claim. The evidence against defendant was quite strong even though there were few witnesses. See Transcript of Trial pp 183 ff., 271 ff. The defense was weak. See id. at 313 ff.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2566136/ | (2007)
DISTRICT COUNCIL NO. 9, Plaintiff,
v.
EMPIRE STATE REGIONAL COUNCIL OF CARPENTERS, et al., Defendants.
No. 06 Civ. 6557(BMC)(JMA).
United States District Court, E.D. New York.
September 26, 2007.
MEMORANDUM DECISION AND ORDER
COGAN, District Judge.
This breach of contract action under § 301 of the Labor Management Relations Act stems from a jurisdictional dispute between plaintiff, District Council No. 9 ("District 9"), and another labor union, Empire State Regional Council of Carpenters, as a result of conduct in which it and its affiliate, Local 52 (together, the "Carpenters"), have engaged. Plaintiff alleges that the Carpenters have competed for and taken business in violation of the constitutions and by-laws of umbrella labor associations that it alleges govern both unions. Plaintiff also asserts a breach of contract claim against those umbrella associations for failing to enforce their own governing provisions that allegedly require them to take action against the Carpenters.
The case is before the Court on defendants' motions to dismiss, which raise a number of points. The motions are granted because I find that the relevant documents do not authorize plaintiff to maintain this action.
BACKGROUND
I. Union Organization
The AFL-CIO has "departments," which are actually self-governing labor associations, to represent workers in specified trades and occupations. The department at the top of the associational pyramid in this case is defendant Building and Construction Trades Department ("BCTD"), which covers what its name implies. BCTD, in turn, includes among its members state and local labor organizations and unions, including the defendants New York State Building and Construction Trades Council (the "State Council"), the Building and Construction Trades Council of Westchester and Putnam Counties, New York (the "Westchester Council"), and the Building and Construction Trades Council of Nassau and Suffolk County (the "Long Island Council") (all three Councils will be collectively referred to as the "Councils.")
District 9 is a local union and affiliate of the International Union of Painters and Allied Trades ("IUPAT"). IUPAT is also a member of BCTD. The relationship of District 9 itself to BCTD and the Councils is not spelled out in the amended complaint or motion papers. However, at oral argument, District 9 explained that it is a direct member of each of the Councils, and this does not appear to be disputed.
District 9 also asserted at oral argument that it is a member of BCTD. BCTD disagrees. The issue turns on the construction of Article 1, § 2 of BCTD's Constitution. This defines BCTD's members as "National and International building and construction trades unions ... which are primarily and customarily, or historically, engaged or operating in the building and construction trades industry and all branches, division [sic] and subdivisions thereof." District 9 asserts that it is a "branch, division" or "subdivision" of IUPAT, and therefore a member of BCTD. BCTD's view, in contrast, is that this last clause modifies the phrase "construction trades industry," allowing member unions that are in branches, divisions and subdivisions of the construction trades industry to join, rather than referring to branches, divisions and subdivisions of national or international unions.
II. Jurisdictional Disputes
Article X of BCTD's Constitution requires all member unions to submit to its jurisdiction to determine any dispute between members over which member organization will receive or has received a particular job. Article X of the Constitution mandates that:
All jurisdictional disputes between or among affiliated National and International Unions and their affiliated Local Unions and employers shall be settled and adjusted according to the present plan established by the [BCTD], or any other plan or method of procedure that may be adopted in the future by the [BCTD] for the settlement of jurisdictional disputes. Said present plan or any other plan adopted in the future shall be recognized as final and binding upon the [BCTD] and upon all affiliated National or International Unions and their affiliated Local Unions.
The referenced dispute resolution mechanism is entitled the "Plan for the Settlement of Jurisdictional Disputes in the Construction Industry." Plaintiff refers to this as "the Plan," and I will as well. The substance of the Plan is not at issue here and indeed the parties have not advised me as to how it operates.
Article XII of BCTD's Constitution provides that it will promulgate a separate, uniform constitution which will govern all local councils, and that such constitution may be supplemented by the local councils as long as nothing in the supplement is inconsistent with BCTD's Constitution. Pursuant to this provision, BCTD has promulgated a "Constitution and Bylaws to Govern Local Councils of the Building and Trades Construction Department, AFL-CIO" (the "Uniform Constitution").
Article XII, § 5 of the Uniform Constitution requires member unions, in their collective bargaining agreements with employers, to include the same submission to the Plan as is required by Article X of BCTD's Constitution, quoted above. In other words, member unions are required to obtain employers' agreement to submit any jurisdictional dispute between unions to the BCTD for binding determination, rather than the employer taking sides. Specifically, § 5 provides:
Local Councils and all Local Unions affiliated with the Council shall incorporate in all collective bargaining agreements without change the following provisions:
"All jurisdictional disputes between or among building and construction trades unions and employers shall be settled and adjusted according to the present plan established by the [BCTD] or any other plan or method of procedure that may be adopted in the future by the [BCTD]. Decisions rendered shall be final, binding and conclusive on the employers and unions."
The Long Island Council's Constitution and By-laws also have a provision on jurisdictional disputes that is similar to Article X of BCTD's Constitution. The State Council's Constitution and By-laws and Westchester Council's Constitution and By-laws do not. However, there seems to be no dispute that Article XII, § 5 of the Uniform Constitution applies to the State and Westchester Councils to achieve the same result.
Finally, it should be noted that on March 22, 2006, the State Council adopted a resolution stating that it would "remove and permanently disqualify from membership in the [State Council] and all local or regional Building Trades Councils within the State of New York any local union or district or regional council or other similar body that participates in, either directly or through direct affiliation, raiding of the jurisdiction of any signatory to this Resolution."
III. Interpretation and Enforcement
BCTD's President is given broad discretion to interpret its Constitution. Article V, § 4 provides that "[t]he President shall have the authority to interpret the Constitution of the [BCTD]," and further provides that "the President's interpretation shall be conclusive and in full force and effect" unless it is amended.
BCTD's Constitution places the authority to discipline its member councils in both its President and its Governing Board of Presidents (made up of its President and the presidents of each member national and international union). As to the President, BCTD's Constitution provides as follows:
The President is authorized to take such disciplinary action against local, state or provincial building and construction trades councils.... Such disciplinary action may be taken ... when such council... violates or fails to comply with any of the provisions of [this] Constitution... or engages in any activity or course of conduct which is contrary or detrimental to the welfare or bests interests of the [BCTD], or when such council fails to conform its policies to the policies of the [BCTD].
In addition, BCTD's Governing Board of President is "authorized and empowered to... enforce the provisions contained in this Constitution."
The State Council has similar provisions in its Constitution and By-laws.
IV. The Instant Case
The Carpenters cannot qualify for membership in BCTD or the Councils because their governing association, the United Brotherhood of Carpenters and Joiners of America (the "UBCJA"), withdrew from the AFL-CIO in 2001. Under Article IX, Section 3 of the AFL-CIO Constitution, to enjoy representation in local councils, local unions must be part of national or international unions that are affiliated with the AFL-CIO. Although the AFL-CIO provided options by which UBCJA affiliates like the Carpenters could separately qualify for AFL-CIO membership after the UBCJA withdrew, the Carpenters availed themselves of none of those options.
Nevertheless, the crux of this case is the amended complaint's allegation that the Carpenters "remain affiliated" with the BCTD and the Councils and that these entities have "permitted full participation and benefits of membership in spite of the withdrawal of the Carpenters' parent organization...." The amended complaint does not allege what the "full participation and benefits of membership" are, but plaintiffs counsel explained at oral argument that what is really at stake here, in major part, are "project labor agreements." These are project-specific agreements, like a contract to build a particular structure, in which the Councils enter into a collective bargaining agreement with an owner, developer, or contractor, and then select local unions to accomplish the various types of work needed for that project. District 9 contends that only locals in good standing can participate in these project labor agreements; the Councils dispute that.
District 9's complaint is thus that BCTD and the Councils are putting the Carpenters into those agreements instead of, or in addition to, District 9, when District 9 wants the work for itself. District 9 would presumably not have a problem if it could have jurisdictional disputes that arise from this situation resolved under the Plan, but the Carpenters are refusing to do so and BCTD and the Councils are not making them do so. Since the Carpenters, pursuant to the AFL-CIO Constitution, are not even supposed to be an eligible member because their parent organization is not part of the AFL-CIO, District 9 resents losing work to them. It wants the Constitution and By-laws enforced to exclude the Carpenters, or alternatively, it wants the Carpenters to subscribe to the Plan in their collective bargaining agreements. District 9 alleges that it has repeatedly complained to BCTD and the Councils about this problem, but that either they took no action at all or did not take any dispositive action that was satisfactory to District 9.
The sixteen count amended complaint is a paradigm of confused pleading, containing much immaterial history about the severance of ties between the AFL-CIO and the UBCJA. The claims for relief are separately labeled as to each defendant and then multiple claims run together as to each defendant, except in one instance where two claims are labeled separately against one defendant, and another where the claims are labeled against two defendants and then run together. In essence, each of the defendants is alleged to have violated the constitutional provisions applicable to it by, in the case of the Carpenters, participating as a member without complying with the Plan, or, in the case of the other defendants, by not disciplining or expelling the Carpenters for violating the Plan or forcing the Carpenters to include the Plan in their collective bargaining agreements.
The amended complaint seeks various forms of relief, some of which is inconsistent and therefore must be viewed as alternative requests. First, plaintiff seeks a declaratory judgment that the Carpenters are not eligible to participate in the Councils. Second, plaintiff seeks an injunction forcing the Councils to expel the Carpenters and deny them the benefits of membership. Third, plaintiff seeks declaratory relief that if the Carpenters are permitted to participate in the Councils, they must adhere to the Plan. Fourth, plaintiff seeks an injunction requiring the Councils and BCTD to act upon plaintiff's claims that the Carpenters are in violation of the constitutional documents. Fifth, plaintiff seeks reimbursement of all dues it has paid to the Councils and the elimination of any outstanding dues balance until the Carpenters are made to comply with the constitutional documents.
DISCUSSION
I. General Principles
A. Standard on a Motion to Dismiss
When deciding a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the Court must "accept[ ] all factual allegations in the complaint as true and draw[ ] all reasonable inferences in the plaintiff['s] favor." Ganino v. Citizens Utils. Co., 228 F.3d 154, 161 (2d Cir.2000). Nonetheless, "factual allegations must be enough to raise a right of relief above the speculative level, on the assumption that all of the allegations in the complaint are true." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007). "The complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir.1995) (quotations and citation omitted); accord Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002). That is important here because the amended complaint's references to the various constitutional documents allow me to consider those documents on this motion to dismiss.
B. Governing Rules
The constitutional documents of labor unions, i.e., their constitution and by-laws, constitute a contract of Section 301(a) of the Labor Management Relations Act. United Ass'n of Journeymen v. Local 334, 452 U.S. 615, 619-22, 101 S.Ct. 2546, 2549-50, 69 L.Ed.2d 280 (1981). Those documents are subject to the generally applicable rules of contract interpretation under the common law, as modified by any overriding principles of federal labor law. See Cement and Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Services Fund and Annuity Fund v. Lollo, 35 F.3d 29, 34-35 (2d Cir.1994). One of those overriding principles is that courts must give considerable deference to a union's interpretation of it constitution and by-laws, which will control unless it is patently unreasonable. See, e.g., Sim v. New York Mailers' Union Number 6, 166 F.3d 465, 470 (2d Cir.1999) ("[T]he interpretation of bylaw provisions by Union officials will be upheld unless patently unreasonable.") (citations and internal quotations omitted). "Patently unreasonable" means an interpretation that "conflicts with the `stark and unambiguous' language of the Constitution or reads out of the Constitution important provisions." Executive Bd. of Transport Workers Union of Philadelphia, Local 234 v. Transport Workers Union of America, AFL-CIO, 338 F.3d 166, 170 (3d Cir.2003) (citation and internal quotations omitted).
II. Application
A. District 9's Rights against BCTD and the Carpenters under the BCTD Constitution and By-laws
The Carpenters and BCTD contend that even if the Carpenters are subject to the controlling constitutional provisions of BCTD and the Councils (which the Carpenters deny), it is up to those entities, not District 9, to enforce those provisions, and District 9 cannot proceed against them when the entities of which the Carpenters are allegedly a member have not. For this and other points, the Carpenters rely on United Derrickmen and Riggers Assoc. Local Union No. 197 v. Local No. 1 Bricklayers and Allied Craftsman, 119 F.Supp.2d 168 (E.D.N.Y.2000), a case that does have a number of similarities to the instant dispute.
Derrickmen involved the Building and Construction Trades Council of Greater New York ("BCTC"), which was itself a council within BCTD. The dispute was between two BCTC locals, the plaintiff Local 197 and the defendant Local 1, and the issue, in part, was enforcement of the same or a similar Plan that is at issue in the instant case to resolve jurisdictional disputes. Local 197 sought to prevent Local 1 from raiding opportunities without submitting to the Plan and to compel it to include the Plan language in its collective bargaining agreements. On cross-motions for summary judgment, Judge Glasser dismissed the complaint for a number of reasons, including that Local 197 had no standing to enforce adherence to the Plan against another local. He reasoned that "[n]othing in the BCTD Constitution demonstrates an intent to confer an enforceable right to sue upon the thousands of local unions affiliated with the fifteen International and National Unions comprising the BCTD." Id. at 174.
In the instant case, I come to the same conclusion as Judge Glasser albeit through a slightly different process emanating from the different posture of and arguments made in this case. First, I reject District 9's argument that it is a member of BCTD under Article 1, § 2 of BCTD's Constitution. The phrase at the end of the sentence "and all branches, division [sic] and subdivisions thereof" is far removed from the subject "building and construction trades unions" earlier in the sentence, and indeed immediately follows the limiting phrase "building and construction trades industry" without being separated by a comma. I see no reasonable reading of the sentence that would interpret "all branches, division [sic] and subdivisions thereof" as pertaining to "building and construction trades unions" instead of "building and construction trades industry." This is reinforced by the fact that while union organizations are commonly referred to as umbrella organizations, affiliates, members, councils, or locals, the sentence uses none of those nouns. Instead, it uses words conveying a broad, general description"branches, division or subdivision thereof"to define or expand the scope of the industry that BCTD covers. Finally, as noted above, BCTD's interpretation of its own constitutional documents is entitled to deference, and it does not interpret its Constitution to include District 9 as a member.
Since District 9 is not a member of BCTD, its only path to gaining enforceable rights is as an intended third party beneficiary of the BCTD Constitution. District 9 asserts that since it is bound by the BCTD Constitution, and derives both benefits and burdens from the implementation of the Plan, as well as other provisions of the Constitution, its status as intended third party beneficiary necessarily follows. For the same reasons as the Court in Derrickmen, 119 F.Supp.2d at 174-75, I reject this argument.
Under its plain language, the right to commence enforcement proceedings for obligations under the Constitution is vested in the national and international unions. They are the only entities in the Constitution that are authorized to file charges, and the exclusion of the locals from that grant of authority reflects a contractual intent to preclude locals from acting as the claimant or grievant in that process. Not only is the power to file charges limited to the national and international union members of BCTD, but the only proper respondent for such charges is another national or international union, not one of those union's locals. The Constitution thus envisions enforcement just as it does membershipwholly between national or international Unions. Each such national or international is responsible both for protecting its own locals against business raiding by other national or internationals' locals, and for defending them if they are alleged to have engaged in such conduct.
For reasons not identified in its amended complaint, IUPTA, which is District 9's international governing organization and a member of BCTD, has chosen not to protect District 9 by asserting District 9's claims as stated in this action. The complaint, in fact, pointedly alleges that IUPTA is not a party to this action, perhaps hinting, since the allegation is self-evident from the absence of IUPTA in the caption, that IUPTA wanted District 9 to make it clear that IUPTA was not involved. But District 9 cannot simply skip that contractually mandated requirement. Obtaining the support and cooperation of its own international union is a fundamental step it must take before it can obtain relief from BCTD. Having failed to do so, District 9 has no standing under the BCTD Constitution to proceed directly against either BCTD or the Carpenters.
B. District 9's Claims against the Councils and the Carpenters
As noted above, although the amended complaint is silent on the issue, it appears common ground that District 9 is a member of each of the Councils. This removes the standing problem that District 9 has in proceeding against BCTD. However, District 9 still faces at least two equally insurmountable obstacles.
1. The Claim against the Carpenters
As to the Carpenters, there is nothing in the Councils' constitutional documents that allows one local to sue another over a jurisdictional dispute. The mechanism is for District 9 to complain to the Councils about another member's conducthere, allegedly, the Carpentersand for the Councils to act on that complaint. I will address District's 9 claims against the Councils for failing to take action on its complaint below, but it suffices to note here that even District 9, by having requested relief from the Councils, recognizes that they are the proper forum in which to seek relief and to have the Plan enforced against renegade members.
District 9 attempts to avoid this result by pointing to basic principles of the law governing unincorporated associations, a group to which labor unions obviously belong. In particular, District 9 cites to a treatise on New York law for the proposition that "[t]he constitution, rules, and bylaws of an unincorporated association, if they are not immoral, contrary to public policy or the law of the land, or unreasonable, constitute a contract between the members themselves, and between the association and the individual members, which the courts will enforce." 6A N.Y.Jur.2d Associations § 6 (2007) (emphasis added). This statement of the law is obviously accurate. It is essentially the same principle from which the federal rule requiring interpretation of union constitutional documents as contracts, see United Ass'n of Journeymen v. Local 334, 452 U.S. 615, 619-22, 101 S.Ct. 2546, 69 L.Ed.2d 280 (1981), is derived.
However, by isolating the phrase "between the members themselves," District 9 reads too much into this principle. The principle is one of interpretative approach, not substantive law. It does not vest rights in parties beyond those granted by the language of the agreement. To view the rule as creating a substantive right to enforce the agreement against fellow members would subsume the rule itself, transforming what is supposed to be a rule adopting principles of contract interpretation into one that creates a super-contract. This is because District 9's approach would transcend the very language that is meant to be enforced and violate those same principles of contract interpretation. Thus, if an associational agreement grants one member the right to sue another, a court will recognize that provision as a substantive right under the agreement and enforce it as it would any contractual right. But if no such right is granted, and no principle of contract law supplies it, this rule of interpretation standing alone will not permit the courts to infer such a right where the parties have not agreed to it.
Here, nothing in the Councils' constitutional documents gives one member the right to sue another. No duty is set out that is enforceable directly between them. Thus, even if the Carpenters are assumed to be a member of the Councils, District 9 has no right to proceed against them.
2. The Claim against the Councils
District 9's claim against the Councils faces a different but more fundamental problem. Under the governing language, the Councils, and particularly their officers and committees charged with enforcing their constitutions and by-laws, have complete discretion as to whether to bring disciplinary proceedings against any member. Nothing requires them to do so. Because, under the controlling language, their discretion is so unencumbered, locals who join these Councils accept the risk, not only that the Council will reject their request to discipline another member, but that the Council will refuse to consider the request at all.
To understand why this is the case, one needs to look at the remedy that District 9 is seeking. This kind of relief, compelling an unincorporated association to act according to its constitutional documents, is the equitable counterpart against private entities that the legal remedy of mandamus supplies against public entities. It is well established that corporations, as creations of the state, are subject to a writ of mandamus to compel them to act according to their articles of incorporation and by-laws, see 5A Fletcher Cyc. Corp. § 2366 (2007), just as mandamus can be used to compel public officials to perform their statutory duties. Although unincorporated associations like labor unions are not created by the state and thus are not subject to mandamus on the law side of the court, Phalen v. Theatrical Protective Union No. 1, 22 N.Y.2d 34, 290 N.Y.S.2d 881, 238 N.E.2d 295 (1968), federal and state courts have long recognized that the remedy on the equity side of specific performance, requiring a private actor to conform to its contractual obligations to prevent irreparable injury, is closely analogous to a writ of mandamus. See In Re Tyler, 149 U.S. 164, 190, 13 S.Ct. 785, 37 L.Ed. 689 (1893) (comparing "an injunction to prevent such wrong and injury" to "a mandamus, in a like case, to enforce the performance of a plain legal duty, purely ministerial"); Antoni v. Greenhow, 107 U.S. 769, 781, 2 S.Ct. 91, 27 L.Ed. 468 (1883) ("Mandamus, in this class of cases, is in the nature of a suit to obtain a specific performance of a contract") (emphasis in original); Parsons v. Marye, 23 F. 113, 121 (C.C.E.D.Va.1885) ("a mandatory injunction ... is the counterpart in equity of a mandamus at law."); Phalen, 22 N.Y.2d at 40, 290 N.Y.S.2d at 885-86, 238 N.E.2d 295 ("unincorporated labor unions are not the sort of bodies against whom mandamus traditionally lies... [but] the very same relief could be obtained in an ordinary action in equity for a mandatory injunction").
Of course, it is an equally venerable principle that mandamus will only lie to require performance of a purely ministerial act; when the statutory or corporate provision sought to be enforced is discretionary, mandamus is not available. See Burrell v. U.S., 467 F.3d 160, 164 (2d Cir.2006), citing Work v. United States ex rel. Rives, 267 U.S. 175, 177, 45 S.Ct. 252, 69 L.Ed. 561 (1925) ("Mandamus issues to compel an officer to perform a purely ministerial duty. It cannot be used to compel or control a duty in the discharge of which by law he is given discretion."); Brasseur v. Speranza, 21 A.D.3d 297, 297-98, 800 N.Y.S.2d 669, 670 (1st Dep't 2005) (where by-laws required corporation to "maintain the common elements of the condominium," mandamus was unavailable because "the obligation sought to be enforced ... involves more than a mere ministerial act.").
Since the mandamus remedy at law to compel a corporation to comply with its charter and by-laws is analogous to a injunction against an unincorporated association to comply with its constitution and bylaws, it logically follows that discretion in the enforcement of its constitutional provisions on the part of the unincorporated association will render the equitable remedy unavailable. Indeed, even in an action at law for damages, where the higher standard of irreparable injury does not apply, the presence of discretion in exercising constitutional provisions precludes a finding of duty between the association and its members to take any particular steps.
Brenner v. Local 514, United Brotherhoood of Carpenters and Joiners of America, 927 F.2d 1283 (3d Cir.1991), illustrates this point. There, individual members of a local sued their local and the UBCJA, which was the local's governing association, alleging as against UBCJA that it had failed to adequately supervise the local and prevent its illegal retaliation against the plaintiffs for opposing the local's management. The plaintiffs relied on § 6 of UBCJA's constitution, which provided that the UBCJA
"shall have the right to establish supervision over and to conduct the affairs of any subordinate body (including the removal of any or all officers of such subordinate body) to correct financial irregularities or to assure the performance of collective bargaining agreements and the responsibility of the subordinate body as a bargaining agent or to protect the interests and rights of the members or whenever the affairs of the subordinate body are conducted in such manner as to be detrimental to the welfare of the members and to the best interests" of the UBCJA.
Id. at 1291. The Third Circuit rejected the contention that this provision mandated any action on the part of the UBCJA:
Assuming that section 6 of the constitution gave the International the right to intervene to require the local fairly to refer union members from the hiring hall, we see nothing in section 6 which can be construed as an obligation undertaken by the International to do so. The retention of regulatory and supervisory powers by the International in Section 6 merely gave it a discretionary right, as distinguished from a duty, to intervene in the affairs of Local 514.
Id. at 1292.
That is the case here. The constitutional provisions upon which District 9 relies do not require the Councils to do anything.[1] They are grants of authority, not a list of mandated actions that the Councils must take. District 9 therefore has no right to injunctive relief compelling the Councils to exercise their discretion neither in the way that District 9 would like, nor in any way at all.
District 9's various attempts to transform the permissive into the mandatory are not persuasive. First, it notes that there is a right to administratively appeal adverse determinations of claims to BCTD. This means, according to District 9, that the Councils must determine grievances. But its logic is flawed; it places the cart before the horse. Simply because the Councils provide for a right of appeal of a decision, should they choose to make it, does not in any way mean that they must make it. The right of appeal if an adverse decision is made does not alter the permissive grant of authority to make decisions that is plainly set forth in the constitutional documents.
Second, District 9 points to a distinction between the State and local Councils' constitutionsthe former contains the discretionary grants of authority to discipline, while the latter does not contain any language on the issue at all. Yet as District 9 conceded at oral argument, this is simply because the local Councils' constitutional documents defer to BCTD. Article 8 of the Westchester Council's Constitution and By-laws states that "this Council shall not suspend or expel any affiliated Local Union without first obtaining approval of the Governing Board or Presidents" of BCTD, and the Long Island Council's Constitution and By-laws contains nearly identical language. Thus, District 9 has stumbled into an even bigger problem as to the local Councilsthey are constitutionally prohibited from providing at least some of the relief that District 9 has requested, and upon which request District 9 contends that the Councils are required to act.
Third, District 9 argues that the failure to act violates a memorandum written by the President of the AFL-CIO and a State Council resolution mandating the removal of the Carpenters that were by their terms mandatory. Specifically, it relies upon a memorandum from the AFL-CIO's President in 2005 stating that Carpenters affiliates who did not accept the re-affiliation option "must" be expelled from all AFL-CIO affiliates, and the State Council's 2006 resolution advising that it "will remove and permanently disqualify" any affiliate that raids. District 9, however, cites no authority for the proposition that officers' memoranda or associational resolutions enjoy the same status as the association's constitution and by-laws. It would be a dangerous adventure to infuse isolated or ad-hoc statements, not approved with the regularity of constitutional provisions or by-laws, and particularly from a single association officer, with the binding effect of contractual undertakings.[2]
Finally, District 9 argues that at the very least, the issue of whether action is mandatory or permissive is ambiguous under the applicable documents, and thus discovery and trial are needed to interpret the parties' intent. I do not see the ambiguity; the constitutional documents plainly compel no action. But even if there were such ambiguity, this type of case presents an instance where federal labor policy supersedes the common law rules of contract interpretation. It is not only that federal courts defer to a union's interpretation of its own constitutional documents, see Sim v. New York Mailers' Union Number 6, 166 F.3d 465, 470 (2d Cir.1999); it is the policy recognizing that affairs within and between unions are most often best resolved between those parties themselves without judicial interference. See Local No. 48, United Broth. of Carpenters and Joiners of America v. United Broth. of Carpenters and Joiners of America, 920 F.2d 1047, 1051 (1st Cir.1990) ("Courts have neither a monopoly on fairness nor a sufficient expertise in the administration of labor organizations to warrant pervasive judicial intervention in union affairs.") (quoting Gurton v. Arons, 339 F.2d 371, 375 (2d Cir.1964)) ("General supervision of unions by the courts would not contribute to the betterment of the unions or their members or to the cause of labor-management relations"); Bennett v. Saunders, No. 99 Civ. 0854, 1999 WL 529539, *2 (S.D.N.Y. July 23, 1999) ("The Second Circuit has repeatedly emphasized this policy of non-interference in the context of labor union disputes.")
Accordingly, District 9 has no right to maintain this action under the constitutional documents.
CONCLUSION
Defendants have raised a number of other grounds for dismissal but there is no need to address them in light of the discussion above. The motions to dismiss are granted, and the amended complaint is dismissed.
SO ORDERED.
NOTES
[1] The same is true as to District 9's claims against BCTD under its Constitution.
[2] Even if one were to take that casual step towards contract formation, District 9 would still have its standing problem as to BCTD. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2565101/ | 277 F.Supp.2d 1244 (2003)
AMERICAN CANOE ASSOCIATION, et al., Plaintiffs,
v.
Thomas E. WHITE, Secretary of the Army, et al., Defendants.
No. CV-00-BE-1795-NE.
United States District Court, N.D. Alabama, Northeastern Division.
August 15, 2003.
*1245 *1246 *1247 Ray Vaughan, WildLaw, Montgomery, David Bookbinder, Sierra Club, Washington, DC, for Plaintiff.
Alice H. Martin, Edward Q. Ragland, U.S. Attorneys' Office, Birmingham, Deborah Shoemake, Katherine S. Vance, U.S. Army Corps of Engineers, District Counsel, Mobile, for Defendant.
MEMORANDUM OPINION
BOWDRE, District Judge.
I. Introduction
This case is before the court on Plaintiffs' Motion for Summary Judgment (Doc. # 29) and Defendants' Cross Motion for Summary Judgment (Doc. # 32).[1] Plaintiffs, American Canoe Association, Inc., Alabama Rivers Alliance, Friends of the Mulberry Fork, and Wild Alabama, are environmental groups who object to the decision of the United States Army Corps of Engineers to issue a § 404 Clean Water Act[2] permit to the Cullman-Morgan Water District to construct a dam across the Duck River in Cullman County, Alabama. Defendants are Thomas E. White, the Secretary *1248 of the Army, and the United States Army Corps of Engineers ("COE").
Plaintiffs brought this action pursuant to the National Environmental Policy Act, 42 U.S.C. § 4321, et seq. ("NEPA"). Plaintiffs argue that the COE's decision to issue the permit was arbitrary and capricious. Plaintiffs ask this court to vacate the COE's decision to issue the permit without conducting an Environmental Impact Statement ("EIS"), vacate the § 404 permit, and order the COE to perform an EIS for the project. In their Complaint Plaintiffs seek declaratory and injunctive relief. They ask the court, in essence, to declare that the COE issued a permit for the Duck River Project in violation of NEPA and to vacate that permit. They also ask the court to enjoin the COE from allowing the Duck River Project to proceed until the COE prepares an EIS.
The issues raised in the cross motions for summary judgment have been fully briefed by the parties. The court held a hearing on these motions on February 20, 2003. After the hearing, the court allowed the parties to submit additional briefs on whether the COE took a hard look at the future water quality of the proposed impoundment and whether the COE took a hard look at the downstream effects of the proposed dam. On April 2, 2003, Defendants submitted a post-argument memorandum addressing these issues (Doc. # 49). On April 24, 2003, plaintiffs submitted a response to defendants' memorandum (Doc. # 52). Thus, these motions are now ripe for decision.
The issue before the court is whether the COE's decision to issue a Finding of No Significant Impact ("FONSI") and a permit to build the dam, as opposed to first requiring the preparation of an EIS, was arbitrary and capricious. Upon due consideration, the court answers this question affirmatively. The court finds that the COE did not take a hard look at the cumulative effects of other proposed projects in the Black Warrior River Basin, the future water quality of the proposed reservoir, and the effect the proposed dam will have on the Mulberry Fork of the Black Warrior River. The court also finds that, even if the COE took a hard look at these environmental issues, the COE failed to make a convincing case for issuing a FONSI.
Because the court concludes that the Administrative Record fails to address these environmental concerns, the court concludes that remand is necessary. Therefore, the court GRANTS in part Plaintiffs' Motion for Summary Judgment (Doc. # 29) insofar as plaintiffs' requested a remand to the COE and a declaration that the permit be vacated. However, the court denies all other relief requested by plaintiffs. Specifically, the court does not mandate that the COE conduct an EIS. On remand, the COE should take a hard look at the issues discussed below, reconsider its decision, and determine whether an EIS is required for the Duck River project. Defendants' Motion for Summary Judgment is DENIED.
II. Facts and Procedural History[3]
The Cullman-Morgan Water District (the "Water District") was incorporated in July 1993 and is made up of Cullman *1249 County and the southern portion of Morgan County. The Water District's major customer is the poultry industry. Cullman County alone produces more poultry than twenty-five individual states. The Water District's incorporation was an attempt to rectify a growing need for water to service the poultry industry and other industrial facilities in Cullman and Morgan counties. Currently, the Water District is served by Lake Catoma, a man-made reservoir.
In 1994 and 1995, the Nashville District[4] of the COE prepared two reports which considered a minimum of fifteen options to satisfy the Water District's growing water needs. After preparing these reports, the COE selected the Duck River site as the preferred alternative. The preferred alternative is the construction of a dam on the Duck River that will create a reservoir for additional water capacity. This reservoir will flood 640 acres of land and will eliminate 5.7 linear miles of the Duck River, 3.2 miles of tributaries to the Duck River, and 1.32 acres of forested wetlands. The Water District holds the permit to construct the Duck River Dam. The reservoir is proposed to be used as a public water supply to meet emergency and future needs for Cullman County and portions of five surrounding counties.
Section 404 of the Clean Water Act, 33 U.S.C. § 1344, requires the COE to issue a permit for "the discharge of dredged or fill material" into navigable waters. Thus, a § 404 permit is a prerequisite to the building of any dam. On March 22, 1996, The Water District applied to the Mobile District of the COE for a § 404 permit to build the Duck River Dam. The COE issued a Draft Environmental Assessment ("EA") for the project in May, 1999. The Draft EA recommended the Duck River project as the preferred alternative and evaluated the potential environmental impacts of this alternative. The COE forwarded the Draft EA to several state and federal agencies. The Alabama Department of Environmental Management ("ADEM"), the Alabama Department of Conservation and Natural Resources ("ADCNR"), the United States Environmental Protection Agency ("EPA"), the U.S. Fish and Wildlife Service ("FWS"), and several environmental groups and individuals expressed concerns about the environmental impacts of the Duck River impoundment. These concerns included the loss of a free flowing stream, loss of wetlands, loss of fish and wildlife habitat, and the degradation of water quality in the proposed reservoir and downstream of the reservoir.
In October 1999, the COE issued a Final EA for the project. The Final EA included the following mitigation measures added in response to the concerns voiced by the state and federal agencies: (1) minimum downstream flows from the Duck River reservoir were increased to levels recommend by the ADCNR; (2) annual releases were added for a canoe race on the Mulberry Fork; (3) a Watershed Management Plan was included; (4) Cullman County donated $120,000 to the Cullman County Soil and Water Conservation District to hire a full time employee to manage ongoing efforts to improve water quality in the Duck River; (5) water quality *1250 and biological monitoring programs were established to obtain base line criteria for evaluating pre- and post-impoundment conditions; and (7) a management plan for a reservoir buffer for old growth forest was added.
Following the issuance of the Final EA, the EPA and the FWS expressed further concerns about the impacts of the dam on the downstream portion of the Duck River. However, on January 4, 2000, the FWS notified the COE that despite its concerns over the project, it would not request a higher level review of the proposed permit. Similarly, on January 24, 2000, the EPA decided not to elevate its review of the project.
On January 28, 2000, the COE issued a FONSI and a § 404(b)(1) evaluation of the project. The FONSI concluded that the proposed project would not have significant adverse effects on the quality of the human environment. Thus, on February 1, 2000, the COE issued a § 404 permit to the Water District. The permit authorized the Water District to discharge 12,500 cubic yards of rock and earth fill into the Duck River to construct a dam and a 640 acre reservoir.
On April 10, 2000, plaintiffs filed this action. Plaintiffs generally argue that the COE's decision to issue the FONSI and the permit, as opposed to requiring the preparation of an EIS, was arbitrary and capricious. On March 2, 2001, plaintiffs moved for summary judgment and asked the court to vacate the COE's FONSI and issue an order requiring the COE to prepare an EIS. On March 30, 2001, defendants filed a cross-motion for summary judgment, asking this court to find that the permit is valid and that the COE complied with NEPA. On August 13, 2002, this case was reassigned to the undersigned judge.
III. Legal Standards
1. Statutory Standards
"The `object of NEPA is to require federal agencies to consider environmental values when making decisions [and] the initial responsibility of the federal agency is to determine the extent of the environmental impact.'" Hill v. Boy, 144 F.3d 1446, 1449 (11th Cir.1998) (quoting C.A.R.E. Now, Inc. v. Federal Aviation Admin., 844 F.2d 1569, 1572 (11th Cir. 1988)). "The National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321-4370d, is not a substantive environmental statute which dictates a particular outcome if certain consequences exist. Instead, NEPA creates `a particular bureaucratic decision-making process.'" Sierra Club v. United States Corps of Eng'rs, 295 F.3d 1209, 1214 (11th Cir.2002) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)).
Section 102(2) of NEPA, 42 U.S.C. § 4332(2)(C), contains a Congressional mandate that federal agencies consider the environmental impact, and potential alternatives, for every proposed "major Federal action significantly affecting the quality of the human environment." It is an "action-forcing" provision designed to prevent agencies from acting on incomplete information and to "ensure[] that important effects will not be overlooked or underestimated only to be discovered after resources have been committed or the die otherwise cast." United States Corps of Eng'rs, 295 F.3d at 1214 (quoting Robertson, 490 U.S. at 349, 109 S.Ct. 1835).
To determine whether an action may have significant environmental impacts, and therefore require an EIS, an agency is required to comply with regulations promulgated by the Federal Council on Environmental Quality ("CEQ"). 40 C.F.R. *1251 § 1500.3; Hill, 144 F.3d at 1450. The CEQ regulations direct federal agencies to first prepare an EA that "provide[s] sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact." 40 C.F.R. § 1508.9(a)(1) (2002). "Thus, an agency will reach one of two conclusions in an EA: `either that the project requires the preparation of an EIS to detail its environmental impact, or that the project will have no significant impact ... necessitating no further study of the environmental consequences which would ordinarily be explored further through an EIS.'" Hill, 144 F.3d at 1450 (quoting Sabine River Auth. v. United States Dep't of Interior, 951 F.2d 669, 677 (5th Cir. 1992)). If the agency makes the latter conclusion, as in the instant case, the agency must issue a FONSI explaining why the action will have no significant impact on the environment. 40 C.F.R. §§ 1501.4(e), 1508.13.
Plaintiffs challenge the COE's decision to issue a FONSI and to not prepare an EIS and argue that its decision was arbitrary, capricious, and violative of the Administrative Procedure Act ("APA"). See 5 U.S.C. § 706(2)(A, C). The Eleventh Circuit holds that courts must review an agency's decision not to prepare an EIS under an "arbitrary and capricious" standard of review. Hill, 144 F.3d at 1450. In applying this standard, a district court gives deference to the agency and refrains from substituting its own judgment for that of the agency. United States Corps of Eng'rs, 295 F.3d at 1216 (citing Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). However, the court has a duty to look beyond the scope of the decision itself to the relevant factors that the agency considered. "This duty requires the court to consider not only the final documents prepared by the agency, but also the entire administrative record." United States Corps of Eng'rs, 295 F.3d at 1216 (citation omitted).
The Eleventh Circuit has adopted four criteria that a court should consider in determining whether an agency's decision not to prepare an EIS is arbitrary and capricious:
First, the agency must have accurately identified the relevant environmental concern. Second, once the agency has identified the problem it must have taken a "hard look" at the problem in preparing the EA. Third, if a finding of no significant impact is made, the agency must be able to make a convincing case for its finding. Last, if the agency does find an impact of true significance, preparation of an EIS can be avoided only if the agency finds that changes or safeguards in the project sufficiently reduce the impact to a minimum.
Hill, 144 F.3d at 1450 (citations omitted). In determining whether an agency has met the second step of this process and taken a "hard look" at relevant environmental problems, the Eleventh Circuit offers the following guidance:
An agency has met its "hard look" requirement if it has "examined the relevant data and articulated a satisfactory explanation for its action including a `rational connection between the facts found and the choice made.'" Motor Vehicle Mfrs. [Ass'n v. State Farm Mut. Auto. Ins. Co.], 463 U.S. at 43, 103 S.Ct. at 2866. The court will overturn an agency's decision as arbitrary and capricious under "hard look" review if it suffers from one of the following: (1) the decision does not rely on the factors that Congress intended the agency to consider; (2) the agency failed entirely to consider an important aspect of the problem; (3) the agency offers an explanation which runs counter *1252 to the evidence; or (4) the decision is so implausible that it cannot be the result of differing viewpoints or the result of agency expertise. Id., 103 S.Ct. at 2867. If the court finds deficiencies in the agency's reasoning, it may not rectify them or provide a reasoned basis for the agency decision which the agency itself has not articulated. Id., 103 S.Ct. at 2867. Instead, it must remand to the agency so that it may reconsider its own reasoning and decision.
United States Corps of Eng'rs, 295 F.3d at 1214.
When reviewing a final agency action under the APA, the scope of the court's review is properly limited to the administrative record that was before the agency when it made its decision. Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985); Pollgreen v. Morris, 770 F.2d 1536, 1545 (11th Cir.1985). "The role of the court in reviewing the sufficiency of an agency's consideration of environmental facts is limited both by the time in which the decision was made and by the statute mandating review." Fund for Animals v. Rice, 85 F.3d 535, 546 (11th Cir.1996). Thus, in analyzing the COE's action, the court only considers the Administrative Record that was filed in this case. The court disregards any evidence that was filed by the parties and any arguments that were made at the hearing that relied on evidence outside the record and instead focuses on the Administrative Record.
Where the initial level of judicial review of agency action lies in a district court, the district court does not act as a fact-finder. Florida Power & Light Co., 470 U.S. at 744, 105 S.Ct. 1598. Instead, "[t]he task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the record the agency presents to the reviewing court." Florida Power & Light Co., 470 U.S. at 743-44, 105 S.Ct. 1598. Thus, the only issue before this court is whether the COE's decision not to issue a FONSI and not to prepare an EIS for the Duck River project was an arbitrary and capricious action in violation of the APA.
2. Summary Judgment Standard
This case is before the court on cross-motions for summary judgment filed pursuant to Rule 56 of the Federal Rules of Civil Procedure. When a district court reviews a motion for summary judgment under Rule 56, it must determine two things: (1) whether any genuine issues of material fact exist; and, if not, (2) whether the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). To succeed, the moving party bears the burden of establishing both prongs of the summary judgment test. The nonmoving party may defeat the motion for summary judgment by establishing either genuine issues of material fact or that the movant is not entitled to judgment as a matter of law.
The moving party "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56). The party seeking summary judgment can meet this burden by offering evidence showing no dispute of material fact or by showing that the nonmoving party's evidence fails to meet some element of its case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548. Rule 56, *1253 however, does not require "that the moving party support its motion with affidavits or other similar materials negating the opponent's claim." Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
When the moving party has met his burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [his] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (quoting Fed. R. Civ. P 56(e)). The responding party does not need to present evidence in a form admissible at trial; "however, he may not merely rest on his pleadings." Celotex, 477 U.S. at 324, 106 S.Ct. 2548. "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." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
In responding to a properly-supported motion for summary judgment, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material fact." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If the evidence is "merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted); accord Spence v. Zimmerman, 873 F.2d 256 (11th Cir.1989).
Substantive law determines which facts are material and which are irrelevant. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Issues of fact are "`genuine' only if a reasonable jury considering the evidence presented could find for the nonmoving party." Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Material facts affect the outcome of the trial under governing law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. To determine whether a material fact exists, the court must consider all the evidence in the light most favorable to the nonmoving party. Anderson, 477 U.S. at 249, 106 S.Ct. 2505; Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th Cir. 2002); Witter v. Delta Air Lines, Inc., 138 F.3d 1366, 1369 (11th Cir.1998).
After both parties have addressed the motion for summary judgment, the court must grant the motion if no genuine issues of material fact exist and if the moving part is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In reviewing the evidence submitted, the court must "view the evidence presented through the prism of the substantive evidentiary burden," to determine whether the nonmoving party presented sufficient evidence on which the jury could reasonably find for the nonmovant. Anderson, 477 U.S. at 254, 106 S.Ct. 2505; Cottle v. Storer Communication, Inc., 849 F.2d 570, 575 (11th Cir.1988). The court should not weigh the evidence or make determinations as to the credibility of witnesses because these decisions are within the province of the jury. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505; Stewart v. Booker T. Washington Ins. Co., 232 F.3d 844, 848 (11th Cir.2000); Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir.1999). Thus, "the evidence of the nonmovant is to be believed and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S.Ct. 2505. "The nonmovant need not be given the benefit of every *1254 inference but only of every reasonable inference." Graham, 193 F.3d at 1282 (quoting Brown v. City of Clewiston, 848 F.2d 1534, 1540 n. 12 (11th Cir.1988)).
IV. Discussion
Plaintiffs make two primary challenges to the COE's issuance of the permit. First, they argue that the COE failed to take a "hard look" at the environmental impacts of the Duck River dam. Second, plaintiffs argue that, even assuming the COE took the requisite hard look at these environmental impacts, the COE failed to make a "convincing case" for its finding of no significant environmental impact for the proposed project.
At oral argument and in their post-hearing brief, defendants stated that the COE concluded its review of the Duck River project with a FONSI, thereby implicating the third step of the Hill v. Boy framework. Thus, defendants argued that this court should only consider whether the COE made a convincing case for issuing the FONSI. However, defendants also argued in their post-hearing brief that should the court find that defendants failed to make a convincing case for issuing the FONSI, the court should then move to the fourth step and consider whether the COE included sufficient safeguards in the permit to reduce any significant environmental impacts to a minimum. The court is not persuaded by this alternative reasoning.
Because defendants have consistently argued that they issued a FONSI based on a finding of no significant environmental impact-not that they included sufficient safeguards to ameliorate any significant impacts-the court finds that the proper question before the court is whether defendants met steps two and three of the Hill v. Boy framework. Therefore, the court considers whether the COE took a hard look at the relevant environmental problems and whether the COE made a convincing case for its FONSI.
The court recognizes that its review of the COE's agency action must be narrow and must presume the agency action valid. However, "a court can only uphold the decision of an administrative agency on those grounds `upon which the record discloses that its action was based.'" America's Cmty. Bankers v. FDIC, 200 F.3d 822, 835 (D.C.Cir.2000) (quoting SEC v. Chenery Corp., 318 U.S. 80, 87, 63 S.Ct. 454, 87 L.Ed. 626 (1943)). "Courts are not commissioned to remake administrative determinations on different bases than those considered and relied upon by the administrative agencies charged with the making of those decisions." America's Cmty. Bankers, 200 F.3d at 835.
Plaintiffs argue that the COE failed to take a hard look at (1) the need for a dam to supply water to the Water District; (2) the impacts of reduced flows downstream of the dam; (3) the future condition of the Duck River reservoir; and (4) the cumulative impacts of the proposed dam and other existing and planned water supply projects in the Black Warrior Basin. In assessing whether defendants took a hard look at these environmental issues, the court examines whether (1) the decision relies on the factors that Congress intended the agency to consider; (2) the agency failed to consider an important aspect of the problem; (3) the agency offers an explanation that runs counter to the evidence; or (4) the decision is so implausible that it cannot be the result of differing viewpoints or the result of agency expertise. United States Corps of Eng'rs, 295 F.3d at 1214.
As an initial matter, the court finds that the COE adequately addressed the need for an additional water source for the *1255 Water District and that the COE took the requisite hard look at this need. In the EA the COE predicted that residential, commercial, and industrial demand for water in the Water District will dramatically increase in the next few decades.[5] A primary reason for this projected increase is the continued growth of industrial poultry farming in this area.[6] Although Cullman County accounts for less than 2% of Alabama's land area, its farm income represents 14.2% of the state total.[7] The Phase II Study conducted by the COE in 1995 projected that the existing source of water for the Water District, Lake Catoma, will reach its capacity by 2005-2007.[8] Based on these projections and studies, the court cannot say that the COE failed to take a hard look at the need for an additional water source for the Water District. Indeed, the court acknowledges that the need for an additional source of water for the District presents a real need that must be addressed, but the need alone fails to support the COE's decision.
Plaintiffs' most fact-intensive arguments focus on two issues: (1) whether the COE took a hard look at the cumulative impacts of other proposed reservoirs in the Black Warrior Basin, the future condition of the Duck River reservoir, and the reduced flows downstream of the dam; and (2) whether the COE made a convincing case for its FONSI.
A. The Cumulative Effects of Other Proposed Projects
CEQ regulations provide a valuable analytical framework for evaluating how cumulative impacts are to be addressed in an EA. See Town of Cave Creek v. FAA, 325 F.3d 320, 328 (D.C.Cir.2003) (finding that regulations require the agency to consider the cumulative environmental impacts of any proposed action) (citing 40 C.F.R. § 1508.8); Kern v. United States Bureau of Land Mgmt., 284 F.3d 1062, 1076-77 (9th Cir.2002) (noting that, although the CEQ regulations only require that the agency preparing the EA consider cumulative impacts in its EA, the Third, Eighth, and Ninth Circuit Courts of Appeal often require that the EA include a discussion of the cumulative impact analysis) (citing Soc'y Hill Towers Owners' Ass'n v. Rendell, 210 F.3d 168, 180 (3d Cir.2000); Newton County Wildlife Ass'n v. Rogers, 141 F.3d 803, 809 (8th Cir. 1998)).
Although the Eleventh Circuit has not specifically held that the agency must include a discussion of cumulative impacts analysis in its EA, the regulation cited above clearly requires the agency to at least consider cumulative impacts. Unless the COE discusses the cumulative impact, a reviewing court cannot determine whether the agency complied with the regulatory mandate that it consider cumulative impacts. When an EA concludes with a FONSI, as in the instant case, the agency is required to briefly explain why an action will not have a significant impact on the human environment. 40 C.F.R. § 1508.13. "Although the impact of a particular project may be inconsequential when considered in isolation, if the cumulative impact of a given project and other planned projects is significant, an applicant can not simply prepare an EA for its project, issue a FONSI, and ignore the overall impact of the project on a particular [area]." Soc'y Hill Towers Owners' Ass'n, 210 F.3d at 180 (citing 40 C.F.R. § 1508.27(b)(7)). The CEQ regulations define a "cumulative impact" as an "impact on the environment which results from the incremental impact *1256 of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions." 40 C.F.R. 1508.7. "Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time." 40 C.F.R. 1508.7.
Plaintiffs argue that the COE failed to take a hard look at the cumulative impacts of the proposed dam and other existing and planned water supply projects in the Black Warrior River Basin. Plaintiffs point out that the EPA raised this issue in 1996 and recommended "that the Corps begin a state wide initiative to address water needs and develop a statewide plan to address these needs in the least environmentally damaging manner."[9] Plaintiffs also note that the COE failed to develop this statewide plan and that the EPA's final comments about the EA stated that it "does not address the issues and concerns raised in our letters," including "questions on the cumulative impacts of the various reservoirs that currently exist in the Black Warrior River drainage basin."[10]
Defendants counter that "Section 5.2 of the Final EA discusses, at length, cumulative and indirect impacts of the project." Doc. # 33 at 23. Section 5.2 of the EA is titled "Cumulative and Indirect (Secondary) Impacts to North Central Alabama" and includes four sections.[11] However, only section 5.2.2, "Impoundment Development," discusses the cumulative impact of the proposed project with other proposed projects in North Central Alabama. The only paragraph within section 5.2.2 that addresses this issue states:
In recent years, several projects in the North Central Alabama area have been proposed. They include the Tom Bevill Reservoir on North River above Lake Tuscaloosa in Fayette County, an impoundment project by the Birmingham Water Works Board on the Locust Fork of the Black Warrior in Blount County and a project in Lamar County on a stream located in the Tombigbee River Watershed. Currently only the Tom Bevill Reservoir project has a DOA permit. No permit application has been filed for the Locust Fork project and according to the Birmingham Water Works Board (Ponstein, 1999) they do not intend to actively pursue the project for at least 10 years. The proposed Lamar County project was dropped from consideration because of potential environmental impacts.[12]
Defendants also argue that section 5.3 of the EA evidences a hard look at the cumulative impacts of the project. The pertinent part of section 5.3 reads as follows:
As discussed in Section 5.2.2, several other reservoir projects have been proposed in the North Central Alabama area. Only one of these projects has a current DOA permit while the others have been postponed or cancelled. Depending upon withdrawals from these proposed projects and if they are all constructed there could be impacts to the flows in area streams. However, *1257 based upon the releases and Watershed Management Plan proposed by the Applicant, impacts to the drainage basin from construction and operation of the Duck River Impoundment will be minimal.
AR 1654-55. Based on the above-cited language from the EA, defendants contend that they took a hard look at these proposed projects and concluded that "[t]he cumulative impacts of [the Duck River Reservoir] and other projects will not result in a major impairment of the water resources nor interfere with the productivity and water quality of existing aquatic ecosystems."[13]
After engaging in an exhaustive review of the Administrative Record, the court has real concerns about whether the COE took a hard look at the cumulative impacts of the project. The most logical cumulative impact for the Duck River project would come from the proposed impoundment on the Locust Fork, as this proposed impoundment is located within the Black Warrior River Basin and is only thirty miles from the proposed impoundment on the Duck River. Interestingly, the Administrative Record indicates that the COE initially intended to conduct an environmental impact study on the Duck River project because of the cumulative problems that would result from building reservoirs on both the Duck River and the Locust Fork.
In a February 24, 1994, Memorandum to the Chief of the Mobile Operations Division, Davis L. Findley, the Acting Chief of the Regulatory Branch for the Mobile Division, stated:
Several alternatives and reservoir sites were studied, but two sites will be recommended to the county. The original site on Flint Creek is in the Nashville District. The second site is on Duck Creek in the Mobile District. Nashville's Planning Division and the Appalachian Regional Commission (funding agency-$5 million) have decided an EIS is required, and Nashville will be starting the EIS in the next few weeks. If the County selects the Mobile District site we need to coordinate the EIS with Nashville. The Mobile District site (Duck Creek) is about 30 miles from the proposed Birmingham reservoir site and within the Section 22 Black Warrior headwaters study area. The study will have to address this project if Duck Creek is selected.[14] (emphasis added).
Despite this statement from the Acting Chief of the Regulatory Branch for the Mobile District, the COE ultimately issued a FONSI based on its assumption that the Locust Fork project had been postponed "for at least ten years."[15] Thus, the COE's conclusory statement that "[t]he cumulative impacts of [the Duck River Reservoir] and other projects will not result in a major impairment of the water resources," was not based on any studies of the environmental impacts of building both the Locust Fork project and the Duck River project but on the COE's assumption that the Locust Fork project would not be built for at least a decade and, thus, did not deserve consideration in the EA.[16]
In Hill v. Boy, 144 F.3d 1446, 1451 (11th Cir.1998), the Eleventh Circuit remanded an EA to the COE because the COE did not take a hard look at the potential environmental consequences of a petroleum pipeline remaining underneath a proposed reservoir. The court remanded the EA because the record did "not support the Corps' assumption that the pipeline will *1258 be relocated and because ... the Corps' failed to adequately consider the environmental impact of the pipeline remaining underneath the proposed reservoir." Hill, 144 F.3d at 1451 (emphasis added). The assumption made in Hillnamely that the pipeline would be removed and therefore, was not an environmental problemis similar to the COE's assumption in the case that the Locust Fork project will not take place for at least a decade, and thus, was not an environmental problem that needed to be examined by the agency. This conclusory assumption is not supported by any evidence in the Administrative Record. Instead, it is based solely on a 1999 representation by the Birmingham Water Works Board that it does not intend to pursue the Locust Fork project for ten years.
In Hill, the Eleventh Circuit explicitly declined to address the issue of whether newly proffered evidence can be considered by a court when reviewing agency action. 144 F.3d at 1446 n. 11. The court did not address this issue because it found that remand was necessary because the record before the COE did not support the assumption that the pipeline would be relocated. See Hill, 144 F.3d at 1451 (noting that "a reviewing court may remand a case to the agency for additional investigation or explanation `if the record before the agency does not support the agency action, if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it'") (quoting Florida Power & Light Co., 470 U.S. at 744, 105 S.Ct. 1598.) However, the appellate court did note that the COE did not dispute the newly proffered evidence offered by the plaintiffs that the pipeline was not going to be removed. Hill, 144 F.3d at 1446 n11.
This court also does not reach the question of whether newly proffered evidence can be considered when reviewing agency action. Like the court in Hill, this court finds that the COE's assumption that the Locust Fork project will not take place for a decade is a conclusory assumption not supported by the record. The record contains no studies of the Locust Fork project and no evidence that the cumulative impacts of the Locust Fork project and the Duck River project would be insignificant. Indeed, the record indicates that COE personnel were aware that the cumulative impacts of these two projects should be addressed in an EIS.[17] The COE's reasoning that, because the Locust Fork project will not be built for "at least a decade," it was not an issue worthy of examination is contrary to the CEQ regulations governing the agency's actions. See 40 C.F.R. § 1508.27(b)(7) (stating that for NEPA purposes "significance exists if it is reasonable to anticipate a cumulatively significant impact on the environment"). Thus, the court finds that the COE failed to take a hard look at these cumulative impacts with the information that was before the agency at the time it made its decision.
However, even if the court were to assume that the COE took a hard look at the cumulative impacts, the court finds that the agency failed to make a "convincing case" for its FONSI. The agency's blanket statement that a ten-year delay for the Locust Fork project eliminates any cumulative environmental problems for the Black Warrior River Basin is illogical and conclusory. The COE's assumption is clearly unwarranted based on its original assessment that indicated that the cumulative impacts of the Locust Fork project must be studied and that an EIS must be issued for the Duck River project.[18] Furthermore, *1259 the record is completely devoid of any evidence that the Birmingham Water Works Board has abandoned the Locust Fork project. To the contrary, the record indicates that the Locust Fork project will ultimately be pursued.[19] (stating that the Locust Fork project will not be "actively" pursued until 2009).
In determining whether a remand is necessary, the court must "address the question of whether the issuance of the Corps' EA would be arbitrary and capricious based on the opposite assumption" that the Locust Fork project will be built. See Hill, 144 F.3d at 1451. The COE failed to take a hard look at the Locust Fork project in preparing the EA and failed to assess the potential adverse environmental impacts resulting from the construction of both the Duck River project and the Locust Fork project. The COE assumed that because the Locust Fork project had not been permitted and had been postponed until 2009, it need not be studied to determine whether the Duck River project will have significant adverse environmental impacts on the quality of the human environment. In making this assumption, the COE failed to identify the environmental concerns that would arise if the Locust Fork project were in fact pursued.
Because the court concludes that the record does not support-and ultimately fails to address-the COE's assumption that the Locust Fork project poses no cumulative impacts that must be addressed by the agency, the court finds that a remand is necessary.[20] On remand, the COE should consider whether the Locust Fork project will ultimately be built and, if so, whether the presence of the Locust Fork reservoir necessitates the preparation of an EIS for the Duck River project.[21]
B. The Future Water Quality of the Proposed Reservoir
Plaintiffs also argue that the COE failed to take a hard look at the future condition of the proposed reservoir. Specifically, plaintiffs argue that the COE failed to properly address the likelihood that the reservoir will become eutrophic as the result of the collection of nitrogen and phosphorus runoff from ever-increasing agricultural operations in the Water District. Plaintiffs claim that because the COE failed to take a hard look at the increasing problem of agricultural runoff in the Water District, the Duck River Reservoir might ultimately become unfit for human consumption, the stated goal of the project, without significant additional treatment.
The future water quality of the proposed reservoir has been before the agency since the Duck River project was chosen as the preferred alternative. In an April 24, 1996 Memorandum summarizing an On-Site Meeting for Commenting Agencies on the *1260 Duck River project, Jim Ezell, a consultant for the City of Cullman, stated that "Butch Thrasher ... Superintendent of the Cullman Water Treatment Plant, joined the meeting. Butch was questioned concerning possible water quality impacts due to agriculture in the area of Lake Catoma. He stated that he believed there could possibly be a problem since they recently have had an algae bloom."[22] In an internal email dated September 19, 1998, COE employee John B. McFayden noted that the Fish & Wildlife Service and the EPA "will continue to question project water quality in the [proposed] lake and downstream. The issue isWill all the `chicken shit' pollute the lake. PD folksis the EA adequate to address this issue?"[23]
As a result of the COE's recognition that the proposed impoundment might be impacted from increased poultry production and the resulting nonpoint source pollution in the Water District, the Water District hired a contractor to sample water in the Duck River project area. This sampling took place in 1998 and was included in a Draft Report on Water Quality Modeling that was sent to the COE in October 1998. At that time, the contractor told the COE that "we have a problem" with the water quality of the proposed lake.[24]
In response to the water quality problems that were revealed by the initial testing, the contractor engaged a sub-contractor to undertake a technical review of the environmental documentation that had been produced on the project.[25] In an October 26, 1998, letter to the contractor, the subcontractor stated the following:
The issue of source protection to assure adequate water quality in the proposed reservoir was a major concern expressed during the meeting. I believe this can be addressed through the development of a comprehensive watershed management plan and the establishment of a watershed management organization with the authority and ability to implement and enforce the plan. The purpose of the reservoir is to provide a safe and reliable water source for the Cullman-Morgan Water District, and the project represents a sizeable investment. The water quality data collected to date indicates a high potential for accelerated eutrophication if measures are not taken to control non-point source nutrient enrichment from existing agricultural practices. An effective watershed management plan should be developed and presented in the NEPA document prior to circulation.[26] (emphasis added).
The COE immediately began preparing a watershed management plan as suggested by the subcontractor and also engaged its Waterways Experiment Station to conduct a BATHTUB eutrophication model for the proposed reservoir.[27] The BATHTUB model is a mathematical model that is used as a tool for assessing the eutrophication potential of reservoirs and for predicting the effectiveness of protection measures.[28] Thus, the BATHTUB model was chosen to help the COE determine if the proposed best management practices ("BMPs") in the newly formulated watershed management plan would ultimately prevent the Duck River reservoir from becoming too eutrophic.[29]
*1261 The Draft EA issued by the COE stated that the BATHTUB model produced the following conclusions: "The proposed impoundment will receive high nutrient loads and will likely exhibit water quality characteristics of a mildly eutrophic system.... Application of BMP's in the watershed will reduce nutrient loadings. Present loadings need to be reduced approximately 60 percent in order to achieve water quality characteristics associated with nearby lakes of acceptable water quality."[30] (emphasis added). In an effort to begin reducing nutrient loadings in the Duck River, the Cullman County Soil and Water Conservation District, in cooperation with the Natural Resources Conservation Service, established a watershed management plan. This management plan was included in the Draft EA.
Agency comments to the Draft EA reflected a general dissatisfaction with the COE's assumption that the watershed management plan would be able to reduce current nutrient loadings by 60%-the reduction necessary to make the Duck River reservoir comparable to nearby lakes of acceptable water quality.[31] The Fish & Wildlife Service's comments are particularly instructive:
According to the EA, existing phosphorous and nitrogen loading in the Duck River creates the potential in the proposed reservoir for accelerated eutrophication. A water quality model of the proposed reservoir was conducted using the BATHTUB model .... The model was based on available data and the assumption that Best Management Practices (BMP's) would be effectively implemented to reduce existing nutrient loading in the watershed by 60 percent. The model's results predicted a reservoir that would be mildly eutrophic. This "best case" scenario predicts a reservoir that would thermally stratify with an anoxic hypolimnion. Mildly eutrophic lakes can concentrate and store nutrients and contaminants, thus releasing toxic slugs that can result in down-stream fish die-offs and loss of wildlife resources. Elevated fecal coliform levels, blue-green algal blooms in the reservoir, low pH and high concentrations of dissolved metals in the tailwater discharges including iron and manganese, would be expected in the "best case" scenario at the proposed project. The potential exists for long-term water quality problems associated with releases from the proposed dam site. In addition, the reservoir's water would be adversely affected requiring extensive and expensive treatment before use as a potable water source. The "worse [sic] case" scenario would be a severely eutrophic lake if the existing nutrient loading is not reduced by the anticipated 60 percent. A highly eutrophic lake would be less desirable and more expensive for the CMWD to operate for its intended purpose as a water supply reservoir. The long-term effects downstream of the dam could forever diminish utilization of the Duck River by fish and wildlife resources.[32]*1262 The F & WS comments highlight concerns about the COE's assumption that the watershed management plan will result in a 60% reduction in nutrient loadings.
Plaintiffs argue that in making this assumption, the COE failed to take a hard look at the future water quality of the proposed reservoir. The COE argues that it addressed this issue by including a watershed management plan as a necessary condition of the EA.[33] Section 9.4 of the Final EA describes the watershed management plan and states that the "purpose and goals of this management plan are to reduce nutrient loadings in the proposed impoundment, provide a reasonably treatable, high quality water supply, provide acceptable water quality for downstream releases and promote an ecologically sound lake environment."[34] To accomplish these goals, the plan includes, inter alia, a water quality testing program for water in the proposed impoundment and downstream of the impoundment.[35]
After examining the record, the court finds that the COE was cognizant of the likelihood that the proposed reservoir will suffer from eutrophication caused by the runoff created from the increasing poultry industry in the area. In an effort to address this problem and to satisfy its statutory obligations under NEPA, the COE worked with the permit-holder to establish a watershed management plan that it hopes will reduce nonpoint source pollution. The problem for this court is that the COE issued a FONSI based on the assumption that the watershed management plan will reduce nutrient loadings in the proposed reservoir by 60%. This "best-case scenario" assumption is problematic because it is, at best, a post hoc goal rather than a mitigation condition designed to reduce a significant impact.[36] The reservoir will be constructed regardless of whether nutrient loadings are reduced by 60%, 25%, or even 10%.[37]
Although the court finds that the COE studied the future water quality problems in the proposed reservoir, the court concludes that agency ultimately failed to take a hard look at the results of the study. Like ADEM, the court recognizes that the proposed reservoir is a much needed water source for the Water District.[38] However, the current record does not support the COE's assumption that current nutrient loadings will be reduced by any percentage, particularly because the stated goal of the project is to provide potable water for a growing poultry industry-the very source of the pollution at issue.
*1263 Even if the court assumes that the agency's studies and the inclusion of the watershed management plan qualify as a hard look at the future condition of the reservoir, the court does not find that the COE made a convincing case for its FONSI. As previously stated, the agency issued a FONSI that explicitly found that the proposed project would have no significant impact on the environment. Therefore, the agency's FONSI was necessarily based upon the assumption that nutrient loadings would be reduced by 60%, as stated in the Final EA.[39] The COE fails to make a convincing case that the adverse effects on the water quality caused by nonpoint source pollution justify a finding of no significant environmental impacts.
As in Hill, 144 F.3d at 1451, and as the court did previously in evaluating the cumulative impacts issue, the court must decide whether the issuance of the EA "would be arbitrary and capricious based on the opposite assumption" that nutrient loading would not be reduced by 60% by the management plan. Assuming that the management plan does not significantly reduce current nutrient loadings, the court finds that issuance of the FONSI was arbitrary and capricious based upon its own test results reflecting a "high potential for accelerated eutrophication" if the watershed management plan were not successful.[40]
Because the record does not support the COE's assumption that nutrients will be reduced by 60%, the court finds that a remand is necessary. In making this determination, the court considers whether the EA would be arbitrary and capricious based on the opposite assumption that nutrients will not be reduced by 60%. Assuming this worst case scenario, the court concludes that the COE's FONSI and resulting decision not to prepare an EIS was arbitrary and capricious. A remand is necessary so that the agency can consider whether nutrient loadings will not be reduced by 60% and, if so, whether the presence of this pollution necessitates the preparation of an EIS.[41]
C. The Downstream Effects of the Dam
Plaintiffs' final argument is that the COE failed to take a hard look at the downstream effects of the dam. Although plaintiffs make numerous arguments about the effect of altered temperature, sedimentation, and other environmental consequences on the downstream portion of the Duck River and the Mulberry Fork, the court finds that defendants did take a hard look at the effect of the dam on the 11 miles of the Duck River below the dam. Specifically, the permit contains mandatory downstream releases that were recommended by the Alabama Department of Conservation and Natural Resources.[42] The inclusion of these releases, as well as the fisheries, aquatic habitat, and low flow *1264 studies that were conducted on the Duck River, evidences a hard look at the effect of the dam on the Duck River.
However, the court is concerned about the COE's failure to study the effect of the dam on the Mulberry Fork of the Black Warrior River. The Duck River extends for 11 miles below the proposed dam to its confluence with the Mulberry Fork..[43] The proposed reservoir will impound 19% of the total watershed of the Mulberry Fork.[44] Although the mandatory downstream releases that were included in the permit will benefit the Mulberry Fork, the COE failed to conduct any studies of the effect the overall reduced flow will have on the Mulberry Fork. The record indicates that the COE limited its study of the environmental effects of the project to the Duck River because one agency employee concluded that the Mulberry Fork would not be affected by the impoundment. In a February 24, 1997, email to a subordinate COE employee, John Mcfayden concluded that "I do not believe we need to studying [sic] watersheds beyond the Duck River downstream of the dam. They should not be effected [sic]."[45] Although this conclusion was not based on any scientific studies or data, the COE did not respond to other agencies' requests that the Mulberry Fork be studied, and the EA ultimately failed to address this issue.[46]
A reviewing court may remand a case to the agency for additional investigation or explanation "if the record before the agency does not support the agency action, if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it." Hill, 144 F.3d at 1446 n. 11 (internal citation omitted). Because the COE failed to undertake any investigation of the effects the proposed dam will have on the Mulberry Fork, the court finds that the COE did not consider all relevant factors in evaluating the environmental consequences of the Duck River project. Therefore, the court finds that remand is necessary to consider the effects the proposed dam will have on the Mulberry Fork. On remand, the COE should consider whether the construction of the Duck River reservoir will detrimentally affect the Mulberry Fork and, if so, whether the effects are sufficiently significant to require an EIS for the Duck River project.
V. Conclusion
The court is acutely aware that the proposed reservoir would provide a much needed water resource for the growing poultry industry in the Water District. The court is also mindful that its review of the COE's issuance of the permit must be deferential and that this court is not to substitute its judgment for that of the agency. See United States Corps of Eng'rs, 295 F.3d at 1216. However, this court has a duty to look beyond the scope of the agency decision and to determine whether the agency accurately identified the relevant environmental problems. Id. This court must be satisfied that the agency took a hard look at these relevant problems in preparing the EA and that the agency made a convincing case for its finding *1265 of no significant impact. See Hill, 144 F.3d at 1450.
After engaging in a thorough review of the record, the court finds that the COE did not take a hard look at the cumulative effects of other proposed projects in the Black Warrior River Basin, the future water quality of the proposed reservoir, and the effect the proposed dam will have on the Mulberry Fork of the Black Warrior River. The court also finds that, even if the COE took a hard look at these environmental issues, the COE failed to make a convincing case for issuing its FONSI. The court, therefore, finds that the COE's decision to issue a FONSI was arbitrary and capricious based on its various assumptions. Because the court concludes that the record does not support the agency's FONSI, the court finds that a remand is necessary. On remand, the COE should take a hard look at the issues discussed above and determine whether an EIS is required for the Duck River project. Because the court concludes that the Administrative Record does not support the agency's action, and that the finding of no significant impact was arbitrary and capricious, the permit for the Duck River Project issued based on the FONSI must be vacated.
Plaintiffs seek an injunction precluding COE from allowing the Duck River Project to proceed until Plaintiff has conducted an environmental impact study. Because the court remands this matter to the COE to take another look at the issues addressed in this opinion and to then decide whether an EIS is needed, the court denies the plaintiffs' request to mandate an EIS. However, the COE is enjoined from allowing the project to proceed until it has taken a hard look at the issues raised and made a new determination concerning the potential environmental impacts addressed in this opinion.
By separate order, the plaintiff's Motion for Summary Judgment will be granted in part, and denied in part; the defendants' Motion for Summary Judgment will be denied.
FINAL JUDGMENT
This case is before the court on Plaintiffs' Motion for Summary Judgment (Doc. # 29) and Defendants' Cross Motion for Summary Judgment (Doc. # 32). The issues raised in the cross motions for summary judgment have been fully briefed by the parties. The court held a hearing on these motions on February 20, 2003. After the hearing, the court allowed the parties to submit additional briefs on whether the United States Corps of Engineers ("COE") took a hard look at the future water quality of the proposed impoundment and whether the COE took a hard look at the downstream effects of the proposed dam. On April 2, 2003, Defendants submitted a post-argument memorandum addressing these issues (Doc. # 49). On April 24, 2003, plaintiffs submitted a response to defendants' memorandum (Doc. # 52). Thus, these motions are now ripe for decision.
The plaintiffs in their Complaint seek declaratory and injunctive relief. In essence, they seek a declaration that the Environmental Assessment (EA) issued by the COE violated the National Environmental Policy Act, (NEPA) 42 U.S.C. § 4332(2)(c), and seek an order vacating of the Duck River Project permit. They also seek an injunction prohibiting the COE from allowing the Duck River Project to proceed until the COE prepares an environmental impact statement.
The issue before the court is whether the COE's decision to issue a finding of no significant impact ("FONSI") and the permit to build the dam, as opposed to requiring the preparation of an Environmental *1266 Impact Statement ("EIS"), was arbitrary and capricious. Upon due consideration, the court answers this question in the affirmative for the reasons stated in the Memorandum Opinion issued contemporaneously herewith. The court finds that the COE did not take a hard look at the cumulative effects of other proposed projects in the Black Warrior River Basin, the future water quality of the proposed reservoir, or the effect the proposed dam will have on the Mulberry Fork of the Black Warrior River. The court also finds that, even if the COE took a hard look at these environmental issues, the COE failed to make a convincing case for issuing its FONSI.
Because the court concludes that the Administrative Record does not support the agency's action, the court finds that remand is necessary. Therefore, the permit issued for the Duck River Project must be vacated. Consequently, the court GRANTS IN PART Plaintiffs' Motion for Summary Judgment (Doc. # 29) insofar as plaintiffs request a declaration that the EA violated NEPA and seek a remand to the agency for review. However, the court DENIES all other relief requested by plaintiffs. On remand, the COE should take a hard look at the issues discussed in the Memorandum Opinion, reconsider its decision, and determine whether an EIS is required for the Duck River project.
Defendants' Motion for Summary Judgment (Doc. # 32) is DENIED with prejudice. Costs are to be taxed against the Defendants.
NOTES
[1] Plaintiffs' filed a brief titled "Plaintiffs' Motion for Summary Judgment" (Doc. # 29), but did not file a formal motion seeking summary judgment. At the hearing, the court noted this procedural deficiency and agreed to orally accept the brief as a motion for summary judgment.
[2] 33 U.S.C. § 1344(b)(1).
[3] The facts set out below are gleaned from the parties' submissions of facts claimed to be undisputed, their respective responses to those submissions, and the court's own examination of the evidentiary record. All reasonable doubts about the facts have been resolved in favor of the nonmoving party. See Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir.2002). These are the "facts" for summary judgment purposes only. They may not be the actual facts. See Cox v. Adm'r U.S. Steel & Carnegie Pension Fund, 17 F.3d 1386, 1400 (11th Cir.1994).
[4] Because the COE originally assumed that the source of additional water would lie within the Nashville District's civil works boundary, the Nashville District of the COE conducted the initial studies. However, because the proposed Duck River impoundment is located within the civil works boundary of the Mobile District of the COE, the Mobile District was the proper District to process the Duck River permit application. The Mobile District is currently overseeing the project. Following the transfer of the project to the Mobile District, the Water District hired COE employees from the Nashville District as paid consultants. AR 2417.
[5] AR 1600-01.
[6] AR 1601.
[7] AR 1601.
[8] AR 1622.
[9] AR 510.
[10] See, AR 2235. The U.S. Fish and Wildlife Service voiced similar concerns in a May 7, 1996 letter to the COE: "The Service is not only concerned about the direct impacts of this single reservoir but the cumulative impacts of other similar projects. Several reservoirs are currently in the Black Warrior drainage basin and five new sites (Locust Fork, tributary to Locust Fork, Fayette County, Lamar County and Duck River) including this one are being proposed. The potential cumulative impacts of these dams have not been adequately addressed by the appropriate agencies." AR 476.
[11] AR 1651-54.
[12] AR 1652.
[13] AR 2441.
[14] AR 3.
[15] AR 1652.
[16] AR 2441.
[17] AR 3.
[18] AR 3.
[19] AR 1652.
[20] Although the court finds that remand is required because the COE failed to take a hard look at the cumulative impacts of the Locust Fork project and failed to make a convincing case for its FONSI as a result of this failure, the court also addresses the other arguments made by plaintiffs so that the agency may address all of these concerns on remand.
[21] The court also notes that the record contains no substantive discussion of whether the proposed Tom Bevill Reservoir will have any cumulative impacts on the area. The Tom Bevill project is the only proposed project that had received a permit from the COE at the time of the EA. Although the Tom Bevill project is not located as close to the Duck River as the Locust Fork Project, the court questions why the Tom Bevill project was not addressed in the EA. To avoid a future challenge that the COE failed to take a hard look at the Tom Bevill project, the agency may want to consider this issue on remand and at least explain why it was not considered.
[22] AR 471.
[23] AR 632. Similar concerns about the water quality in the proposed lake caused by runoff from the poultry industry are noted at AR 634, 647.
[24] AR 673.
[25] AR 679.
[26] AR 679.
[27] AR 851.
[28] AR 852.
[29] AR 852.
[30] AR 911.
[31] See, AR 1432 (F & WS), 1465-66(EPA). When the Water District applied to the Alabama Department of Environmental Management ("ADEM") to upgrade the classification of the Duck River and its tributaries to a public water supply, ADEM responded that "We could not, with today's information and water quality status of [the] Duck River and [its] tributaries, recommend that a Public Water Supply Classification be approved by the Environmental Management Commission." AR 1529. However, ADEM stated that it is "open to reconsideration of our present position" when new water quality data is available. Id.
[32] AR 1431-32.
[33] AR 1737 (stating that the watershed management plan is designed to prevent a "worst case scenario").
[34] AR 1663.
[35] AR 1663-64.
[36] Defendants have consistently argued that they issued a FONSI based on a finding of no significant environmental impact-not that they included sufficient safeguards to ameliorate any significant impacts.
[37] Defendants argued in their post-hearing brief that the court placed too much emphasis on the assumed 60% reduction at the hearing because Figure 10 of the Waterways Experiment Station study states that a 25% or 10% reduction in nutrient loadings would result in an impoundment comparable to Lake Weiss or Lake Purdy (the water supply for Jefferson County). However, defendants also state that Appendix F of the EA, where the Waterways Experiment Station is found, is beyond the purview of this court in conducting its judicial review of the NEPA process. Any emphasis the court places on the 60% reduction assumed by the COE comes from this court's analysis of the administrative record. However, even if the court looked past the 60% reduction assumption that is cited in the Final EA, the COE's FONSI would still be based on the assumption that some reduction in loadings-whether 60% or 10%-would result from the management plan.
[38] See AR 1529.
[39] AR 1644.
[40] See AR 679; See also, AR 1431-32 outlining concerns from F & WS about the effects of a "mildly eutrophic" lake under the best case scenario assuming best management practices, and the greater concerns of a "severely eutrophic" lake under the worst case scenario.
[41] Notwithstanding defendants' argument at the hearing that this court can only consider evidence that is in the record, defendants filed a Declaration (Doc. 46) following the hearing that included over sixty pages of additional materials. These materials included "documentation of ongoing activities in the Duck River Watershed to address water quality issues." As previously stated, the court did not consider these documents in reaching its decision. See Hill v. Boy, 144 F.3d at 1446 n11. On remand, the agency can consider any additional testing that has been done since the watershed management plan was instituted.
[42] AR 2509.
[43] AR 2509.
[44] AR 1738.
[45] AR 540.
[46] The only study apparently done on the Mulberry Fork was the Aquatic Habitat Characterization and Benthic Species Survey, AR 1829-82, which studied four miles of the Mulberry Fork and the entire length of the Duck River below the proposed dam. This study, standing alone, does not make a convincing case for the COE's decision to issue its FONSI. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2562330/ | 592 F.Supp.2d 225 (2009)
2009 DNH 006
EMBASSY SOFTWARE CORPORATION
v.
ECOPY, INC.
Civil No. 06-cv-00391-JL.
United States District Court, D. New Hampshire.
January 13, 2009.
*226 Lawrence D.W. Graves, Coolidge & Graves PLLC, Keene, NH, for Embassy Software Corporation.
Jonathan W. Lent, Mark S. Puzella, Goodwin Procter LLP, Boston, MA, Thomas J. Donovan, Jeremy T. Walker, McLane Graf Raulerson & Middleton PA, Manchester, NH, for eCopy, Inc.
ORDER
JOSEPH N. LaPLANTE, District Judge.
This case involves the validity of a copyright registration obtained by a corporation that has been administratively dissolved under state corporation law. The issue is potentially dispositive because this court's jurisdiction requires the existence of a valid copyright registration.
The plaintiff, Embassy Software Corporation ("New Embassy"), has sued[1] defendant eCopy, Inc., a Delaware corporation, alleging copyright infringement in violation of 17 U.S.C. § 501 (2000 and 2002). The claim arises from what New Embassy claims is eCopy's unauthorized use of New Embassy's intellectual property, a portable document software program. This court has jurisdiction under 28 U.S.C. §§ 1331 (federal question), 1338 (copyright), and 1367 (supplemental jurisdiction).
Before the court is eCopy's motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). ECopy asserts that this court lacks jurisdiction because the copyright registration at issue is invalid, having been obtained by an administratively dissolved corporation, or in its words, "an entity that did not exist." After a hearing, and for the reasons set forth below, eCopy's motion is denied.
I. APPLICABLE LEGAL STANDARD
During the litigation of this dispositive motion, both parties' filings presented to the court matters outside the pleadings. "If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed.R.Civ.P. 12(d); DeMayo v. Nugent, 517 F.3d 11, 19 (1st Cir.2008). Rule 12(d) "is perhaps too infrequently invoked and too often overlooked. In a proper case, it can be an excellent device for conserving time, expense, and scarce judicial resources by targeting early resolution of threshold issues." Rivera-Gomez v. de Castro, 900 F.2d 1, 2 (1st Cir.1990) (decided under prior version of the rule). The *227 court will proceed under the directive of Rule 12(d) in this case.
Summary judgment is appropriate where the "pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In making this determination, the "court must scrutinize the record in the light most flattering to the party opposing the motion, indulging all reasonable inferences in that party's favor." Mulvihill v. Top-Flite Golf Co., 335 F.3d 15, 19 (1st Cir.2003).
II. BACKGROUND
The initial complaint and amended complaint in this action created ambiguities as to the registration, ownership, and ultimately the validity of the copyright in question. These ambiguities triggered eCopy's motion to dismiss because, as more fully explained infra Part III, this court's subject matter jurisdiction depends on the registration of a valid copyright. Noting that the plaintiff carries the burden of establishing subject matter jurisdiction, see Aversa v. United States, 99 F.3d 1200, 1209 (1st Cir.1996), the court sua sponte ordered the plaintiff to file a Second Amended Complaint "clearly alleging facts establishing the proper claimants with respect to, and the actual possessors of, the... copyright during the entire period relevant to this litigation." Embassy Software Corp. v. eCopy, Inc., No. 06-cv-00391 at 4 (D.N.H. Oct. 30, 2008). The court further invited supplemental briefing, id., of which only eCopy took advantage. The Second Amended Complaint is the subject of this motion, and forms the basis of the facts as set forth below.[2]
Jeffrey K. Tidd, a software programmer and former employee of eCopy,[3] established Embassy Software Corporation ("Old Embassy") in 2001. Old Embassy and eCopy contracted for Old Embassy's development of a portable document format software program referred to by the parties as "G1." On November 7, 2003, unbeknownst to both parties, Old Embassy was administratively dissolved by the New Hampshire Secretary of State's office for failure to comply with routine filing requirements under New Hampshire corporation law. N.H.Rev.Stat. Ann. 293-A:14.21 (Supp.2008) (amended 2004, 2006).
Almost three years later, in August, 2006, Old Embassy registered the copyright to a new portable document format software program called "G2."[4] The copyright application listed Tidd as author and Old Embassy as claimant. Tidd and eCopy had been wrangling over whether G2 was a derivative program developed from a prior iteration of G1, or an entirely new successor product. Two months later, Old Embassy put the dispute into suit, alleging in its complaint that it held a registered *228 copyright in G2. In its answer to Old Embassy's complaint, eCopy pointed out that Old Embassy had been administratively dissolved in November, 2003, and alleged that the copyright registration of G2 is therefore invalid because Old Embassy "did not exist" at the time it purported to register G2 as copyright claimant in 2006.
Old Embassy's representatives attempted to reinstate its active status under the statutory procedure in the New Hampshire Business Corporation Act, see N.H.Rev.Stat. Ann. § 293-A:14.22-a (Supp.2008), but were foiled by eCopy's pending counterclaim. An application for post-dissolution reinstatement, it turns out, must "[c]ontain a statement asserting that no lawsuits are pending against the corporation." N.H.Rev.Stat. Ann. § 293-A:14.22-a(a)(5). Tidd established a new corporation, also called Embassy Software Corporation ("New Embassy") in December, 2006, and assigned all of his intellectual property interest in G2 to New Embassy. New Embassy contends that as a result of these assignments (more fully explained below), "from and after [the administrative dissolution of Old Embassy], Tidd may have been effectively conducting business in his personal capacity, doing business as `Embassy Software,' ... [and] any and all causes of action arising out of eCopy's relationship with `Embassy' have been assigned for convenience to New Embassy." (Second Am. Compl. ¶ 12 (parenthesis omitted).) The original complaint was amended in April 2007 to substitute New Embassy for Old Embassy as plaintiff.
New Embassy now claims that it holds a registered copyright to G2. Specifically, New Embassy's Second Amended Complaint alleges that New Embassy came to own the G2 copyright as follows: Tidd executed a quitclaim assignment to Old Embassy of his right, title, and interest he "might have had" in G2 in August, 2005 (id. at ¶ 16), a year before the G2 copyright was registered in Old Embassy's name. Once it came to light during this litigation that Old Embassy had been administratively dissolved and could not be reinstated because of eCopy's counterclaim,[5] Tidd rescinded the Old Embassy assignment. About a month after New Embassy was incorporated, Tidd again assigned his interest in G2, but this time to New Embassy. Finally, in August 2008, 22 months after this lawsuit was initiated (by Old Embassy, as owner to the copyright by assignment alleging copyright infringement by eCopy), a registration amendment was filed in the United States Copyright office, (see Def's Supplemental Mem. Exhibit B) adding Tidd and his father, James Tidd, as additional claimants to the G2 copyright as of its original registration.[6]
ECopy moves to dismiss on the grounds that the alleged invalidity of the G2 copyright registration caused by Old Embassy's dissolution renders this court without jurisdiction.
III. ANALYSIS
Title 17 of the United States Code (the "Copyright Act") governs copyrights. Section 411 provides that "no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance *229 with this title." 17 U.S.C. § 411(a) (2000). The First Circuit Court of Appeals has held that this rule is jurisdictional; a complete application is a jurisdictional prerequisite to filing suit in federal court for copyright infringement. Torres-Negron v. J & N Records, LLC, 504 F.3d 151, 156 (1st Cir.2007) (collecting cases); Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1160 (1st Cir.1994) ("registration of the copyright is a prerequisite to suit under the Copyright Act").
Section 202.3 of the regulations promulgated by the Copyright Office prescribes the conditions for the valid registration of United States copyright. It defines a copyright claimant as either the author of a work, 37 C.F.R. § 202.3(a)(3)(i) (2007), or a "person or organization that has obtained ownership of all rights under the copyright initially belonging to the author." 37 C.F.R. § 202.3(a)(3)(ii) (2007).[7]
The argument advanced by eCopy is deceptively simple. Since Old Embassy had been administratively dissolved at the time it was registered as G2 claimant, it "did not exist" as an "organization" under § 202.3(a)(ii), and thus the copyright registration was invalid.[8] Without a valid registration, argues eCopy, this court lacks subject matter jurisdiction and New Embassy's infringement action must be dismissed. See, e.g., Morgan, Inc. v. White Rock Distilleries, Inc., 230 F.Supp.2d 104, 109 (D.Me.2002). More specifically, eCopy argues that the G2 copyright is invalid because in registering the copyright, Old Embassy either knowingly or inadvertently identified itself as the copyright claimantthe error or implicit misrepresentation being that Old Embassy existed. According to eCopy, "Tidd should have know[n] at the time of the G2 [r]egistration application that Old Embassy no longer existed." ECopy goes on to claim that "even if Tidd's error was inadvertent, it is both material and prejudicial, and thus renders the G2 [r]egistration invalid." (Def's Reply Mem. in Supp. of Def's 12(c) Motion 7-8.)
"The predominant rule is that an invalid registration (involving material errors, fraud, or an incomplete application) nullifies the federal court's subject matter jurisdiction." Torres-Negron, 504 F.3d at 160. "[M]ost errors or mistakes in a copyright registration application will be inadvertent or immaterial, and thus will not invalidate the application (or any resulting certificate)." Id. at 162 (citing Data Gen. Corp., 36 F.3d at 1161). "In general, an error is immaterial if its discovery is not likely to have led the Copyright Office to refuse the application." Data Gen. Corp., 36 F.3d at 1161.
*230 According to eCopy, "the error is material because the Copyright Office's regulations require a claimant to be a person or organization and therefore, the Copyright Office would have refused the application had it been aware that the identified `organization' claimant, Embassy Software, Inc., did not exist." (Def's Mem. in Supp. of Rule 12(c) Motion 11-12.) But this argumentthat Old Embassy's false (and implicit) representation that it was an organization was material because the copyright regulations require a claimant to be an organizationreally just begs the question. It explains only why the representation is allegedly false, but not why it is materially so.
Further, eCopy's argument mischaracterizes, or at least misapprehends, New Hampshire corporation law. Its memorandum of law quotes the New Hampshire Business Corporation Act provision governing administrative dissolution, N.H.Rev.Stat. Ann. § 293-A:14.21, in support of its claim that "[b]ecause it was dissolved, Old Embassy did not exist at the time it was the purported copyright claimant." (Def's Mem. in Supp. of 12(c) Motion 9.) But that very provision states that the opposite is true: "A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under [a separate provision] and notify claimants under [other provisions]." N.H.Rev.Stat. Ann. § 293-A:14.21(b) (Supp.2008) (emphasis added).[9] Thus, Old Embassy did in fact exist, albeit with statutory limitations on its permissible conduct, at the time it was registered as the G2 copyright claimant. It is therefore not clear that the specification of Old Embassy as claimant was false or erroneous to begin with, let alone knowingly or materially so.
This court's inquiry thus shifts to whether Old Embassy, in its limited post-dissolution capacity, could permissibly register or hold the G2 copyright. ECopy contends that because it was administratively dissolved, it lacked the authority to register the copyright or take the assignment. While § 293-A:14.21(b) certainly limits an administratively dissolved corporation's lawful activities to wind up, liquidation, and notification, it does not follow that such an entity somehow "exists" only for those purposes and "ceases to exist" for others. If anything, eCopy's argument in this vein amounts to a claim that Old Embassy's acceptance of an assignment and ownership of the G2 copyright was an ultra vires act.[10]
The fact that a corporate act is ultra vires, however, does not mean that the act is necessarily void, or even voidable. "According to the better reasoning, a corporation has the capacity, even if it does not have the authority, to do an ultra vires act although there are decisions more or less to the contrary." 7A William Meade Fletcher, et al., Cyclopedia of the Law of Private Corporations, § 3424 (Perm. ed., rev. vol. 2006) (emphasis added). Although eCopy strives mightily to *231 cite those contrary cases,[11] New Hampshire has expressly and definitively adopted the "better reasoning" as described by Professor Fletcher. The ultra vires provision of the Business Corporation Act provides:
Ultra Vires. No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation shall be invalid because the corporation was without capacity or power to do the act or to make or receive the conveyance or transfer, but the lack of capacity or power may be asserted [by a shareholder, the corporation itself, or the N.H. Attorney General under specified circumstances].
N.H.Rev.Stat. Ann. § 293-A:3.04 (2001).[12] Therefore, under New Hampshire law, the assignment to Old Embassy and registration was at least presumptively valid. Further, there is no question that eCopy is not among those statutorily authorized to assert the ultra vires doctrine to challenge corporate conduct. And even if Old Embassy's conduct were not saved by the ultra vires statute, it strains credulity to argue that the Copyright Office would have rejected the G2 registration application on that basis. There is no reason to believe, and eCopy advances no persuasive argument, that the Copyright Office would have analyzed Old Embassy's conduct under applicable New Hampshire corporation law to determine whether Old Embassy's ownership of the G2 copyright was ultra vires, much less that it would have rejected the G2 copyright application on that basis.[13]
At oral argument, eCopy correctly pointed out that the various statutory provisions that make up the Business Corporation *232 Act must be read and interpreted in pari materia.[14] It then invoked a corollary of that canon of constructionthat where one statute deals with a subject in general terms, and another does so more specifically, the more specific provision will prevail in the event of a conflict, see SUTHERLAND, supra § 51:5to suggest that New Hampshire's ultra vires statute is trumped by its administrative dissolution statutes. See generally, State v. Gifford, 148 N.H. 215, 216, 808 A.2d 1 (2002); see also State v. Bell, 125 N.H. 425, 432, 480 A.2d 906 (1984). Specifically, it claimed that the ultra vires statute, N.H.Rev.Stat. Ann. § 293-A:3.04, which would defeat its argument that the G2 copyright registration is invalid, is rendered inapplicable by §§ 293-A:14:21(b), limiting post-dissolution activities to wind-up, liquidation, and notice, and § 293-A:14.05, a more specific list of authorized post-dissolution activities. See N.H.Rev.Stat. Ann. § 293-A:14.05 (2001) (authorizing post-administrative dissolution asset collection, liability discharge, property distribution to stockholders, and "every other act necessary to wind up and liquidate its business and affairs"). The specificity of these latter provisions, eCopy argues, overcomes the ultra vires statute's prohibition against the nullification of Old Embassy's purportedly unauthorized receipt of the G2 copyright assignment.
Assuming, without deciding, that the G2 copyright assignment was beyond the scope of wind-up or other activities authorized by §§ 293-A:14:21(b) and 293-A:14.05,[15] the court nonetheless rejects this argument. These post-dissolution provisions are not more specific treatments of general issues covered by the ultra vires statute. If anything, the converse is true. The post-dissolution provisions explain what acts are authorizedand, by negative implication, unauthorizedafter the administrative dissolution of a corporation. The ultra vires statute, on the other hand, addresses the legal effect of, and who may challenge, any act deemed to be unauthorized for any number of reasons.
Moreover, in order to invoke this rule of statutory construction, a party normally must demonstrate that the statutes in question were enacted at different times and conflict each other. See SUTHERLAND, supra, § 51:5. The statutes in question were enacted contemporaneously, see 1992 N.H. Laws 255:1, and the ultra vires statute logically follows, rather than contradicts, the dissolution provisions. See SUTHERLAND, supra § 51:1-51:5 (in pari materia rule, including temporal and substantive relationships between general and specific statutes). Finally, as an extrinsic aid to statutory construction, the in pari materia rule and its corollaries "may not be resorted to if the statute," like the ultra vires provision of the Business Corporation Act, "is clear and unambiguous." Id. § 51:1; see Buchholz v. Waterville Estates Ass'n, 156 N.H. 172, 173, 934 A.2d 511 (2007).
Thus, both prongs of eCopy's attack are defeated by New Hampshire's Business Corporation Act. First, Old Embassy existed as an organization, albeit one with limited authority, at the time of the G2 copyright registration. Second, its acts of registering and receiving claimant status were within its capacity, if not its statutory authority, and these acts are not subject to *233 any challenge by eCopy. Accordingly, eCopy's motion for judgment on the pleadings, treated as a summary judgment under Rule 12(d), must fail.
This decision is limited to the issue of the validity of the G2 copyright registration on the grounds asserted by eCopy. Although both parties' submissions also addressed New Embassy's standing to sue, eCopy was clear that its dispositive motion was premised on the jurisdictional prerequisite of copyright validity, and not the validity of New Embassy's status as copyright claimant. While this court is unprepared to grant judgment as a matter of law based on copyright invalidity as it relates to subject matter jurisdiction, it is not unmoved by eCopy's related argument. As eCopy points out, it is by no means clear that New Embassythe only plaintiff in the suit in its current procedural postureactually holds a legal interest in the apparently valid G2 copyright. While it would seem to make intuitive sense that Tidd intended to convey his authorship-conferred rights to Old Embassy, rescind the assignment, and then make a similar assignment to New Embassy (making it the proper plaintiff), the Second Amended Complaint contains inconclusive and arguably inconsistent factual assertions. A clerical error apparently made in registering the G2 copyright further clouds the issue. See supra Part II, n. 4. Finally, New Embassy's "Form CA" amendment of the registration, challenged by eCopy as an inappropriate vehicle to add claimants, contains information which arguably contradicts and potentially undermines the allegations in the Second Amended Complaint as they relate to standing. See id., n. 6. Although the court ordered the plaintiff to file that amended pleading to clarify the ownership of record of the G2 copyright "during the entire period relevant to this litigation," the Second Amended Complaint raised as many questions as it answered, and may invite further standing-based challenges from the defendant.
IV. CONCLUSION
The defendant's motion for judgment on the pleadings, treated by the court as a summary judgment motion under Rule 12(d), is denied. Nothing in this order precludes the defendant from making a summary judgment challenge to the validity of New Embassy's copyright claim, as opposed to the validity of the G2 copyright itself. The parties are ordered to file a revised joint discovery plan under Rule 26 and Local Rule 26.1.
SO ORDERED.
NOTES
[1] The lawsuit was initiated by a related but separate corporation of the same name ("Old Embassy") which, as explained below, was administratively dissolved by the State of New Hampshire. An amended complaint substituted "New Embassy" as the plaintiff in this case.
[2] As required in a summary judgment analysis, this statement of facts puts the background facts in the light most flattering to New Embassy, indulging all reasonable inferences in its favor. See Mulvihill, 335 F.3d at 19. The court notes that these facts, as set forth in the pleadings, possess the clarity of a muddy river; the basic contours of the flow can be discerned, but not the existence of what lies beneath the surface.
[3] In 1994, Tidd formed Tidal Software Corporation, which he sold to eCopy in 1995. Tidal Software performed work for eCopy prior to the acquisition, and Tidd went to work for eCopy as its Vice President of Engineering. Tidd left eCopy's employ in 1995.
[4] Actually, Old Embassy's registered agent listed "Embassy Software, Inc.," rather than the corporation's correct name, "Embassy Software Corp.," as the claimant with respect to G2, but eCopy concedes, for the purposes of this motion, that that was a clerical error and that Old Embassy was the intended copyright claimant.
[5] The court will assume, as the parties do, that the counterclaim precluded reinstatement under N.H.Rev.Stat. Ann. § 293-A:14.22-a(a)(5), but does not adopt that proposition indisputable as a matter of law.
[6] This amendment at least superficially contradicted Tidd's quitclaim assignment of the copyright to Old Embassy in August 2005.
[7] This second category "includes a person or organization that has obtained, from the author or from an entity that has obtained ownership of all rights under the copyright initially belonging to the author, the contractual right to claim legal title to the copyright in an application for copyright registration." Id. at n. 1.
[8] Of course, the reason Old Embassy was not retroactively reinstated, thus presumably reestablishing the validity of its copyright registration, see N.H.Rev.Stat. Ann. § 293-A:14.22-a(f), was the mere existence of eCopy's counterclaim. N.H.Rev.Stat. Ann. § 293-A:14.22-a(a)(5). It is not lost on the court, however, that with a single pleadingits answer and counterclaimeCopy put Old Embassy on notice that it had been administratively dissolved (with all of the ensuing ramifications for this court's jurisdiction if the dissolution voided the G2 copyright registration), and simultaneously blocked Old Embassy from retroactively curing the dissolution through a routine statutory reinstatement procedure. N.H.Rev.Stat. Ann. § 293-A:14.22 (Supp. 2008). This raises questions regarding the operation of the applicable Business Corporation Act provisions, and the effect of the counterclaim, that the court need not answer in order to decide this motion.
[9] This provision has never been interpreted by the New Hampshire Supreme Court, but its similar predecessor provision, also continuing corporate existence beyond the date of administrative dissolution, was held by the court to expand, rather than limit the rights and remedies of dissolved corporations. See, e.g., Fischer v. City of Dover, 131 N.H. 469, 473-74, 554 A.2d 1293 (1989); MBC, Inc. v. Engel, 119 N.H. 8, 11, 397 A.2d 636 (1979) (same) (interpreting since-repealed N.H.Rev.Stat. Ann. § 294:98 (Supp.1997)).
[10] An ultra vires act is one that is "unauthorized [or] beyond the scope of power allowed or granted by a corporate charter or by law." Black's Law Dictionary 1559 (8th ed. 2004).
[11] One case cited by eCopy warrants consideration. In Foamation, Inc. v. Wedeward Enterprises, Inc., 947 F.Supp. 1287 (E.D.Wi. 1996), an unfair competition action that questioned the validity of a claimed copyright registration involving the famous foam "cheese wedge" hats worn by Green Bay Packers fans, the United States District Court for the Eastern District of Wisconsin found (in the context of a request for a preliminary injunction) the plaintiff's copyright registration to be likely invalid where the plaintiff corporation did not yet exist at the time it claimed authorship of the work in question. See id. at 1297 n. 8. That ruling, however, was based on (1) misstatements knowingly made (id. at 1297), see Torres-Negron, 504 F.3d at 162 (noting difference between inadvertence and fraud in deciding jurisdictional issue), (2) a corporation that did not yet exist, as opposed to being administratively dissolved at the time of registration, id. at n. 8, (3) a finding of pre-existence authorship, an intrinsically affirmative activity id., as opposed to the more passive receipt of an assignment of the work in question, and (4) forfeiture of any copyright. Id. at 1298.
[12] Curiously, eCopy cited this very provision in its opposition to New Embassy's original counterclaim to defeat New Embassy's assertion of the ultra vires doctrine as a defense. Neither its written submissions nor its oral argument explained why this statute defeats the plaintiff's assertion of the ultra vires doctrine, but not its own. At oral argument, eCopy argued that the ultra vires provision was properly understood only to prevent the inappropriate voiding of contracts entered by corporate officers or agents that exceeded the corporate authority under the articles of incorporation. Ultra vires acts, however, include not only acts unauthorized by a corporate charter, but those (as eCopy characterizes Old Embassy's conduct in this case) not authorized under the law. See supra n. 9; 7A Fletcher, supra, § 3399 ("An ultra vires act or contract, . . . according to the strict construction of the term, is one not within the express or implied powers of the corporation fixed by its charter, the statutes, or the common law.") (emphasis added).
[13] Even if the law were not so explicit on this point, the administrative dissolution provisions cited by eCopy, §§ 293-A:14.21 and 293-A:14.22, create the same inference by permitting retroactive corporate status reinstatement through relatively routine filings with the New Hampshire Secretary of State.
[14] Separate statutes or provisions that deal with the same subject are "commonly referred to as statutes in pari materia. ..." 2B N.J. Singer & J.D. Singer, Sutherland Statutory Construction, § 51:1 (7th ed. 2008) ("SUTHERLAND"). Thus, they all should be construed together." Id. § 51:2; Williams v. Babcock, 121 N.H. 185, 190, 428 A.2d 108 (1981).
[15] See 16A Fletcher, § 8134 (2003). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567779/ | 253 F.Supp.2d 643 (2003)
MEDICAL RESEARCH ASSOCIATES, P.C., Plaintiff,
v.
MEDCON FINANCIAL SERVICES, INC. F/K/A Allmed Financial Corp., Defendant.
No. 01 CIV. 6249 CMLMS.
United States District Court, S.D. New York.
March 25, 2003.
*645 Jacob E. Amir, Law Office, Adam J. Feldman, New York City, for Plaintiff.
Robert F. Diubaldo, Hoey, King, Toker & Epstein, New York City, for Defendant.
MEMORANDUM DECISION AND ORDER PARTIALLY GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT
MCMAHON, District Judge.
Plaintiff Medical Research Associates, P.C. ("Medical Research") sues defendant Medcon Financial Services, Inc. ("Medcon") for breach of contract, negligence, breach of its fiduciary duties, and tortious interference with contract. Medcon moves for summary judgment on all of plaintiffs claims pursuant to Rule 56 of the Federal Rules of Civil Procedure. Medical Research cross-moves for summary judgment on its breach of contract claim.
For the following reasons, plaintiffs motion is denied and defendant's motion is denied in part and granted in part.
FACTS
Medical Research is a group of New York physicians organized as a New York professional corporation. [Plaintiffs 56.1 Statement ¶ 4; Defendant's 56.1 Statement ¶ 1]. Medcon is a New Jersey corporation that provides administrative, billing, and collection services to physicians and health care providers. [Defendant's 56.1 Statement ¶ 6].
On or about July 1, 1996, Medical Research entered into a contract (the "1996 Contract") with Allmed, a subsidiary of a New York health care provider named Anthem, Inc. In 1998, Medcon purchased a set of assets from Allmed that included the 1996 Contract. [Defendant's 56.1 Statement ¶ 5].
The 1996 Contract provided that Allmed (and subsequently, as Allmed's successorin-interest, Medcon) would collect information from Medical Research regarding its *646 treatment of patients, process the information through its computer system, and submit the information to respective insurance providers for reimbursement. [Plaintiffs 56.1 Statement ¶ 2, Ex. 4; Defendant's 56.1 Statement ¶ 11]. The effective date of the contract was from July 1, 1996 to June 30, 1999, renewable automatically for an additional two year term unless either party terminated it in writing at least ninety days prior to July 1, 1999. [Plaintiffs 56.1 Statement ¶ 2, Ex. 4].
In practice, Medical Research provided the patient information in the form of "charge tickets." [Plaintiffs 56.1 Statement ¶ 2; Defendant's 56.1 Statement ¶ 11]. Medcon's messengers picked up the charge tickets, and Medcon entered the information into its computer system. [Plaintiffs 56.1 Statement ¶ 3; Defendant's 56.1 Statement ¶ 11]. Upon entry of the information from the charge tickets, the computer system automatically generated a "batch processing number." A Medcon employee would then attach a "batch cover sheet" to the group of charges entered into the system and record onto the cover sheet the batch number, the date of entry into the system, and the amount due. [Plaintiffs 56.1 Statement ¶ 4]. Medcon would then forward the information entered into the system to respective insurance providers. [Plaintiff's 56.1 Statement ¶ 5; Defendant's 56.1 Statement ¶ 11].
In a letter dated July 13, 1999, Medcon notified Medical Research that it was terminating its services under the 1996 Contract. [Defendant's 56.1 Statement ¶ 12, Ex. J]. The parties then entered into an agreement (the "1999 Agreement") through a letter dated November 3, 1999 finalizing the termination of their relationship. [Plaintiffs 56.1 Statement ¶ 8, Ex. 10, Defendant's 56.1 Statement ¶ 13, Ex. L]. The 1999 Agreement provided that Medcon was to cease all collection and administrative efforts for Medical Research claims dated after September 30, 1999, and that Medcon was to process all pre-September 30 claims that it received prior to October 31 before November 30. [Plaintiffs 56.1 Statement ¶ 8, Ex. 10; Defendant's 56.1 Statement ¶¶ 15-16, Ex. L].
In addition, Medcon was to forward either directly to Medical Research or to its new billing company, Creative Physician Managementany claims that it received outside the deadlines set forth in the 1999 Agreement. [Plaintiffs 56.1 Statement ¶ 8, Ex. 10; Defendant's 56.1 Statement ¶¶ 17, Ex. L]. Pursuant to those terms, Medical Research agreed "to release Medcon from their obligations under the billing service agreement currently in effect, and to pay Medcon for all services rendered under this agreement up to and including collections received through November 30, 1999, in accordance with the payment services specified in the billing services agreement (subject to the adjustments discussed above)." [Plaintiffs 56.1 Statement, Ex. 10]. Accordingly, Medical Research continued (between July 1 and September 30, 1999) to provide medical services to its patients and forward the "charge tickets" to Medcon. [Plaintiffs 56.1 Statement ¶ 10].
Medical Research alleges that after the termination of the parties' relationship it learned that Medcon had not processed a substantial number of claims. [Plaintiffs 56.1 Statement ¶ 12]. Specifically, Medical Research claims that insurance providers did not receive from Medcon claims for patients Medical Research treated during the summer of 1999.
DISCUSSION
I. Summary Judgment Standard
A party is entitled to summary judgment when there is no "genuine issue of material fact" and the undisputed facts *647 warrant judgment for the moving party as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering a motion for summary judgment, "the court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in [its] favor." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The moving party has the initial burden of demonstrating the absence of a disputed issue of material fact. Celotex v. Catrett, All U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has made such a showing, the nonmoving party must present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The party opposing summary judgment "may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998). Moreover, not every disputed factual issue is material in light of the substantive law that governs the case. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgment." Anderson, All U.S. at 248, 106 S.Ct. 2505.
II. Choice of Law
A federal court sitting in New York must apply New York's choice of law rules when its jurisdiction is based on diversity. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Here, two principles of New York choice of law doctrine seem to run counter to each other. First, "New York law is clear in cases involving a contract with an express choice-of-law provision: Absent fraud or violation of public policy, a court is to apply the law selected in the contract as long as the state selected has sufficient contacts with the transaction." Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir.2000) (citing International Minerals and Resources, S.A. v. Pappas, 96 F.3d 586, 592 (2d Cir.1996)). The 1996 Contract provides: "This agreement shall be governed by the law of the State of Indiana." [Plaintiffs 56.1 Statement, Ex. 4, at ¶ XI].
New York courts have also held, however, that if the parties' briefs assume that New York law controls, such "implied consent... is sufficient to establish choice of law." Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 138 (2d Cir.2000) (quoting Tehran-Berkeley Civil & Environmental Engineers v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239, 242 (2d Cir.1989)). Here, both parties apply New York law in their briefs. Medcon does so after a discussion and application of New York choice-of-law rules. Medical Research does so with no such discussion.
This contradiction seems to arise from confusion regarding whether plaintiffs breach of contract action arises from an alleged breach of the 1996 Contract or the 1999 Agreement. Medical Research does not directly address this issue, but seems to implicitly argue that Medcon breached the 1996 Contract. Medcon argues that the 1999 Agreement constituted an accord, and that its performance pursuant to the 1999 Agreement constituted satisfaction.
While the 1996 Contract contains a choice-of-law clause, the 1999 Agreement does not. Thus, insofar as the 1999 Agreement contains no choice-of-law clause and the parties have implicitly consented to the application of New York law, New York law applies to construction of that agreement. See, e.g., American Fuel Corp. v. Utah Energy Development Co., Inc., 122 F.3d 130, 134 (2d Cir.1997) ("[W]here the parties have agreed to the application of *648 the forum law, their consent concludes the choice of law inquiry."). I must apply Indiana law, however, to any construction of the 1996 Contract.
In addition, I must address what jurisdiction's laws applies to plaintiffs torts claims, because "under New York's choice of law rules, the law of different jurisdictions can apply to the tort claims and the contract claims in a given suit." Lazard Freres & Co. v. Protective Life Ins. Co., 108 F.3d 1531, 1540 (2d Cir.1997). In Golden Pacific Bancorp, v. FDIC, 273 F.3d 509 (2d Cir.2001), plaintiff sued defendant for breach of contract, breach of fiduciary duty, unjust enrichment, and corporate waste. Because the parties' briefs assumed that New York substantive law governed, the Second Circuit applied New York law to the contract and tort claims. Id. at 514 n. 4, 519-20. Here, the parties' briefs assume that New York law applies to the contract and tort law claims. I therefore find that New York law applies.
III. Both Parties' Motions for Summary Judgment on Plaintiffs Breach of Contract Claim are Denied
Medcon argues that (1) the 1999 Agreement constituted an accord and that no genuine issue of fact exists as to whether it tendered satisfaction; and (2) no genuine issue of fact exists as to whether Medical Research suffered damages. Medical Research argues that no genuine issue of fact exists as to whether Medcon breached the 1996 Contract.
Under New York law, "[a]n accord is an agreement that a stipulated performance will be accepted, in the future, in lieu of an existing claim." Denburg v. Parker Chapin Flattau & Klimpl, 82 N.Y.2d 375, 383, 604 N.Y.S.2d 900, 905, 624 N.E.2d 995, 1000 (1993); see also May Dep't Stores Co. v. International Leasing Corp., Inc., 1 F.3d 138, 140 (2d Cir.1993); Sudul v. Computer Outsourcing Services, Inc., 917 F.Supp. 1033, 1047 (S.D.N.Y. 1996). The execution of the agreement is called satisfaction. "If the satisfaction is not tendered, the obligee may sue under the original claim or for breach of the accord." Denburg, 82 N.Y.2d at 383, 604 N.Y.S.2d at 905, 624 N.E.2d at 1000.
It is often difficult to distinguish between an executory accord and a novation. See, e.g., National American Corp. v. Federal Republic of Nigeria, 448 F.Supp. 622, 643 (S.D.N.Y.1978), affd, 597 F.2d 314 (2d Cir.1979). While a novation is "an agreement for an existing obligation to be extinguished immediately by the acceptance of a new promise," a new agreement constitutes an accord if the parties intended that under the new agreement "an existing claim [would] be discharged in the future by the rendition of a substituted performance." May Dep't Stores Co., 1 F.3d at 140 (internal citations omitted).
Here, I find that the 1999 Agreement constituted an accord. The undisputed facts establish that Medcon informed Medical Research of its desire to terminate the contract less than ninety days prior to July 1, 1999. As a result, the 1996 Contract had already automatically renewed for a two year period and any failure to perform under the 1996 Contract would have constituted a breach of contract. Medical Research and Medcon then entered into an agreement (the 1999 Agreement) whereby Medical Research agreed that any future claim would be discharged by the rendition of the substituted performance set forth in the 1999 Agreement. In other words, Medical Research agreed, "to release Medcon from their obligations under the billing service agreement currently in effect" if Medcon satisfied the terms of the 1999 Agreement. [Plaintiffs 56.1 Statement, Ex. 10].
*649 Thus, I must determine whether a genuine issue of fact exists as to whether Medcon tendered satisfaction of the accordthe 1999 Agreement. The determinative issue is really whether Medcon processed the claims Medical Research submitted to it between July 1 and September 30, 1999. Failure to do so would constitute a failure to tender satisfaction, in which case Medical Research could sue for breach of either the 1996 Contract or the 1999 Agreement.
In support of its motion, Medcon relies primarily on the analyses conducted by two experts it hired. Those experts conclude that there is no evidence that Medcon failed to process claims with the insurance companies. [Defendant's 56.1 Statement ¶¶ 23, 26]. In response, Medical Research argues that (1) the expert that it hired concluded that Medcon failed to process the overwhelming claims it forwarded to Medcon; (2) 452 batch sheets that Medcon produced, totaling $1,995,223.63 in claims, provide evidence that Medcon received charges from Medical Research; and (3) a tremendous shortfall in Medical Research's revenue, as compared to the same months during the prior year, provides evidence that Medcon failed to process the claims. The evidence that the parties offer precludes me from granting summary judgment for either of them. A genuine issue of material fact exists as to whether Medcon complied with the terms of the 1999 Agreement.
This same evidence also precludes summary judgment on the basis that Medical Research cannot prove that it suffered damages, an essential element of a cause of action for breach of contract. See, e.g., First Investors Corp. v. Liberty Mut. Ins. Corp., 152 F.3d 162, 168 (2d Cir.1998). The issue of whether Medcon tendered satisfaction is intertwined with the question of whether Medical Research suffered damages. And the evidence before me for example Medical Research's expert testimony and the 452 "batch cover sheets"suffices to create a genuine issue of material fact on this issue.
IV. Defendant's Motion for Summary Judgment on Plaintiffs Tort Claims is Granted
A. Negligence
In its second cause of action, Medical Research argues that Medcon had a duty to use proper care and control in ensuring that it forwarded claims to insurance providers in a timely manner; that Medcon knew or should have known that its failure to process claims in timely manner would render it impossible to collect payment; and that Medcon's negligence entitles it to compensatory damages. [Cmplt. ¶¶ 31-34]. Though Medical Research seems to refer to this in its motion papers as a "fraud" claim, Medcon correctly characterizes it as a claim for negligent performance of contract. Because New York does not recognize any such cause of action, plaintiffs second cause of action must be dismissed. See Tevdorachvili v. Chase Manhattan Bank, 103 F.Supp.2d 632, 644 (E.D.N.Y.2000) (citing Megaris Furs, Inc. v. Gimbel Bros., Inc., 172 A.D.2d 209, 211, 568 N.Y.S.2d 581, 583 (1st Dep't 1991)).
B. Breach of Fiduciary Duty
In its third cause of action, plaintiff alleges that Medcon acted as Medical Research's agent and breached its fiduciary duty by failing to process claims in a timely fashion and ensure that plaintiff received payment; to record and report claims for payment; to give proper notice of its intention to terminate the agreement; and to assist in the transition of services to be handled by a new medical billing company (Creative Physician Management). [Cmplt. ¶ 37]. These are the *650 same allegations upon which plaintiff bases its breach of contract claim. "Since the plaintiff is not alleging tort liability or a breach of a duty distinct from, or in addition to, the breach of contract claim, th[is] cause[] of action should be dismissed." Layden v. Boccio, 253 A.D.2d 540, 541, 686 N.Y.S.2d 763, 764 (2d Dep't 1998); see also Remee Products Corp. v. Sho-Me Power Elec. Co-op, 2002 WL 31323827, at *9 (S.D.N.Y. Oct. 17, 2002) (granting summary judgment on plaintiffs breach of fiduciary duty claim because plaintiff did not allege tort liability distinct from or in addition to breach of contract claim).
C. Tortious Interference with Contract
Medical Research's fourth cause of action is one for tortious interference with contract. Plaintiff argues that Medcon's actions tortiously interfered with its contractual relationship with Creative Physician Management. Plaintiff seems to argue that Medcon's failure to timely transfer documents to Creative Physician Management in an organized fashion constitutes tortious interference. The 1999 Agreement contains specific provisions dealing with the transfer of documents to Creative Physician Management. Thus, Medical Research once again bases its tort claim on the same allegations that it argues constitutes breach of contract. "It is a well established principal that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated." Clark-Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382, 390, 521 N.Y.S.2d 653, 516 N.E.2d 190, 194 (1987). Here, as in Clark-Fitzpatrick, plaintiffs allegations "is merely a restatement, albeit in slightly different language, of the ... contractual obligations asserted in the cause of action for breach of contract." Id. As a result, plaintiffs tortious interference with contract claim is dismissed for the same reasons that I dismissed its breach of fiduciary duty claim.
CONCLUSION
Plaintiff and defendant's motion for summary judgment on plaintiffs first cause of action for breach of contract are both denied. Defendant's motion for summary judgment on plaintiffs second, third, and fourth causes of action is granted.
This is the decision and order of the Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567661/ | 253 F.Supp.2d 173 (2003)
Victor Levy CORDERO, Petitioner,
v.
UNITED STATES of America, Respondent.
No. CIV. 00-1151(RLA), CR. 91-299(RLA).
United States District Court, D. Puerto Rico.
March 18, 2003.
*174 Victor Levy Cordero, Pro Se, San Juan, for Plaintiff or Petitioner.
Lena Watkins, Esq, Narcotic and Dangerous Drug Section, U.S. Department of Justice, Washington, D.C, for Defendant or Respondent.
ORDER DISMISSING 28 U.S.C. § 2255 PETITION
ACOSTA, District Judge.
The Court has before it VICTOR LEVY CORDERO's petition for post-conviction relief under 28 U.S.C. § 2255.
LEVY CORDERO was convicted after a jury trial on Counts One, Two and Three of a superseding indictment that charged drug conspiracy; importation of approximately 5,000 pounds of marihuana in or about March or April of 1987; and possession of the same with intent to distribute, all in violation of 21 U.S.C. §§ 846 and 960, 21 U.S.C. § 952 and 21 U.S.C. § 841(a)(1).
LEVY CORDERO was sentenced on June 8, 1993 to twenty (20) years in prison and 10 years of supervised release. On appeal, the First Circuit remanded the case to this Court for a hearing on the reliability of defendant's alibi evidence that the Court had excluded at trial. See United States v. Levy-Cordero, 67 F.3d 1002 (1st Cir.1995).
After the alibi reliability hearing, the First Circuit determined that this Court's "failure to place before the jury any evidence that Levy was in Florida during the relevant weekend was `harmless beyond a reasonable doubt.'" United States v. Levy-Cordero, 156 F.3d 244, 247 (1st Cir. 1998) (Levy II). Accordingly, the conviction was affirmed.
LEVY CORDERO filed the present petition after denial of his writ of certiorari. Levy-Cordero v. United States, 526 U.S. 1040, 119 S.Ct. 1337, 143 L.Ed.2d 501 (1999).
DISCUSSION
Claim of Ineffective Assistance of Counsel due to His Attorney Engaging in Criminal Conduct
LEVY CORDERO's first ineffective assistance of counsel claim alleges that his attorney Robert Moore labored under an actual conflict of interest because, unbeknownst to LEVY CORDERO, Moore "had himself engaged in criminal activity related to the same type of conduct related to drugs for which [LEVY CORDERO] was convicted."
To obtain a new trial based on an ineffective assistance of counsel claim, LEVY CORDERO must demonstrate "(1) that counsel fell below the applicable standard for performance, and (2) that prejudice resulted." Carey v. United States, 50 F.3d 1097, 1100 (1st Cir.1995). The Court will presume that prejudice resulted "if the defendant demonstrates that counsel actively represented conflicting interests and *175 that an actual conflict of interest adversely affected his lawyer's performance." Id. (internal quotations omitted). An actual conflict of interest exists when "a plausible alternative defense strategy or tactic" is inherently in conflict with, or not undertaken because of, the attorney's other interests or loyalties. Id.
LEVY CORDERO's claim fails because he does not identify any plausible alterative defense strategy or tactic. LEVY CORDERO contends that there was an actual conflict merely because his attorney may have been engaged in criminal conduct at the time of his representation and failed to disclose this fact to LEVY. Neither the law nor the record of this case supports this claim.
A "per se" Sixth Amendment violation does not occur merely because a defense attorney may have committed a crime. Generally, the attorney's alleged criminal conduct "must be sufficiently related to the [defendant's] charged crimes to create a real possibility that the attorney's vigorous defense of his client will be compromised." United States v. Fulton, 5 F.3d 605, 611 (2d Cir.1993). An attorney's criminal conduct may give rise to a conflict of interest resulting in ineffective assistance of counsel if a vigorous defense would risk disclosure of the attorney's conduct. See, e.g., Fulton, 5 F.3d at 609-11 (both defendant and counsel allegedly imported heroin in concert with a government witness); United States v. Greig, 967 F.2d 1018, 1025 (5th Cir.1992) (at defendant's drug trafficking trial, it was "plainly obvious ... that... counsel was preoccupied with conducting his own defense" where defendant and counsel were also both implicated in witness tampering); United States v. Camilla, 725 F.2d 867, 870 (2d Cir.1984) ("[I]t must have occurred to counsel that a vigorous defense might uncover evidence or prompt testimony revealing his own crimes[.]").
In addition, an attorney who is anticipating criminal or disciplinary charges stemming from his alleged misconduct unrelated to the defendant may labor under a conflict of interest. A defendant seeking post-conviction relief, however, must at least identify a defect in counsel's representation and allege some connection between the misconduct and the defect. LEVY CORDERO has done neither. See United States v. Soldevila-Lopez, 17 F.3d 480, 486-87 (1st Cir. 1994) (rejecting as "theoretical or merely speculative" defendant's claim that counsel who had failed to timely raise issue had interest in losing issue on the merits to avoid disciplinary proceedings); United States v. Gonzalez, 970 F.2d 1095, 1101 (2d Cir.1992) (rejecting conflict allegation where defendant unable to demonstrate "any connection between the substance of [counsel's] advice in December of 1990 regarding [defendant's] plea and [counsel's] discovery two months later that he [himself] was under investigation in an unrelated case").
In this case, where Attorney Moore's misconduct was completely unrelated to the charges against LEVY CORDERO, see Transcript of January 16, 1996 hearing at 159 (docket No. 562, Attachment A), and there is no indication that Attorney Moore anticipated adverse consequences stemming from his misconduct, there was no actual or potential conflict of interest. In sum, LEVY CORDERO has failed to specify how Moore's criminal conduct adversely affected the defense, and "the inherent risk of harmful conflict here was not so great that a defendant ... necessarily suffered] an actual or constructive denial of the assistance of counsel altogether." Familia-Consoro v. United States, 160 F.3d 761, 766 (1st Cir.1998) (internal quotation *176 omitted). Accordingly, this claim is dismissed.
Claim of Ineffective Assistance of Counsel With Respect to the Alleged Alibi Evidence
LEVY CORDERO next alleges that he was denied effective assistance of counsel because Attorney Moore "failed", to conduct thorough investigation on two alibi defenses given to him by petitioner. In support of this claim, LEVY CORDERO first argues that Attorney Moore's lack of preparation "led him to openly violate [the Court's] Omnibus Order concerning alibi defenses," thereby depriving the jury of the opportunity to hear evidence that this Court later deemed "reliable." This allegation inaccurately construes what transpired regarding petitioner's proffered "alibis".
Initially, this Court excluded at trial the alibi placing LEVY CORDERO in Florida during the weekend of March 27 (the "Gainesville alibi" as petitioner calls it.) Moreover, based on the recantation of this alibi by LEVY CORDERO's own witnesses at the hearing on remand, the First Circuit held that the alibi was "false or utterly unreliable." Levy II, 156 F.3d at 247. As to the alibi placing LEVY CORDERO in Puerto Rico at the end of March (the Puerto Rico alibi) that this Court heard evidence on at the remand hearing; this was not the alibi proffered at trial. Thus, whether Attorney Moore complied with discovery requirements or not is irrelevant as to his alleged alibi defenses, both of which were in time discredited by the appeals court. See Levy II156 F.3d at 248 ("A convicted criminal cannot successfully lay claim to a new trial when, years after his conviction, his friends suddenly provide a new alibi unsupported by anything other than their collective word.").
Furthermore, it is unclear what "information," if any, LEVY CORDERO gave Attorney Moore to investigate regarding the alibi. LEVY CORDERO does not contest Attorney Moore's testimony that, initially, neither LEVY CORDERO nor his friends could remember whether or not they took the trip to the races in 1987 and that their memories began to crystalize during the trial. LEVY CORDERO's non-specific claim of providing sufficient information to his attorney earlier is thus "inadequate on its face" and inconsistent with the record; it lacks sufficient detail to call into question what transpired between petitioner and Attorney Moore.
Additionally, LEVY CORDERO argues that Attorney Moore failed to investigate "information and evidence that could have shown the impossibility of petitioner's boat `La Bebe' being part of the criminal activity alleged in the indictment." First of all, this allegation is "inherently incredible," David, 134 F.3d at 477.
Although LEVY CORDERO provides a vivid account of what allegedly happened to his boat in March 1987, he does not specify which, if any, part of this "information and evidence" constituted the "leads" he gave Attorney Moore to investigate the alleged alibi. Second, this alleged alibi was consistent with the proffered vacation alibi. It would have been logical to attempt to obtain the evidence or at least refer to this alibi at the hearing on remand, when LEVY CORDERO was represented by a different attorney, yet he did not do so. Finally, in a motion filed a few months prior to the Motion to Vacate Sentence, LEVY CORDERO requested discovery of documents relating to the seizure of his boat "[b]ecause there exists the possibility of being able to develop based on recent discovery a new argument concerning the use of the boat[.]" Crim. 91-299, docket No. 1557 (emphasis added). This is *177 yet another indication that his attorney was not inefficient at the time he was investigating the boat's whereabouts.
Thus, petitioner's allegations in this regard lack credence and this claim must be dismissed.
General Claims of Ineffective Assistance of Counsel and Claim With Respect to the Telephone Records Evidence
LEVY CORDERO's general allegations of incompetency, lack of preparation for trial, lack of knowledge of federal court rules, and lack of concentration, Motion 11 (Ground Three), do not merit consideration as they are vague and unsupported by the record. Petitioner was, in fact, vigorously represented by counsel; witnesses were aptly cross-examined and their impeachment sought, the evidence was questioned and reasonable defenses or contradictions were developed for the jury's consideration and ably addressed in the closing arguments. See David, 134 F.3d at 477-78.
In addition, LEVY CORDERO seeks relief based upon a claim that Attorney Moore failed to introduce into evidence records indicating that a cellular telephone allegedly used by Rosa-Collazo to contact LEVY CORDERO was not in service in March 1987. The government refused to stipulate to the records because, although one document indicated that the telephone number was not in service between January and August 1987, the September 1987 toll record reflected a previous bill totaling $507.28.
The record reflects that, after study, Attorney Moore concluded that the records were "misleading":[1] Attorney Moore had obtained information from the telephone company records custodian indicating that the same subscriber had "changed his number every few months." He therefore concluded that the records he had obtained did not, in fairness to both parties, prove the point he wanted to establish, which was that Rosa didn't make a call during the month of March. See Trial Transcript, December 14, 1992, at p. 129. Thus, LEVY CORDERO's allegation fails to establish either deficient performance on counsel's part or prejudice resulting from failure to introduce the records into evidence.
Claim that Petitioner's Sentence is in Violation of Apprendi v. New Jersey
By way of a motion for leave to file a supplemental pleading[2] LEVY CORDRO avers that the Court erred in sentencing him pursuant to the rule enunciated in Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000). The rule in Apprendi is that, "[o]ther 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 the jury, and proved beyond a reasonable doubt." 530 U.S. at 490, 120 S.Ct. 2348. Petitioner claims that he "received a sentence five (5) years longer than the maximum he could have received had he been sentenced on the facts as found by the jury."
Apprendi was decided after LEVY CORDERO filed the present petition. The First Circuit has not directly addressed the question of whether Apprendi applies retroactively. The general consensus of several other circuits is that Apprendi does not apply retroactively to *178 cases on collateral review. See Negrón v. U.S., 175 F.Supp.2d 148 (D.P.R.2001) (citing U.S. v. Moss, 252 F.3d 993 (8th Cir. 2001); McCoy v. U.S., 266 F.3d 1245 (11th Cir.2001); Forbes v. U.S., 262 F.3d 143 (2nd Cir.2001); U.S. v. Sanders, 247 F.3d 139 (4th Cir.2001)). This Court will not depart from the opinions in these cases, and will not, therefore, apply Apprendi retroactively. Accordingly, this claim must also be DISMISSED.
Claim of Erroneous Application of the Law at Sentencing
Petitioner also blames his attorney for providing ineffective assistance at sentencing. He alleges that due to his counsel's incompetency, his Judgment and Commitment Order reflects an error concerning the applicable law for sentencing purposes.[3]
LEVY CORDERO contends that, because his infringement of the law, according to the indictment, occurred from March 27, up to March 29, 1987, "the applicable sentencing law at the time had to be the Sentencing Reform Act of 1984, a non guidelines sentence." He further avers that "[u]nder this non guidelines sentencing law the convicted had only to serve 2/3 of his sentence as it is clearly mandated under the law." Petitioner does not cite any legal authority in support of this proposition.
The Court has reviewed the record and petitioner's Presentence Report and finds that petitioner was properly sentenced pursuant to a non-Sentencing Guidelines Presentence Report.
However, to the extent that LEVY CORDERO is claiming that his sentence is subject to parole, his claim is unfounded. LEVY CORDERO was convicted on Counts Two and Three for violations of 21 U.S.C. 841 and 952 (Supp. IV 1986). The penalty statutes for those violations, as amended by the Anti-Drug Abuse Act of 1986, Pub.L. 99-570 §§ 1002, 1302, 100 Stat. 3207, 3207-2 to 3207-4, 3207-15 to 3207-18, provided for supervised release following incarceration, and did not provide for parole. See Gozlon-Peretz v. United States, 498 U.S. 395, 409, 111 S.Ct. 840, 112 L.Ed.2d 919 (1991) ("We hold that for offenses committed in the interim period between October 27, 1986, and November 1, 1987, supervised release applies for all drug offenses in the categories specified by ADAA § 1002"); Padilla Palacios v. United States, 932 F.2d 31, 33-34 (1st Cir.1991) ("We can therefore conclude, for the same reasons stated by the Supreme Court in Gozlon-Peretz, that supervised release applies for all drug offenses committed during the hiatus period in the categories specified by ADAA § 1302.") Accordingly, this Court imposed the only lawful form of post-conviction supervision available.
To the extent that petitioner claims that he has been prejudiced by the Bureau of Prison's (BOP) custody and security designation based on the Judgment and Commitment Order issued by this Court, this claim is DENIED for failure to exhaust the administrative remedies available to him within the BOP. See Dunne v. Henman, 875 F.2d 244, 249 (9th Cir.1989) ("Federal district courts have no authority to monitor the execution of a prisoner's sentence. That task is left to the Bureau of Prisons.").
*179 In light of the above, VICTOR LEVY CORDERO's petition to vacate, set aside or correct his sentence pursuant to 28 U.S.C. § 2255 is hereby DISMISSED. Judgment to issue.
IT IS SO ORDERED.
JUDGMENT
The Court having dismissed petitioner's motion under 28 U.S.C. § 2255 through its Order issued on this same date; it is hereby
ORDERED and ADJUDGED that this case be and the same is hereby dismissed.
IT IS SO ORDERED.
NOTES
[1] See Trial Transcript, December 14, 1992, at p. 129.
[2] See Motion for Leave to File Amended Habeas Relief... (docket No. 17), which is hereby GRANTED. See also United States of America's Response. . . (docket No. 19).
[3] See also petitioner's Emergency Motion to the Court (docket No. 24); Response of the United States in Opposition to Levy-Cordero's Emergency motion to the Court (docket No. 28); and petitioner's Brief Reply to Government's Opposition to Emergency Motion (docket No. 31). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2341445/ | 5 F. Supp. 2d 48 (1998)
Charles R. JOHNSON, General Partner of Johnson Cranberry Limited Partnership, and Francis V. Johnson a/k/a Van Johnson, Plaintiffs,
v.
KOPLOVSKY FOODS, INC., Edward M. Koplovsky, Elaine Koplovsky, Clermont, Inc., Braintree Hill Corporation General Partner of Braintree Hill Limited Partnership, and Zero Franklin Street Corporation, General Partner of Zero Franklin Street Limited Partnership, Defendants.
Civil Action No. 98-10536-EFH.
United States District Court, D. Massachusetts.
May 5, 1998.
*49 *50 Andrew M. Osborne, Osborne & Visconti, Dedham, MA, for Plaintiffs.
John J. Monaghan, Gordon P. Katz, Sherburne, Powers & Needham, Boston, MA, for Defendants.
Joseph F. Ryan, James W. Stoll, Anthony L. Gray, Anthony L. Gray, Brown, Rudnick, Freed & Gesmer, Boston, MA, for Congress Financial Corporation (Northwest), Movant.
MEMORANDUM
HARRINGTON, District Judge.
This is an action for damages and injunctive relief arising from the failure of Koplovsky Foods, Inc. ("KFI") and Clermont, Inc. ("Clermont") to make payment for cranberries sold and delivered to them by Plaintiffs Francis V. Johnson and Charles R. Johnson. Plaintiffs' complaint assert actions under contract, the Perishable Agricultural Commodities Act ("PACA"), the Fraudulent Conveyance Act, and the Massachusetts Unfair Trade Practices Act against KFI, Clermont, Braintree Hill Corporation, Zero Franklin Corporation, Elaine Koplovsky and Edward M. Koplovsky. Edward M. Koplovsky is an owner and majority shareholder of KFI and Clermont. Elaine Koplovsky is an officer of KFI. Edward and Elaine Koplovsky are officers of Zero Franklin Street *51 Corporation and Braintree Hill Corporation. These corporations are the general partners, respectively, of Zero Franklin Street Limited Partnership and Braintree Hill Limited Partnership. Plaintiffs filed a motion seeking a preliminary injunction and writ of attachments against each of the defendants.
After review of the parties' memoranda and oral arguments, the Court makes the following findings: (1) Francis V. Johnson has a substantial likelihood of success on the merits against KFI under the contract for goods sold and delivered and against Clermont under the theory of reach and apply; (2) Charles R. Johnson has a substantial likelihood of success on the merits against Clermont under the contract for goods sold and delivered; (3) plaintiffs do not have a reasonable likelihood of success on the merits under PACA; (4) plaintiffs have a reasonable likelihood of success on the merits that Clermont and KFI are alter egos; (5) plaintiffs do not have a reasonable likelihood of success on the merits that Zero Franklin and Braintree Hill are the alter egos of Elaine and Edward M. Koplovsky; (6) plaintiffs do not have a reasonable likelihood of success on the merits under Mass.Gen.L. ch. 93A for unfair and deceptive acts against KFI, Clermont, Edward M. Koplovsky and Elaine Koplovsky; and (7) plaintiffs do not have a reasonable likelihood of success on the merits under the Fraudulent Conveyance Act for transfer of the cranberry crop to Clermont and land parcels to the real estate limited partnerships.
The Court issued an Order on May 1, 1998 granting a preliminary injunction against KFI and Clermont and continuing the Writs of Attachment in the amount of $1,750,000.00 upon all assets of KFI and Clermont. The Order also enjoined Reach-and-Apply Defendant Clermont from paying any amount due by it to KFI and enjoined KFI from receiving any of its approximately $10 million receivable from Clermont. The amount payable to KFI from Clermont is subject to an equitable attachment in favor of plaintiff in the amount of $277,014.60. The motion seeking a preliminary injunction and writ of attachments against Edward M. Koplovsky, Elaine Koplovsky, Braintree Hill and Zero Franklin was not granted.
I. Legal Standard
Pursuant to Rule 64 of the Federal Rules of Civil Procedure, the remedy of pre-judgment attachment is available "under the circumstances and in the manner provided by the law of the state in which the district court is held." In Massachusetts, the substantive standard and the procedure governing attachments are contained in Rule 4.1 of the Massachusetts Rules of Civil Procedure. It provides that an order approving attachment "may be entered only after notice to the defendant and hearing and upon a finding by the court that there is a reasonable likelihood that the plaintiff will recover judgment." Mass.R.Civ.P.4.1(c). That rule also requires the movant to submit affidavits setting forth "specific facts sufficient to warrant the required findings" based upon the affiant's own information or belief. Mass. R.Civ.P. 4.1(c) & (h). "[T]he central question on the motion for approval of attachment is whether plaintiffs are likely to prevail on the merits and obtain damages in the necessary amount." Anderson Foreign Motors, Inc. v. New England Toyota Distributor, Inc., 475 F. Supp. 973, 978 (D.Mass.1979).
Pursuant to Fed.R.Civ.P. 65, plaintiffs seek a preliminary injunction against defendants restricting all transfer of assets except in the ordinary course of business. A party seeking preliminary injunctive relief must prove: (1) a substantial likelihood of success on the merits; (2) a significant risk of irreparable harm if the injunction is withheld;[1] (3) a favorable balance of hardships; and (4) a fit (or, at least, a lack of friction) between the injunction and the public interest. E.E.O.C. v. Astra USA, Inc., 94 F.3d 738, 742 (1st Cir.1996).
II. Liability of Defendants for Breach of Contract
Liability under the contracts for goods sold and delivered is undisputed by the parties. *52 Defendants KFI and Clermont conceded during oral argument their inability to perform under the contracts due to the precipitous decline in the market price of cranberry concentrate during October 1997. In an agreement dated December 28, 1994, KFI agreed to buy the entire cranberry crop produced by Francis V. Johnson during the years 1995, 1996 and 1997. Between October 2, 1997 and October 30, 1997, Francis V. Johnson delivered $362,910.60 worth of cranberries. On October 27, 1997 KFI made a payment of $50,000. On January 20, 1998 KFI made a payment of $35,896.00. An outstanding balance of $277,014.60 is due under the contract. KFI transferred these cranberries to Clermont for an account receivable. The Court also finds that there is a reasonable likelihood of success on the merits for Francis V. Johnson's reach-and-apply claim against Clermont.
In June 1995 an agreement was made between Charles R. Johnson and Clermont for the sale of the entire cranberry crop produced by Charles R. Johnson during the years 1995, 1996 and 1997 to Clermont. Between October 2, 1997 and October 30, 1997, Charles R. Johnson delivered $1,383,746.60 worth of cranberries. On October 27, 1997 Charles R. Johnson received a payment of $50,000. On January 20, 1998 Charles R. Johnson received $277,514 and was informed that Clermont had encountered financial difficulties. There is an outstanding balance of $1,056,232.60 under the contract.
III. Liability of Defendants under PACA
Count IV of the complaint seeks recovery against individual defendants Edward M. Koplovsky and Elaine Koplovsky as the "responsible persons" under PACA. 7 U.S.C. § 499a(b)(9); 7 C.F.R. § 46.2(ff). This motion raises a novel question regarding eligibility for trust protection under PACA, a statute which has been litigated only rarely in this Circuit. A threshold requirement for a reasonable likelihood of success on the merits under PACA is plaintiffs' eligibility for PACA protection. Defendants have not filed a memorandum in opposition to the preliminary injunction and rely on their filings in the related case of Hiller Cranberry v. Koplovsky Foods, Inc., 2 F. Supp. 2d 157. Their argument, previously presented to the Court, is that plaintiff is not entitled to trust protection because the agreements for the sale of the cranberry crop contained payment periods in excess of thirty days, in violation of regulations promulgated by the Secretary of Agriculture.
Due to the scarcity of case law on the subject, it is helpful to begin with a brief overview of PACA. PACA was enacted in 1930 to promote fair trading practices in the marketing of perishable agricultural commodities, largely fruits and vegetables. In a 1984 amendment to PACA, Congress provided for the imposition of a trust on certain assets of a defaulting buyer of perishable agricultural commodities in favor of sellers supplying the produce on a "cash" or "short-term credit" basis 7 U.S.C. § 499e(c)(2); see H.R.Rep. No. 543, 98th Cong., 2d Sess. 6-7, 12. There are a number of procedural and substantive prerequisites to securing the protection of a PACA trust, the specifics of which the statute leaves largely to the regulatory discretion of the Department of Agriculture. Relevant to the present case are the PACA regulations designed to insure that a produce supplier seeking the protection of the statutory trust is indeed a "short-term" creditor. In re Davis Distributors, Inc., 861 F.2d 416, 417 (4th Cir.1988). In particular, Section 499e(c)(3)(i) provides that the Secretary of Agriculture shall promulgate regulations providing the maximum time upon which parties may agree for payment and still have the benefit of PACA protection. The Secretary issued regulations that establish "the time prescribed by which payment must be made" under Section 499e(c)(3)(i) as between ten and twenty days, with ten days as the standard period. 7 C.F.R. § 46.2(aa). The regulations further provide, with respect to private agreements under Section 499e(c)(3)(ii), that "[t]he maximum time for payment for a shipment to which a seller, supplier, or agent can agree and still qualify for coverage under the trust is thirty days after receipt and acceptance of the commodities...." 7 C.F.R. § 46.46(e)(2).
The eligibility of PACA trust protections based on the terms of the maximum *53 time for payment presents a question of first impression in this Circuit. All of the other circuits addressing the question have upheld the thirty-day maximum period for private agreements as being a permissible construction of the statute. In re Altabon Foods, Inc., 998 F.2d 718, 720 (9th Cir.1993); In re Lombardo Fruit and Produce Co., 12 F.3d 806, 809 (8th Cir.1993); In re Davis Distributors, Inc., 861 F.2d at 417-18; Mid-Valley Produce Corp. v. 4-XXX Produce Corp., 819 F. Supp. 209, 211 (E.D.N.Y.1993). The legislative history unambiguously demonstrates that Congress intended the Department of Agriculture to set a maximum period under which private agreements may extend the payment period. In re Altabon Foods, Inc., 998 F.2d at 720. These courts have held that a payment period extending beyond the thirty-day maximum allowed by the regulations deprives the supplier of PACA trust protection. The Court follows these circuits in holding that any written agreement extending the payment period beyond thirty days would negate the statutory trust provisions.
There are two separate agreements at issue in this case. The contract between Clermont and Charles R. Johnson was executed in June of 1995. The terms of the Agreement allow three-quarters of the purchase price to be paid well in excess of the thirty-day maximum time for payment period established by 7 C.F.R. § 46.46(e)(2). These payment terms are much longer than the forty-five to sixty days provided in the contract in In re Altabon which the Ninth Circuit found constituted a waiver of trust protection. In re Altabon Foods, Inc., 998 F.2d at 718. The terms of the Agreement vary slightly from those in In re Altabon because in the instant case twenty-five percent of the purchase price is required to be paid within the thirty-day period.
The issue presented is whether payment terms that are, in part, within the thirty day maximum time period, in their entirety violate the PACA scheme. This issue has not been litigated in the First Circuit nor does there appear any precedent from other Court of Appeals. The regulations define "full payment promptly" as "specifying the period of time for making payment without committing a violation of the act." 7 C.F.R. § 46.2(aa). Reading "full payment promptly" in connection with the "maximum time for payment" in Section 46.46(e)(2) indicates to the Court that the entire payment must be made within the thirty-day period. This reading of the regulations is supported by the legislative history which was intended to protect those supplying credit on a short term basis. See H.R.Rep. No. 543, 98th Cong., 2d Sess. 6-7, 12. The cranberry crop was delivered in October 1997. Under the present contract, twenty-five percent would be paid within thirty days with the balance of the payments spread out until May 31, 1998. Clearly three-quarters of the purchase price is beyond the thirty-day maximum period and in violation of the PACA scheme. The Court rules that this type of structured payment contract is inconsistent with the Secretary's regulations and the statute's concern with short-term credit suppliers. In order, thus, to be eligible for the protection of the PACA statutory trust, the written agreement must comply in its entirety with PACA's thirty-day maximum payment rule.
The second contract between KFI and Francis V. Johnson was executed by a letter dated December 28, 1994. This contract, unlike the first contract, contains no terms relating to the dates of payment. Once again this raises an issue which finds scarce precedent in the case law. In most cases, buyers must pay for shipped commodities within ten days after receipt of the produce. 7 C.F.R. § 46.2(aa). The regulations require any agreement to allow more time, up to thirty days after receipt, be reduced to writing. 7 C.F.R. § 46.46(f)(2). Accordingly, several courts addressing the issue concluded that oral agreements have no effect on produce sellers' trust protection. Hull Company and J & J Distributing Co. v. Hauser's Foods, Inc., 924 F.2d 777 (8th Cir. 1991). Likewise courts have held that a party's course of dealings to extend payment time does not effect PACA protection. Mid-Valley Produce Corp. v. 4-XXX Produce Corp., 819 F. Supp. 209, 211-12 (E.D.N.Y. 1993). In this case the written agreement does not contain any terms of payment, *54 therefore, the Court rules that the ten-day rule controls.
The question now is whether the failure to state a payment date in the letter agreement disqualifies Francis V. Johnson from the protection of PACA statutory trust. The regulations are ambiguous as to whether the ten-day rule applies automatically or must be a term of the contract. The Court employs traditional tools of statutory interpretation, particularly the presumption that ambiguous language in a remedial statute is entitled to a generous construction consistent with its reformative mission. Hogar Agua y Vida en el Desierto, Inc. v. Jorge Suarez-Medina, 36 F.3d 177 (1st Cir.1994); United States v. Ven-Fuel, Inc., 758 F.2d 741, 759 (1st Cir.1985) ("It is hornbook law that remedial legislation is to be fairly and reasonably construed so as to effectuate the apparent legislative purpose.") PACA was designed to protect small farmers and growers from "the sharp practices of financially irresponsible and unscrupulous brokers in perishable commodities." Chidsey v. Geurin, 443 F.2d 584, 587 (6th Cir.1971). The regulations only require that the payment terms be in writing when extending the payment period beyond ten days. The Court rules that it would be inconsistent with the regulations and underlying statutory purpose to penalize a farmer for not including terms into a simple purchase and sale agreement when not required by the statute. Therefore, the Court rules that in the absence of a written agreement extending the time period, under the regulations payment is due within ten days after delivery.
While the trust is automatically created under the statute, the unpaid seller will lose the trust benefits of the trust unless he "gives written notice of intent to preserve the benefits of the trust to the commission merchant, dealer or broker, and has filed such notice with the Secretary within thirty days after expiration of the time prescribed by which payment must be made, as set forth in regulations issued by the Secretary." 7 U.S.C. § 499e(c)(3). The regulations issued by the Secretary require payment within ten days of receipt of the goods. 7 C.F.R. § 46.2(aa)(5). Thus, plaintiff must give notice to both the purchaser and the Secretary within forty days of the purchaser's receipt of the goods. Neither the complaint, plaintiffs' memorandum nor supporting affidavits mention any timely notice to either the Secretary or defendants. Without written notice of intent to preserve benefits of the trust, Charles R. Johnson is not entitled to PACA statutory trust protection.[2]
Therefore, the Court finds that there is not a reasonable likelihood of success on the merits against Elaine and Edward M. Koplovsky under either contract because PACA is not applicable as a matter of law.
IV. Alter Ego Liability
In Count VIII plaintiffs argue that Clermont and KFI are alter egos. In Count IX plaintiffs argue that Zero Franklin and Braintree Hill are the alter egos of Elaine and Edward M. Koplovsky. To support this contention, plaintiff must meet a very high standard. American Home Assurance Company v. Sport Maska, Inc., 808 F. Supp. 67, 73 (D.Mass.1992). Under Massachusetts law, disregarding separate corporate entities is the exception, not the rule. Dale v. H.B. Smith Co., Inc., 910 F. Supp. 14, 18 (D.Mass.1995). Piercing the corporate veil is permitted only (1) where one corporation actively and directly participates in the activities of the second corporation, apparently exercising pervasive control, and there is some fraudulent or injurious consequence of the intercorporate relationship, or (2) there is a confused intermingling between corporate entities engaged in a common enterprise. My Bread Baking Co. v. Cumberland Farms, Inc., et al., 353 Mass. 614, 618-19, 233 N.E.2d 748 (1968); Pepsi-Cola Metropolitan Bottling Co. v. Checkers, Inc., 754 F.2d 10, 15 (1st Cir.1985).
*55 A. Clermont and KFI as Alter Egos
Plaintiffs contend that confused intermingling between KFI and Clermont was evident because Warren Wilson acted as an agent of both KFI and Clermont. He represented both companies in discussions with the plaintiffs, took delivery of the cranberries, and delivered payments to plaintiffs. More importantly, all payments were drawn on KFI's checking account. The defendants have not submitted any factual evidence in opposition to plaintiffs' allegation of alter ego liability. Instead defendants have relied on their submission in the companion case which involved a different set of facts. In the Hiller Cranberry case there was no evidence that funds were used interchangeably by KFI and Clermont, which is at the essence of confused corporate intermingling.
At this time, on the issue of preliminary injunction and attachments, the Court need not rule on the reasonable likelihood of success on the merits that KFI and Clermont are alter egos. Both KFI and Clermont are liable under the contract for goods sold and delivered and an injunction has been issued against both corporations. The order for attachments in the amount of $1,750,000.00 against KFI and Clermont has been entered on behalf of Plaintiffs Charles R. Johnson and Francis V. Johnson. These attachments are sufficient to secure plaintiffs' claims which are in the amount of $277,014.60 and $1,056,232.60.
B. Zero Franklin and Braintree Hill as Alter Egos of Elaine and Edward Koplovsky
Count IX alleges that Zero and Franklin are alter egos of Elaine and Edward M. Koplovsky. Initially, the Court questions the complaint as drafted because there is not a party "Zero and Franklin" named in the complaint. There are, however, two real estate entities, Zero Franklin Corporation and Braintree Hill Corporation, named in the complaint. The Court assumes plaintiffs intended the Court to determine whether Zero Franklin and Braintree Hill are alter egos of Edward M. Koplovsky and Elaine Koplovsky. The Court, however, need go no further because there has been no finding of individual liability of the Koplovskys. Therefore, with no basis of liability, the Court need not address the alter ego theory as regards the Koplovskys.
V. Unfair Trade Practices and Fraudulent Conveyance Claims
A. Unfair Trade Practices
Count X alleges that KFI, Clermont, Edward M. Koplovsky, and Elaine Koplovsky's actions constitute unfair or deceptive acts or practices under Chapter 93A of the Massachusetts General Laws. Specifically, plaintiffs assert that KFI and Clermont obtained goods from plaintiffs with knowledge or reason to know that they would be unable to make payment. Plaintiffs further assert that Elaine Koplovsky and Edward M. Koplovsky controlled the actions of KFI and Clermont. It is well established that breach of contract, without more, would not violate Chapter 93A. Chambers Steel Engraving Corp. v. Tambrands, Inc., 895 F.2d 858, 861 (1st Cir.1990). It is to be noted that it is the corporations KFI and Clermont which contracted for and received the cranberry product and were responsible for payment and not the Koplovskys. There is no allegation that the Koplovskys personally made any misrepresentation or are liable under the contracts. Again, the Court does not need to rule on the reasonable likelihood of success under Chapter 93A against KFI and Clermont, as both are liable under contract for goods sold and delivered.
Because litigation under Chapter 93A is "rampant," the courts have developed a rigorous test for assessing such claims. Quaker State Oil Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1513 (1st Cir.1989). "The objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble world of commerce." Id. Stated another way, a Chapter 93A plaintiff "must show that the defendant's actions fell `within at least the penumbra of some common-law, statutory, or other established concept of fairness,' or were `immoral, unethical, oppressive or unscrupulous,' and resulted in `substantial injury ... to competitors or other businessmen.'" *56 Id. (quoting PMP Assoc., Inc. v. Globe Newspaper Co., 366 Mass. 593, 321 N.E.2d 915, 917 (1975)).
In this case, it seems unlikely that the alleged conduct of Defendants Koplovsky rises to the level of "rascality" necessary for plaintiffs to recover under Chapter 93A. Plaintiffs' Chapter 93A action is not based on any underlying cognizable tortious cause of action against the Koplovskys. Instead, the thrust of plaintiffs' argument is that KFI and Clermont had no intention to pay plaintiffs for the cranberry crop and that the Koplovskys controlled the actions of the corporations. It is very difficult to prove a defendant's present intention relating to future conduct. Moreover, the inability of KFI and Clermont to pay resulted from the precipitous decline in the market price for cranberry concentrate caused by the actions of a third party. This, coupled with the undisputed fact that payments were made up to and after the decline in market price, weighs against a finding of a reasonable likelihood of success against the Koplovskys, who were not responsible for payment under the contracts nor alleged to have personally made any misrepresentation.
Moreover, without the PACA claim there is no federal subject matter jurisdiction under 28 U.S.C. § 1331 nor is there complete diversity under Section 1332 because plaintiffs and Defendants KFI, Elaine Koplovsky and Edward M. Koplovsky are citizens of Massachusetts. Based on the complaint and supporting affidavits, the Court rules that there is not a reasonable likelihood of success on the merits under Chapter 93A against the Defendants Koplovsky for their conduct does not attain the necessary level of rascality for recovery.
B. Fraudulent Conveyances
Count V alleges that KFI's transfer of the cranberry crop to Clermont for an account receivable was a fraudulent conveyance in violation of Massachusetts General Laws Chapter 109A, § 5(a). Additionally, Count VI alleges that Edward M. Koplovsky transferred title to three parcels of real estate in Massachusetts to Zero and forty parcels of real estate to Braintree for consideration of $1.00 in violation of Massachusetts General Laws Chapter 109A, § 5(a).
The Court finds that under the contract for goods sold and delivered KFI and Clermont are "debtors" for the purposes of Chapter 109A, § 5. At this time, on the matter of a preliminary injunction and attachment, the Court need not need to address the reasonable likelihood of success on the merits because the injunction and attachments are already in place against KFI and Clermont.
The Fraudulent Conveyance Act furnishes an expeditious method whereby creditors may satisfy their claims, but it does not create claims. Blumenthal v. Blumenthal, 303 Mass. 275, 21 N.E.2d 244 (1939). The Court has ruled that there is not a reasonable likelihood of success on the merits against Edward M. Koplovsky and Elaine Koplovsky individually, a priori there can be no reasonable likelihood of success on the fraudulent conveyance claim.
CONCLUSION
The Court issued a Court Order of Preliminary Injunction and Issuance of Attachment on May 1, 1998. The Court ordered a preliminary injunction against KFI and Clermont.
All attachments previously approved by this Court against KFI and Clermont, in favor of the plaintiffs, shall continue in effect.
All attachments previously approved by this Court against Edward M. Koplovsky, Elaine Koplovsky, Braintree Hill Corporation, and Zero Franklin Street Corporation, in favor of plaintiffs, are hereby dissolved.
NOTES
[1] KFI and Clermont are unable to pay for the cranberries at this time due to the precipitous decline in the price of cranberry juice concentrate.
[2] Nor has plaintiff Francis V. Johnson produced any evidence of an intent to preserve trust benefits within the required statutory period. The Court does not need to address this point because by the terms of Francis V. Johnson's contract with KFI plaintiff is not entitled to PACA statutory protection. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1426456/ | 913 F. Supp. 483 (1996)
The KENDALL COMPANY
v.
SOUTHERN MEDICAL SUPPLIES, INC.
Civil Action No. 94-150.
United States District Court, E.D. Louisiana.
January 30, 1996.
*484 Frederick William Bradley, Kathleen Friel Ketchum, Liskow & Lewis, New Orleans, LA, for The Kendall Co.
Robert T. Garrity, Jr., Robert T. Garrity, A.P.L.C., Harahan, LA and Richard Edgar Anderson, Bencomo & Associates, New Orleans, LA, for Southern Medical Supplies, Inc., Lawrence Fakier, Gerard Bourgeois.
Robert A. Kutcher, Bronfin & Heller, New Orleans, LA, for Grandville Corporation.
Robert T. Garrity, Jr., Robert T. Garrity, A.P.L.C., Harahan, LA, for Southern Medical Supplies, Inc.
George Burton Jurgens, III, Scott Thomas Zander, Nesser, King & LeBlanc, New Orleans, LA, for Joseph Fern.
ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
VANCE, District Judge.
This matter is before the Court on the motion of defendant, Southern Medical Supplies, *485 Inc. ("SMS"), for summary judgment. For the reasons stated below, the Court DENIES defendant's motion.
I. BACKGROUND
The Kendall Company is a manufacturer and distributor of medical supplies. Since 1988, defendant Southern Medical Supplies, Inc. ("SMS") has been an authorized distributor of Kendall's products. (Defendant's Ex. 8, Aff. of Jack Henry, Vice President of Kendall.) Kendall's claim against SMS is for fraudulently submitting claims for rebates to Kendall based on sham sales of Kendall's Kerlix product to Louisiana hospitals. (Complaint at ¶¶ 9-10.)
Kendall had instituted a rebate credit system under which it permitted distributors to buy its products at significantly discounted prices, provided they sold the product to certain preferred customers, such as the State of Louisiana. (Defendant's Ex. 8, Aff. of Jack Henry, at ¶ 3.) The distributor obtained the discounted price by submitting to Kendall's rebate processing department a claim form with a copy of its invoice to the preferred customer. Kendall claims that SMS submitted false invoices claiming sales to Louisiana hospitals that were actually made to a third party. SMS admits for the purposes of its motion that it diverted Kendall's product to nonpreferred purchasers contrary to what was represented by the invoices it submitted to Kendall's rebate department. (Defendant's Mem.Supp. Summ.Judg. at 3.)
Kendall's former supervisor of its rebate processing department, Michael J. Carrol, testified that Kendall's management was very concerned about granting improper rebates to distributors. (Defendant's Ex. 1, Aff. of Michael J. Carrol, at ¶ 2.) For this reason, in 1992 Kendall instituted an audit program, which involved contacting end-customers to verify purchases of Kendall's product from certain distributors. (Id. at ¶ 2.) Kendall selected certain distributors to audit in this fashion including SMS. The audit involved sending letters to end-customers requesting that they provide copies of the distributor's invoices to confirm purchases of particular products from particular distributors. (Id.) SMS was audited because of its high volume of rebate claims for rebates of 50% or greater. (Id.)
In May of 1992, Kendall sent the first letters to end-customers seeking to verify SMS's sales. (Id. at 5; Defendant's Ex. 5 at attachment 2, May 27, 1992 letter from Carrol of Kendall to Terrebonne General Medical Center requesting copies of certain SMS invoices.) On the same day, Kendall wrote to Lawrence Fakier of SMS requesting invoices and shipping tickets on the same transactions. (Plaintiff's Ex. A, May 27, 1992 letter from M. Carrol to L. Fakier.) Fakier responded on June 28, 1992 by enclosing copies of false invoices and some delivery information. (Aff. of Sandra J. Copparini, at ¶ 3(b); Kendall's Ex. B, June 28, 1992 letter from L. Fakier to M. Carrol.) By July 23, 1992, Kendall received information that Terrebonne General Hospital, after two efforts to verify the SMS invoices, had no record of receiving or paying the SMS invoices in issue. (Defendant's Ex. 2, Depo. of Joanne Connata, at 42-43, 67-68 and attached Ex. 14.) Terrebonne General was not contacted again by Kendall about this matter until a year later when Kendall visited the hospital. (Id. at 43.) Between July 1992 and October 1992, two other Louisiana hospitals, Leonard J. Chabert Medical Center and Earl K. Long Medical Center, reported to Kendall that they were likewise unable to verify the SMS invoices in issue. (Defendant's Ex. 3, R. 30(b)(6) Depo. of Leonard Chabert Medical Center; Defendant's Ex. 4, and attachment 8, Letter from Earl K. Long Medical Center to Kendall dated October 7, 1992.)
In response, Kendall notified SMS on October 22, 1992 that SMS's customers could not verify its claim to shipments and requested proof of receipt of deliveries, other than invoices, within ten days. (Plaintiff's Ex. C, Letter to L. Fakier from Kendall dated October 22, 1992.) SMS acknowledged receipt of the letter on November 4, 1992 and agreed to furnish the requested information. (Kendall's Ex. D, Letter to Kendall from L. Fakier dated November 4, 1992.) On December 15, 1992, SMS transmitted some additional information and claimed that it made deliveries to two Louisiana hospitals by its own *486 truck. (Kendall's Ex. E, Letter from L. Fakier to Kendall dated December 15, 1992.) On January 28, 1993, Kendall's management received a memorandum from Sandra Copparini of its customer accounts audit group reporting that the Louisiana hospital customers could not confirm certain deliveries from SMS and that, after two requests for proof of delivery, SMS could not confirm many of the deliveries in issue with supporting documentation. (Plaintiff's Ex. F, January 28, 1993 memorandum from S. Copparini to D. Ulrich and M. Carrol.) The memorandum summarized the situation with respect to four of SMS's invoices to Southern Medical Center as follows:
Summary:
Original request included shipping POD [proof of delivery] for the two invoices, as well as invoice copies. Invoice copies were furnished without POD.
Letter of 10/22/92 reiterated our request for POD. They were omitted from their response.
Correspondence from So. Louisiana (attached) regarding our request for invoice copies is "incompatible" to what they have for invoices.
(Id.) From this point, it appears that Kendall took no further action on this information until the Summer of 1993. At that time, Kendall's employees documented their suspicion that SMS was illicitly claiming rebates for Kerlix purchased on the gray market. (Plaintiff's Ex. H, June 17, 1993 memorandum from Phil Royston to Jack Henry.) In August, 1993, SMS admitted discrepancies between rebates and sales, denied gray market purchases, and asked Kendall to wait until the end of the year to see if its accounts balanced out. (Plaintiff's Ex. I, August 23, 1993 letter from L. Fakier to Richard Ulrich.) Fakier offered no explanation of the unproved deliveries. In September of 1993, Kendall put invisible markings on product delivered to SMS and determined that SMS was in fact diverting product to third parties. (S. Copparini Affidavit at ¶ K.) Thereafter, the matter was turned over to Kendall's legal department, and Kendall filed suit on January 13, 1994.
II. DISCUSSION
In its motion for summary judgment, SMS contends that Kendall pled its complaint in tort and is therefore subject to the one-year prescriptive period for tort actions. Since Kendall filed suit on January 13, 1994, SMS argues that all of Kendall's claims for damages arising prior to January 13, 1993 are prescribed. In response, Kendall asserts that the action is governed by the three-year prescriptive period for open account claims. The Court will examine each argument in turn.
A. Kendall's Cause of Action Arises in Tort
Under Louisiana law, the "character of an action disclosed in the pleadings determines the prescriptive period applicable to that action." Starns v. Emmons, 538 So. 2d 275, 277 (La.1989); see also Gendusa v. City of New Orleans, 635 So. 2d 1158, 1161 (La. App. 4th Cir.1994), writ denied, 642 So. 2d 1296 (La.). The Court must therefore analyze Kendall's complaint to determine if its claims are for satisfaction of an open account or for a tort.
The Court finds that Kendall's complaint is seeking a remedy for tortious conduct. Kendall's complaint alleges that SMS engaged in the following behavior:
10.
On information and belief, Kendall alleges that SMS fraudulently prepared and submitted false invoices for the express and unlawful purpose of obtaining rebates to which it was not entitled.
11.
The practice of obtaining rebates in this deceptive manner constitutes fraud and misrepresentation under Louisiana law and SMS is obliged under such law to reimburse Kendall for all amounts wrongfully taken and/or withheld from Kendall, and for all other damages, attorneys' fees, and costs resulting from this fraudulent and tortious activity.
Kendall's Complaint at ¶¶ 10-11 (emphasis added). Kendall's allegations set out a claim *487 for fraud, or fraudulent misrepresentation, which is classified as tortious conduct under Louisiana law. See Equilease Corp. v. Smith Int'l Inc., 588 F.2d 919, 923 n. 4 (5th Cir. 1979) (delictual recovery for fraud is provided for in article 2315, the general tort provision of the Civil Code); Silver v. Nelson, 610 F. Supp. 505, 517 (E.D.La.1985) (setting out elements of fraudulent misrepresentation). The general elements for a claim of fraudulent misrepresentation are as follows: (1) a misrepresentation of a material fact, (2) made with an intent to deceive, and (3) causing justifiable reliance with resulting injury. See Nelson, 610 F.Supp. at 517. All of these elements are present in Kendall's allegations.
The plaintiff's complaint also fits the facts for tortious conversion. Such a tort is committed when one acts in derogation of the plaintiff's possessory rights, and requires a "wrongful exercise or assumption of authority over another's goods, depriving him of the possession, permanently or for an indefinite time." Quealy v. Paine, Webber, Jackson & Curtis, Inc., 475 So. 2d 756, 761 (La.1985); see also Hampton v. Hibernia Nat'l Bank, 598 So. 2d 502, 504 (La.App.2d Cir.1992) (deciding whether action in tort or contract). Defendant's alleged preparation of false invoices to receive rebates to which it was not entitled meets the elements for tortious conversion. Therefore, the allegations contained in the complaint are delictual in nature and are governed by the one-year prescriptive period under La.Civ.Code art. 3492.[1]
However, Kendall contends that it pled an action for "open accounts," which is subject to a three-year prescriptive period. An "open account includes any account for which a part or all of the balance is past due, whether or not the account reflects one or more transactions and whether or not at the time of contracting the parties expected future transactions." La.R.S. 9:2781. Kendall's pleading is inconsistent with that of an open account action. First, Kendall makes no allegations of an open account in its complaint; instead, it asserts that SMS engaged in "fraudulent and tortious activity." Second, Kendall requests attorney's fees but fails to allege that it made the proper written demand on SMS for the amount owed as is required under the statutory provision for open accounts. See La.R.S. 9:2781. This leads the Court to conclude that Kendall was not in fact pleading an action for open account, but one for tortious conduct. Accordingly, Kendall's action is subject to a one-year prescriptive period.
B. Accrual of Kendall's Cause of Action
The prescriptive period set forth in La.Civ. Code art. 3492 begins running the date the injury or damage is sustained. See Wimberly v. Gatch, 635 So. 2d 206, 210 (La.1994). However, Louisiana courts have created the doctrine of contra non valentem agere nulla currit praescripto, which means "prescription does not run against a party unable to act," as an exception to the general rule. Id. at 211. The doctrine of contra non valentum suspends prescription when the circumstances of the case fall under one of the following four categories:
(1) Where there was some legal cause which prevented the courts or their officers from taking cognizance of or acting on the plaintiff's action;
(2) Where there was some condition coupled with a contract or connected with the proceedings which prevented the creditor from suing or acting;
(3) Where the debtor himself has done some act effectually to prevent the creditor from availing himself of his cause of action; and
(4) Where some cause of action is not known or reasonably knowable by the plaintiff, even though his ignorance is not induced by the defendant.
Id.
At a minimum, the Court finds that the fourth category is applicable here. This category, commonly known as the discovery rule, provides that the prescriptive period commences when the injured party "discovers or should have discovered" the facts underlying his cause of action. Id. Thus, prescription does not run against one who is *488 ignorant of those facts, so long as the ignorance is not "willful, negligent or unreasonable." Id. at 212. The prescriptive period begins to run when the injured party has either "constructive" or "actual" knowledge. Constructive knowledge sufficient to trigger prescription is more than mere apprehension that something might be wrong, but less than actual knowledge that something was wrong. Griffin v. Kinberger, 507 So. 2d 821, 823 (La. 1987); Wimberly v. Schumpert Medical Center, 641 So. 2d 1016, 1020 (La.App.2d Cir. 1994). Prescription begins to run when it can be objectively determined that the exercise of reasonable diligence would have alerted a reasonably minded plaintiff of the reasonable possibility that it was the victim of tortious conduct. Griffin, 507 So.2d at 823; Wimberly, 641 So.2d at 1020.
The Court finds that Kendall had constructive knowledge of its cause of action once the January 28, 1993 memorandum was submitted to Kendall's management. (See Plaintiff's Ex. F.) Because Kendall filed its complaint within one year of acquiring constructive knowledge, none of its claims are prescribed. While it is true as defendant claims that Kendall knew in the Summer of 1992 that its customers could not verify SMS's sales, and that by October 1992, SMS had not produced requested proof of delivery, it was not unreasonable for Kendall to follow up with a valued distributor such as SMS by informing it of the discrepancies and giving it another opportunity to provide an explanation or supporting documentation. This is what Kendall did by its October 22, 1992 letter to SMS. (See Plaintiff's Ex. C.) It is also not unreasonable for Kendall to have awaited a response to its October 22, 1992 letter and to take time to evaluate the information received in response to its letter. It apparently did this also, which resulted in the January 28, 1993 memorandum by Sandra Copparini to Kendall's management. However, once Kendall's management was apprised of the information in the January 28, 1993 memorandum, which outlined the situation in detail, it had knowledge of sufficient facts that would have alerted a reasonable plaintiff of the reasonable possibility that SMS was engaging in tortious conduct. See Griffin, supra, 507 So.2d at 823; Wimberly, supra, 641 So.2d at 1020. Although the January 28, 1993 memorandum did not label SMS's conduct as fraudulent, it did not offer an innocent explanation of it, and it set forth SMS's repeated failure to explain satisfactorily why it could not document deliveries that its customers had no records of receiving. See Wimberly, supra, 635 So.2d at 212 (ignorance must not be willful, negligent or unreasonable). Furthermore, SMS obviously had a motive to engage in the challenged conduct because it could enhance its profits by doing so. Accordingly, Kendall had constructive knowledge of its cause of action as of January 28, 1993. Since this action was filed within one year of that date, the action is timely. Accordingly,
IT IS ORDERED that defendant's motion for summary judgment is hereby DENIED.
NOTES
[1] The Court's illustration of the tort causes of action that are consistent with the allegations pled in the complaint is not meant to be an exhaustive one. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2429458/ | 154 F. Supp. 2d 432 (2001)
FILMS BY JOVE, INC., and Soyuzmultfilm Studios, Plaintiffs,
v.
Joseph BEROV, Natasha Orlova, The Rigma America Corporation, Saint Petersburg Publishing House and Group, Defendants.
No. CIV. A. 98-CV-7674 (DGT).
United States District Court, E.D. New York.
August 27, 2001.
*433 Julian H. Lowenfeld, New York City.
Kenneth A. Feinswog, Los Angeles, CA.
Paul R. Levenson, Kaplan, Gottbetter & Levenson, LLP, New York City.
Robert W. Clarida, Cowan, Liebowitz & Latman, P.C., New York City.
MEMORANDUM AND ORDER
TRAGER, District Judge.
In December of 1998, plaintiffs Films by Jove ("FBJ") and Soyuzmultfilm Studio ("SMS"[1]) (collectively, "the plaintiffs" or "the third party defendants") brought this action for copyright infringement, breach of contract, unfair competition and RICO violations against Joseph Berov, Natasha Orlova, Rigma America Corporation and the St. Petersburg Publishing House and Group (collectively, "the defendants"). On May 4, 1999, this court issued a preliminary injunction on consent of the defendants restraining them from reproduction of any motion picture in which plaintiffs own the copyright. On August 10, 2000, plaintiffs moved to hold the defendants in contempt for violating and continuing to violate the court's injunction by selling copyrighted material allegedly belonging to the plaintiffs[2] out of their St. Petersburg *434 Publishing House retail stores in Brooklyn. A hearing on that motion was held on August 17 and August 18, 2000, but the issue was left undecided, and the hearing was adjourned until October 10, 2000 after it became apparent that a third party, the Federal State Unitarian Enterprise Soyuzmultfilm Studio ("FSUESMS" or "the third party plaintiff"), would be intervening in the lawsuit as a third party plaintiff, seeking declaratory and injunctive relief necessary to secure its right of operative management[3] of the copyrights to the films at issue, which, it claimed, were owned, strictly speaking, by the Russian government.[4] On October 10, 2000, the contempt hearing was continued. The defendants, at that time, conceded a violation of the injunction in the event that the plaintiffs do, in fact, possess the copyrights to the animated films sold by the defendants.
This same question of copyright ownership is now before the court. The plaintiffs have moved for summary judgment on this issue, and FSUESMS has cross-moved for summary judgment on its own claims to the copyrights.[5] The final resolution of the plaintiffs' contempt motion hinges on the disposition of the question of copyright ownership.
Background
(1)
The parties agree that in 1936, the Soviet government expropriated from the Russian Orthodox Church the premises of the Church of St. Nicholas the Enlightener in Moscow, Russia and founded there a state enterprise[6] called Soyuzmultfilm Studio, *435 which, from 1936 until the present, created about 1500 animated motion picture films, many of which became extremely popular.[7]See Mem. Law. Supp. Pls.' Mot. Dis. 3D Party Compl. Pursuant to FRCP 12(b)(6) [hereinafter "Pls.' Mot. Dis."] at 2; Notice of Mot. to Dismiss 3D Party Compl. Pursuant to FRCP 12(b)(6) [hereinafter "Pls.' Not. Mot. Dis."] at 2. From 1936 to 1989, Soyuzmultfilm Studio, like virtually all enterprises in the Soviet Union, operated as a state enterprise. See Pls.' Mot. Dis. at 2. Unfortunately, as far as the history of Soyuzmultfilm Studio goes, the parties agree on little else, although their disagreements, as the patient reader will discover, are either disputes as to issues of law or disputes about facts that are not dispositive on any of the issues resolved in this opinion.[8]
According to plaintiffs, on December 20, 1989, as part of the ownership liberalization trend that accompanied Glasnost and Perestroika, Soyuzmultfilm Studio became a "lease enterprise" or "rent entity."[9]See id. at 2-3. "Many state companies became rent enterprises in the late 1980s and 1990s. In accordance with law, they stopped to be `state-owned', but having in mind a further transition to privately held companies, they acquired another legal status, taking on lease only state buildings and equipment, but keeping their income and products for themselves and thus they received freedom from the state." Pls.' Ex. 15, Decl. of Mila Straupe [hereinafter "Straupe Decl."] ¶ 11. The lease enterprise, operating under a ten-year lease agreement concluded with the Soviet State Film Committee known as Goskino,[10] paid rent to the state for facilities and equipment, while the copyrights to the films, which, in the plaintiffs' version of the story, originally belonged to the state enterprise, passed by operation of law from the no-longer-existent state enterprise Soyuzmultfilm Studio to the identically-named rent enterprise that took its place. See id. at 3; Pls.' Response to Def.'s and Third *436 Party Pls.' Jnt. Statement Pursuant to Local Rule 56.1 [hereinafter "Pls.' 56.1 Resp."] ¶ 32; Straupe Decl. ¶ 12.
On July 1, 1999, shortly before the lease was due to expire, the rent entity Soyuzmultfilm Studio was again reorganized, this time into a private joint stock company.[11]See Straupe Decl. ¶ 12. That corporation, still named Soyuzmultfilm Studio, became the lawful successor to all of the rights and obligations of its predecessor, including, according to plaintiffs, all copyrights and trademarks. See id. The joint stock company, however, did not incorporate into its institutive capital the state-owned material assets, e.g., premises, equipment, furniture, etc., that had been leased to the rent enterprise by Goskino, and those state-owned assets reverted to the state upon the expiration of the lease term. See id. Accordingly, the joint stock company relocated in 1999 from its old offices in the Church of St. Nicholas the Enlightener to a new office in Krasnogorsk, a Moscow suburb. See id.
From the early nineties on, the lease enterprise and SMS, its successor, have had "to put up with a fight in Russia once spearheaded by Goskino and now [Soveksportfilm] and the State Property Ministry to take control of the films produced by the studios of Russia during the USSR." See Sept. 22 Borsten Decl. ¶ 6. The rights of the lease enterprise Soyuzmultfilm Studio and its successor, the joint stock company SMS, among other studios, were vindicated in various court decisions, see Decl. of Rimma Erokhina, Ex. 6, attached to Decl. of Julian Lowenfeld, most definitively in a June 19, 1996 decision of the Commercial Court of Paris, which ruled for Soyuzmultfilm Studio, Mosfilm Studio, Lenfilm Studio and Films by Jove and against Soveksportfilm, finding that economic legislation passed by the USSR in 1986 and thereafter had put an end to the state monopoly on foreign trade, and Soveksportfilm could no longer license films produced by Russian film studios without the agreement of the studios, which were the rightful copyright holders. See Ex. 14, attached to Decl. of Julian Lowenfeld. The French court noted a series of under-the-table transactions that Soveksportfilm had engaged in in order to transfer to itself, without consent, rights to 125 films owned by the studios.[12]See id.
*437 Around the same time that SMS was leaving its Church of St. Nicholas the Enlightener location, then-Prime Minister Sergei Stepashin, responding to the demands of Goskino and a faction of approximately fifty people displeased with the leadership of a certain Mr. Skuliabin (spelled elsewhere as "Sculabin"), the director of the lease enterprise Soyuzmultfilm Studio as of 1993,[13] issued a decree recommending the creation of a new state enterprise for the exploitation of the Church of St. Nicholas facilities vacated by the joint stock company. See Pls.' Mot. Dis. at 5; Pls.' Ex. 17 (hereinafter "Stephashin Order"); Tr. of Hearing on Aug. 17, 2000 at 20; Decl. of Vitoslav Shilobreev attached to FSUESMS's Order to Show Cause.[14] On October 11, 1999, that faction of SMS officers who had been unsuccessful in their attempts to be elected to SMS's governing board proceeded to register the newly-organized "Federal State Unitarian Enterprise Soyuzmultfilm Studio."[15]See id.
Meanwhile, the Russian Orthodox Church had initiated a lawsuit to reclaim *438 the property that had been expropriated from it in 1936. See id. According to the plaintiffsand, it should be reiterated, everything discussed heretofore and postdating the creation of the lease enterprise is the plaintiffs' version of the facts FSUESMS, faced, by virtue of the Church's claims, with the loss of its only assets, viz., the premises and their facilities, decided to make a unilateral claim that it, and not the joint stock company SMS, was the "real" Soyuzmultfilm Studio. See id. To accomplish this end, FSUESMS, working closely with Goskino and the State Ministry of Property, see Sept. 22 Borsten Decl., advanced the contention that the lease enterprise Soyuzmultfilm Studio either had never existed or, at the very least, had not taken possession of anything other than the material assets of the state enterprise Soyuzmultfilm Studio and further, that the state enterprise had continued to exist in a latent, non-functioning form during the entire pendency of the lease (1989-1999). See Straupe Decl. ¶ 15. FSUESMS then, instead of attempting to register as a new company, requested to register as an amended form of the non-existent state enterprise Soyuzmultfilm Studio. It proceeded to request to register amendments to the extinguished charter of the state enterprise Soyuzmultfilm Studio, which had ceased to exist in 1989. See id. ¶ 16. These amendments were mistakenly and illegally registered by the Moscow City Registration Chamber in October of 1999. See id. ¶ 17. Thus, by the close of 1999, two independent enterprises, SMS and FSUESS, were both registered by the government and both claimed to be the rightful heirs of the state enterprise Soyuzmultfilm Studio and its extensive film library.
So much for the plaintiffs' version of Soyuzmultfilm Studio's colorful history. The defendants and FSUESMS offer a fundamentally different account.[16] According to them, the copyrights in the films made by the state enterprise Soyuzmultfilm Studio belonged at all times to the Soviet state and were merely under the operative management of the state enterprise Soyuzmultfilm Studio. See Mem. Law. Opp. Mot. for Partial Sum. J. by Pls./3rd Party Defs. and Supp. Cross-Mot. for Sum. J. by 3rd Party Pl. [hereinafter "FSUESMS's Cross-Mot."] at 2. The state enterprise administered those copyrighted films on behalf of the state and Goskino, the state agency responsible for managing the funding for state film production. See id. at 3.
The creation of the lease enterprise Soyuzmultfilm Studio in 1989 as part of the restructuring of the Soviet economy did not terminate the existence of the state enterprise Soyuzmulfilm Studio. See id. at 4. Rather, the state enterprise had suspended film production during the period of the lease. See id. The lease itself, entered into with the lease enterprise Soyuzmultfilm Studio by Goskino, as the funding entity for stateowned film assets, transferred to the lease enterprise only material assets, viz., the premises and equipment, located at the site of the Church where the state enterprise had heretofore been active. See id. at 3. The copyrights to the state enterprise's film library continued to be owned by the state. See id.
In 1994, the "state enterprise" form was abolished and replaced by a similar "state *439 unitarian enterprise" form by the Civil Code of the Russian Federation, First Part (1994), and the state enterprise Soyuzmultfilm had to be restructured accordingly. See Maggs Decl., attached to FSUESMS's Not. of Cross-Mot. and Cross-Mot. for Sum. J. [hereinafter "Maggs Decl."] at 5 (Peter B. Maggs is defendants'/FSUESMS's Russian law expert). This restructuring was effectuated in 1999 when FSUESMS was created by order of Prime Minister Stepashin and registered soon thereafter. See FSUESMS's Cross-Mot. at 4. Also in 1999, "certain employees of the lease enterprise formed a fully private joint-stock company ... also calling itself `Soyuzmultfilm Studios.'" Id. That company proceeded to claim itself as the rightful successor to the lease enterprise and the rightful owner of the copyrights in the film library created during the era of the state enterprise's active operation. See id.
At this point, the narratives of the parties begin to converge. A series of lawsuits ensued between SMS and FSUESMS, with each trying to nullify the registration of the other. Although the validity of corporate registrations and not the ownership of copyrights was the central issue being decided, some of these cases found occasion to address the possession of the copyrights in the state enterprise Soyuzmultfilm Studio's library. The decisions of lower courts,[17] which ruled in favor of SMS, found that the right to the copyrights in the films and trademark in the name Soyuzmultfilm Studio, among other intangible assets, passed to the lease enterprise by operation of law and was legitimately transferred to the joint stock company SMS when the lease enterprise sold its assets to that newly-formed entity prior to the expiration of the lease term. See June 5, 2000 Decision, Ex. 19, attached to Decl. of Julian Lowenfeld [hereinafter "Jun. 5 Dec."]; June 24, 2000 Decision, Ex. 20, attached to Decl. of Julian Lowenfeld [hereinafter "Jun. 24 Dec."]. In addition, these decisions found no connection between the 1936 State Enterprise Soyuzmultfilm Studio and its purported 1999 resurrection in the form of FSUESMS. See id. Accordingly, the FSUESMS's registration was cancelled. See id.
However, these decisions[18] were vacated by the Federal Arbitrazh Court for the District of Moscow, which premised its conclusions on the failure of the lower courts to consider evidence that the copyrights and other non-material assets of the state enterprise Soyuzmultfilm Studio may *440 have belonged to the state at the time that Goskino concluded the lease agreement with the lease enterprise and that these assets, consequently, never passed to either the lease enterprise or to the joint stock company:
The lease enterprise "Studio Souzmultfilm" [sic] was established on the basis of a rent agreement without the right to purchase all the property of the enterprise, which was state-owned. Moreover, the composition and the quantity of the property subject to be rented out was not identified, because the transference-acceptance act was never recorded and documents listing the property were never produced.
In the process of transferring the leased enterprise to a joint-stock company it was necessary to separate the property of the enterprise from the property owned by the state and include in a separate balance sheet. Furthermore, the separate balance sheet was worked out independently by the leased enterprise, without the participation of the owner, who leased out the enterprise. This balance was then not presented to the owner for approval.
. . . . .
The Court when settling the dispute did not consider the fact if the act of transference can be considered accurate, which defined the size of the Charter capital of the joint-stock company and identified the size of the property owned by the state. The issue is if the leased enterprise has the right to independently and without the approval of the property owner to transfer according to the act of transference to the joint-stock company the property that does not belong to it. The Court also ignored this fact.
The decision reached by the Court that the Charter capital did not include state-owned property was based on incomplete evidence.
The conclusions of the Court that the property acquired in 1990-91 was not state-owned was not based on factual evidence.
Aug. 18 Dec.[19]
Importantly, on September 19, 2000, the Higher Arbitrazh Court of the Russian Federation denied SMS a further appeal at the current time but instructed, for the purposes of remand, that the August 18, 2000 opinion of the Federal Arbitrazh Court for the District of Moscow, quoted above, is not a binding view of the evidence in the case, and the lower court should allow SMS to argue its position on remand. Arifulin Letter, Ex. 7, attached to Decl. of Paul Stephan.
On remand, the Moscow Region Arbitrazh Court issued an opinion on December 26, 2000 in the suit by FSUESMS, the Ministry of State Property of the Russian Federation and Goskino against SMS. That opinion, by and large, reinstated and expanded upon the earlier lower court findings:
According to Article 486 of the RSFSR Civil Code which was in effect at the time of the transformation of the state enterprise, "Film Studios Soyuzmultfilm" into a lease enterprise with the identical name, the copyrights to a film belong to the enterprise that shot the film.
According to Article 498 of the RSFSR Civil Code, copyrights of an organization do not have term limitation. *441 When the organization is transformed the copyrights shall be transferred to the successor organization.
Therefore, copyrights to animated films created by the state enterprise "Film Studios Soyuzmultfilm" were transferred by operation of law to its successor[l]ease enterprise "Film Studios Soyuzmultfilm." A lease enterprise with an identical name became the successor of rights of the state enterprise "Film Studios Soyuzmultfilm" according to the existing laws, i.e., Article 16 of the ... Fundamental Principles [of][L]egislation and Union Republics on Lease.
Copyrights were not and could not be transferred by the lease agreement because they had been transferred by operation of law and cannot be limited by an agreement.
Therefore, the copyrights of the lease enterprise are not related to the issues of the lease agreement, and the expiration of that agreement does not cause the copyrights of the [l]ease enterprise "Film Studios Soyuzmultfilm" to expire.
At the time of the transformation of the [l]ease enterprise into a [shareholding] company[,] the lease enterprise had the copyrights to its animated film[s] by law.
. . . . .
Pursuant to Article [486] of the RSFSR Civil Code, copyright in the animated feature films belonged to "Film Studios Soyuzmultfilm" and not to Goskino USSR or any other representative of the state.
According to RSFSR Article 496 the copyrights to the animated feature films made by "Film Studios Soyuzmultfilm" belonged to the Studio without time limit, and upon its reorganization, the copyrights went to [l]ease enterprise "Film Studios Soyuzmultfilm" also with no term limitations.
Thus Goskino of the Russian Federation could not have transferred copyrights of the animated movies of "Film Studios Soyuzmultfilm" to the Lease Enterprise for lease because Goskino never had those rights to begin with.
. . . . .
[FSUESMS's] argument that the copyrights to the animated films belong to [it] has no foundation, based on the submitted documents and oral arguments of both sides in the lawsuit, because, pursuant to Articles 23, 37 of the RSFSR Civil Code and Article 11 of the Fundamentals of Civil Legislation USSR and Republics, a state enterprise, after leasing out an enterprise and complex of facilities and property, could not exist anymore, and could no longer be a legal person at the same time because it did not have its own property and legal capacity.
When leasing out an enterprise (state property) [takes] place in accordance with paragraph 4, Article 16 of the Fundamental Principles on Lease, which established full succession of rights to the state enterprise assumed by the [l]ease [e]nterprise, then according to Article 37 of the RSFSR Civil Code[,] this action shall constitute an actual reorganization of a state enterprise.
Dec. 26, 2000 Dec., Ex. 8, attached to Decl. of Paul Stephan [hereinafter "Dec. 26 Dec."].
The December 26 decision was affirmed on appeal on January 22, 2001. However, on April 20, 2001, well after the motion in this case had been submitted, the Federal Arbitrazh Court for the District of Moscow, the same court that had earlier remanded the case, issued a ruling overturning the December 26, 2000 and January 22, 2001 decisions. See Apr. 20, 2001 Ruling *442 [hereinafter "Apr. 20 Dec."], attached to Aff. of Vladimir Zlobinsky of May 9, 2001.
That ruling began the core of analysis by noting that Article 59 of the Civil Code of the Russian Federation provides that the act transferring property from one owner to another is the document that "defines the scope of rights and obligations being transferred to the respective recipient of rights." Id. at 5. But, in this case, because that transfer document is signed only by the deputy director of the lease enterprise and not signed at all by the general director of the joint stock company, it is "not deemed [to be] indisputable evidence establishing succession rights" from the lease enterprise to the joint stock company.
Accordingly, the court goes on to analyze the transfer in more detail:
At the time of the creation of the leased enterprise "Film Studio Soyuzmultfilm" on the basis of the assets of the film studio, no determination was made as to the specific property to be transferred for lease and no property transfer and acceptance act was made. Therefore, it is impossible to determine which property was leased, and therefore impossible to determine the rights of the leased enterprise in respect of the state property subsequently transferred to the joint stock company.
According to paragraph 1.2 of Charter of the leased enterprise the leased property remains property of the state. It is being utilized by the lessee.
According to Article 295 of the Civil Code of the Russian Federation an enterprise has no right to sell the real property it is utilizing, to lease it ... or to otherwise dispose of it without the owner's consent.
Therefore, the court's conclusion that the property transfer act is not subject to approval by the State Property Ministry, which acts for the property owner, is not based in law. The consent of the owner of state property was never obtained[;] the evidence is missing in this case.
Therefore, the leased enterprise, in violation of the aforementioned legal requirements, disposed of the state property by transferring it to the joint stock company.
Id. at 6. The court went on to nullify the joint stock company's registration. See id. at 7. As yet, although SMS represented at oral argument that they are appealing the decision to the Higher Arbitrazh Court of the Russian Federation, see Oral Arg. at 66, there has been no word about whether that court will accept the appeal or what the result of any such appeal will be.
However, this situation was significantly complicated by the other series of decisions in the case, the opinions on remand in the suit by SMS against FSUESMS. On January 25, 2001, the lower court refused to nullify FSUESMS's registration and found that
the succession of rights of the lease enterprise from the state enterprise, as stipulated in Item 4, Article 16 of the Fundamentals of USSR law "On Leasing," arises not as a result of the conversion of the state enterprise into the lease enterprise, but by the operation of the agreement on lease of the property complex which definition is given in Article 132 of the Civil Code of the Russian Federation. Because the succession of rights is based on the lease agreement, it has a temporal nature and is restricted by the terms of such agreement. The succession of the lessee from a state enterprise can not continue after termination of the lease agreement because the lessee in this event, in accordance with Article 664 of the Civil Code of the Russian Federation, is obliged to return *443 the leased property of the state. In this case the term of the agreement on the lease of the property complex of the state enterprise expired on December 20, 1999.
Discussion of January 25, 2001 decision within Decision of April 3, 2001, Ex. B, attached to Decl. of Anya Zontova, at 2.
On appeal, the conclusion of the January 25, 2001 decision, viz., that the registration of the FSUESMS was not to be nullified, was upheld, but the appellate court, in a decision issued on April 3, 2001 specifically took issue with the bases for the January ruling:
After examining all the case materials, including the arguments of appeals claims and listening to the representatives of the appellants participating in the case, the Appeals Court concluded that the Lower Court rightfully denied to satisfy the demands of the appealed claims[. H]owever, the Appeals Court cannot agree with the conclusions by the Lower Court in its decision denying the appeal. Thus, the Appeals Court considers as wrongful the Lower Court's statement that the succession of rights of the lease enterprise that was based on the lease agreement, has a temporal nature and is restricted by the term of such agreement. The Lower Court's conclusion does not comply with the law which was in effect at the time of concluding the agreement on the lease of the property complex of the state enterprise of December 20, 1989....
Item 4, Article 16 of the Fundamentals on Leasing stipulates that a lease enterprise becomes the successor of material rights and obligations of the state enterprise leased by it, including its right to use land and other natural resources.
After signing the agreement, the organization of lessees receives in the established order the property of the state enterprise and acquires the status of a lease agreement.
The fact of signing the lease agreement determines the formation of a lease enterprise. As it takes place, the activity of the state enterprise ceases through the conversion resulting from the formation of a lease enterprise on the basis of a state enterprise (Article 16 of the Fundamentals on Leasing.)
Thus, after signing the agreement of December 20, 1989 by the USSR State Committee on Cinematography and the labor collective of [the state enterprise Soyuzmultfilm Studio], the activity of the state enterprise ..., created by decree # 246/001 of June 10, 1936, ceased. By operation of law, the successor of rights of this enterprise became the lease enterprise [Soyuzmulfilm Studio], which later was converted into the joint stock company [Soyuzmultfilm Studio] and continues to be such at the present time.
The Lower court's conclusion about the resumption of activity of the state enterprise [Soyuzmultfilm Studio] after the lease agreement ended, and returning to it the rights and obligations which have been passed on to the lease enterprise is erroneous, because the existing law does not stipulate the implementation of such a legal construct.
The succession of rights is tightly linked with the legal capacity of a legal entity. It is an integral property of a legal entity, not of a leased property complex. Therefore when the property is returned after the agreement ended, there is no automatic return of the succession of rights and obligations.
In addition, as it was mentioned previously, the state enterprise [Soyuzmultfilm Studio] ceased its activity by operation of law, for which reason any *444 resumption of specifically its activity is impossible.
Apr. 3, 2001 Dec., Ex. B, attached to Decl. of Anya Zontova [hereinafter "Apr. 3 Dec."] at 4-5.
The Appeals Court, however, went on to conclude that although SMS inherited the rights of the state enterprise after the expiration of the lease term, this did not mean that FSUESMS was invalidly registered. "The registration of the newly formed [FSUESMS] does not violate the Plaintiff's civil rights and interests protected by law," the court wrote. Id. at 5. FSUESMS's charter, the court found, did not specifically stipulate that it had inherited the rights of the state enterprise Soyuzmultfilm Studio, and a mere reference in Item 1.1 of that charter to the Order of 1936, which had created the state enterprise Soyuzmultfilm Studio, was not grounds to invalidate the registration. Id.
That decision, in turn, was appealed to the Federal Arbitrazh Court for the District of Moscow, the same court responsible for the April 20, 2001 reversal of lower court rulings in the suit brought by FSUESMS and others against SMS. This time, however, in a decision issued on June 4, 2001, the court affirmed the decision below. It summarized the holding below as follows:
The Appeals Court has established that on December 20, 1989, the labor collective of the state enterprise [Soyuzmultfilm Studio] concluded the agreement with the USSR State Committee on Cinematography on the lease of the state enterprise property (case file 30-33, Vol. 1) after the signing of which, the activity of the state enterprise [Soyuzmultfilm Studio], created by decree of No. 246/001 of June 10, 1936 ceased.
The successor of rights of this state enterprise by operation of law became the lease enterprise [Soyuzmultfilm Studio,] which later was converted into the joint stock company [Soyuzmultfilm Studio].
The succession of rights, in the opinion of the Appeals Court, is tightly linked with legal capacities of a legal entity. It is an integral property of a legal entity, not a leased property complex. Therefore when the property is returned after the agreement ended, there is no automatic return of the succession of rights and obligations.
However, the act of the registration by MRC of the [FSUESMS] on November 10, 1999, disputed by the Plaintiff, in the Appeals Court's view, does not violate the rights and interests of the Plaintiff, because the [FSUESMS] is a newly formed entity on the basis of the state property and does not affect the civil rights of the [joint stock company Soyuzmultfilm Studio] and its interests protected by law.
June 4, 2001 Dec., Ex. A, attached to Decl. of Anya Zontova [hereinafter "Jun. 4 Dec."] at 2-3.
The FSUESMS, according to the court, appealed the ruling in order to alter what the court described as "the motivational part" of the ruling, id. at 3, in other words, the reasoning underlying the decision, while SMS appealed the ruling that had allowed FSUESMS's registration to stand. See id. The court refused both appeals:
The case materials show that on December 20, 1989 between USSR State Committee on Cinematography (lessor) and the labor collective of "Kinostudiya Soyuzmultfilm" (lessee) the lease agreement was concluded, under which the film studio were given for a lease use, for the term of 10 years, the main and circulating assets (equipment, appliances and other commodity and material assets) which were in the film studio's balance sheets at the moment the agreement *445 became effective, as well as the monies received from the centralized sources of funding under the plans of major construction work and material and technical procurement for the 12th and 13th five-year periods (Items 1.1, 5.6 of the Agreement). Pursuant to Item 1.2 of the Agreement, the leased property remains state property and in the economic management of the lessee. As this took place, the composition and the quantity of the leased property was not determined, because the receipt and transfer acts were not executed, and the documents identifying that property were not made.
The executive committee of the Moscow Sverdlovskiy regional council registered by the Decision of November 14 1990 the Charter of the lease enterprise [Soyuzmultfilm Studio] which was adopted on January 4, 1990 at the conference of the film studio labor collective.
Item 4, Article 16 of the Fundamentals of USSR law "On Leasing" stipulates that a lease enterprise becomes the successor of property rights and obligations of a state enterprise that was leased by it, including its rights to dispose of the land and other natural resources.
Thus, the Appeals Court has made the rightful conclusion that after signing the lease agreement, the activity of the state enterprise [Soyuzmultfilm Studio] created by decree No. 246/001 of June 10, 1936 ceased.
On October 11, 1999, a new legal entity was formed, the [FSUESMS].
This enterprise was created on the basis of the Order of the Russian Federation Government of June 30, 1999 No. 1038-R (Vol. 1, case file 80) in connection with the expiration in December 1999 of the term of the December 20, 1989 agreement with the labor collective of [Soyuzmultfilm Studio], on the lease of the film studio's assets which were in state property.
Pursuant to Article 13 of the Civil Code of the Russian Federation, a nonnormative act of a state body or a local government body is subject to being invalidated by the court in the event this act simultaneously does not comply with the law or other legal acts and it violates a legal entity's rights and interests protected by law. The court fully and thoroughly investigated the circumstances of the case, evaluated in the aggregate the arguments collected regarding the case, and came to a rightful conclusion that the registration of the newly formed [FSUESMS] does not violate the civil rights and interests of [SMS] protected by law.
In the Charter of the newly formed enterprise, the succession of rights from the state enterprise [Soyuzmultfilm Studio] is not stipulated.
The one and only indication in the Charter's Item 1.1 of the Order No. 246/001 of June 10, 1936 is not grounds for invalidating the registration of the state enterprise.
Considering the aforementioned statements, the Cassation Court finds that the Arbitrazh Court rendered the case full and comprehensive consideration, in compliance with the norms of the material and procedural laws.
Id. at 4-5.
As of time of the writing of this opinion, I have not received any information about possible appeals from this ruling. Therefore, at this time the ruling stands that the state enterprise Soyuzmultfilm Studio ceased to exist at the time of the formation of the lease enterprise, that a new entity, FSUESMS, was created in 1999 to take over the state property, i.e., material assets, *446 held by the lease enterprise for a ten-year period between 1989 and 1999 and that the other rights and assets belonging to the lease enterprise passed by operation of law to SMS, its successor, in 1999.[20]
(2)
On May 22, 1992, an agreement was signed between the lease enterprise and a California corporation called Films by Jove, Inc. by which the parties agreed, in exchange for valuable consideration, to make the latter the exclusive licensee worldwide for the Soyuzmultfilm film library. See Pls.' Mot. Dis. at 3. FBJ thereafter invested more than three million dollars to restore, update and revoice the library. See id. Partnered with the world-famous dancer Mikhail Baryshnikov, FBJ employed well-known actors from around the world to revoice the films in multiple languages: English-language versions: Jessica Lange, Kathleen Turner, Bill Murray, Shirley MacLaine, Charlton Heston, Sarah Jessica Parker and Jim Belushi; French-language versions: Catherine Deneuve and Irene Jacob; Spanish-language versions: Julio Iglesias, Maria Conchita Alonso and Edward James Olmos. See id. ¶ 5. When the lease enterprise Soyuzmultfilm Studio was reorganized into SMS, the agreement between the lease enterprise and FBJ also passed to SMS.
Defendant Rigma America Corporation, doing business as St. Petersburg Publishing House, operates several stores in Brooklyn, a warehouse and major wholesale / distribution and duplication facilities for Russian-language entertainment products, including audio and videocassettes, CDs and DVDs. See Pls.' Mot. Dis. at 4. Defendant Joseph Berov is Rigma's sole officer, director and stockholder. See Defs.' Mem. Opp. Pls.' Mots. for Partial Sum. J. and for Ord. of Contempt and Supp. Defs.' Cross-Mot. for Partial Sum. J. [hereinafter "Defs.' Cross-Mot."] at 5. Defendant Natasha Orlova, according to the defendants, is "a sometime employee of Rigma who has no ownership interest in the company." Id.
FBJ and Rigma concluded an agreement on July 20, 1998 to give defendants the rights to distribute certain films to which FBJ has the exclusive rights. See Pls. Mot. Dis. at 4. The agreement permitted distribution of a special edition of these titles only for retail purposes within the defendants' retail catalogue. See id.
Following what they perceived to be repeated violations of the agreement and of their copyrights in the films, FBJ instituted this present action. A preliminary injunction in plaintiffs' favor was entered on defendants' consent on May 4, 1999. As has been detailed above, defendants have admitted to violating the injunction, and the sole issue now before the court is whether or not FBJ is the legitimate copyright holder in the films sold by the defendants.
Discussion
(1)
Plaintiffs first contend that FSUESMS has no standing to bring suit in this court because its registration has been cancelled, and therefore, it does not legally exist in Russia. See Pl.'s Mot. Dis. at 7. As plaintiffs have indicated, to make a determination about whether a foreign corporation has standing to sue, the courts must look to the law of the country where the corporation is or claims to be incorporated:
*447 A corporation organized and existing under the laws of a foreign state which we have recognized and with which we have comity may ordinarily seek the aid of our courts in assertion of its rights, even against our own citizens. If the existence of the corporation, its capacity to sue, or the authority of its directors to represent it or to bring the action is challenged, we look to the charter and the law of its corporate domicile for the data upon which we can rest our determination of such questions.
Russian Reinsurance Co. v. Stoddard, 240 N.Y. 149, 147 N.E. 703 (Court of Appeals, New York, 1925). Also, Fed.R.Civ.P. 17(b) explicitly provides that "[t]he capacity of a corporation to sue or be sued shall be determined by the law under which it was organized."
Plaintiffs argue that because FSUESMS's registration was cancelled by the June 5, 2000 and July 24, 2000 Russian court decisions, FSUESMS is not a legal enterprise, cannot do business under Russian law, see Art. 135 of the Russian Arbitration Procedural Code, and therefore, does not have standing to sue in this court. See Pls.' Mot. Dis. at 8-9. Plaintiffs add that the August 18, 2000 decision by the Federal Arbitrazh Court for the District of Moscow that is relied on by FSUESMS did not overturn the June 5, 2000 and July 24, 2000 decisions but rather, addressed itself to the March 6, 2000 and June 7, 2000 lower court decisions in the suit brought by FSUESMS against SMS. See id. at 9-10, 147 N.E. 703. The legitimacy of FSUESMS's registration was not litigated in those cases. See id.
Plaintiffs' memorandum in support of their motion to dismiss is dated September 22, 2000. On September 25, 2000, the Federal Arbitrazh Court for the District of Moscow issued a brief order vacating and remanding for reconsideration the June 5, 2000 and July 24, 2000 decisions relied upon by the plaintiffs that cancelled FSUESMS's registration. See Sept. 25 Dec. As of the date of this opinion, a decision on remand has upheld FSUESMS's registration, and that decision has been affirmed at two successive appellate levels.[21] Although there is one last appeal that may be taken, at the present time FSUESMS's registration has been held valid, and accordingly, it will be presumed that FSUESMS has the necessary standing to bring suit in this court until such time as a Russian court with authority to revoke FSUESMS's corporate registration should decide otherwise.[22]
(2)
In order for Films by Jove to be able to pursue its claim against the defendants, FBJ must be the rightful owner of the copyrights in the relevant films.[23] FBJ claims its rights in the copyrights on the basis of the 1992 agreement between it and the lease enterprise Soyuzmultfilm Studio, which purported to make FBJ the exclusive worldwide licensee in the films produced by the state enterprise and lease enterprise Soyuzmultfilm Studio. The *448 first question that must be answered, then, in determining whether or not FBJ is currently entitled to maintain a suit for copyright infringement is whether or not the lease enterprise Soyuzmultfilm Studio was the rightful owner of the copyrights at the time when it licensed them to FBJ.
The issue of initial copyright ownership must be decided in accordance with Russian law. The Second Circuit has endorsed this view. See Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 90 (2d Cir.1998) ("Since the works at issue were created by Russian nationals and first published in Russia, Russian law is the appropriate source of law to determine the issues of ownership of rights."). Many of the works at issue are "restored works," which are no longer in the public domain as a result of the Uruguay Rounds Agreements Act of 1995. See Pls.' Not. of Mot. to Dis. 3rd Party Compl. Purs. to FRCP 12(b)(6) at 6. 17 U.S.C. 104A(b) awards ownership of a restored work to "the author or initial rightholder of the work as determined by the law of the source country of the work." The source country, as defined by 17 U.S.C. 104A(h)(8) is Russia. In any case, therefore, Russian law applies, and all parties are in agreement on this. See FSUESMS's Cross-Mot. at 5.
No similar agreement exists, however, on the question of what Russian law has to say about the paradigm this case involves. Each side presents experts in Soviet and Russian copyright law to support its position. It should be noted, in this connection, that "[d]etermination of a foreign country's law is an issue of law." Itar-Tass, 153 F.3d at 92; see Fed. R.Civ.P. 44.1; Bassis v. Universal Line, S.A., 436 F.2d 64, 68 (2d Cir.1970). Therefore, disagreements among experts about Russian law do not stand in the way of a grant of summary judgment in favor of either party.
Both parties agree that in Russian copyright law, as in its American counterpart, "[o]nly the successor to the primary rights of the author may further transfer the rights. There must be a continuous chain of transfers starting with the Film Studios. Otherwise a party conducting the transfer does not have the authorship rights and cannot transfer such right to anybody else." Decl. of Professor V.A. Dozortsev ¶ 1, Ex. 10, attached to Decl. of Julian Lowenfeld. Accordingly, Plaintiffs' principal experts, Professor Paul B. Stephan, who is Percy Brown, Jr. Professor of Law and the E. James Kelly, Jr. Class of 1965 Research Professor at the University of Virginia School of Law and Professor Michael Newcity, who is Deputy Director of the Center for Slavic, Eurasian, and East European Studies at Duke University begin by arguing that the copyrights belonged, as an initial matter, to the state enterprise Soyuzmultfilm Studio. The suggestion is that if the copyrights were owned by the state enterprise Soyuzmultfilm Studio, they could have been legitimately transferred to the lease enterprise Soyuzmultfilm Studio, whereupon the lease enterprise could have concluded an equally legitimate agreement with FBJ. If, on the other hand, as FSUESMS's expert, Prof. Maggs, argues, the copyrights were never owned by the state enterprise Soyuzmultfilm Studio, they could never have been legitimately transferred to the lease enterprise Soyuzmultfilm Studio, which, therefore, could not make them the subject of an agreement with FBJ. We will see in due course whether or not this starkly polarized way of putting the question holds up under scrutiny.
Professor Newcity first notes that the films at issue in this case were initially published between the years 1946 and *449 1995,[24] the majority between 1964 and 1990. See Newcity Decl. of January 23, 2001 [hereinafter "First Newcity Decl."] ¶ 21. For most of this period, the copyright law in effect was either the U.S.S.R. Fundamentals of Copyright Law adopted by the Russian Soviet Federative Socialist Republic ("R.S.F.S.R.") in October, 1928 or the R.S.F.S.R. Civil Code which superseded the 1928 law in 1964. See id. It is not disputed that the 1964 law and the 1928 law were, in all relevant respects, identical. See id. ¶ 22. The 1964 law was itself expressly superseded by the Russian Law on Copyright and Neighboring Rights in 1993. See id. ¶ 21.
Article 3 of the Decree of the All-Union Central Executive Committee of the R.S.F.S.R., dated October 8, 1928, "On Copyright," provided that copyright in a film was granted to the film studio that published it. Id. ¶ 24.[25] Article 486 of the 1964 Civil Code, entitled "Copyright in Motion Pictures, Television Films, Radio and Television Transmissions," provided that
Copyright in a motion picture or a television film is owned by the enterprise which made the film.
Copyright in an amateur motion picture [or] television film is owned by its authors or coauthors.
The author of the script, the composer, director, chief cameraman, artistic director, and the authors of other works which constitute a component part of a motion picture or a television film own the copyright in each of their works. Copyright in a radio or television transmission is owned by the radio or television organization transmitting it, and the copyrights in the works included in that transmission are owned by their authors.
Id. ¶ 23. Thus, it would appear that the copyrights in all films during the period of the state enterprise Soyuzmultfilm's active existence, 1936-1989, would have belonged to that same enterprise.
However, FSUESMS's principal expert, Peter B. Maggs, Peer and Sarah Pedersen Professor of Law at the University of Illinois College of Law, contends that this interpretation of Article 486 is inaccurate. See Maggs Decl. ¶ 18. According to him, the above translation of that article erroneously uses the terminology "is owned by," whereas "[c]opyright in a cinematic film or a television film belongs to the enterprise which has effectuated the filming" would have been the more appropriate translation. Id. (emphasis added by Professor Maggs). The Russian verb that gave rise to this dispute, transcribed into the Latin alphabet, is "prinadlezhat," which, according to both Professor Maggs and Professor Newcity, can be translated as either "to belong to" or "to own." See Maggs Decl. ¶ 18; First Newcity Decl. ¶ 27. Professor Newcity provides entries from two dictionaries which suggest that "prinadlezhat" can be translated in either fashion. See Ex. 1, attached to First Newcity Decl. But, despite this ambiguity, Professor Maggs insists that "belongs to" is the proper translation in the current context.
What hinges on this distinction, at least according to Professor Maggs, is the question of who actually owns the copyrights, the state enterprise or the state itself. The state, Professor Maggs argues, was *450 the actual owner of the pre 1989 copyrights. See Maggs Decl. ¶ 18. State enterprises such as Soyuzmultfilm Studio did not own property but rather, held the property of the Soviet state in "operative management," which means, simply, that the state enterprise was responsible for managing property owned by the state. See id.
In support of this interpretation of the law, Professor Maggs offers two pieces of evidence, Article 94 of the 1964 Russian Civil Code and an excerpt from a text, Soviet Law (London: Butterworths, 1983), by Professor William Butler, an expert on Soviet law. The former reads:
The state is the sole owner of all state property
State property assigned to state organizations is in the operative management of these organizations exercised within the limits established by law, which exercise in accordance with the purposes of their activity, planned tasks, and the purpose of the propertythe rights of possession, use, and disposition of the property.
Id. ¶ 18. The latter states:
The State is regarded as the sole owner of all state property In those instances when the State allocates a portion of its property to State organisations it does not relinquish ownership but places the property in the `operative management' of that organization whose right of possession, use, and disposition must be exercised in accordance with law, the charter of the organization, and the purpose of the property.
Id. ¶ 19.
Plaintiffs contest Professor Maggs' reading of Article 486 as well as the significance of both pieces of evidence. Professor Newcity first notes that the relevant paragraph from Article 486 applies both to state and to non-state enterprises, and, as Professor Maggs concedes, non-state enterprises have full ownership of their copyrights. See First Newcity Decl. ¶ 28; Maggs Decl. ¶ 18 ("In particular, under Article 486, if a non-state enterprise, for instance a cooperative, made a motion picture, it would become the owner of the intellectual property rights in the picture, while if a state enterprise made a motion picture it would have the right of operative management of the intellectual property rights in the picture."). Why, to frame Professor Newcity's argument sharply, would the drafters of the copyright statute allow the ambiguous word "prinadlezhat" to designate two very different levels of ownership or control depending on whether the enterprise of relevance is a state or non-state enterprise without making that distinction apparent? Furthermore, the word "prenadlezhat" is used throughout the rest of Article 486 to refer to copyright ownership on the part of individuals, as opposed to enterprises, and there is no dispute that the word would certainly denote true ownership in these contexts. See Newcity Decl. ¶ 29. Why, once again, use the same ambiguous word in consecutive paragraphs from within a single provision of a code to denote two very different levels of ownership / control without taking care to note any such differentiation with particularity?
Furthermore, Professor Newcity notes, Professor Maggs has cited no scholarly or judicial authority in support of his interpretation. See id. ¶ 35. The sole authorities in his favor, Article 94 of the 1964 R.S.F.S.R. Civil Code and the above-cited excerpt from Professor Butler's book, are irrelevant because they refer to physical or material property, not intellectual property. See id. ¶ 36. Article 94, Professor Newcity points out, is taken from Part II of the R.S.F.S.R. Civil Code, which relates to the law of tangible property used by *451 state enterprises to produce goods and services. See id. In support of this view, Professor Newcity cites Article 95:
Article 95. Objects of the Right of State Ownership
State property extends to all land, its minerals, waters, forests, factories, mills, pits, mines, and electric power stations, to rail, water, air, and motor transport, banks, means of communication, agricultural, trading, communal, and other enterprises organised by the state, and also to the main housing resources in towns and urban settlements. The state may also own property of any other kind.
The land, its minerals, waters, and forests, being the exclusive property of the state, may be granted out for use only.
See id. Copyright, Professor Newcity notes, is addressed by Part IV of the Civil Code. See id. Therefore, Article 94 is inapplicable to the case at bar. See id. Adducing Professor Maggs' own statement that "[u]nder normal Soviet civil law drafting style, the `General Provisions' of a statute apply also to the more specific narrower types of transactions covered by the statute, unless clearly negated," Maggs Decl. ¶ 38, Professor Newcity observes that the "General Provisions" of the Civil Code are to be found in Part I, which is then followed by seven parts each addressing a discrete area of the law, of which Part II, "The Law of Property" and Part VI, "Copyright Law" are examples. See First Newcity Decl. ¶ 37; Ex. 3, attached to First Newcity Decl. This, offers Newcity, is an additional reason why these two parts of the code are not directly relevant to one another. See First Newcity Decl. ¶ 37.
Professor Newcity goes on to survey scholarly and judicial authority and finds all sources to support the view that the state enterprise responsible for producing a film owns the copyright to that film. Professor Newcity attests to having consulted more than a dozen scholarly books with not one dissenting voice. See id. ¶ 43. For example, copyright expert Eduard P. Gavrilov in his 1984 book Soviet Copyright Law has written:
The cases in which an original copyright is owned by a legal entity are established by the legislation of the USSR and the civil codes of the union republics. All-union legislation does not provide for such cases, but the civil code secures, in the first place, to an organization that publishes a scientific collection, encyclopedic dictionary, journal, and other periodic publications, the copyright to that publication as a whole; and in the second place, to an enterprise that shoots a motion picture or television film, and to radio and television organization that transmit radio and television broadcasts, the copyright to the specified works.
See id. ¶ 43. Gavrilov's view is seconded by S.A. Chernysheva in her 1984 book Legal Regulation of Copyright Relations in Cinematography and Television, as well as by Irina Savel'eva in her 1986 text Legal Regulation of Relations in the Field of Artisitic Creation.[26]See id. ¶ 44.
Those who have surveyed the 1928 law reach similar conclusions. Among these experts are B.S. Antimonv and E.A. Fleishits who, in their 1957 book, Copyright Law, speaking of the 1928 legislation, conclude that "[the law] recognized ... film studios that create films as subjects of copyright." See id. ¶ 42. V.I. Serebrovskiy echoes this conclusion in his 1956 book Problems of Soviet Copyright Law, *452 as does Serge L. Levitsky in his 1964 book Introduction to Soviet Copyright Law. See id.
Further, Professor Gavrilov has submitted a declaration in this case in which he concludes, in accordance with his view conveyed above, that "the unlimited exclusive copyright, including the right to show the films, was vested in film studio `Soyuzmultfilm' ... for all the films under consideration." Decl. of Eduard P. Gavrilov, Ex. 4, attached to Decl. of Julian Lowenfeld. In addition to Gavrilov, another leading authority on Russian copyright law, Professor Viktor A. Dozortsev has written that "the Studio which filmed the picture is the sole proprietor of the copyright ... that has ... the right to use the work and the entire right to dispose of the work." Decl. of V.A. Dozortsev, Ex. 10, attached to Decl. of Julian Lowenfeld. Svetlana Rozina, another expert on Russian copyright law, has also submitted a declaration in agreement with this conclusion. See Decl. of Svetlana Rozina, Ex. 11, attached to Decl. of Julian Lowenfeld.
Judicial decision, although not entitled to the same weight as similar decisions in common law regimes, as Professor Newcity cautions, have reached identical determinations. Professor Newcity makes mention of the Matveevna v. Krupniy Plan case, in which the court held that "[a]ccording to the Civil Code (Article 486, CC of RSFSR) ... all the proprietary rights belonged to the film studio, which produced the film," Ex. 8, attached to Decl. of Julian Lowenfeld, and the Sergeyev case, where the court held that "[a]ccording to the Article 486 of CC of the Russian Soviet Socialist Federation of 1964, which was in effect during the creation of the filmsthe author's right for the film belonged to the organization which shot the films ..., i.e., film studios." Ex. 9, attached to Decl. of Julian Lowenfeld. The December 26, 2000 remand decision of the Moscow Region Arbitrazh Court in the suit between SMS and FSUESMS, quoted at length above, also held that the copyrights produced by the state enterprise Soyuzmultfilm Studio belonged to that state enterprise as per the operations of Article 486.[27]
Additional evidence cited by Professor Newcity in support of his argument includes the fact that after 1978, at which time Goskino instituted the requirement that copyright notices be placed on films, the state enterprise Soyuzmultfilm was listed as the copyright proprietor. See First Newcity Decl. ¶ 47. Further, Professor Newcity cites specific circumstances under which the state could become a copyright holder. See id. ¶ 48. These circumstances are limited to: (1) the case where the state uses its right, available both under the 1928 and 1964 law, to purchase compulsorily an author's copyright; (2) the case where a copyright proprietor specifically designated the state as a successor to the copyright in his or her will; (3) the case where an enterprise owning a copyright is liquidated and the copyright escheats to the state; and finally, (4) the case where the term of copyright on a given work had expired, whereupon the R.S.F.S.R. Council of Ministers could proclaim *453 it to be state property. See id. None of these circumstances obtain here, Professor Newcity notes, and therefore, the copyrights in this case could not have belonged to the state. See id. ¶ 49. Article 498 of the 1964 R.S.F.S.R. Civil Code, which provides that "[a] copyright of an organization is valid permanently. In case of the reorganization of the organization which owns it, the copyright is transferred to its successor in title, and in case of its liquidation, to the state," Id. ¶ 55, is, according to Professor Newcity, particularly compelling evidence that the copyrights belonged to the state enterprise ab initio, since otherwise there would be no need to include such a provision in the Code, or alternatively, the provision would only apply to non-state enterprises, which its broad language does not indicate. See id. ¶ 51.
Finally, Professor Newcity points to legislative action by Russia's current government that implicitly recognized that state enterprises such as Soyuzmultfilm Studio were indeed copyright holders. See id. ¶ 52. Plaintiffs' other principal expert, Professor Stephan, elaborates on the nature of this action in detail. In 1998-99, the Russian Duma contemplated a bill that would have, if enacted, asserted government ownership of all copyrights in audiovisual works created before August 2, 1992, aside from those held by individuals, as opposed to organizations. See Decl. of Paul Stephan of January 22, 2001 [hereinafter "Second Stephan Decl."] ¶ 16. A November 11, 1998 letter from the Russian Federation State Committee on Cinematography ("Roskino") argued against the adoption of the proposal, observing that "for films made before August 3, 1992, there exist two kinds of rights: first the state rights, expressed through keeping all the initial stock of films in state archival facilities, and second, exclusive property rights to films (objects of copyrights), which belong to the film studios." Id. ¶ 16. The letter further argued that the ends of the proposed legislation could only be properly achieved by "a transfer of copyright on a contractual basis, an obligatory condition of which would be the payment of copyright compensation." Id. The Russian government followed suit, submitting an official response opposing the law to the legislature on April 12, 1999, arguing that copyrighted works created before the enactment of the 1993 Russian Copyright Law had the protection of Russian law and could not be expropriated by the proposed measure, which would have applied to "juridical persons, including those that had been transformed at that time [from state enterprises] into shareholding companies and other organizations." Id. A similar conclusion was reached by the Duma's Committee for Cultural Affairs, which concluded that the proposal "in form directed toward taking away the proprietary rights to audio-visual creative work of juridical persons (movie and TV studios), would amount to an expropriation of intellectual property from their legal rightful owners." Id. Persuaded by such opinions, the Duma rejected the bill. See id.
Professor Stephan also presents some very illuminating background information on the Soviet copyright situation that is helpful in distinguishing the rights of the state enterprise from the rights of the state. According to him, Professor Maggs' use of the term "operative management" to describe the rights of state enterprises vis-à-vis the works that they had created obscures the debate extending from the 1950s to the 1980s among Soviet legal scholars about what precisely the rights of such enterprises were and should be. See id. ¶ 2. As a threshold matter, there was no dispute that the copyright itself, the underlying right, was held by the state enterprise. See id. ¶ 3. The dispute centered *454 more on the question of what precisely that copyright entailed, i.e., to what extent the state could restrict and control the economic uses of the state enterprise's copyrights. See id.
Two schools of thought evolved. See id. ¶ 2. The advocates of the "economic law" approach suggested that "all organs of the Soviet government held whatever they possessed or controlled at the sufferance of the Soviet state and acted only as agents of the state." Id. By contrast, the "civil law" advocates "conceded that the state had ultimate sovereignty over all state property, but maintained that the assignment of ownership rights to state entities was legally meaningful and would be supported by the normal rules of civil law absent some specific enactment of the state to the contrary." Id. "The economic law school maintained that the state enterprise had essentially no rights, and that the default owner of state property was some higher level of the state bureaucracy. The civil law school argued that state enterprises had property and contract rights, subject to specific and valid orders from the state bureaucracy limiting those rights." Id.
In practice, although Article 486 of the Civil Code of the R.S.F.S.R. awarded copyrights to their authors and to state enterprises if they were the originators of the copyrighted works, the exploitation of those copyrights was restricted by the state. See id. ¶ 3. For example, the right to foreign exploitation of a film was denied to copyright holders by the State Monopoly on Foreign Trade from the early days of the U.S.S.R. A December 29, 1973 decree of the U.S.S.R. Council of Ministers adopted a "Regulation on the State Committee of the Council of Ministers of the U.S.S.R. on Cinematography" "confirmed Goskino's monopoly rights to distribute films produced by Soviet film studios within the Soviet Union (Article 63) and to market films abroad through the auspices of the All Union Association [Soveksportfilm] (Article 60)." Id.
Professor Stephan summarizes this state of affairs as follows: "Thus an act of Soviet administrative law limited the ability of the enterprises that held copyrights in films of a range of powers to exploit these rights commercially. But the underlying right, as opposed to the power to exploit commercially, remained with the enterprise, and with perestroyka the commercial power was regained."[28]Id. But, after all, *455 what does it mean to "own" a copyright other than to have some ability to exploit it? Or, to employ the dominant law school property metaphor, if the proverbial "bundle of sticks" commonly associated with the right of possession to an intangible item belongs to someone other than the "rightful holder" of that item, can it truly be said that the rightful holder retains anything at all, and is it not precisely this issuethe question of who owned what sticks in the bundlethat constituted the essence of the dispute between the civil law and economic law advocates? Accordingly, taking Professor's Stephan's position as accurate, it could be concluded that the *456 issue of the true "ownership" of Soviet-era copyrights, or at least ownership as American copyright law would define it, could not be fully resolved until after the collapse of the Soviet Union and the subsequent Perestroika period reforms had made a choice, one way or the other, either to valorize, or alternatively, to devalue the incipient right granted to the state enterprise. Thus, the inquiry of whether or not the copyrights were owned by the state or by the state enterprise, requiring no definitive resolution during the Soviet era, would be collapsed into an inquiry of how Perestroika-era legislators elected to treat these rights. There will be occasion to return to these questions later, when the legitimacy of the copyright transfer between the state enterprise Soyuzmultfilm and the lease enterprise Soyuzmultfilm is discussed.
Professor Maggs disputes many of the various arguments suggested by Professor Newcity and Professor Stephan. He begins by noting that even if Professor Newcity were correct that the state enterprise Soyuzmultfilm had full ownership of as opposed to operative management over the copyrights, this would not help plaintiffs, since there is no documentary evidence that any copyrights were ever transferred from the state enterprise to the lease enterprise in 1989. See Reply Decl. of Peter B. Maggs [hereinafter "Maggs Reply Decl."], attached to Reply Decl. of Robert W. Clarida [hereinafter "Clarida Reply Decl."] ¶ 15. Moreover, if the state enterprise had truly been liquidated in 1989 when the lease enterprise came into being, its copyrights would have escheated to the state pursuant to Article 498 of the Civil Code, which, as Professor Newcity noted, provides for such an outcome in the event of an enterprise's liquidation. See id.
Professor Maggs proceeds to insist, however, that the copyrights were, in fact, owned by the Soviet state. He suggests that Professor Newcity has misinterpreted his linguistic argument by attributing to Professor Maggs the position that the word "prinadlezhat" in Article 486 means something less than full ownership. See id. ¶ 20. Professor Maggs corrects this misconception:
My position was very simple. My position was not that the language of Article 486 indicated that the State Enterprise owned or did not own the copyright. My position was that since the word `prinadlezhit'[29]`belongs to' in Article 486 could cover either ownership or operative management, it is necessary to look to other sources, both to accepted Soviet legal theory of property rights and to the specific language of the directly relevant Article 94 of the Civil Code to determine what is meant by the word in a particular context.
See id.
Article 94, which, the reader will remember, set forth the notion of operative management, was, according to Professor Newcity, only pertinent to forms of property other than intellectual property. Professor Maggs disagrees. First, he notes that Article 95, the basis for Professor Newcity's argument, explicitly states that "[t]he state may also own property of any other kind." See id. ¶ 21. Next, he takes issue with Professor Newcity's suggestion that Article 94 and the other provisions of Part Two of the Civil Code that detail the law of property do not apply to the Civil Code as a whole. "In fact, `Part One. *457 General Principles,' `Part Two. Law of Property,' and `Part Three (I.) General Principles of Obligations' apply throughout the Code." See id. ¶ 22. Professor Maggs adduces, as evidence, a 1970 commentary on the Code by E.A. Fleishits & O.S. Ioffe, where citations to the applicability of provisions from Part Two and Part Three (I) appear throughout after individual code sections. See id. In particular, Articles 94 and 95 are cited in a commentary to Article 237 "Contract of Purchase and Sale." See id. ¶ 23. Another authoritative 1982 commentary edited by S.N. Bratus and O.N. Sadikov also cites the applicability of Articles 94 and 95 to Article 237. These citations, according to Professor Maggs, belie Professor Newcity's argument that Article 94 does not apply to other sections of the Civil Code. See id.
Professor Maggs goes on to attempt to cast doubt upon the import of Newcity's impressive catalogue of expert opinion in support of the point that the copyrights were owned by the state enterprise Soyuzmultfilm Studio as opposed to the state. Every one of these experts, Professor Maggs says, use ambiguous terms such as "holder" and "belongs to" rather than the Russian word "sobstevnnik" that, according to Professor Maggs, "unambiguously denote[s] ownership." Id. ¶ 24. To the extent that Professor Newcity has used the word "own" or "ownership" in his translations, he has skirted the issue. See id. ¶ 25.
It is not entirely clear how Professor Maggs' distinction between "belongs to" and "is/are owned by," both of which can, after all, mean the same thing, refutes the above-quoted opinion of Professor Gavrilov, when Gavrilov says that "the unlimited exclusive copyright, including the right to show the films, was vested in film studio `Soyuzmultfilm'... for all the films under consideration." Decl. of Eduard P. Gavrilov, Ex. 4, attached to Decl. of Julian Lowenfeld, or the opinion of Professor Dozortsev, where he says that "the Studio which filmed the picture is the sole proprietor of the copyright ... that has ... the right to use the work and the entire right to dispose of the work." Decl. of V.A. Dozortsev, Ex. 10, attached to Decl. of Julian Lowenfeld. The word "prenadlezhat" does not appear in these quotations, and Professor Maggs does not meaningfully address their substance. What, after all, does Professor Gavrilov mean other than copyright ownership when he talks about "the unlimited exclusive copyright" being "vested in" Soyuzmultfilm Studio? What does Professor Dozortsev mean other than copyright ownership when he claims that the studio is the "sole proprietor of the copyright" and has the "right to use" and "entire right to dispose" of the work? Professor Maggs offers no response to such questions.
He does, however, parry Professor Newcity's point about the placement of copyright notices on films, calling it inconsequential, since "[r]egistration did not establish ownership; it merely allowed central authorities, who were providing the funds for making films and were censoring films, to keep track of which studios made which films." Id. ¶ 26.
As for the proposed copyright legislation mulled over and ultimately rejected by the Duma, Professor Maggs objects to the discussion as being irrelevant, "because Russian courts have never treated the history of legislation that was not passed nor comments on such legislation as of any legal significance whatsoever." See id. ¶ 30. His claim here is surely a bit overstated, since, although rejected legislation may not be binding legal authority, it can certainly be useful as an indication of what authoritative voices understand the current state of the law to be. If a *458 legislature would have to pass a new law in order to put copyrights in the hands of the state, then it stands to reason that without that law, those copyrights are owned by someone or something other than the state. The series of letters opposing the measure by Roskino, the Russian government and the Duma's Committee for Cultural Affairs, all of which label the proposed legislation an exercise in expropriation of intellectual property, gives credence to precisely this notion.
Perhaps sensing that his dismissal of this legislative action as irrelevant does not quite suffice to dispel its import, Professor Maggs' proceeds to make the following argument:
None of the material [Professor Stephan] discusses refers specifically to Soyuzmultfilm. One of the letters does refer to Mosfilm, the largest of the Russian film studios. As we know from Mosfilm v. Committee of the Russian Federation for Cinematography, et al. (Exhibit 10 to the Declaration of Julian Lowenfeld), a Russian court, after examining the relevant documents, held the privatization process for Mosfilm properly transferred copyrights to the successor private company. Obviously with respect to Mosfilm and other privatized studios that did own copyrights, the writers of the comments quite properly viewed the proposed law as involving expropriation. But we know from the Information Letter of the High Arbitration Court that film studios created by a reorganization whose reorganization papers did not provide for transfer of copyrights had no copyright rights at all to prior repertory. And certainly those film studios like the lessee enterprise, that merely leased equipment and buildings, obtained no copyrights. Thus it would be totally improper in any event to apply the conclusions in these comments to the copyright rights of film studios not mentioned in the letter.
Id. ¶ 30. This argument is somewhat less than analytically bulletproof. First of all, Professor Maggs has elsewhere in his reply declaration discussed the December 26, 2000 remand decision of the Moscow Region Arbitrazh Court which concluded that the privatization process for Soyuzmultfilm Studio, like the Mosfilm privatization process that Professor Maggs refers to, succeeded in transferring the copyrights of the state enterprise to the lease enterprise (and later to the joint stock company plaintiff).[30]See id. ¶ 11. The Information Letter of the High Arbitration Court (appearing as Exhibit 1 attached to the Maggs Reply Declaration) on which Professor Maggs seems to place great reliance here and elsewhere, is a document of little relevance to the case at bar, as will be explained shortly.
Professor Maggs also provides no reason to exclude Soyuzmultfilm Studio from the rather broad language of the letters adduced by Professor Stephan. The Duma's October 15, 1999 "Official Response" to the proposed legislation, for example, states that the "[p]roposed bill is directed toward taking away proprietary rights of juridical persons (movies and TV studios) to audio-visual creative works and that would mean expropriation of intellectual property from their legal rightful owners." Duma's Official Response, Ex. 11, attached to Second Stephan Decl. ¶ 1. The state enterprise, it will be recalled, "is a juristic person, it enjoys the rights and performs the duties connected with its activity, and it possesses a specific part of *459 public property and has its own balance sheet." The Legislation of Perestroika, Ex. 2, attached to Second Stephan Decl. at 21. In addition, Article 486 of the 1964 Civil Code of the R.S.F.S.R., the article that awards copyrights in motion pictures to the enterprises which shot them, is specifically cited in the Duma's letter. Duma's Official Response, Ex. 11, attached to Second Stephan Decl. ¶ 1. Thus, it is quite clear that the language of the Duma's Official Response is broad enough to have applied to Soyuzmultfilm Studio.
In response to Professor Stephan's distinctions between the "civil law" theorists and the "economic law" theorists, Professor Maggs advances the claim that during the pre-Perestroika period, even the most ardent representatives of the civil law school, such as Professor O.S. Ioffe, emphasized the fact that there was a "single fund" of state property and that enterprises owned no property:
State socialist ownership constitutes national property. It is characterized therefore by the principle of a single fund. The content of this principle is that state property, regardless of in whose possession it is located belongs by right of ownership only to the state. Individual state agenciesstate enterprises and institutionspossess specified systems of state property necessary for the performance of the tasks placed upon them. However the state agencies are not the owners of the state property transferred to them. The Soviet state acts as the single and sole owner.
. . . . .
State agencies possess, use, and dispose of the property in their possession not by their authority but by the authority granted to them by the state as owner.
Id. ¶ 16. Professor Maggs points out that the unambiguous word "sobstvennik" (owner) is used here. See id.
Professor Newcity and Professor Stephan respond to Professor Maggs' arguments. Newcity's first point is that he has not misread Professor Maggs' argument with respect to the use of the word "prinadlezhat."
In his Declaration Professor Mags asserts that there is a dichotomy in Soviet copyright law. Non-state enterprises and individuals enjoyed ownership of their copyrights; state enterprises had only the right of operative management. The thrust of the analysis in my Declaration was that no such dichotomy existed. The Russian word that Professor Mags seizes on as the basis for his argument prinadlezhatis used throughout Soviet and Russian copyright legislation to refer to the rights of individuals, non-state enterprises, and state enterprises. No ambiguity existed in the copyright legislation; state enterprises owned the copyright in their films to the same extent as non-state enterprises and individuals. The ambiguity that Professor Maggs seeks to create by introducing principles of law relevant to other forms of property simply is fallacious.
Newcity Reply Decl. ¶ 6., attached to Decl. of Julian Lowenfeld of Feb. 20, 2001 (citations omitted). The "prinadlezhat" language was used throughout legislation and commentaries by Soviet and Russian scholars in referring to state enterprises, non-state enterprises and individuals. See id. ¶ 8. No distinction was made among these categories. See id. Yet, Professor Maggs insists that this same language denoted a different possessory interest for state enterprises than for non-state enterprises and individuals. See id. Professor Newcity's argument is that, without some basis for this distinction, Professor Maggs' view cannot be maintained. See id.
*460 Professor Newcity likewise disputes Professor Maggs' interpretation of Article 94 and its applicability to non-material assets. See id. ¶ 7. While conceding that parts of the Civil Code may be cited by scholars to help interpret provisions from other parts of the Civil Code, Professor Newcity notes that it is a far cry from that proposition to Professor Maggs' suggestion that the provisions of Part II, which are clearly intended to govern tangible assets, will supersede the provisions of Part IV, which deal with intangible assets, absent some clear, express statement in the Civil Code that effects such a result. See id.
Finally, Professor Newcity responds to Professor Maggs' claim that even if the state enterprise had originally owned the copyrights, its copyrights would have automatically escheated to the state as per the operations of Article 498 of the R.S.F.S.R. Civil Code upon the liquidation of the state enterprise by pointing out that the enterprise was not liquidated, but rather, was transformed into the lease enterprise, an event that would have triggered a different paragraph of Article 498 and resulted in the passing of the copyright from the state enterprise to the lease enterprise. See id. ¶ 16. This point will be developed more fully later as part of the discussion of the transfer of the copyright from the state enterprise to the lease enterprise.
Professor Stephan disputes Professor Maggs' application of the "single fund" concept. "Soviet law," he writes, "gave great significance to the distinction between material and immaterial property. The former were characterized by the principle of the single fund, as the reference to Professor Ioffe's 1967 treatise indicates. Immaterial rights, and in particular intellectual property, stood on a different basis, as the language of the R.S.F.S .R. Civil Code clearly indicates." Stephan Reply Decl. ¶ 5, attached to Decl. of Julian Lowenfeld of Feb. 20, 2001. Professor Stephan goes on to note that Professor Ioffe himself recognized this distinction when, in the same treatise quoted by Professor Maggs, in speaking of state enterprises among other institutions, he wrote: "If the legal entity is the original owner of the copyright, its copyright is transferred: 1) in the case of reorganizationto its legal successors, and 2) in the case of liquidationto the state." Id. (emphasis added).
In the final analysis, it appears that plaintiffs and their experts have the better of the argument on the issue of who owned the copyrights prior to 1989. The text of Article 486 of the 1964 Civil Code of the R.S.F.S.R. and the corresponding provision of the 1928 Code, which vest copyright ownership in a film in the enterprise that created the film, is too clear, and Professor Maggs has not provided sufficient justification to depart from the obvious reading of the statute. He has adequately explained away neither the litany of expert opinion provided by the plaintiffs' principal experts nor the import of the Duma's contemplated 1998-1999 legislative action. Nor has he adequately accounted for Article 498 of the 1964 Civil Code and other provisions of the Code which expressly enumerate the circumstances under which the state could have possibly obtained ownership of the copyrights.
At the very least, plaintiffs have established the following proposition: before 1989, the state enterprise Soyuzmultfilm was, in some sense, the owner the copyrights in the films it produced. The argument would then be over the extent to which it was understood, during the Soviet era, that the state was also, in some sense, the owner of the copyrights. It is quite clear, for example, that the state enterprise Soyuzmultfilm did not enjoy the *461 rights of foreign or even domestic distribution that a copyright owner in the United States would have had and that some of these rights were retained by the state and placed under the aegis of various state agencies, such as Goskino and Soveksportfilm. Nevertheless, the state enterprise Soyuzmultfilm was a legal entity with at least nominal ownership of the copyrights. Although Professor Maggs has made much of the distinction between "prinadlezhat" and "sobstvennik," it appears that the distinction in Russian is no less murky than the difference between "belongs to" and "is/are owned by," in English,[31] and it would be foolhardy to make any bold conclusions about the power of the state enterprise Soyuzmultfilm Studio to transfer film copyrights to the lease enterprise on the basis of the contrast between these words, particularly when other provisions of the law address the transfer issue more directly.
Thus, although plaintiffs are probably correct in saying that the copyrights in the films produced by the state enterprise Soyuzmultfilm Studio belonged, for most purposes, to the state enterprise, the issue of initial copyright ownership, at least as far as this case goes, must inevitably collapse into the question of whether or not the state enterprise had the power to alienate those copyrights, the power to transfer them to another organization such as the lease enterprise and, if not, whether those copyrights could have passed to the lease enterprise in some other fashion. We turn, then, to these questions.
(3)
Plaintiffs' expert Professor Stephan delineates the history of the formation of the lease enterprise Soyuzmultfilm Studio and the transfer of copyrights to it from the state enterprise:
To understand the somewhat unusual attributes of a lease enterprise, one must locate the concept of a lease enterprise within the unfolding of the Perestroyka program of the Soviet leadership between 1986 and 1991. In the beginning, Communist doctrine and Soviet law were hostile to the concept of private ownership of property used for productive economic activity. Aside from a few economically necessary but ideologically inconvenient exceptions, such as the use of small patches of land by members of collective farms for personal profit, the regime treated private economic activity as an undesirable, indeed criminal act. Thus any entity engaged in for-profit conduct had to trace its ownership back either to the state or some other collective entity, without the possibility of private investment.
*462 By the mid-1980s the Soviet leadership had come to the realization that the concept of social ownership was not working and that reforms were needed. At the same time, the leaders wanted change to be incremental. Rather than introducing sweeping reforms, the government experimented with projects that pointed toward privatization, but avoided full consummation of private ownership of the means of production. Thus in 1986 the Supreme Soviet (then the highest legislative body in the Soviet Union) authorized family-based economic activity, on the grounds that no one outside the family would have to work for a private person. In 1987 the legislature reformed the organization of the state-owned enterprise, the predominant business form of that era, to give those entities some characteristics of a private firm but without private ownership. In that year it also became possible for foreign private investors to take minority positions in joint ventures established under Soviet law. The following year the parliament enacted a law on cooperatives, which extended the family-business model by permitting private employment but did not leave much (if any) room for passive investors. It was against this background that the lease enterprise was created, first by a decree of the Presidium of the Supreme Soviet in April 1989, and then, following the constitutional reform that led to the establishment of the Congress of Deputies as the highest legislative body, by enactment of the Fundamental Principles on Leasing in December 1989.
The lease enterprise was intended to serve as a bridge to privatization and the creation of a fully private corporation, the legality of which was not confirmed until the Congress of Deputies amended the Soviet Constitution in February 1990. As a result, the legislation establishing lease enterprise provides for attributes that go beyond a narrow conception of leasing. The overall conception of the legislation, as is apparent both from its terms and from the statements of the political and legal authorities who introduced and defended it, is to transfer all the functions, rights and responsibilities of a state-owned firm into a private entity, so that the state would become only the passive recipient of rents and that all the risks and rewards of the business would rest with the private firm. At the same time, the state would retain a reversionary ownership interest so as not to violate the then extant prohibition against private ownership of the means of production. The legislation also left open what would happen to that reversionary interest, anticipating that state ownership would come to an end and that lease enterprises ultimately would be succeeded by private firms with absolute ownership rights.
Lease enterprises were organized to acquire all the assets and liabilities of a state-owned firm in return for rental payments. These arrangements, as leases, had terms, in the case of Soyuzmultfilm ten years. But this did not mean that the lease enterprise acquired only the right to use these assets for ten years, or that it could be returned to its prior form as a state-owned enterprise. The prior entity, having gone through the process of creating a lease enterprise, ceased to exist at the moment of the reorganization. The lease enterprise became the legal successor of the predecessor state-owned firm, possessing all its rights, debts and other legal obligations. The rights received by the lease enterprise included the rights to use and dispose of the property transferred to it for the period of the rent *463 agreement. After that period, the lease enterprise would either surrender the formerly state property it still retained back to the state or, with the permission of the state, begin the process of privatization. Articles 16(4) and 21(1) of the Fundamental Principles on Leasing (Osnovy zakonodatel'stva Soyuza SSR i soyuznykh respublik ob arende) makes this point clearly. In particular, Article 16(4) refers to the lease enterprise as the "recipient" (preyemnik) of the ownership rights of the predecessor state enterprise, indicating that a complete transfer of those rights takes place. Article 21(1) further stipulates that all products created by the lease enterprise and all of its receipts will belong to the founders of the lease enterprise even after its obligation to return property to the state matures.
In particular, intellectual property rights transferred to the lease enterprise were not leased, but rather fully owned by the lease enterprise. The lease enterprise had the right to enter into long-term licensing agreements and, within the limits of Soviet law of the time, outright transfers of intellectual property, subject only to the limitation that, at the end of the term of the lease enterprise, its successor would assume the rights and obligations of any contracts into which the lease enterprise has entered. Article 498 of the Civil Code of the R.S.F.S.R., as it was in effect in 1989 and following years, deals with the ownership of intellectual property rights. This provision uses the same word as does Article 16(4) of the Fundamental Principles in addressing what happens upon the reorganization of the rights' owners. Article 498 states that, upon the reorganization of an enterprise, ownership of intellectual property rights passes to the "recipient" (preyemnik). There is no question that the conversion of a state enterprise into lease enterprise constitutes a reorganization within the meaning of Article 498.
See Decl. of Paul B. Stephan of Sept. 12, 2000 [hereinafter "First Stephan Decl."], Ex. 12, attached to Decl. of Julian Lowenfeld, ¶¶ 5-9.
FSUESMS's expert, Professor Maggs, contends that there was never a legitimate transfer of the copyrights from the state enterprise to the lease enterprise, and in the alternative, even if there were, that the expiration of the lease term in 1999 would have effectuated the return of any transferred copyrights to the state. The lessor named in the preamble to the lease is not the state enterprise Soyuzmultfilm but rather Goskino, which, Professor Maggs explains, is not because Goskino is the owner of Soyuzmultfilm's assets but because Goskino "at that time had the right to assign the management of this state property from one organization (the State Enterprise) to another organization (the Lessee Organization)." Maggs Decl. ¶ 24. But the "key question," as Professor Maggs puts it, "is what was the state property, rights to management of which GOSKINO assigned by the lease." Id. ¶ 25.
In this connection, Professor Maggs cites the opinion of the Federal Arbitrazh Court for the District of Moscow of August 18, 2000, which is one of the two opinions that vacated lower court decisions and remanded for further consideration in light of the premise that "[l]egal succession of enterprises is determined by the composition of the property, rights, and duties transferred by the statement (balance sheet) of property, rights, and obligations." Maggs Decl. ¶ 30. "According to the lease contract of December 29, 1989, of the Soyuzmultfilm Film Studio," the court wrote, "the fixed and circulating assets were transferred for leased use for a term of 10 *464 years. The question of the transfer of copyrights to the films created in the studio's past were [sic] not decided by the owner in this contract." Id.
According to Professor Maggs, the court was clearly directing the attention of the lower court on remand to Article 1.1 of the Lease Contract, which provides:
Lessor grants and Lessee Organization receives in lease the basic and circulating assets (equipment, stock-in-trade, and other goods-material items of value) that are on the balance sheet of the Soyuzmultfilm Film Studio at the time of entry of the present contract into legal force and also receipts from centralized sources in accordance with the plans of capital construction and material-technical support for the 12th and 13th five [year] plans.
Id. ¶ 31. It is unclear whether or not film copyrights appeared on the lease enterprise's balance sheet, if such a document ever existed, and plaintiffs have not offered it as an exhibit despite being repeatedly challenged to do so by Professor Maggs and FSUESMS.[32]
Professor Maggs offers two alternatives. If the copyrights do appear on the balance sheet, then they remained state property pursuant to Article 1.2 of the Lease Contract: "[t]he property granted in lease shall remain in state ownership. It shall be under the economic management of the Lessee Organization. The lessor may not alienate this property." Id. ¶ 34. The first paragraph of Article 9 of the Fundamental Principles on Leasing suggests a similar outcome: "The grant of property in lease shall not entail the transfer of the right of ownership to this property." Id. If, on the other hand, the copyrights do not appear on the lease enterprise's balance sheet or if, as the plaintiffs suggest, there is no balance sheet, then Professor Maggs suggests that the lease enterprise, and therefore, the joint stock company plaintiff, would have no way of proving that the copyrights were ever transferred from the state enterprise Soyuzmultfilm. See id. ¶ 35-6.
Professor Maggs then proceeds to cast doubt upon the applicability of Article 16(4) of the Fundamental Principles on Leasing, relied upon by Professor Stephan in his description of Perestroika reforms, supra, and providing that "[a] leased enterprise shall become the legal successor of the property rights and duties of the state enterprise assumed in the lease, including also its rights of use of land and other natural resources," id. ¶ 37, by arguing that the language of the lease contract did not state that the enterprise itself was being leased but rather transferred only those assets that were included on the balance sheet as of December 20, 1989. See id. ¶ 38.
Moreover, even if the lease had been for the enterprise as a whole, Professor Maggs argues that the rights transferred under Article 16(4) would have reverted back to the lessor, the state, after the expiration of the lease term. See id. This is because the "General Provisions" of the Fundamental Principles, applicable to the whole statute unless specifically disclaimed, according to Professor Maggs, provide that the lease shall be for "fixed term possession and use." Id. Also, paragraph *465 2 of Article 7 of the Fundamental Principles requires the lessee to "return the property after the termination of the contract, a provision which would make no sense if Article 16(4) were read to grant a perpetual transfer of rights from a state enterprise to a lease enterprise." Id.
Of course, having made this argument, Professor Maggs must account somehow for what is expressly stated in Article 16(4), namely, that the lease enterprise shall succeed to the property rights and duties of the state enterprise. In his view, Article 16(4) has the purpose not of transferring anything beyond what is included on the balance sheet but of overcoming a general rule against assignment of rights in certain types of property, such as land. See id. ¶ 39. Land was typically "not under the `operative management' of state enterprises, but rather was used by the state enterprise under a non-assignable right of use." Id. By referring to the lease enterprise as a "successor" and not as an "assignee," Article 16(4) manages to overcome the prohibition on assignment and effect a temporary transfer of rights; but the transfer was never intended to exceed the length of the lease term. See id.
Professor Maggs claims that a nonsensical result would follow from plaintiffs' reading of Article 16(4). "Rights of land use" are explicitly mentioned among the rights which a lease enterprise succeeds to when it steps into the shoes of a state enterprise. Consistent with plaintiffs' reading of the article, this succession would have to be perpetual. Yet, in the case at bar, the physical propertythe church building and land under and around it on which the state enterprise Soyuzmultfilm Studio and its successor, the lease enterprise Soyuzmultfilm Studio, conducted their affairswere returned to the state after the expiration of the lease term in 1999. This is undisputed, and it is, in fact, the very reason that FSUESMS was able to occupy the Church of St. Nicholas the Enlightener pursuant to the Stepashin decree in 1999. SMS had moved out to a Krasnogorsk location, taking with it only its claims to the film library that had accumulated over the many decades of the state enterprise Soyuzmultfilm Studio's existence. Professor Maggs contends that SMS had no choice but to leave its premises: "I believe [the building and land] were returned because the law was absolutely clear that they could not be retained." Id. "To show how ridiculous Plaintiffs' theory is," Professor Maggs writes, "the theory would mean if a state farm enterprise (which under Soviet law had the right to use, but not other rights in the state land that it farmed) were leased, then the Lessee Organization, at the end of the lease, would have to give back the tractors but keep the farm land forever." Id.
Even if the lease enterprise had obtained the right to use the copyrights to the pre-1989 films, Professor Maggs continues, it would not have been able to license them to FBJ. See id. ¶ 41. Article 18 of the Fundamental Principles on Leasing permits transfer only of "material valuables," which intellectual property is not. See id. ¶ 42.
Professor Maggs also faults Professor Stephan's analysis insofar as the latter refers to the lease enterprise as a "bridge to privatization." Id. ¶ 61. "[Professor Stephan] fails to point out that under Article 10 of the Fundamental Principles [on Leasing] there were two types of leasing arrangement, those where the contract of lease did and those where it did not provide for a buyout by the Lessee Organization. The lease contract in the present case had no right of buyout. So it did not provide a `bridge to privatization.'" Id.
Professor Newcity responds to Professor Maggs' theory of the lease transfer (or *466 lack thereof) by arguing that Professor Maggs has gone about his analysis in an entirely misguided manner:
Professor Maggs devotes a substantial portion of his Declaration to a discussion of the question whether ownership of the copyrights in the films was transferred from the State Enterprise to the Lease Enterprise by the Lease Agreement. However, he completely ignores the fact that upon reorganization of the State Enterprise the ownership of these copyrights transferred from the State Enterprise to the Lease Enterprise by operation of law. As such, this transfer was not dependent on the provisions of the Lease Agreement and much of Professor Maggs' analysis is irrelevant.
First Newcity Decl. ¶ 54. Article 498 of the 1964 R.S.F.S.R. Civil Code is the law to which Professor Newcity is principally referring. See id. ¶ 55. That article, it might be recalled, provided that "[i]n case of the reorganization of the organization which owns it, the copyright is transferred to its successor in title, and in case of its liquidation, to the state." See id. This provision accords with Article 37 of the Civil Code, which appears in the General Principles of the Code:
Article 37. Dissolution of a Juridical Person
A juridical person can be dissolved by means of liquidation or reorganization (merger, division, and accession).
In the case of merger and division of juridical persons, the property (rights and obligations) passes to the newly constituted juridical persons. In the case of accession of one person to another, its property (rights and obligations) passes to the latter. The ownership passes on the day of signature of the transfer balance, unless other provision is made by the law or decree for reorganization. The method of liquidation and reorganization of a juridical person is laid down by legislation of the USSR and by decrees of the Council of Ministers of the RSFSR.
Id. ¶ 56.
According to Professor Newcity, "the reorganization of the State Enterprise into the Lease Enterprise in 1989 represented a transformation of the enterprise as provided for by the Law on State Enterprises (Associations)." Id. Professor Stephan expands upon this point:
To effectuate the policy of encouraging direct economic incentives for producers, the [Fundamental Principles on Leasing] permitted a complete transformation of a state enterprise into a lease enterprise, resulting in the disappearance of the state enterprise and the emergence of the privately owned lease enterprise as its legal successor. The assets of the lease enterprise would consist of both property leased from the state (not from the former state enterprise, which ceased to exist) and of assets belonging to the former state enterprise that passed through rights of succession under Article 498 of the Civil Code of 1964, rather than through the lease. Articles 9 and 10 of the [Fundamental Principles on Leasing] specify the ownership of property leased from the state and stipulate that at the end of the lease the state property must either revert to the state or be bought out by the lease enterprise. But Article 16, which recognizes that ownership of other property could pass to the lease enterprise through succession rather than by lease or purchase, indicates the legislature's acceptance of the proposition that a lease enterprise could acquire interests under the normal operation of the rules of the Civil Code outside the scope of the lease contract. Rights to *467 which a lease enterprise could succeed under Article 498 include copyrights, which belonged to the state enterprise rather than its supervising agency and which, pursuant to the legislation of perestroyka, included the right to derive hard currency earnings from foreign exploitation.
Professor Maggs claims that copyrights could pass to a lease enterprise only if specified on the balance sheet of the state entity that was transformed into the lease enterprise. This is incorrect. Neither the Law on the State Enterprise nor the Fundamentals on Leasing give such conclusive effect to the balance sheet; indeed, the Fundamentals do not refer to the balance sheet at all. Article 4 of the Fundamentals states that the right to lease property belongs to the owner of that property. The lease between Goskino and [the lease enterprise Soyuzmultfilm Studio] therefore covered only property under the management of Goskino, and had no bearing on those interests belonging to [the state enterprise Soyuzmultfilm Studio] in its own right. The land occupied by the studio and other material assets (such as film stock) was under the operative management of the higher bureaucratic agency, Goskino. [The lease enterprise Soyuzmultfilm Studio] obtained only such an interest in those assets as Goskino conveyed by lease. But as to other rightsthe copyrights, contracts with the skilled employees of the studio, the know-how on which a creative enterprise rests, past awards and the reputation that went with them, indeed almost everything that would make a film studio valuable[the lease enterprise Soyuzmultfilm Studio] obtained ownership by stepping into the shoes of its predecessor pursuant to Article 498 of the Civil Code, not by lease based on the Fundamentals.
Second Stephan Decl. ¶¶ 7-8.
Professor Maggs, as Professor Stephan points out, seeks to avoid this result, viz., the passing of the copyrights by operation of law to the lease enterprise Soyuzmultfilm Studio upon the reorganization of the State Enterprise Soyuzmultfilm Studio, by suggesting that the state enterprise Soyuzmultfilm Studio and FSUESMS are one and the same. See Maggs Decl. ¶ 11. The state enterprise continued to exist between 1989 and 1999, the argument would go. The consequence of such a state of affairs would be that the state enterprise Soyuzmutfilm Studio held a reversion interest in the film copyrights which vested at the end of the lease term. See Stephan Decl. ¶ 9. Professor Maggs never makes this argument explicitly and at no point offers any reason whatsoever to think that the state enterprise Soyuzmultfilm Studio continued to exist in some quiescent form after the 1989 creation of the lease enterprise. The most Professor Maggs does claim is that the reason the state enterprise was forced to register an amended charter in 1999 as a federal state unitarian enterprise was due to changes in the law which abolished the state enterprise form. See Maggs Decl. ¶ 11. But those changes, namely the adoption of the Civil Code of the Russian Federation, First Part, came in 1994. See id. The state enterprise Soyuzmultfilm ceased all operations in 1989 when the lease enterprise came into existence and registered its amended charter in 1999, five years after the adoption of the 1994 law which allegedly created the necessity for the amendment. Professor Maggs can point to not so much as a single act to suggest signs of life on the part of the state enterprise during the period 1989 to 1999. Professor Stephan adds: "The belated attempt of [FSUESMS] to declare itself the successor to [the state enterprise *468 Soyuzmultfilm Studio] does not accord with Russian law in any respect." Stephan Decl. ¶ 10. This understanding finds recent support in the June 4, 2001 decision of the Federal Arbitrazh Court for the District of Moscow.
In his reply declaration, Professor Maggs attempts to cast doubt upon the notion that the lease enterprise was the legal successor of the state enterprise. The lease enterprise's charter, he notes, did not indicate that it was the state enterprise's successor, which, he says, was in contravention of the "universal practice in the drafting of charters in the Soviet Union and Russia when [a] new enterprise claims to be the legal successor of a prior enterprise." Maggs Reply Decl. ¶ 4. In addition, nothing in the charter indicates a claim to the ownership of the state enterprise's copyrights. See id.
Professor Maggs also places much stock in a September 28, 1999 Information Letter of the High Arbitrazh Court. See id. Information Letters, Professor Maggs explains, are documents through which the High Arbitrazh Court regularly gives guidance to lower courts by stating the facts and holdings of cases correctly decided by the lower courts. See id. The lower arbitrazh courts are expected to follow the guidance offered or risk reversal. See id. This particular Information Letter involved the 1990 transfer of physical assets and personnel from a film studio to an entity created by a reorganization. See id. ¶ 6. The principal question was whether copyrights previously made by the film studio were transferred as part of the reorganization. See id.
According to Professor Maggs, the Information Letter "indicated that the argument that there was automatic succession `is contrary to law, since legal succession of enterprises is determined by the content of the property, rights, and obligations transferred by the statement (balance).'" Id. ¶ 7. This language, Professor Maggs writes, "refutes the statement in Paragraph 51 of Michael Newcity's Declaration, `Under Article 498, in the event that a state enterprise that owns a copyright is reorganized, its copyrights are transferred to its successor.'" Id.
The relevance and import of the Information Letter, which, if it truly meant what Professor Maggs insists it means, would be devastating to plaintiffs' case, is questioned by both Professor Newcity and Professor Stephan. Professor Newcity writes:
Professor Maggs refers extensively to an Informational Letter from the Higher Arbitrazh Court, dated September 28, 1999, which relates to the transfer of ownership from a state enterprise-film studio to a new legal entity. Professor Maggs cites this Informational Letter for the proposition that the copyright in films produced by a state enterprise was not automatically transferred to "an entity created by a reorganization." This Informational Letter, however, is not applicable to the situation in this case because it relates to a fundamentally different and inapplicable form of reorganization.
As I explained in my Declaration, Soviet law recognized several different forms or reorganization of state enterprises. When the State Enterprise was reorganized as a lease enterprise, the form of reorganization followed was a "transformation" (in Russian, preobrazovanie ... ) under which the original enterprise was reorganized into a new enterprise. Under a transformation the old enterprise ceased to exist and was succeeded by the new enterprise. This is the process that occurred when the State Enterprise was transformed into the Lease Enterprise; the State Enterprise *469 ceased to exist and, under Article 498 of the RSFSR Civil Code, the Lease Enterprise succeeded by operation of law to the ownership of the now-defunct State Enterprise's copyrights.
This is not the form of reorganization that occurred in the case discussed in the Informational Letter. As a result, the Informational Letter is wholly inapplicable to the present case. The first line of the text of the Informational Letter specifies that the form of reorganization that occurred in that case was a "separation" or "spin-off" (in Russian, vydelenie ... ). This form of reorganization is provided for in Article 23(1) of the Law on State Enterprises (Associations), which was adopted on June 30, 1987, and in later Soviet legislation. In this form of reorganization, discrete units within an enterprise are spun-off from an existing enterprise. One of the important features of this form of reorganization is that the parent enterprise does not cease to exist. Thus, after this form of reorganization occurred, the parent enterprise and one or more daughter enterprises would exist simultaneously. In such a reorganization it was obviously essential that there be a clear agreed-upon delineation of which assets of the parent enterprise were being transferred to the daughter enterprise(s). There was no automatic succession by the daughter enterprise to the ownership of the parent's assets since the parent continued in existence. For this obvious reason, the provisions of Article 498 of the RSFSR Civil Code, which relate to succession of ownership of copyright when one enterprise ceases to exist and is succeeded by another enterprise, did not apply. Thus, the situation described in the Informational Letter is completely different from the reorganization that occurred when the State Enterprise was reorganized into the Lease Enterprise. Consequently, this Informational Letter has no bearing on this case.
Newcity Reply ¶¶ 14-16 (footnote and citations omitted).
Professor Stephan is in agreement. According to him, Professor Maggs has failed to note that the Information Letter is a "straightforward application of Article 37(6) of the U.S.S.R. Law on Enterprises, enacted June 4, 1990, as well as the almost identical Article 37(7) of the R.S.F.S.R. Law on Enterprises and Entrepeneurial Activity, enacted December 25, 1990." Id. ¶ 10. The U.S.S.R. law reads:
Should one or several new enterprises be detached from the enterprise, the property rights and obligations of the reorganized enterprise shall be transferred, in the appropriate proportions, to each of them, by means of the act of division (balance).
Id. By way of contrast, the U.S.S.R. Law goes on to state, in article 37(7), that if "one enterprise is transformed into another, all property rights and obligations of the previous enterprise shall be transferred to the newly created enterprise."[33]Id.
"The September 29, 1999, information letter explicitly deals with a split-up situation, not with a legal transformation. The conversion of [the state enterprise Soyuzmultfilm Studio] into [the lease enterprise Soyuzmultfilm Studio], by contrast, was a legal transformation." Stephan Reply Decl. ¶ 11. Professor Stephan adds, "Both the U.S.S.R. and R.S.F.S.R. statutes made *470 clear that transformations were different from split-ups, that different rules applied to the former, and that no balance or similar contract-type document was necessary to achieve a transfer of immaterial rights in the case of transformations." Id. ¶ 11.
The first sentence of the High Arbitrazh Court's Information Letter is, indeed, very clear in delineating the form or reorganization to which it applies: "If, in the separation of a new enterprise from an enterprise that is the possessor[34] ... of copyrights, the question of the transfer of copyrights to the new legal entity is not decided, then the latter may not be recognized as holder of these rights." Information Letter, Ex. 1, attached to Reply Decl. of Robert W. Clarida. Professor Maggs' response to this point in his Sur-Reply Declaration is that Professor Newcityand, by implication, Professor Stephanerr in applying "a common law mode of analysis in a civil law jurisdiction, by trying to narrow the holding of the case summarized in the Informational Letter to its exact facts." Maggs Sur-Reply Decl. ¶ 4. "In the Russian civil law tradition," he continues, "lower courts look to broad legal principles stated by the higher courts. They do not engage in the nice distinctions between `holding' and `dictum' that are characteristic of the common law." Id.
Unfortunately for Professor Maggs' argument, the plaintiffs' position with respect to the Information Letter has the distinct virtue of making perfect sense. As Professor Newcity explains, while there is every reason to itemize the property conveyed in a partial transfer, that is, a spin-off or separation, the same need does not exist to itemize everything that is transferred in a full transformation, where one enterprise steps into the shoes of its predecessor, since the totality of the first enterprise's assets would be transferred to its successor. Surely, Professor Maggs cannot mean to suggest that the Information Letter, although it very clearly and unambiguously states, "If, in the separation of a new enterprise from an enterprise that is the possessor ... of copyrights ...," will be read by lower courts to apply to situations that do not involve the separation of a new enterprise, but rather, the reorganization of one enterprise into another. Such a reading would not only fail to account for the court's very specific language but would give license to broaden virtually any holding to facts clearly beyond its scope.
Not only, therefore, is Professor Maggs' position on this issue hardly sustainable on its face, implying, as it would, that a lower court would apply a higher court's decision to facts to which that decision is not addressed and clearly irrelevant, but it is rendered even less sustainable in light of the fact that Professor Maggs himself engaged in the very kind of distinction between holding and dicta that he has claimed Russian courts do not honor in attempting to diminish the importance of the December 26, 2000 decision on remand by the Moscow Region Arbitrazh Court, *471 which, more or less, adopted virtually every aspect of plaintiffs' theory of the case. After noting that the Moscow Region Arbitrazh Court "holds that [FSUESMS has] no standing to complain of the transfer of property from the Lessee Organization to the Joint Stock Company, even if [FSUESMS has] valid claims that the transfer lists includes property belonging to [it]," Professor Maggs goes on to say that "[t]he decision also contains a great deal of discussion about why the court believes [FSUESMS has] failed to prove that [it] had any rights, but this discussion is rendered largely irrelevant by the court's decision on lack of standing." Maggs Reply ¶ 12. This "great deal of discussion," which most readers would take for the central holding of the case, is thus dismissed as dicta by Professor Maggs.[35] Not only is his analysis on this point not convincing, but it has the additional drawback of casting doubt upon the proposition that he now advances, viz., that Russian courts do not distinguish between holding and dicta. The upshot of this discussion, in short, is that the Information Letter adduced by and heavily relied upon by Professor Maggs is all-too-obviously irrelevant to the case at bar.
Professor Maggs does offer a second argument in favor of the applicability of the Information Letter, namely, that plaintiffs' experts are assuming their conclusion by assuming the lease enterprise to be the legal successor to all the rights of the state enterprise as opposed to just some of the rights. See Maggs Sur-Reply ¶ 4. These assumptions, according to Professor Maggs, "are contrary to the now admitted fact that the most valuable rights claimed by the lessee enterprisethe copyrights, were not included in the balance sheet incorporated by reference in the contract." Id.
Professor Maggs argument is quite circular, however. His proposition to be proven is that the copyrights had to be included on the lease enterprise's balance sheet to have been legitimately transferred. In support of this proposition, he adduces the Information Letter, which applies only in those instances where there is a partial as opposed to a complete transfer of interest from an enterprise to its successor. To prove that the transfer of interest in the case at bar is not complete, Professor Maggs summons to mind the fact that the balance sheet contains no mention of the copyrights, which were, therefore, not transferred. But, of course, the notion that the failure to include the copyrights on the balance sheet implies that they were not transferred is precisely the proposition to be proven. Hence, the circularity. Professor Maggs has still not offered a single fact that would stand in the way of this court concluding that the state enterprise Soyuzmultfilm Studio was fully transformed into the lease enterprise bearing, for good reason, the same name.
Professor Stephan also disputes Professor Maggs' claim that the inclusion of the fact that an enterprise has succeeded to the position of another enterprise has been a universal practice in the drafting of charters in the Soviet Union and Russia. "This assertion is simply untrue," he says. Stephan Reply Decl. ¶ 3. "Assertions in the Charter cannot change the property rights *472 of the enterprise. The implication of Professor Maggs' argument is that documents generated by a Soviet-era enterprise ... have the capacity to determine what that enterprise owned." Id. "This assertion, if true, would imply that Soviet law of the perestroyka erased the boundaries between property and contract law by allowing essentially contractual documents to dictate property rights. Soviet law did no such thing." Id.
Professor Maggs' response to this point in his sur-reply is more credible than his arguments with respect to the Information Letter. He notes that he is in complete agreement with Professor Stephan that assertions made in an organization's charter cannot alter the underlying property rights held by that organization. Maggs Sur-Reply Decl. ¶ 5. The point to be made is not that such assertions have legally binding effect but rather that, in his opinion, it is a universal practice to note in the Charter when an enterprise is the legal successor of a former enterprise. See id. The absence of such a notation would, then, be suggestive as an evidentiary matter. But Professor Stephan has also denied that it is a universal custom to include this information in the Charter. See Stephan Reply Decl. ¶ 3. Having no further basis for knowing who is right, the court will have to content itself with leaving the issue, which, in any case, is not dispositive, open.
The same need not be said, however, about the broader issue of the transfer of copyrights from the state entity Soyuzmultfilm Studio to the lease entity Soyuzmultfilm Studio. It is apparent that the disputed copyrights passed by operation of law, viz., Article 498 of the 1964 Civil Code of the R.S.F.S.R., from the state entity to the lease entity upon the transformation of the former into the latter. FSUESMS's and Professor Maggs' half-hearted suggestions that FSUESMS is the same entity as the defunct state enterprise Soyuzmultfilm Studio amount to a transparent attempt to revive a disinterred corpse and give it all the cosmetic accoutrements of the living. Unfortunately, the enterprise's ten-year sojourn through limbo has left its unmistakable mark and rendered the attempt to claim it as an amended form of the state enterprise a futile exercise in reincarnation. This is a determination that has been explicitly made by Russian courts in the April 3, 2001 decision upholding the registration of FSUESMS and the April 20, 2001 decision by the Federal Arbitrazh Court for the District of Moscow upholding the April 3 decision. These decisions found that FSUESMS was a new entity created in 1999 and that the state enterprise Soyuzmultfilm Studio had ceased to exist in 1989, when it was transformed into the lease enterprise.[36]
The legislation of the Perestroika period gave substance to the germinal copyrights *473 awarded to the state enterprise Soyuzmultfilm Studio under Soviet law and transferred those copyrights to the lease enterprise that succeeded it. As the Moscow Region Arbitrazh Court wrote in its opinion on remand on December 26, 2000:
[FSUESMS'] argument that the copyrights to the animated films belong to [FSUESMS] has no foundation, based on the submitted documents and oral arguments of both sides in the lawsuit, because, pursuant to Articles 23, 37 of the RSFSR Civil Code and Article 11 of the Fundamentals of Civil Legislation USSR and Republics, a state enterprise, after leasing out an enterprise and complex of facilities and property, could not exist anymore, and could no longer be a legal person at the same time because it did not have its own property and legal capacity.
When leasing out an enterprise (state property) [takes] place in accordance with paragraph 4, Article 16 of the Fundamental Principles on Lease, which established full succession of rights to the state enterprise assumed by the [l]ease [e]nterprise, then according to Article 37 of the RSFSR Civil Code[,] this action shall constitute an actual reorganization of a state enterprise.
See Dec. 26 Dec.
It might appear, on the face of it, that the holding and reasoning of the December 26, 2000 decision would have been undermined by the April 20, 2001 Federal Arbitrazh Court for the District of Moscow. Several important factors weigh heavily against any such notion, however. First, there is the September 19, 2000 response by the Higher Arbitrazh Court of the Russian Federation to the Federal Arbitrazh Court's initial August 18, 2000 decision to vacate and remand previous lower court rulings. Professor Stephan describes the significance of the high court's statement:
A suggestion that the Higher Arbitrazh Court does not endorse the reasoning of the intermediate court can be found in its September 19, 2000, ruling regarding the appeal of the intermediate court's August 18 opinion. Normally the Higher Court, in declining to accept an appeal, states only that "a basis for accepting an objection is not presented," a formulation that is as standardized as our Supreme Court's statement that "the petition for certiorari is denied." In its September 19 ruling, however, the Higher Court went out of its way to state that the intermediate court's decision "does not constitute an evaluation of the evidence in a new hearing in this case or represent the conclusions of the court regarding whether [the claim] is subject to satisfaction or not." In simpler terms, the Higher Court stated what it normally does not say, namely that the decision of the intermediate court to remand a case for further proceedings should have no bearing on what the lower court should do upon remand. Only after making this observation did the Higher Court indicate that its intervention at this time would be premature. In context, this statement is a strong signal to the lower arbitrazh court that it should not regard itself as bound by any of the speculations contained in the August 18 opinion of the intermediate court. Accordingly, on remand the lower court on December 26, 2000, confirmed its earlier determination that [the lease enterprise] owned the copyrights at issue in this litigation and thus had the capacity to transfer them in 1999 to its legal successor, the joint stock company.
Second Stephan Decl. ¶ 15 (footnote omitted).
*474 Professor Maggs points out that this is not a "ruling" but an "unpublished informal letter from a court official suggesting that a formal filing of an objection would be futile, since such an objection would be rejected on the ground that the Joint Stock Company would have the chance to present its evidence to the trial court on remand." Maggs Reply Decl. ¶ 11. He proceeds to say that he does not believe that "any Russian court would give such an informal letter any weight whatsoever in determining what the substantive law might bethe letter gave only informal advice on a procedural matterwhether a decision was ripe for review." Id. Nevertheless, Professor Maggs does not dispute that the Higher Arbitrazh Court's letter, however informal it might have been, was an unusual means of proceeding, whereas the usual "a basis for accepting an objection is not presented" would have been sufficient to inform the parties that the case was not yet ripe for review. The implication, in other words, is that the Higher Arbitrazh Court may have a different view of the case than does the Federal Arbitrazh Court for the District of Moscow, and now that the latter court has issued a binding opinion, the time for review may have arrived.
Even more telling than such speculation, however, is the actual opinion issued by the Federal Arbitrazh Court for the District of Moscow. The opinion is, in a word, incoherent and, more important, irrelevant to the issue of copyright transfer. The court's reasoning does not support the conclusion that it reaches. "According to the property transfer act, there was transferred to the joint stock company the tangible assets owned by the state for separate accounting as state property in accordance with Annex No. 2," the court writes. Apr. 20 Dec. at 6 (emphasis added). "The transfer of state property was made in violation of Article 209 of the Civil Code of the Russian Federation, which provides that only property owner has the rights of ownership, use and disposal of its property." Id. "The consent of the owner of state property [i .e. the state] was never obtained," the court continues. Id. "Therefore, the leased enterprise, in violation of the aforementioned legal requirements, disposed of the state property by transferring it to the joint stock company." Id.
The problem with this line of reasoning is that the tangible property, the land and equipment, etc., was returned to the state upon the expiration of the lease term. This is precisely why SMS moved out of the Church of St. Nicholas the Enlightener and into its new Krasnogorsk location. But what about the intangible property, SMS's most valuable asset, the most important asset underlying the dispute between the two companies claiming to be Soyuzmultfilm Studio? Shockingly, the court says absolutely nothing about this. In fact, Article 498, the crucial provision relating to the transfer by operation of law of copyrights and other intellectual property from the lease enterprise to the joint stock company, is nowhere mentioned in the April 20 opinion. The closest the court comes is writing, in summarizing what it takes to be the lower court's opinion, that the lower court found that "[b]ecause the succession to the rights is based in law (Article 486 of the Civil Code of the former Russian Soviet Federative Socialist Republic,[37] Article 58 of the Civil Code of the Russian Federation), it cannot be limited by lease agreement." Id. at 4. The court *475 at no point returns to this discussion, nor does it explain why the lower court's conclusion was incorrect.
All in all, then, the entire opinion seems absolutely irrelevant to the issue of whether the film copyrights were properly transferred, which, although important to the dispute at bar, was not legally dispositive on the issue of the validity of SMS's registration. The court never claims them to have been state property (rather, it is careful to specify that the tangible property belonged to the state); it never claims that they were transferred by way of the lease; it never protests that the owner's consent to their transfer was not obtained; they are, in short, absent from the opinion which, as a whole, may be reconstructed as follows: (1) the tangible property transferred to the joint stock company belonged to the state; [ (2) but, of course, the tangible property was returned to the state upon the expiration of the lease term;] (3) the state did not consent to its transfer; (4) therefore, the joint stock company did not properly receive its assets, and its registration should be nullified.[38]
It may be safely concluded, then, that the reasoning of the December 26, 2000 opinion emerges not only unscathed but unexamined. Even if this court might question the basis for the April 20, 2001 ruling, therefore, there is no need to fly in the face of a Russian court decision, because the case at bar presents the issue of copyright ownership, which had nothing to do with the holding of the April 20, 2001 decision.[39] The copyrights were passed by operation of law to the lease enterprise, which then conveyed them to the joint stock company.
This conclusion also finds ample support in the Russian court decisions in the case filed by SMS against FSUESMS, namely the April 3, 2001 decision of the appeals court and, even more significantly, the June 4, 2001 decision of the Federal Arbitrazh Court for the District of Moscow affirming the April 3 decision. This last decision was issued by the same court that invalidated SMS's registration in the April 20 decision and, moreover, post-dated that decision. Both courts, although recognizing the validity of FSUESMS's registration, clearly and unequivocally stated that the state enterprise ceased to exist in 1989 when it was reorganized into the lease enterprise and that the lease enterprise was then transformed into the joint stock company SMS. See Excerpts from these decisions supra. Both courts, further found that, while the state property mentioned in the lease enterprise's balance *476 sheet, i.e., the material assets, were returned to the state in 1999, upon the expiration of the lease term, the other rights and assets of the lease enterprise, which, of course, included copyrights, were transferred to the lease enterprise when the state enterprise ceased to exist in 1989 and were transferred, in turn, to SMS in 1999.[40] Whether or not FSUESMS will be ultimately successful in holding on to its registration as a legitimate organization in its own right and laying claim to the physical property of the Church of St. Nicholas the Enlightener is a question not before this court. However, as far as the copyrights of the state enterprise Soyuzmultfilm go, to these FSUESMS has no claim.
(4)
Having resolved the issue of the transfer of film copyrights from the state enterprise to the lease enterprise, it would seem that it remains now to be determined whether or not the international distribution rights to the films were legitimately transferred from the lease enterprise to plaintiff FBJ. FSUESMS argues that "[p]laintiffs have ... failed to satisfy the requirement of § 204(a) of the U.S. Copyright Act, 17 U.S.C., which provides that `a transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." FSUESMS's Cross-Mot. at 8.
According to FSUESMS, "Plaintiffs have produced no documents that even purport to constitute a transfer of copyright ownership from the State, either to (1) Soviet [Soyuzmultfilm Studio] or to (2) its alleged legal successor, the lease enterprise, or to (3) the lease enterprise's alleged successor, JSC." Id. FSUESMS expands upon this argument:
The one document of transfer upon which plaintiffs do rely, the 1992 "exclusive distribution agreement" between FBJ and the lease enterprise, fails to establish a transfer of any subsisting rights to plaintiff for two reasons. First, it purports to grant rights which the lease enterprise did not have the power to convey. Second, even assuming that the lease enterprise had the power to grant exclusive distribution rights in the Films during the term of its ten-year lease from Goskino, that power did not and could not extend beyond the term of the lease, which ended in December 1999.
Id.
FSUESMS's arguments are flawed insofar as they implicitly depend on assumptions that have already been rejected by *477 this court. First of all, because the copyrights in the films never belonged to the state to begin with,[41] there was no requirement that a conveyance instrument explicitly transfer the copyrights from the state to the lease enterprise, especially in light of the fact that the copyrights were transferred to the lease enterprise by operation of law. For that same reason, the expiration of the lease agreement between Goskino and the lease enterprise Soyuzmultfilm did not end the assignment of copyrights to FBJ. As the Moscow Region Arbitrazh Court put it in its decision on remand:
Copyrights were not and could not be transferred by the lease agreement because they had been transferred by operation of law and cannot be limited by an agreement.
Therefore the copyrights of the lease enterprise are not related to the issues of the lease agreement and the expiration of that agreement does not cause the copyrights of the [l]ease enterprise "Film Studios Soyuzmultfilm" to expire.
At the time of the transformation of the [l]ease enterprise into a [shareholding] company the lease enterprise had the copyrights to its animated film by law.
Dec. 26 Dec.
This is sufficient to address FSUESMS's arguments about the invalidity of the transfer insofar as they depend on the need for a document conveying upon the lease enterprise the right to alienate its copyrights. However, insofar as FSUESMS's argument about the invalidity of the transfer to FBJ is premised on any lack of formalities under 17 U.S.C. § 204(a) in the distribution agreement between the lease enterprise Soyuzmultfilm and plaintiff FBJ, there is no need to determine whether or not the strictures of § 204(a) have been satisfied. The reason is that neither defendants nor FSUESMS have standing to contest the validity of the transfer.[42]
In Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2nd Cir.1982), an infringer attempted to contest the validity of a copyright transfer between a grantor and grantee. See id. at 36. The plaintiff grantee had not complied with the formalities of 17 U.S.C. § 204(a), which provides that a grant "is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing *478 and signed by the owner of the rights conveyed...." Id. Despite essentially acknowledging that the transfer would have failed under § 204(a) had it been challenged by the transferor, the court refused to hold the transfer invalid under that provision because there was no dispute between the transferor and transferee as to the validity of the transfer.[43]See id. Specifically, the court wrote that in light of the fact that "the purpose of the provision is to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses," "[i]n this case, in which the copyright holder appears to have no dispute with its licensee on this matter, it would be anomalous to permit a third party infringer to invoke this provision against the licensee." Id.
Eden Toys has been followed repeatedly in this circuit and in others. See Arthur A. Kaplan Co., Inc. v. Panaria Int'l, Inc., 1998 WL 603225, 1998 U.S. Dist. LEXIS 14360 at *6 (S.D.N.Y.1998) (refusing to analyze the validity of assignment agreements at the behest of the defendant where the assignor and assignee were in agreement that an assignment had taken place); Intimo, Inc. v. Briefly Stated, Inc., 948 F. Supp. 315, 318 (S.D.N.Y.1996) (finding that plaintiff had standing to pursue copyright infringement action based on an amended assignment signed just a few days before the trial was to begin); Hart v. Sampley, 1992 WL 336496, 1992 U.S. Dist. LEXIS 21478 at *4 (D.D.C.1992) ("Even if, as defendants suggest, the transfer was in some way defective, the defendants would not have standing to challenge the validity of the transfer because they were not parties to the agreement."); see also Mem. Law Supp. Pls.' Mot. Sum. J. and Opp. Defs.' Mot. Sum. J. [hereinafter "Pls.' Sum. J. Mot."] at 18 (listing further relevant cases).
Defendants and FSUESMS protest that "[FSUESMS] is not an infringer or a stranger to these works, but seeks judicial recognition of its own rights in the works. The Eden Toys line of cases is thus inapposite, and plaintiffs' failure to provide a written `instrument of conveyance' as required under § 204(a) cannot be excused."[44] Jnt. Reply at 7. However, the holding and logic of Eden Toys cannot rationally be limited to rooting out challenges by copyright infringers to transfers between transferors and transferees. The Second Circuit in Eden Toys explicitly premised its holding on the purpose behind § 204(a), viz., to prevent would-be-transferees from taking advantage of copyright holders. That concern simply does not apply to the facts of this case.
Insofar as FSUESMS was contesting the transfer of the copyrights from the state enterprise Soyuzmultfilm to the lease enterprise Soyuzmultfilm, it was well within its rights, since it was claiming to be the state enterprise Soyuzmultfilm and had staked a claim to the film copyrights. But FSUESMS is in no position to protest the legitimacy of the assignment of rights to plaintiff FBJ, since, even if that transfer were illegitimate, the international distribution rights to the films in question would have remained with the lease enterprise and gone over to the joint stock company SMS when the lease enterprise reorganized *479 itself as SMS in 1999. Allowing FSUESMS now to contest the validity of the agreement between the lease enterprise and FBJ when there is no disagreement between the transferor and transferee as to the validity of the transfer would be no different than allowing an infringer to make the same challenge. Or rather, it would be even more foolhardy, since the infringer, at least, stands to benefit if a plaintiff in a given lawsuit is stripped of its standing to sue,[45] which is not true of FSUESMS, its claim of right being in no way dependent upon or related to the invalidity of the transfer. Seen another way, FSUESMS would be no closer to obtaining its proposed relief, a declaration of its status as a legitimate copyright holder, if the transfer from the lease enterprise to FBJ were declared invalid.
(5)
Defendants and FSUESMS make one final argument that must be addressed at this time. 17 U.S.C. § 410(a) explains the significance of the certificate of copyright registration:
When, after examination, the Register of Copyrights determines that, in accordance with the provisions of this title, the material deposited constitutes copyrightable subject matter and that the other legal and formal requirements of this title have been met, the Register shall register the claim and issue to the applicant a certificate of registration under the seal of the Copyright Office. The certificate shall contain the information given in the application, together with the number and effective date of the registration.
17 U.S.C. § 410(a) (1976). 17 U.S.C. § 410(c), in turn, explains the relevance of copyright registration to judicial proceedings: "[i]n any judicial proceedings the certificate of a registration made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate." 17 U.S.C. § 410(c) (1976). § 410(c) applies to Form GATT registration certificates covering "restored" foreign copyrights as well as domestic works. Here, it is undisputed that the plaintiffs registered the works at issue more than five years after the date of initial publication, and defendants desire, accordingly, to put the plaintiffs to their proof, requiring them to show the validity of the copyrights.
The final sentence of 410(c), however, specifically provides that "[t]he evidentiary weight to be accorded the certificate of registration made [not within five years after first publication of the work] shall be within the discretion of the court." Id. As plaintiffs note,
[i]t is particularly appropriate that the Court [exercise its discretion to presume the validity of the copyrights] in this action because plaintiffs presented the "Goskino certificates" exhibiting that the State Enterprise was the producer of the motion pictures, as part of the exhibits to the Declaration of Herman Sinitzyn submitted in connection with the preliminary injunction; the items in question are clearly copyrightable in that they are animated films (Skuliabin Declaration); defendants' exact copies of said videos have already been submitted to the Court in connection with the contempt proceedings and exhibit the originality of plaintiffs' works; and defendants and FSUE are not contesting the ability of someone to assert copyright ownership in said films because they are also seeking rights in the same films. *480 Mem. Law. Supp. Pls.' Mot. Sum. J. and Opp. Defs.' Mot. Sum. J. at 23, n.5. For substantially these reasons, the plaintiffs copyrights will be presumed valid.
Conclusion
The plaintiffs have shown, to the satisfaction of this court, that the copyrights in the state enterprise Soyuzmultfilm Studio's substantial film library passed, in 1989, to the lease enterprise Soyuzmultfilm Studio and, by agreement, have been assigned to FBJ for international distribution. The lease enterprise Soyuzmultfilm Studio received them by operation of law when the state enterprise was reorganized into the lease enterprise and ceased to exist. Accompanying Perestroika reforms gave the lease enterprise robust rights in connection with those copyrights, clearing up any ambiguity that may have existed about the division of what American jurists would think of as copyright ownership rights between the state and the state enterprise. The lease enterprise entered into an agreement with plaintiff Films by Jove, Inc. for the latter organization to enjoy exclusive rights of international distribution, which organization then expended over three million dollars to develop those rights. Later, in 1999, the copyrights themselves passed to plaintiff SMS when the lease enterprise was reformed into a joint stock company still bearing the Soyuzmultfilm Studio name.
Defendants and FSUESMS have suggested a dramatically different version of events. According to them, the copyrights belonged to the state ab initio, could never have passed to the lease enterprise or, in turn, to the plaintiffs and now belong to FSUESMS, which is claimed to be the same entity as the state enterprise Soyuzmultfilm Studio, returned to claim its rights after a ten-year period of hibernation. Unfortunately for FSUESMS, and for the defendants, "facts," as Josef Stalin, who would know, having gone to great lengths to obscure them, once said, "are obstinate things." Taglines Galore, http:// www. taglinesgalore.com/tags/f.html. The undisputed factsthat the state enterprise did not undertake a single act, either official or unofficial, to which anyone can point between 1989 and 1999, that the state enterprise did not file its "amended" charter as a federal state unitary enterprise, which, it claimed, was an act undertaken in response to the abolition of the "state enterprise" form of organization by the Civil Code of the Russian Federation, First Part, in 1994, until a full five years later, that significantly, between 1992 and 1999, neither the state enterprise nor Goskino nor anyone else had challenged the lease enterprise's 1992 distribution agreement with Films by Jovethese undisputed facts and the law belie FSUESMS's version of the story.
Accordingly, summary judgment is granted in favor of the plaintiffs. A judgment of contempt will be entered against the defendants. Furthermore, FSUESMS's third-party plaintiff complaint is dismissed, and its request for a declaration that it has operative management over what it claims to be Russian-state-owned copyrights in the animated films created by the state enterprise Soyuzmultfilm Studio is denied. Plaintiffs shall submit a proposed judgment on notice.
SO ORDERED.
NOTES
[1] "Soyuzmultfilm Studio" (or "Soyuzmultfilm Studios," as it is referred to by some of the affiants and in certain documents) was a name used by a Soviet state enterprise in existence since 1936, a lease enterprise in existence between 1989 and 1999 and the joint stock company named as a plaintiff in this suit. Since the question of whether there is a direct line of succession from the state enterprise to the lease enterprise to the joint stock company is at the heart of this litigation, the abbreviation "SMS" will be used to designate only the plaintiff joint stock company. The other forms of Soyuzmultfilm Studio will be referred to by the full name, along with any additional explanatory information necessary to impart clarity to the discussion.
[2] These materials are animated films made between the years 1946 and 1991. Specifically, the titles at issue in this litigation, in Russian and English, are: Bitva (Battle), Ptitchka Tari (Bird Tari), Kanikuli Bonifatsia (Bonifasia's Holidays), Hrabrets Udalets (Brave and Fast One), Priklucheniya Buratino (Buratino), Kentervilskoye Privedenie (Canterville's Ghost), Cheburaska (Cheburaska), Zolushka (Cinderella), Chipollino (Cipollino), Zhuravliniye Peria (Crane Feathers), Krokodile Ghena (Crocodile Genady), Skaska Tzareh Saltan (Czar Saltan), Skaska o Mertvoy Sarevne 7 Ragatiriah (Dead Princess and 7 Strong Men), Ded Moroz i Seriy Volk (Father Frost and Grey Wolf), V Yarange Gorit Ogon (Flame Burns in Igloo), Foca na Vse Ruki Doka (Foca the Handyman), Tsarevna Liagushka (Frog Princess), O Tom Kak Gnom Pokinul Dom (Gnome Who Left Home), Shaibu! Shaibu! (Goal! Goal!), Zolotaya Antelopa (Golden Antelope), Skaska o Zolotom Petooshke (Golden Rooster), Koniok Gorbunok (Humpback Horse), Ibolit i Barmaley (Iboleet and Barmoley), V Nekotorom Tsarsive (In Some Kingdom), Pokhischenie (Kidnapping), Poslednaya Ohota Akeli (Last Hunt of Akela), Parozik iz Romashkova (Locomotive from Romashkov), Match Revansh (Match Revenge), Maugli (Maugli), Rusalochka (Mermaid), Novogodnee Puteshestvie (New Year Journey), Shelkunchik (Nutcracker), Petia i Krasnaya Shapochka (Peter and Red Riding Hood), Aleniky Tsvetochuk (Pink Flower), Poni Begaet po Krugu (Pony Rides in a Circle), Mezha (Property Line / Dividing Line) Raksha (Raksha), Vozvraschenie k Ludiam (Return to the People), Shapocliak (Shapocliak), Pastushka i Trubochist (Shepherdess and Chimney Sweep), Serebrianoe Kopitse (Silver Hooves), Snegorochka (Snow Girl), Snegovik-Pochtovik (Snow Postman), Snezhnaya Koroleva (Snow Queen), Duimovochka (Thumbellina), Stoikiy Olovianniy Soldatik (Tin Soldier), Dvendtsat Mesiatsev (Twelve Months), Ded Moroz i Leta (Uncle Frost in Summer), Dikie Lebedi (Wild Swans), Na Zadney Parte # 1 (At the Last Desk # 1), Hrabriy Olenionok (Brave Little Deer), Cheburashka Edot v Shkolu (Cheburashka is Going to School), Veselaya Karusel # 23 (Funny Merry-Go-Round 23), Meteor na Ringe (Meteor in a Ring), Miss Noviy God (Miss New Year), Moroz Ivanovich (Uncle Frost), Kogda Zazhigautsia Yolki (When Xmas Trees Light Up). See Pl.'s Ex. F, attached to Decl. of Joan Borsten of Jan. 25, 2001.
[3] The notion of "operative management," akin to control without actual ownership, will be discussed more fully below.
[4] Joan Borsten, the director of FBJ, makes the accusation that the intervention of FSUESMS at this particular point in time was not a mere matter of chance:
It is highly unlikely that [FSUESMS] legally retained the firm of Cowan, Liebowitz and Latman on August 11, 2000. Not only did [FSUESMS] not have legal standing on that day, but to the best of my knowledge it did not have the financial means to pay the retainer. I have personal knowledge that members of [FSUESMS] lack funds to make ends meet, are reduced to moonlighting jobs, and [FSUESMS] was unable to pay salaries of its employees in August, the very same month thatas Mr. Clarida[, the Cowan, Liebowitz and Latman attorney representing FSUESMS,] told our attorney his firm had received a $20,000 retainer by wire transfer. I suspect that the retainer was in some way either paid by Mr. Berov or a company fronting for him.
Decl. of Joan Borsten of Sept. 22, 2000 [hereinafter "Sept. 22 Borsten Decl."], Ex. 20, attached to Decl. of Julian Lowenfeld, ¶ 26. Although a majority of Ms. Borsten's claims find support in the recordMr. Clarida during oral argument, for example, did not deny that his legal fees were indeed being paid by Mr. Berov. see Tr. of Oral Arg. on June, 5 2001, I refuse to speculate about the motivations of FSUESMS in intervening in this proceeding.
[5] Although this dispute started out purely as an infringement action by FBJ against the defendants, it has become a full-fledged dispute about copyright ownership between FBJ / SMS and FSUESMS. FSUESMS, accordingly, will be bound by any finding this court should make with respect to the ownership of the copyrights.
[6] "State enterprises (associations), along with cooperative enterprises, are the basic unit of the single national-economic complex." The Legislation of Perestroika, Ex. 2, attached to the Decl. of Paul B. Stephan (Pl.'s Russian law expert) of Jan. 22, 2001 at 20.
At the state enterprise, the labor collective, using public property as its proprietor, creates and augments the people's wealth and ensures the combination of the interests of society, the collective and each worker. The enterprise is the socialist commodity producer; it produces and sells output, performs work and provides services in accordance with plan and contracts and on the basis of full economic accountability, self-financing and self-management and the combination of centralized management and the independence of the enterprise.
Id.
[7] "Soyuz" is the Russian word for "union," as in "Soviet Union;" "multfilm" is the Russian word for "animated film" or "cartoon." See Pls.' Not. Mot. at 2.
[8] All of the facts necessary to the conclusions reached below are either conceded or undisputed, and there is not enough evidence for a reasonable jury to reach conclusions different from those reached by this court. In addition, the parties themselves do not point to any factual disputes that must be resolved by a finder of fact prior to a determination of this motion. Their approach to the briefing of the issues in the case consists almost entirely of experts battling over the proper legal consequences under Russian law that attach to facts which are undisputed.
[9] The transformation was ordered on December 12, 1989 by Goskino, the Soviet State Film Committee:
In the interest of ideological and artistic and creative goals, for further strengthening of democratic principles in the management of film production, and for the purpose of further development of the principles of socialist self-administration, and full participation in initiatives, enterpreneurship and incentive of the labor collective of the [film studio Soyuzmultfilm], I hereby: ORDER to transfer [Soyuzmultfilm Studio] to lease as of December 15, 1989.
Ex. E, attached to Decl. of Sergey Skuliabin.
[10] Goskino, meaning literally, "government film," is a government ministry generally charged, during the Soviet era, with overseeing all aspects of film production and internal distribution.
[11] Although the papers submitted in the case do not reflect it, it emerged during oral argument that the plaintiffs actually maintain that the lease enterprise may never have expired, and this has been the subject of a different series of Russian court decisions. See Tr. of Oral Arg. of June 5, 2001 [hereinafter "Oral Arg."] at 17-22. Despite being requested to do so, the plaintiffs submitted no court decisions reflecting this understanding. Without more evidence, it would be impossible for this court to decide the issue. Because all of the submissions in the case, both those of plaintiffs and those of FSUESMS, seem to operate on the assumption that the lease enterprise actually ceased to exist in 1999, when the lease term expired, that same assumption will be made throughout this opinion. Moreover, a resolution of this issue is not necessary to dispose of the case.
[12] The court recites a series of transactions wherein Soveksportfilm illegitimately transferred rights through a series of companies it controlled in part or in whole:
Granted that it is established that the Studios, writers and producers are the sole copyright titleholders under Russian law and that in light of the (worldwide?) Universal Copyright Convention of 1952 it benefits them to apply the mechanisms of protection under French law: that [Soveksportfilm] was in any case bound to respect the contracts of mandate they had enter [sic] into with the Studios; Granted that it is established and recognized by the parties that neither the clause of the contract between [Soveksportfilm] and Cosmos, signed October 31, 1988, and which extends until October 31, 1989 the concession of rights on 20 films, nor the October 14, 1989 contract by which Cosmos ceded its exploitation rights on a catalogue of 125 films to Inter-Audio, nor the October 20, 1989 sales mandate from Inter-Audio, nor the October 20, 1989 sales mandate from Inter-Audio to UGC D.A., nor the contribution in kind made by both Inter-Audio and by [Soveksportfilm] at the time of the formation of Parimedia on November 25, 1989, nor the extension of rights granted on this occasion by [Soveksportfilm] on the catalogue of 125 films, with [Soveksportfilm] renouncing the payments that it was its legal right to receive, nor the March 19, 1993 sales mandate from Parimedia to UGS D.A. nor the ceding of rights from Parimedia to LA Copagnie Des Films on December 30, 1994, were ever mentioned to the Studios nor were ever approved by them;
Granted that on numerous occasions manifest fraud was committed against the Studios and the Films by Jove company, license holder of rights from [Soyuzmultfilm Studio].
Id.
[13] The leader of that faction and current director of FSUESMS, E. Rahimov, had been serving as Deputy Director of the lease enterprise Soyuzmultfilm Studio until he was fired in August, 1999. See Decl. of Sergey Skuliabin ¶ 6.
[14] The accuracy of the Shilobreev Declaration has been questioned by the plaintiffs, who note that Shilobreev's first name is actually Vyacheslav, not Vitoslav, and that, despite the fact that Shilobreev speaks not a word of English, the declaration is written entirely in English and signed by Shilobreev with no Russian original having been offered. See Straupe Decl. ¶¶ 4-5. Shilobreev, it should be noted, is the head of the board of directors of FSUESMS. In addition, Joan Borsten, the director of Films by Jove, contends that Shilobreev
used a third party's corporate seal at the bottom of his declaration. Perhaps this detail is not significant in the U.S.[,] but in Russia corporate seals are so respected and essential to doing business that they are kept under lock and key, and misuse of a corporate seal is a criminal offense. Affixing them to a legal document is considered the ultimate confirmation of legitimacy and authentication. Mr. Shilobreev could not stamp his declaration with the corporate seal of [FSUESMS] as that company did not legally exist at the moment he wrote his declaration as its "Deputy Director." So instead he affixed the declaration with the corporate seal registered to another company altogether, strangely enough a non-profit organization.
Sept. 22 Borsten Decl. ¶ 28.
[15] FSUESMS was specifically contemplated by the Stepashin Order:
In view of the fact that in December, 1999 the term of the lease contract for the Soyuzmultfilm facilities and equipment belonging to the state shall expire[,] the Government accepts the proposal by the Ministry of Property of Russia to include said facilities and equipment into the base assets of newly formed state unitary enterprise Film Studios Soyuzmultfilm of Goskino of Russia.
Ministry of State Property together with Goskino of Russia shall determine the inventory of the state property to become assets of the federal state unitary enterprise Film Studios "Soyuzmultfilm."
Stepashin Order.
[16] The defendants and FSEUSMS agree on substantially all the facts of the case and many of their submissions to the court are jointly filed. The reader should assume, except where an indication to the contrary has been specifically noted, that there is no difference between their positions.
[17] Various exhibits submitted by the parties refer to the Russian courts involved in the dispute by various names. Fundamentally, the system appears to have the following structure: a lower court level, an appeals court level, a second appellate level in the Federal Arbitrazh Court for the District of Moscow and a final appellate level in the Higher Arbitrazh Court of the Russian Federation.
[18] There are actually six decisions of relevance, three in a suit initiated by SMS against FSUESMS and three in a suit initiated by FSUESMS, the Ministry of State Property of the Russian Federation and Goskino against SMS. See FSUESMS's Cross-Mot. at 4. Each series of decisions consisted, first, of a lower court finding in favor of SMS and a confirmation of that ruling on appeal. See id. Both sets of decisions were vacated by the Federal Arbitrazh Court for the District of Moscow, those in the suit by FSUESMS against SMS by an August 18, 2000 opinion discussed in the text below and those in the suit by SMS against FSUESMS by a September 25, 2000 order that gave no reason for the remand but was presumably based on grounds similar to those articulated in the August 18 decision. See Aug. 18, 2000 Decision, Ex. 18, attached to Decl. of Julian Lowenfeld [hereinafter "Aug. 18 Dec."]; Sept. 25, 2000 Decision, Ex. G, attached to Decl. of Decl. of Robert W. Clarida [hereinafter "Sept. 25 Dec."].
[19] There will be instances of awkward phraseology that recur within quotations from translated text throughout the opinion. The "[sic]" designation will not be used in such instances.
[20] All parties expressly agreed during oral argument that they did not wish to await further Russian court decisions before proceeding to decision on the motion before this court. See Oral Arg. at 65-67.
[21] These decisions, rendered, respectively, on January 25, 2001, April 3, 2001 and June 4, 2001, will be addressed in detail below.
[22] It is noteworthy that plaintiffs do not pursue their standing argument in any subsequent submissions to the court.
[23] Technically, FBJ has an argument that the defendants, having signed the injunction, and having violated it while it was still in effect, are now barred from contesting the ownership of the underlying copyrights. If the defendants came to believe, at any given point during the pendency of the injunction, that the copyrights were not legitimately licensed to FBJ, the proper procedure would have been to move to vacate the injunction, not ignore it. Nonetheless, I will determine the issue on the merits.
[24] The dates are actually 1946 to 1991. See Pls.' Not. of Mot. and Mot. to Dis. at 8.
[25] Where Russian law is quoted from or described, citations will often be to the declaration of an expert rather than to the law itself due to the variability of the translations that appear throughout the evidentiary exhibits submitted to the court.
[26] These texts, it might be noted, were written before the beginning of the Perestroika period and are, therefore, uninfluenced by the copyright reforms of that era.
[27] While it might appear that the December 26, 2000 decision has been mooted by the April 20, 2001 ruling of the Federal Arbitrazh Court for the District of Moscow, which reversed the December 26, 2000 decision, the April ruling actually says absolutely nothing about Article 486 or why that article would be inapplicable to this case. Moreover, and even more importantly, it does not at any point say that the copyrights themselves belonged to the state rather than the state enterprise. The decision will be discussed more extensively in the section of this opinion addressing the issue of copyright transfer from the state enterprise to the lease enterprise.
[28] The commercial power was regained through a series of acts that Professor Stephan delineates:
Soviet film studios obtained the right to market their film copyrights abroad as a result of several normative acts. In a response to an earlier determination by the Central Committee of the Communist Part of the Soviet Union, Decree 1526 of the U.S.S.R. Council of Ministers, issued December 22, 1986, gave many state enterprises the right to enter directly into contracts with foreign customers. Sobranie Postanovleniy pravitel'stva SSSR, No. 6, Item 24 (1987). Pursuant to this regulation, Goskino on March 14, 1988, issued Order 38, which divested Soveksportfilm of its monopoly over exports. On March 7, 1989, Decree 203 of the U.S.S.R. Council of Ministers announced a new list of state supervisory bodies that held the right to control the export and import activity of their particular industry. The appendix to this decree indicates that Goskino retained power over the import of foreign films, but had no rights with respect to the export of films belonging to Soviet studios. Sobranie Postanovleniy pravitel'stva SSSR, No. 16, Item 50 (1989). Accordingly, [the state enterprise Soyuzmultfilm Studio] on September 19, 1989, received a license from the U.S.S.R. Ministry of Foreign Economic Relations to exploit its film library through contracts with foreign parties. In other words, as a result of perestroyka the Soviet government recognized that the right to receive hard currency revenues from a film belonged to the enterprise, and not to the state, and authorized film studios generally, and [the state enterprise Soyuzmultfilm Studio] in particular, to exploit this right.
The 1987 Law on the State Enterprise (Association) further strengthened the rights of state enterprises vis-à-vis their supervising bureaucracy. It made clear that state enterprises could have economic rights against the state, which the law protected. Central to this statute was specification of an enterprise's own income that, according to Article 3(1), "is at the enterprise's disposal, it is used independently, and it is not subject to withdrawal." Article 9(3) of the Law in turn limited the rights of higher-level agencies over the enterprise and gave enterprises the right to appeal orders from those agencies to arbitration courts. It states that:
The Ministry, department or other higher-level agency may transmit instructions to the enterprise only in accordance with its jurisdiction as established by legislation. If a ministry, department or other higher-level agency issues an act not in accordance with its jurisdiction or that violates legislative requirements, the enterprise has the right to appeal to a state court of arbitration to have the act in question declared invalid, in full or in part.
Article 19(4) recognized the rights of enterprises to engage in foreign transactions:
The right to carry out directly export-import operations (including markets in capitalist and developing countries) and to create an economic-accountability foreign trade form for this purpose may be granted to an enterprise that provides substantial deliveries of output (works, services) for export.
Article 19(6) allowed state enterprises to establish foreign currency payment accounts, which belonged to the enterprise and were protected from claims by higher organs: "Money in the enterprise's foreign-currency payments fund is not subject to withdrawal and may accumulate for use in subsequent years."
This legislation set the stage for the 1989 Fundamental Principles on Leasing (Fundamentals). The Fundamentals did more than authorize the transfer of state property to lease enterprises (lessees) for a limited term. Its principal purpose was to encourage the transformation of state enterprises into privately owned lease enterprises. In a 1988 speech to the Central Committee of the Communist Party of the Soviet Union, General Secretary Gorbachev spoke of the need to extend leasing relations to "all branches of the national economy," explaining that these relations "ensure the real economic independence and responsibility of workers and labor collectives, as well as a direct connection between people's earnings and the final results of their work." Kommunist, No. 12, p. 23-24 (1988), translated in Soviet Statutes and Decisions at 12-13 (Fall 1990). There ensued what U.S.S.R. Prime Minister Ryzhkov described as a "massive conversion to leasing." Pravda, October 3, 1989, p. 4, translated in Soviet Statutes and Decisions at 13 (Fall 1990). As was true of all the perestroyka legislation intended to expand the sphere of private economic activity, the state would receive compensation not only directly (i.e., rent), but, at least as importantly, through taxes paid on the lease enterprise's income. See Paul B. Stephan, "Perestroyka and Property: The Law of Ownership in the Post-Socialist Soviet Union," 39 Am. J. Comp. L. 35, 49 (1991).
To effectuate the policy of encouraging direct economic incentives for producers, the Fundamentals permitted a complete transformation of a state enterprise into a lease enterprise, resulting in the disappearance of the state enterprise and the emergence of the privately owned lease enterprise as its legal successor.
Id. at ¶¶ 4-7.
[29] "Prinadlezhat" and "prinadlezhit" are forms of the same verb. The former is a plural form, the latter a singular.
[30] Admittedly, Professor Maggs denies that this part of the remand opinion is central to the holding. His argument, however, is, as there will be ample occasion to argue later, unsupported and untenable.
[31] Adding to the confusion is the fact that "prinadlezhat" is a form of a verb, meaning, literally, "belong to," while "sobstvennik" is a noun meaning "owner." See KENNETH KATZNER, ENGLISH-RUSSIAN RUSSIAN-ENGLISH DICTIONARY 731, 805 (1984). There is no noun form of prinadlezhatat least not one that means anything like "one to whom something belongs"and no verb form of sobstvennik. See id. Therefore, the two words cannot be easily substituted for one another in a sentence without reorganizing the structure of the sentence as a whole. The use of one rather than the other in any particular sentence, therefore, may be occasionally dictated less by any fine denotative distinction than by the word's location and function in that sentence. Professor Newcity adds that " `sobstvennik' and related terms are not used in Soviet copyright legislation ... because they are not terms that are used in Russian legal drafting to refer to the ownership of copyright." Newcity Reply Decl. ¶ 10. In support of this claim, Professor Newcity advances the proposition that the word "sobstvennik" is not used in post-Soviet copyright law, viz., in the 1993 Law on Copyrights and Neighboring Rights, even though there is obviously no longer an issue of "operative management" to navigate gingerly around. See id.
[32] At oral argument, the plaintiffs explained that they have not offered a balance sheet because, to their knowledge, one does not exist, see Oral Arg. at 34-39, and their position, of course, is that even if there were one, and even if it purported to transfer only the material assets of the state enterprise Soyuzmultfilm to the lease enterprise, this would still not be determinative of the copyright issue, since the copyrights, under plaintiffs' theory, passed not via the lease but by operation of law.
[33] The R.S.F.S.R. equivalent to 37(7) is 37(8). The number designations are off by one. See id.
[34] Professor Newcity takes issue with Professor Maggs' translation of this word as "possessor." See Newcity Reply Decl. ¶ 9. The Russian original is the word "vladelets," which according to Professor Newcity, should really have been translated as "owner" or "proprietor." Id. According to a recent dictionary of Russian legal terms consulted by Professor Newcity, the phrase "vladelets avtorskogo prava" is specifically translated "copyright owner." Id. Professor Newcity implies that Professor Maggs has avoided that translation in order to evade the acknowledgment that a state enterprise could be a copyright owner. See id. For what it is worth, a Russian dictionary available to the court gives "owner" as the sole translation of "vladelets." See KENNETH KATZNER, ENGLISH-RUSSIAN RUSSIAN-ENGLISH DICTIONARY 453 (1984).
[35] In fact, the joint reply brief of defendants and FSUESMS contains the following sentence, which makes the same dicta / holding distinction even more explicit: "Thus, Professor Maggs concludes that no Russian court would follow the dicta of the December 26, 2000 decision with regard to the transfer of rights, but would instead be guided by the contrary holding set forth in the Information Letter of the Higher Arbitrazh Court." See Jnt. Reply Mem. Law of Defs. and Third Party Pls. Supp. Their Cross-Mot. for Sum. J. [hereinafter "Jnt. Reply"] at 6 (emphasis in original).
[36] FSUESMS attempts to label this aspect of the decisions erroneous dicta. See Jnt. Suppl. Mem. Law of Defs. and Third Party Pls. Further Supp. of Their Cross-Mots. for Sum. J. at 9. However, they are anything but dicta, since when the appeals court, on April 3, 2001, reviewed the January 25, 2001 decision of the lower court which had found FSUESMS's registration to be valid and succession rights to have been determined by the content of the lease enterprise's balance sheet, the appeals court specifically affirmed the holding but provided new reasoning, reversing the lower court's finding that the balance sheet determined the right of succession. Moreover, as the June 4, 2001 decision by the Moscow Arbitrazh Court for the District of Moscow states, FSUESMS specifically appealed the April 3, 2001 decision with respect to the "motivational part" of the ruling, in other words, the reasoning. If that reasoning were truly dicta, there would, of course, be no good reason to appeal it. But FSUESMS did appeal it, and that appeal was denied. Therefore, FSUESMS's current suggestion that the finding that the state enterprise ceased to exist when the lease enterprise succeeded it was just dicta is very obviously mistaken.
[37] Article 486, as the reader might remember, has absolutely nothing to do with succession or transfer of anything but is, rather, the article that vests copyright ownership in films in the enterprise that produced them.
[38] The opinion may be saying, simply, that insofar as SMS incorporated into its charter assets belonging to the state without the consent of the state, its charter was invalid, and it is, therefore, irrelevant that the state property might have been returned to the state thereafter, when the lease expired. It is, moreover, irrelevant that intangible assets not belonging to the state may have been legitimately passed to the joint stock company SMS in the same transfer document. The point is that the joint stock company SMS tried to transfer to itself state property, which it had no right to do, and this alone makes its registration invalid. In this case, however, the opinion would still say absolutely nothing about copyright ownership.
[39] The parties have offered conflicting views of the role of res judicata and collateral estoppel in the Russian court system, with plaintiffs suggesting that that decision has no res judicata effect while FSUESMS and defendants argue that it does. There is no need to resolve this issue here, since the dispute between the parties did not concern the same subject matter as the dispute here, viz., ownership of the disputed copyrights. The Russian court decisions were merely about the validity of the registration of SMS. The copyright ownership question was not necessarily decided there, as the April 20 decision's reasoning makes very clear.
[40] The parties dispute whether the April 20 invalidation of SMS's registration has already taken effect or has not taken effect and is easily remediable by SMS. The June 4, 2001 decision, which affirmed the appeals court's April 3 decision finding that the joint stock company succeeded to the rights of the lease enterprise, seems to bolster plaintiffs' position that the registration cancellation has nothing to do with the issue of rightful succession. However, there is no need to decide the issue definitively here, since even if the joint stock company SMS was invalidly registered, the conclusion that the lease enterprise owned the copyrights at the time it concluded the licensing agreement with FBJ would remain undisturbed, because, as discussed above, those copyrights would have passed to the lease enterprise by operation of law (Article 498) when the state enterprise Soyuzmultfilm Studio ceased to exist in 1989. Thus, FBJ's rights under the agreement would still be enforceable against anyone currently claiming ownership of the copyrights. Because this state of affairs would mean that FBJ's injunction on consent against the defendants would have been validly obtained, there is no need to go further.
[41] At most, as has been noted at length above, the state reserved to itself various exploitation rights, and even those were reintegrated into the underlying copyrights during the Perestroika era.
[42] It is worth pausing briefly to address the choice of law questions that arise in connection with the transfer of copyrights. First, while Itar-Tass decided the choice of law issue with respect to ownership of copyrights, it expressly excluded the transfer of copyrights from the scope of its holding: "[W]e consider only initial ownership, and have no occasion to consider choice of law issues concerning assignment of rights." Itar-Tass, 153 F.3d at 91, n. 11.
Likewise, no occasion to consider choice of law issues concerning assignment of rights presents itself in the case at bar. While defendants and FSUESMS argue that the assignment of rights by the lease enterprise to FBJ is invalid because the former never had those rights to convey, this is really an argument about ownership, not about transfer, and Russian law consequently applies. Where, however, defendants and FSUESMS dispute the effectiveness and formality of the transfer itself, there is no need to reach the choice of law issue because neither defendants nor FSUESMS have standing in this court even to make the invalidity-of-transfer arguments they are making, as will be discussed infra.
The parties themselves have not briefed the transfer choice-of-law issue.
[43] A subsequent formal writing by the copyright owner had also confirmed the transfer, but this fact was not essential to the court's disposition. See id.
[44] It should be noted that plaintiff FBJ claims that its conveyance documents are in accordance with the appropriate formalities. "Plaintiffs believe that said agreements are clear and unambiguous. Even if there are ambiguities, the parties to the aforesaid contracts have cleared up any ambiguities." Pls.' Sum. J. Mot.
[45] The defendants here would not even be able to enjoy this benefit, since SMS, the successor to the lease enterprise, is also a plaintiff to this action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2247041/ | 590 F. Supp. 1246 (1984)
FREEPORT MINERALS COMPANY (Freeport-McMoran Inc.), Plaintiff,
v.
UNITED STATES, Defendant,
Shell Canada Resources Limited and Canadian Superior Oil, Ltd., Intervenors.
Court No. 82-2-00247.
United States Court of International Trade.
June 14, 1984.
*1247 *1248 Covington & Burling, Washington, D.C. (Harvey N. Applebaum and Richard E. Neff, Washington, D.C., on briefs), for plaintiff.
Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C. (Sheila N. Ziff, Washington, D.C., on the brief), for defendant.
Arnold & Porter, Washington, D.C. (Patrick F.J. Macrory, Kenneth I. Juster, and Spencer S. Griffith, Washington, D.C., on brief) for intervenor Shell Canada Resources Ltd.
Shearman & Sterling, New York City (Donald L. Cuneo and David J. Mark, New York City, on brief), for intervenor Canadian Superior Oil, Ltd.
Opinion and Order
MALETZ, Senior Judge:
On January 27, 1982, the International Trade Administration of the Department of Commerce (ITA) made a final determination pursuant to section 751 of the Trade Agreements Act of 1979, 19 U.S.C. § 1675 (1982), to revoke an antidumping finding as to two producers of elemental sulphur in Canada, Shell Canada Resources Limited (Shell) and Canadian Superior Oil, Ltd. (Canadian Superior). See 47 Fed.Reg. 3811 (1982). Plaintiff Freeport Minerals Company (Freeport), a domestic producer of elemental sulphur, challenges this determination via a motion for review under this court's rule 56.1. The government in turn has cross-moved for judgment affirming the ITA's determination.
Freeport contends that the administrative record demonstrates that the revocation determination of the ITA is contrary to law and that the findings upon which the determination was based are not supported by substantial evidence. More particularly, Freeport alleges that the ITA in its section 751 administrative review relating to Shell and Canadian Superior failed to: (1) collect and review sales data up to a time reasonably proximate to its 1982 revocation determination; (2) satisfy the requirement of finding that no sales were being made at less than fair value and that there was no likelihood of the resumption of sales at less than fair value; (3) apply the correct standard in the review process in that it improperly shifted the fact finding burden to Freeport; and (4) make proper dumping comparisons in reviewing a long term sales contract that Shell entered into in 1973 with a company in the United States. For the reasons that follow, the court denies Freeport's motion for rule 56.1 review and grants the government's cross-motion for judgment affirming the ITA's revocation determination.
I. Background
On December 17, 1973, the Treasury Department the predecessor to the present administering authority, the ITA issued a finding of dumping under the Antidumping Act of 1921, as amended, 19 U.S.C. §§ 160 et seq. (1970), with respect to elemental sulphur sold by a number of Canadian manufacturers *1249 including Shell and Canadian Superior. See 38 Fed.Reg. 34,655 (1973). On August 24, 1976, Canadian Superior requested the revocation of the dumping finding as to it, while Shell made a similar request on November 3, 1977.[1] As a result, on February 8, 1979, Treasury issued a tentative determination to modify or revoke the dumping finding as to Shell and Canadian Superior. See 44 Fed.Reg. 8057 (1979). This determination was based on the absence of sales at less than fair value by Shell and Canadian Superior for a period of two years, i.e., from January 1, 1975 through December 31, 1976. Treasury failed, however, to take final action on its tentative determination.
On January 1, 1980, the Trade Agreements Act of 1979 became effective and, among other things, repealed the Antidumping Act of 1921, see 93 Stat. 144 (1979), and prescribed new antidumping provisions. 19 U.S.C. §§ 1673 et seq. (1982). In addition, responsibility for administering the new antidumping law was transferred on January 2, 1980 from the Treasury to the Commerce Department. See Reorg.Plan No. 3 of 1979, 93 Stat. 1381, 5 U.S.C. app. at 1170 (1982). Soon after that, the International Trade Administration of the Department of Commerce started an administrative review of all outstanding dumping findings, as required by section 751 of the Trade Agreements Act. In reviewing the dumping finding on elemental sulphur from Canada, the ITA requested additional data from both Shell and Canadian Superior. Both companies complied and also agreed in writing to an immediate suspension of liquidation and reinstatement of the dumping finding if circumstances developed indicating that elemental sulphur produced by them was imported into the United States at less than fair value prices. See 46 Fed.Reg. 21,214, 21,215 (1981).
As a result of its administrative review, the ITA, on April 8, 1981, issued a tentative determination to revoke the dumping finding against Shell and Canadian Superior, having found that (1) for the period from January 1, 1977 through February 8, 1979, Shell made no sales at less than fair value, with the exception of one sale that involved de minimis margins; (2) for the period from May 1, 1977 through February 8, 1979, Canadian Superior made no sales at less than fair value; and (3) "[t]here is no indication of any sales at less than fair value ... by these firms since ... [February 8, 1979]." Id.
Following this tentative revocation determination in April 1981, Freeport, pursuant to 19 U.S.C. § 1675(d) (1982), requested that the ITA conduct a full hearing. The ITA granted the request and held a hearing on October 19, 1981, at which Freeport appeared through counsel and Shell and Canadian Superior supplied additional information to both the ITA and Freeport.
After receipt of this information and the parties' briefs, the ITA made a final revocation determination on January 27, 1982. 47 Fed.Reg. 3811 (1982). The determination stated in part that the ITA "still finds that all sales by Shell Canada and Canadian Superior Oil were made at not less than fair value. Id. at 3812. The present motion for review and the government's cross-motion followed.
II. Time Frame for Review Period
Freeport argues that the Commerce Department regulations require a showing of no sales at less than fair value for at least a two-year period of time reasonably proximate to the revocation. Thus, in Freeport's view, the minimum two-year period of administrative review should include all sales at least up to the date of the tentative revocation determination. Because the ITA used a more remote period of no sales at less than fair value as the time frame for its tentative revocation determination,[2]*1250 Freeport insists that its determination is fatally flawed. The court cannot agree.
In the first place, there is no specific language in the statute or regulations to support Freeport's contention that the period of administrative review must include all sales up to the tentative revocation determination. On that question, the statute and regulations are silent. The only statutory provision at all relevant is 19 U.S.C. § 1675(c) (1982), which provides that the ITA "may revoke, in whole or in part, ... an antidumping order, ... after review under this section." And the only relevant Commerce Department regulation is section 353.54(a), which provides that "whenever the Secretary determines that sales of merchandise are no longer being made at less than fair value ... and is satisfied that there is no likelihood of resumption of sales at less than fair value, he may act to revoke or terminate ... such order or finding." 19 C.F.R. § 353.54(a) (1980). In order to do this, the regulation requires that the applicant for revocation provide "information demonstrating that the imported merchandise is not being sold at less than fair value," and that the applicant has "no sales at less than fair value for at least a two-year period following ... an Antidumping Duty Finding." Id. at § 353.54(b) (emphasis added).
In short, there is no statutory or regulatory requirement that the ITA base its decision to revoke on the most recent two-year period preceding a tentative revocation determination. And since "[t]he law is silent with respect to the prerequisite for a revocation ... the administering authority has broad discretion." Potts & Lyons, The Trade Agreements Act: Administrative Policy and Practice in Antidumping Investigations, 6 N.C.J. Int'l L. & Com.Reg. 483, 523 (1982). See also Chevron Standard Ltd. v. United States, 5 C.I.T. ___, ___, 563 F. Supp. 1381, 1385 (1983). Given the discretion thus accorded the ITA, deference is due its conclusion that under the statutory scheme a revocation determination need not necessarily be based on the two-year period immediately preceding the date of tentative revocation. See Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S. Ct. 2441, 2445, 57 L. Ed. 2d 337 (1978) ("The administrative interpretation of a statute by the agency charged with its administration is entitled to deference."). See also, e.g., Asahi Chem. Indus. Co. v. United States, 4 C.I.T. 120, 123, 548 F. Supp. 1261, 1264 n. 2 (1982).
Moreover, although the ITA's tentative revocation determination of April 1981 was based on the absence of sales at less than fair value for time periods ending on February 8, 1979, the record here indicates a rational basis for the agency's reliance on those earlier periods and the consequent time lag. For one thing, the complexities of the administrative review process created a time lag between the date of the last sale analyzed for purposes of revocation and the actual notice of tentative revocation. This was particularly true in the present case, where the ITA had to analyze and review a large volume of data involving some fifty-two exporters. See 47 Fed. Reg. 3811, 3812 (1982). Compounding this problem was the ITA's large initial backlog of cases resulting from the transfer to it in January 1980 of antidumping administrative authority from the Treasury Department a situation that exacerbated the inevitable delay in the determination of section 751 review and revocation cases. And there is the important added factor that at the hearing held by the ITA in October 1981 updated information was supplied by Shell and Canadian Superior that indicated an absence of sales at less than fair value.
Freeport nevertheless insists that the final ITA determinations in Roller Chain, Other Than Bicycle, From Japan, 48 Fed. Reg. 51,801 (1983), and Steel Wire Strand for Distressed Concrete From Japan, 48 *1251 Fed.Reg. 45,586 (1983), demonstrate that the revocation determination in the present case violated "the ... [ITA's] well established policy to `update' by means of a subsequent administrative review ... all sales through the date of its tentative revocation." The record here is clear, however, that the ITA did in fact review pertinent information not only up to but beyond the date of publication of its tentative revocation determination. For example, its April 8, 1981 tentative determination notice states that "[t]here is no indication of any sales at less than fair value by ... [Shell and Canadian Superior] since that time [i.e., February 8, 1979]." 46 Fed.Reg. at 21,215. In addition, before making its final determination in January 1982, the ITA considered the additional information supplied by Shell and Canadian Superior at the October 19, 1981 hearing that once again showed an absence of sales at less than fair value.
III. Evidence of Less Than Fair Value Sales or the Likelihood of Resumption of Such Sales
A. Sales at Less Than Fair Value
Freeport also argues that under the circumstances of this case there was a good cause for the ITA to require production of further data. It claims that data it submitted to the ITA showed that prevailing 1981 prices for sulphur in the Vancouver, British Columbia and Tampa, Florida markets reveal a significant probability of less than fair value selling. Among the data Freeport submitted was a statement of its market research manager comparing a market price in Tampa with a price in Vancouver, which comparison, according to Freeport, showed that the price in Vancouver was higher than the Tampa price. From this, Freeport argues that less than fair value sales must have taken place.
The ITA properly gave no weight to this comparison. The record shows that Vancouver is not a home market for Canadian sulphur, but rather is a port from which sulphur is exported. In this regard, the Vancouver price quoted by Freeport is a price for export to third countries and not a home market price. But as to both Shell and Canadian Superior, the proper basis for a fair value comparison is home market price compared to United States price.[3] Accordingly, the price of Canadian sulphur for export to third countries through the Port of Vancouver is irrelevant.
Similarly unpersuasive is a second item in the record cited by Freeport. This consisted of average price statistics for 1981 published by the Alberta Resources Conservation Board, which indicate that "the price to customers in North America (U.S. and Canada combined)" was below the export price to third countries. However, as noted, the export price to third countries is irrelevant because the basis of comparison with United States price for both Shell and Canadian Superior is the Canadian home market price. Moreover, the price that Freeport suggests that the ITA should have used to compare with the third country export price is an average of United States and Canadian prices and thus is meaningless for purposes of making the comparison required by the statute.
Freeport also urges that because margins of sales at less than fair value were found in respect to other Canadian producers in a preliminary sulphur determination published on September 15, 1981, 46 Fed.Reg. 45,789, an inference can be drawn that Shell and Canadian Superior might also be selling at less than fair value. Accordingly, Freeport suggests that the ITA was obligated to investigate further. The inference that Freeport asks the court to draw simply does not withstand analysis. Many of those producers found to have had dumping margins during the period covered by the September 15, 1981 preliminary determination were also found to have had such margins during the periods when Shell and Canadian Superior were found not to be engaging in sales at less than fair value. 46 Fed.Reg. 21,214; id. at 45,689. *1252 Thus, the preliminary determination in question has no bearing in respect to either Shell or Canadian Superior.
B. Likelihood of Resumption of Sales at Less Than Fair Value
Freeport next contends that the ITA violated its own policy in determining that there was no likelihood of resumption of sales at less than fair value. It relies on two ITA determinations Cadmium From Japan, 46 Fed.Reg. 50,815 (1981), and Canned Bartlett Pears From Australia, 46 Fed.Reg. 43,224 (1981) in which the agency reversed its tentative determinations to revoke dumping findings in view of the likelihood of resumption of sales at less than fair value. In both cases there had been no sales of the merchandise in question for a substantial period of time and the ITA, therefore, had no indication regarding the performance of these companies under an antidumping order. In both cases, also, the home market prices for the products in question were substantially higher than the United States market prices, so that if imports from those countries were to be resumed, there was the likelihood that they would be sold at less than fair value.
Here, not only have Shell and Canadian Superior continued to ship sulphur to the United States since the initial dumping finding, such shipments have been consistently at or above fair value. Moreover, both Shell and Canadian Superior have given specific assurances that they would exercise their best efforts to make no sales at less than fair value. These assurances have never been withdrawn and the ITA was entitled to rely upon them.
IV. Alleged Shifting of Fact Finding Burden
Freeport further complains that the ITA "attempted to shift the burden of proving conclusively that Shell and Canadian Superior continued to make sales at less than fair value squarely upon Freeport." It bottoms this conclusion on the ITA's failure to send administrative review questionnaires to Shell and Canadian Superior for the two-year period immediately prior to the tentative revocation determination of April 1981. The ITA's failure to do so, it says, has the effect of placing a burden upon the domestic party opposing revocation to submit substantial evidence proving that Shell and Canadian Superior continued to make sales at less than fair value.
The argument is misdirected. Freeport overlooks what is required of the ITA in a section 751 administrative review proceeding when a finding of no sales at less than fair value is arrived at and no evidence to the contrary is presented. The ITA's finding of no sales at less than fair value is based, as previously indicated, upon substantial evidence in the administrative record.
In effect, Freeport's complaint is that the ITA failed to seek out information refuting its own findings of no sales at less than fair value a burden patently not imposed by the statute. The provisions cited by Freeport to support this contention, 19 U.S.C. §§ 1673, 1673a, and 1673e (1982), deal with an entirely different situation, i.e., the obligation of the ITA to initiate an investigation upon presentation of minimal information indicating only the possible existence of sales at less than fair value. Thus, the threshold of evidentiary information required to initiate an investigation may be very low, depending upon the ability of the complaining party to gather information. That requirement stands in contrast to the circumstances of a section 751 review proceeding in which substantial evidence has already been furnished and is the basis for a finding of no sales at less than fair value. In other words, in light of an administrative record that shows no sales at less than fair value for a substantial period of time, the ITA properly presumed that there were no continuing sales at less than fair value. Given that situation, the ITA acted correctly in requesting Freeport to offer some support for its charges of sales at less than fair value when all the *1253 evidence before the agency pointed to the contrary conclusion.[4]
V. Shell's 1973 Contract
On April 10, 1973, Shell entered into a five-year contract to sell sulphur to a United States purchaser at specific prices. The contract was entered into after Treasury's initiation of the fair value investigation and before the preliminary determination of sales at less than fair value of elemental sulphur. In the event dumping duties were assessed, the agreement provided that the purchaser who was contractually responsible for payment of those duties could cancel the contract.[5]
Freeport maintains that the contract was not valid, because it was not a firm, fixed price contract. The court concludes to the contrary that it was valid since it contained a "definite and determinable purchase price ... prior to the date of exportation for comparison with the foreign market value." Voss Int'l Corp. v. United States, 82 Ct. Cust. 190, 195, C.D. 4801 (1979), modified and remanded, 67 CCPA 96, C.A.D. 1253, 628 F.2d 1328 (1980). Indeed, the ITA later verified that the prices under the contract had not varied.
Freeport next contends that the ITA should have compared the prices of shipments made under the Shell 1973 long term contract with Canadian home market prices during the review period, rather than with the home market price at the time the contract was executed. But this position is inconsistent with the express language of the antidumping statute. 19 U.S.C. § 1677b (1982) establishes the general rule that foreign market value should be ascertained as of the time of exportation to the United States. However, the statute goes on to provide an exception to this general rule. This exception specifies that "in the case of merchandise purchased or agreed to be purchased ... prior to the time of importation, the foreign market value shall be ascertained as of the date of such purchase or agreement to purchase." Id. § 1677b(a) (emphasis added).
The exception recognizes that there is often a delay between sales and export. Congress was aware that it would be unfair to compare the export price with the foreign market price when the latter price may well vary over time. See Hearings on H.R. 2435 Before the Senate Committee on Finance, 67th Cong., 1st Sess., at 42 (1921).[6]
Further, it has been the consistent practice of the ITA to apply this interpretation and compare export prices under a long term contract with foreign market prices as of the date the agreement was entered into. See, e.g., Portable Electric Typewriters from Japan, 48 Fed.Reg. 40,761 (1981); Elemental Sulphur from Canada, 47 Fed. Reg. 14,057 (1982).[7]
*1254 Finally, Freeport asserts that it was improperly denied a hearing with respect to this long term contract. The background is this. In response to questions raised by Freeport at the October 19, 1981 hearing, the ITA released to it under protective order data showing that all shipments made by Shell under the long term contract were at above fair value prices. Freeport then submitted a list of issues that it alleged the data raised and requested a hearing on those issues. Shell then submitted additional data in response to Freeport's concerns. The ITA responded by letter in January 1982 to each of the issues raised by Freeport and denied its request for a hearing. Freeport was given ample opportunity to comment in writing upon these issues.
The law does not require that Freeport be granted multiple hearings. The Act requires only that the ITA hold "a hearing" upon the request of any interested party. 19 U.S.C. § 1675 (1982). Here the ITA held a full hearing before reaching its final decision, and fully considered and responded to each of Freeport's concerns after the hearing was over. Congress could not have intended that a hearing be provided for every request of a petitioner. Otherwise, proceedings could be delayed indefinitely. Freeport was given ample opportunity to raise its concerns and the ITA responded in full. A new hearing was not necessary.
Conclusion
For the foregoing reasons, Freeport's motion for review is denied and the government's cross-motion for judgment affirming the ITA's revocation determination is granted.
NOTES
[1] Unlike the Trade Agreements Act of 1979, the 1921 Antidumping Act did not specifically provide for revocation of a dumping finding. However, Customs Regulations under the "old law" contained provisions for revocation. See 19 C.F.R. § 153.44 (1977).
[2] As previously indicated, the ITA's tentative revocation determination of April 8, 1981 was based on findings of (1) no sales at less than fair value by Shell for the period from January 1, 1977 through February 8, 1979, and (2) no sales at less than fair value by Canadian Superior for the period from May 1, 1977 through February 8, 1979.
[3] In 19 U.S.C. § 1677b(a)(1) (1982), Congress expressed preference for the use of home market sales, as opposed to sales to third countries, as the basis for foreign market value.
[4] Freeport objects also to the ITA's refusal to grant it access to data examined by the Treasury Department in its earlier investigation, claiming that the ITA in fact relied on these data in reaching its own decision. This argument ignores the fact that the data in question were irrelevant to the ITA's own investigation, which fully satisfied the requirements of the Commerce Department regulations. See 19 C.F.R. § 353.54(a) (1980).
[5] Since the latter period of the contract overlapped a portion of the ITA review period (January 1, 1977 to February 8, 1979), the ITA was obligated to make dumping evaluations as to sales under that contract as well as to other sales made within that period.
[6] Freeport argues that the ITA should have compared the export price to the United States with equivalent long term contracts in Canada or third countries. No support is cited for this argument, which runs contrary to the statutes, regulations, and ITA policy. The contract was entered into as of April 10, 1973. The issue for antidumping comparisons is the home market value as of that date. That figure was easily verifiable and there was no need to resort to speculative determinations as to which other long term contracts are similar or comparable to the one at issue. Nonetheless, the ITA did compare the 1973 long term contract with the most recent Shell long term contracts in force on that date. Thus, the ITA utilized the very procedure that Freeport argues it should have.
[7] Cases under the Robinson-Patman Act support this interpretation. It has been held on facts analogous to those presented here that price discrimination cannot be established by comparing the price of sulphur shipped under a fixed price contract with prices under more recently negotiated contracts. Texas Gulf Sulphur Co. v. J.R. Simplot Co., 418 F.2d 793 (9th Cir.1969). The court there stated that fixed price contracts providing "[p]rice protection against market upswings are commonplace in the American industrial scene," id. at 805, and that "[t]he validity of price protection provisions for the purpose of the Robinson-Patman Act must be evaluated at the time the contract is made." Id. at 806 (emphasis added). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/118280/ | 526 U.S. 358 (1999)
UNUM LIFE INSURANCE CO. OF AMERICA
v.
WARD
No. 97-1868.
United States Supreme Court.
Argued February 24, 1999.
Decided April 20, 1999.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
*359 *360 *361 Ginsburg, J., delivered the opinion for a unanimous Court.
William J. Kayatta, Jr., argued the cause for petitioner. With him on the briefs were David L. Bacon, Charles M. Dyke, Barbara H. Furey, Brian G. Kanner, Tamarra T. Rennick, Lesley C. Green, and Russell G. Petti.
Deputy Solicitor General Kneedler argued the cause for the United States as amicus curiae urging reversal. With *362 him on the briefs were Solicitor General Waxman, James A. Feldman, Judith E. Kramer, Allen H. Feldman, Nathaniel I. Spiller, and Elizabeth Hopkins.
Jeffrey Isaac Ehrlich argued the cause for respondent. With him on the briefs were Brian Stuart Koukoutchos, Janice Mazur, Brooks Iler, and Arthur M. Palkowitz.[*]
*363 Justice Ginsburg, delivered the opinion of the Court.
This case, brought under § 502(a) of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 891, as amended, 29 U.S. C. § 1132(a), concerns ERISA's preemption and saving clauses. The preemption clause, § 514(a), 29 U.S. C. § 1144(a), broadly states that ERISA provisions "shall supersede . . . State laws" to the extent that those laws "relate to any employee benefit plan." The saving clause, § 514(b)(2)(A), 29 U.S. C. § 1144(b)(2)(A), phrased with similar breadth, exempts from preemption "any law of any State which regulates insurance." The key words "regulates insurance" in § 514(b)(2)(A), and "relate to" in § 514(a), once again require interpretation, for their meaning is not "plain"; sensible construction of ERISA, our decisions indicate, requires that we measure these words in context. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987) (noting that repeated calls for interpretation are not surprising in view of "the wide variety of state statutory and decisional law arguably affected" by ERISA's preemption and saving clauses).
The context here is a suit to recover disability benefits under an ERISA-governed insurance policy issued by defendant-petitioner UNUM Life Insurance Company of America (UNUM). Plaintiff-respondent John E. Ward submitted his proof of claim to UNUM outside the time limit set in the policy, and UNUM therefore denied Ward's claim.
Ruling in Ward's favor, and reversing the District Court's summary judgment for UNUM, the Court of Appeals for the Ninth Circuit relied on decisional law in California, the State in which Ward worked and in which his employer operated. The Ninth Circuit's judgment rested on two grounds. That *364 court relied first on California's "notice-prejudice" rule, under which an insurer cannot avoid liability although the proof of claim is untimely, unless the insurer shows it was prejudiced by the delay. The notice-prejudice rule is saved from preemption, the Court of Appeals held, because it is "law . . . which regulates insurance." See Ward v. Management Analysis Co. Employee Disability Benefit Plan, 135 F.3d 1276, 1280 (1998).
The Court of Appeals announced a further ground for reversing the District Court's judgment for UNUM, one that would come into play if the insurer proved prejudice due to the delayed notice. Under California's decisions, the Ninth Circuit said, the employer could be deemed an agent of the insurer in administering group insurance policies. Ward's employer knew of his disability within the time the policy allowed for proof of claim. The Ninth Circuit held that the generally applicable agency law reflected in the California cases does not "relate to" employee benefit plans, and therefore is not preempted. See id., at 1281-1283, 1287-1288.
We granted certiorari, 525 U.S. 928 (1998), and now affirm the Court of Appeals' first disposition, and reverse the second. California's notice-prejudice rule, we agree, is a "law. . . which regulates insurance," and is therefore saved from preemption by ERISA. California's agency law, we further hold, does "relate to" employee benefit plans, and therefore does not occupy ground outside ERISA's preemption clause.
I
UNUM issued a long-term group disability policy to Management Analysis Company (MAC) as an insured welfare benefit plan governed by ERISA, effective November 1, 1983. The policy provides that proofs of claim must be furnished to UNUM, at the latest, one year and 180 days after the onset of disability.
Ward was employed by MAC from 1983 until May 1992. Throughout this period, premiums for the disability policy *365 were deducted from Ward's paycheck. Under the admitted facts of the case, Ward became permanently disabled with severe leg pain on the date of his resignation, May 5, 1992. See 135 F.3d, at 1280.
Ward's condition was diagnosed as diabetic neuropathy in December 1992. In late February or early March 1993, he qualified for state disability benefits and thereupon informed MAC of his disability and inquired about continuing health insurance benefits. In July 1993, Ward received a determination of eligibility for Social Security disability benefits and forwarded a copy of this determination to MAC's human resources division. See id., at 1279. In April 1994, Ward discovered among his papers a booklet describing the long-term disability plan and asked MAC whether the plan covered his condition. When MAC told him he was covered, Ward completed an application for benefits and forwarded it to MAC. In turn, and after filling in the employer information section, MAC forwarded the application to UNUM. UNUM received proof of Ward's claim on April 11, 1994. See ibid. This notice was late under the terms of the policy, which required submission of proof of claim by November 5, 1993. See id., at 1280. By letter dated April 13, 1994, UNUM advised Ward that his claim was denied as untimely. See id., at 1279.
In September 1994, Ward filed suit against the MAC plan under § 502 of ERISA, 29 U.S. C. § 1132, to recover the disability benefits provided by the plan. UNUM appeared as a defendant and answered on behalf of itself and the plan. See 135 F.3d, at 1279. To the District Court, Ward argued that under Elfstrom v. New York Life Ins. Co., 67 Cal. 2d 503, 512, 432 P.2d 731, 737 (1967) (en banc), a California employer that administers an insured group health plan should be deemed to act as the agent of the insurance company. Therefore, Ward asserted, his notice of permanent disability to MAC, in February or March 1993, sufficed to supply timely notice to UNUM. See App. to Pet. for Cert. 30a. The District *366 Court rejected this argument, concluding that the agency rule announced in Elfstrom "relate[s] to" ERISA plans; hence it is preempted under § 514(a), 29 U.S. C. § 1144(a). See App. to Pet. for Cert. 30a. The District Court further held that the Elfstrom rule is not saved from preemption as a law that "regulates insurance" within the compass of ERISA's insurance saving clause, § 514(b)(2)(A), 29 U.S. C. § 1144(b)(2)(A). App. to Pet. for Cert. 31a. Accordingly, the court rendered summary judgment in UNUM's favor. See id., at 33a.
The Court of Appeals for the Ninth Circuit reversed, identifying two grounds on which Ward might prevail. First, following the Ninth Circuit's recent decision in Cisneros v. UNUM Life Ins. Co., 134 F.3d 939 (1998), the appeals court held that California's notice-prejudice rule is saved from ERISA preemption as a law that "regulates insurance"; under the notice-prejudice rule, Ward's late notice would not preclude his ERISA claim absent proof that the insurer suffered actual prejudice because of the delay. See 135 F.3d, at 1280. Second, and contingently, the Ninth Circuit held that the Elfstrom rule, under which the employer could be deemed an agent of the insurer, does not "relate to" employee benefit plans, and therefore is not preempted by reason of ERISA. See 135 F.3d, at 1287 (internal quotation marks omitted). The court accordingly remanded the case to the District Court for a determination whether UNUM suffered actual prejudice on account of the late submission of Ward's notice of claim; and if so, whether, under the reasoning of Elfstrom, Ward could nevertheless prevail because he had timely filed his claim. See 135 F.3d, at 1289.
II
California's notice-prejudice rule prescribes:
"[A] defense based on an insured's failure to give timely notice [of a claim] requires the insurer to prove that it suffered substantial prejudice. Prejudice is not presumed *367 from delayed notice alone. The insurer must show actual prejudice, not the mere possibility of prejudice." Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal. App. 4th 715, 760-761, 15 Cal. Rptr. 2d 815, 845 (1st Dist. 1993) (citations omitted).
The parties agree that the notice-prejudice rule falls under ERISA's preemption clause, § 514(a), as a state law that "relate[s] to" an employee benefit plan.[1] Their dispute hinges on this question: Does the rule "regulat[e] insurance" and thus escape preemption under the saving clause, § 514(b)(2)(A).[2]
Our precedent provides a framework for resolving whether a state law "regulates insurance" within the meaning of the saving clause. First, we ask whether, from a "common-sense view of the matter," the contested prescription regulates insurance. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985); see Pilot Life, 481 U. S., at 48. Second, we consider three factors employed to determine whether the regulation fits within the "business of insurance" as that phrase is used in the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U.S. C. § 1011 et seq.: "first, whether the practice has the effect of transferring or spreading a policyholder's risk; second, whether the practice is an integral part of the policy relationship between the insurer and the insured; and third, whether the practice is limited to entities within the insurance industry." Metropolitan Life, *368 471 U. S., at 743 (emphasis, citations, and internal quotation marks omitted); see also Pilot Life, 481 U. S., at 48-49.
A
The Ninth Circuit concluded that California's noticeprejudice rule "regulates insurance" as a matter of common sense. See Cisneros, 134 F. 3d, at 945. We do not normally disturb an appeals court's judgment on an issue so heavily dependent on analysis of state law, see Runyon v. McCrary, 427 U.S. 160, 181-182 (1976), and we lack cause to do so here. The California notice-prejudice rule controls the terms of the insurance relationship by "requiring the insurer to prove prejudice before enforcing proof-of-claim requirements." Cisneros, 134 F. 3d, at 945. As the Ninth Circuit observed, the rule, by its very terms, "is directed specifically at the insurance industry and is applicable only to insurance contracts." Ibid.; see Brief for United States as Amicus Curiae 12 ("[O]ur survey of California law reveals no cases where the state courts apply the notice-prejudice rule as such outside the insurance area. Nor is this surprising, given that the rule is stated in terms of prejudice to an `insurer' resulting from untimeliness of notice."). The rule thus appears to satisfy the common-sense view as a regulation that homes in on the insurance industry and does "not just have an impact on [that] industry." Pilot Life, 481 U. S., at 50.
UNUM and its amici urge in opposition to the Ninth Circuit's common-sense conclusion that the notice-prejudice rule is merely an industry-specific application of the general principle that "disproportionate forfeiture should be avoided in the enforcement of contracts." See Brief for American Council of Life Insurance et al. as Amici Curiae 13; Brief for Association of California Life and Health Insurance Companies as Amicus Curiae 5 ("[N]otice-prejudice is merely a branch of the broad doctrine of harmless error."). Given the tenet from which the notice-prejudice rule springs, UNUM *369 maintains, the rule resembles the Mississippi law at issue in Pilot Life; under that law, punitive damages could be sought for "bad faith" in denying claims without any reasonably arguable basis for the refusal to pay. See 481 U.S., at 50. We determined in Pilot Life that although Mississippi had "identified its law of bad faith with the insurance industry, the roots of this law are firmly planted in the general principles of Mississippi tort and contract law." Ibid. "Any breach of contract," we observed, "and not merely breach of an insurance contract, may lead to liability for punitive damages under [the Mississippi common law of bad faith]." Ibid. Accordingly, we concluded, the Mississippi law did not "regulat[e] insurance" within the meaning of ERISA's saving clause. Ibid.
We do not find it fair to bracket California's noticeprejudice rule for insurance contracts with Mississippi's broad gauged "bad faith" claim for relief. Insurance policies like UNUM's frame timely notice provisions as conditions precedent to be satisfied by the insured before an insurer's contractual obligation arises. See 1 B. Witkin, Summary of California Law, Contracts § 726, p. 657 (9th ed. 1987); Zurn Engineers v. Eagle Star Ins. Co., 61 Cal. App. 3d 493, 499, 132 Cal. Rptr. 206, 210 (2d Dist. 1976). Ordinarily, "failure to comply with conditions precedent . . . prevents an action by the defaulting party to enforce the contract." 14 Cal. Jur. 3d, Contracts § 245, p. 542 (3d ed. 1974). A recent California decision, Platt Pacific Inc. v. Andelson, 6 Cal. 4th 307, 862 P.2d 158 (1993) (en banc), is illustrative. In that case, the California Supreme Court adhered to the normal course: It refused to excuse a plaintiff's failure to comply with a contractual requirement to timely demand arbitration, although there was no allegation that the defendant had been prejudiced by the plaintiff's lapse. The plaintiff had forfeited the right to pursue arbitration, the court concluded, for "the condition precedent [of a timely demand] was neither legally excused nor changed by modification of the parties' *370 written agreement." Id., at 321, 862 P.2d, at 167. "A contrary conclusion," the court stated, "would undermine the law of contracts by vesting in one contracting party the power to unilaterally convert the other contracting party's conditional obligation into an independent, unconditional obligation notwithstanding the terms of the agreement." Id., at 314, 862 P.2d, at 162.
It is no doubt true that diverse California decisions bear out the maxim that "law abhors a forfeiture"[3] and that the *371 notice-prejudice rule is an application of that maxim. But it is an application of a special order, a rule mandatory for insurance contracts, not a principle a court may pliably employ when the circumstances so warrant. Tellingly, UNUM has identified no California authority outside the insurancespecific notice-prejudice context indicating that as a matter of law, failure to abide by a contractual time condition does not work a forfeiture absent prejudice. Outside the noticeprejudice context, the burden of justifying a departure from a contract's written terms generally rests with the party seeking the departure. See, e. g., American Bankers Mortgage Corp. v. Federal Home Loan Mortgage Corp., 75 F.3d 1401, 1413 (CA9 1996); CQL Original Products, Inc. v. National Hockey League Players' Assn., 39 Cal. App. 4th 1347, 1357-1358, n. 6, 46 Cal. Rptr. 2d 412, 418, n. 6 (4th Dist. 1995). In short, the notice-prejudice rule is distinctive most notably because it is a rule firmly applied to insurance contracts, not a general principle guiding a court's discretion in a range of matters.[4]
*372 California's insistence that insurers show prejudice before they may deny coverage because of late notice is grounded in policy concerns specific to the insurance industry. See Brief for Council of State Governments et al. as Amici Curiae 10-14. That grounding is key to our decision. Announcing the notice-prejudice rule in Campbell v. Allstate Ins. Co., 60 Cal. 2d 303, 384 P.2d 155 (1963) (en banc), the California Supreme Court emphasized the "public policy of this state" in favor of compensating insureds. Id., at 307, 384 P.2d, at 157; see ibid. (weighing the relative burdens of notice-prejudice on insurers and insureds). Subsequent notice-prejudice rulings have likewise focused on insurance industry policy and governance. See, e. g., Hanover Ins. Co. v. Carroll, 241 Cal. App. 2d 558, 570, 50 Cal. Rptr. 704, 712 (1st Dist. 1966) (public policy respecting compensation of insured injured parties); Northwestern Title Security Co. v. Flack, 6 Cal. App. 3d 134, 143-144, 85 Cal. Rptr. 693, 698 (1st Dist. 1970) (extending notice-prejudice rule to "claims-type" policies, rejecting contention that sound public policy required limitation of rule to "occurrence-type" policies); Pacific Employers Ins. Co. v. Superior Court, 221 Cal. App. 3d 1348, 1359-1360, 270 Cal. Rptr. 779, 784-785 (2d Dist. 1990) (evaluating insurance industry public policy considerations in reaching the opposite conclusion). Decisions of courts in other States similarly indicate that the notice-prejudice rule addresses policy concerns specific to insurance. See, e. g., Cooper v. Government Employees Ins. Co., 51 N. J. 86, 94, 237 A.2d 870, 874 (1968) (failure to adopt notice-prejudice would "disserve the public interest, for insurance is an instrument of a social policy that the victims of negligence be compensated"); Great American Ins. Co. v. C. G. Tate Construction Co., 303 N. C. 387, 395, 279 S.E.2d 769, 774 (1981) ("The [notice-prejudice] rule we adopt today has the advantages *373 of promoting social policy and fulfilling the reasonable expectations of the purchaser while fully protecting the ability of the insurer to protect its own interests."); Alcazar v. Hayes, 982 S.W.2d 845, 851-853 (Tenn. 1998) (surveying the "compelling public policy justifications" that support departing from traditional contract interpretation in favor of notice-prejudice).
In sum, the Ninth Circuit properly concluded that noticeprejudice is a rule of law governing the insurance relationship distinctively. We reject UNUM's contention that the rule merely restates a general principle disfavoring forfeitures and conclude instead that notice-prejudice, as a matter of common sense, regulates insurance.
B
We next consider the criteria used to determine whether a state law regulates the "business of insurance" within the meaning of the McCarran-Ferguson Act. Preliminarily, we reject UNUM's assertion that a state regulation must satisfy all three McCarran-Ferguson factors in order to "regulate insurance" under ERISA's saving clause. Our precedent is more supple than UNUM conceives it to be. We have indicated that the McCarran-Ferguson factors are "considerations [to be] weighed" in determining whether a state law regulates insurance, Pilot Life, 481 U. S., at 49, and that "[n]one of these criteria is necessarily determinative in itself," Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982). In Metropolitan Life, the case in which we first used the McCarran-Ferguson formulation to assess whether a state law "regulates insurance" for purposes of ERISA's saving clause, we called the McCarran-Ferguson factors "relevant"; we did not describe them as "required." See 471 U.S., at 743; O'Connor v. UNUM Life Ins. Co. of America, 146 F.3d 959, 963 (CADC 1998) ("That the factors are merely `relevant' suggests that they need not all point in the same direction, else they would be `required.' "). As the Ninth *374 Circuit correctly recognized, Metropolitan Life asked first whether the law there in question "fit a common-sense understanding of insurance regulation," Cisneros, 134 F. 3d, at 945, and then looked to the McCarran-Ferguson factors as checking points or "guideposts, not separate essential elements . . . that must each be satisfied" to save the State's law, id., at 946.
The first McCarran-Ferguson factor asks whether the rule at issue "has the effect of transferring or spreading a policyholder's risk." Metropolitan Life, 471 U. S., at 743 (internal quotation marks omitted). The Ninth Circuit determined that the notice-prejudice rule does not satisfy that criterion because it "does not alter the allocation of risk for which the parties initially contracted, namely the risk of lost income from long-term disability." Cisneros, 134 F. 3d, at 946. The United States as amicus curiae, however, suggests that the notice-prejudice rule might be found to satisfy the McCarran-Ferguson "risk-spreading" factor: "Insofar as the notice-prejudice rule shifts the risk of late notice and stale evidence from the insured to the insurance company in some instances, it has the effect of raising premiums and spreading risk among policyholders." Brief for United States as Amicus Curiae 14. We need not pursue this point, because the remaining McCarran-Ferguson factors, verifying the common-sense view, are securely satisfied.
Meeting the second factor, the notice-prejudice rule serves as "an integral part of the policy relationship between the insurer and the insured." Metropolitan Life, 471 U. S., at 743. California's rule changes the bargain between insurer and insured; it "effectively creates a mandatory contract term" that requires the insurer to prove prejudice before enforcing a timeliness-of-claim provision. Cisneros, 134 F. 3d, at 946. As the Ninth Circuit stated: "The [noticeprejudice] rule dictates the terms of the relationship between *375 the insurer and the insured, and consequently, is integral to that relationship." Ibid.[5]
The third McCarran-Ferguson factorwhich asks whether the rule is limited to entities within the insurance industry is also well met. As earlier explained, see supra, at 368 373, California's notice-prejudice rule focuses on the insurance industry. The rule "does not merely have an impact on the insurance industry; it is aimed at it." FMC Corp. v. Holliday, 498 U.S. 52, 61 (1990).
III
UNUM and its amici assert that even if the noticeprejudice rule is saved under 29 U.S. C. § 1144(b)(2)(A), it is nonetheless preempted because it conflicts with substantive provisions of ERISA in three ways. UNUM first contends that the notice-prejudice rule, by altering the notice provisions of the insurance contract, conflicts with ERISA's requirement that plan fiduciaries act "in accordance with the documents and instruments governing the plan." § 1104(a)(1)(D). According to UNUM, § 1104(a)(1)(D) preempts any state law contrary to a written plan term. See Brief for Petitioner 32-33; Tr. of Oral Arg. 8.
UNUM's "contra plan term" argument overlooks controlling precedent and makes scant sense. We have repeatedly held that state laws mandating insurance contract terms are saved from preemption under § 1144(b)(2)(A). See Metropolitan Life, 471 U. S., at 758 ("Massachusetts' mandatedbenefit law is a `law which regulates insurance' and so is not pre-empted by ERISA as it applies to insurance contracts *376 purchased for plans subject to ERISA."); FMC Corp., 498 U. S., at 64 ("[I]f a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer's insurance contracts."). Under UNUM's interpretation of § 1104(a)(1)(D), however, States would be powerless to alter the terms of the insurance relationship in ERISA plans; insurers could displace any state regulation simply by inserting a contrary term in plan documents. This interpretation would virtually "rea[d] the saving clause out of ERISA." Metropolitan Life, 471 U. S., at 741.[6]
UNUM next contends that ERISA's civil enforcement provision, § 502(a), 29 U.S. C. § 1132(a), preempts any action for plan benefits brought under state rules such as noticeprejudice. Whatever the merits of UNUM's view of § 502(a)'s preemptive force,[7] the issue is not implicated here. *377 Ward sued under § 502(a)(1)(B) "to recover benefits due . . . under the terms of his plan." The notice-prejudice rule supplied the relevant rule of decision for this § 502(a) suit. The case therefore does not raise the question whether § 502(a) provides the sole launching ground for an ERISA enforcement action.
Finally, we reject UNUM's suggestion that the noticeprejudice rule conflicts with § 503 of ERISA, 29 U.S. C. § 1133, which requires plans to provide notice and the opportunity for review of denied claims, or with Department of Labor regulations providing that "[a] claim is filed when the requirements of a reasonable claim filing procedure . . . have been met," 29 CFR § 2560.503-1(d) (1998). By allowing a longer period to file than the minimum filing terms mandated by federal law, the notice-prejudice rule complements rather than contradicts ERISA and the regulations. See Brief for United States as Amicus Curiae 19, n. 9.
IV
Ward successfully maintained in the Ninth Circuit that MAC had timely notice of his disability and that his notice to MAC could be found to have served as notice to UNUM on the theory that MAC, as administrator of the group policy, acted as UNUM's agent. The policy itself provides otherwise:
"For all purposes of this policy, the policyholder [MAC] acts on its own behalf or as agent of the employee. Under no circumstances will the policyholder be deemed the agent of the Company [UNUM] without a written authorization." App. to Pet. for Cert. 44a.
*378 California law rendered that policy provision ineffective, the Ninth Circuit appeared to conclude, because under the rule stated in Elfstrom v. New York Life Ins. Co., 67 Cal. 2d, at 512, 432 P.2d, at 737, "the employer is the agent of the insurer in performing the duties of administering group insurance policies." Thus, the Ninth Circuit instructed that, on remand, if UNUM was found to have suffered actual prejudice on account of Ward's late notice of claim, the District Court should then determine whether the claim was timely under Elfstrom. 135 F. 3d, at 1289.
Ward does not argue in this Court that the Elfstrom rule, as comprehended by the Ninth Circuit, is a law that "regulates insurance." See Brief for Respondent 35 (the Ninth Circuit applied "general principles of agency law," not a rule determining when "employers who administer insured plans are agents of the insurer as a matter of law "). Indeed, it is difficult to tell from the Court of Appeals opinion precisely what rule or principle that court derived from Elfstrom. See Brief for Respondent 35 ("[T]he court below did not actually apply the Elfstrom rule in this case."); 135 F.3d, at 1283, and n. 6 (endorsing the reasoning of Paulson v. Western Life Ins. Co, 292 Ore. 38, 636 P.2d 935 (1981), an Oregon Supreme Court decision that purported to reconcile Elfstrom with an apparently conflicting body of case law). Whatever the contours of Elfstrom may be, the Ninth Circuit held that the state law emerging from that case does not "relat[e] to" an ERISA plan within the meaning of § 1144(a), and therefore escapes preemption. See 135 F.3d, at 1287.
In this determination, the Ninth Circuit was mistaken. The Court of Appeals stated, without elaboration, that Elfstrom does not dictate "the manner in which the plan will be administered," and therefore is consistent with this Court's ERISA preemption precedent. Ibid.; see New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657-658 (1995) (identifying among laws that "relat[e] to" employee benefit plans those that *379 "mandat[e] employee benefit structures or their administration"). The Ninth Circuit's statement is not firmly grounded.
As persuasively urged by the United States in its amicus curiae brief, deeming the policyholder-employer the agent of the insurer would have a marked effect on plan administration. It would "forc[e] the employer, as plan administrator, to assume a role, with attendant legal duties and consequences, that it has not undertaken voluntarily"; it would affect "not merely the plan's bookkeeping obligations regarding to whom benefits checks must be sent, but [would] also regulat[e] the basic services that a plan may or must provide to its participants and beneficiaries." Brief 27. Satisfied that the Elfstrom rule "relate[s] to" ERISA plans, we reject the Ninth Circuit's contrary determination.
* * *
For the reasons stated, the judgment of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
NOTES
[*] Briefs of amici curiae urging reversal were filed for the American Council of Life Insurance et al. by Robert N. Eccles, Karen M. Wahle, Jeffrey L. Gabardi, and Phillip E. Stano; for the Association of California Life and Health Insurance Companies by James H. Fleming; for the Association of Private Pension and Welfare Plans et al. by Michael E. Malamut, Loretta M. Smith, Jan Amundson, Quentin Riegel, and Stephen A. Bokat; and for the Business Roundtable by Charles Rothfeld and Lawrence S. Robbins.
Briefs of amici curiae urging affirmance were filed for the State of Texas et al. by John Cornyn, Attorney General of Texas, and David C. Mattax, Eliot Spitzer, Attorney General of New York, Peter Schiff, Acting Solicitor General, Patricia Smith, Assistant Attorney General, and Dan Schweitzer, and by the Attorneys General for their respective jurisdictions as follows: Bill Pryor of Alabama, Janet Napolitano of Arizona, Winston Bryant of Arkansas, Bill Lockyer of California, Gale A. Norton of Colorado, Richard Blumenthal of Connecticut, M. Jane Brady of Delaware, Robert A. Butterworth of Florida, Thurbert E. Baker of Georgia, Margery S. Bronster of Hawaii, Alan G. Lance of Idaho, James E. Ryan of Illinois, Jeffrey A. Modisett of Indiana, Thomas J. Miller of Iowa, Richard P. Ieyoub of Louisiana, Andrew Ketterer of Maine, J. Joseph Curran, Jr., of Maryland, Scott Harshbarger of Massachusetts, Jennifer M. Granholm of Michigan, Mike Hatch of Minnesota, Jeremiah W. (Jay) Nixon of Missouri, Joseph P. Mazurek of Montana, Frankie Sue Del Papa of Nevada, Peter Verniero of New Jersey, Patricia A. Madrid of New Mexico, Michael F. Easley of North Carolina, Heidi Heitkamp of North Dakota, Betty D. Montgomery of Ohio, W. A. Drew Edmondson of Oklahoma, Hardy Myers of Oregon, Mike Fisher of Pennsylvania, Jose Fuentes-Agostini of Puerto Rico, Sheldon Whitehouse of Rhode Island, Charles M. Condon of South Carolina, Paul G. Summers of Tennessee, Jan Graham of Utah, William H. Sorrell of Vermont, Christine O. Gregoire of Washington, Darrell V. McGraw of West Virginia, and Gay Woodhouse of Wyoming; for the Council of State Governments et al. by Richard Ruda and Steven H. Goldblatt; for the National Association of Insurance Commissioners by Sally B. Sur- ridge; and for the National Employment Lawyers Association by Daniel M. Feinberg and Paula A. Brantner.
Mary Ellen Signorille and Melvin Radowitz filed a brief for the American Association of Retired Persons as amicus curiae.
[1] Common-law rules developed by decisions of state courts are "State law" under ERISA. See 29 U.S. C. § 1144(c)(1)("The term `State law' includes all laws, decisions, rules, regulations, or other State action having the effect of law.").
[2] State laws that purport to regulate insurance by "deem[ing]" a plan to be an insurance company are outside the saving clause and remain subject to preemption. See § 1144(b)(2)(B). Self-insured ERISA plans, therefore, are generally sheltered from state insurance regulation. See Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747 (1985). Because this case does not involve a self-insured plan, this limitation on state regulatory authority is not at issue here.
[3] UNUM cites a handful of California cases of this genre. They do not cast doubt on our disposition. In Conservatorship of Rand, 49 Cal. App. 4th 835, 57 Cal. Rptr. 2d 119 (4th Dist. 1996), the court found that a county court rule governing notice to a conservatee of potential liability for fees and costs did not comply with statutory notice requirements, but excused the defective notice because the conservatee had suffered no prejudice. See id., at 838-841, 57 Cal. Rptr. 2d, at 121-123. Rand was not a contract case at all; it concerned the consequences of a court's violation of a statecreated notice provision in the context of a judicial proceeding. Industrial Asphalt Inc. v. Garrett Corp., 180 Cal. App. 3d 1001, 226 Cal. Rptr. 17 (2d Dist. 1986), concerned the notice requirements imposed by California's mechanics lien law and turned on principles of statutory rather than contract interpretation. See id., at 1005-1006, 226 Cal. Rptr., at 18-19. In Industrial Asphalt, moreover, the complaining party had received actual notice of the claim underlying the lien. Ibid. Neither case suggests that California courts are generally unwilling or reluctant to enforce time conditions in private contracts as written.
The older decisions on which UNUM relies are no more instructive. The contract at issue in Ballard v. MacCallum, 15 Cal. 2d 439, 101 P.2d 692 (1940) (en banc), contained contradictory clauses, some appearing to provide for forfeiture in the event of default, others appearing to contemplate an opportunity to cure. See id., at 442, 101 P.2d, at 694. The court invoked a general presumption against forfeitures only to resolve the conflict. See id., at 444, 101 P.2d, at 695. Finally, in Henck v. Lake Hemet Water Co., 9 Cal. 2d 136, 69 P.2d 849 (1937) (en banc), a water supplier attempted to escape the terms of a long-term delivery contract on the ground that the water recipient had not timely made annual payment. The California Supreme Court rejected the supplier's plea, observing that "in a proper case," equity permits a court to excuse a lapse like the recipient's in order to avoid forfeiture. See id., at 141, 142, 69 P.2d, at 852. The Henck court carefully weighed the competing interests of the parties and relied in part on the water supplier's fault in inducing the late payment. See id., at 144-145, 69 P.2d, at 853; cf. Restatement (Second) of Contracts § 229, Comment c, Reporter's Note (1979) (courts are likely to excuse obligor's failure strictly to adhere to a performance timetable where obligee has induced the failure).
These decisions support the uncontested propositions that the law disfavors forfeitures and that in case-specific circumstances California courts will excuse the breach of a time or notice provision in order to avoid an inequitable forfeiture. None of the decisions even remotely suggests that failures to comply with contractual notice periods are excused as a matter of law absent prejudice; none, therefore, suggests that the notice-prejudice rule is merely a routine application of a general antiforfeiture principle.
[4] UNUM features § 229 of the Restatement (Second) of Contracts (1979), and urges that the notice-prejudice rule fits within its compass. Section 229 provides that "[t]o the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the nonoccurrence of that condition unless its occurrence was a material part of the agreed exchange." The notice-prejudice rule, however, is mandatory rather than permissive; it requires California courts to excuse a failure to provide timely notice whenever the insurer cannot carry the burden of showing actual prejudice, and it allows no argument over the materiality of the time prescription.
[5] We reject UNUM's suggestion that because the notice-prejudice rule regulates only the administration of insurance policies, not their substantive terms, it cannot be an integral part of the policy relationship. See Metropolitan Life, 471 U. S., at 728, n. 2 (including laws regulating claims practices and requiring grace periods in catalog of state laws that regulate insurance).
[6] We recognize that applying the States' varying insurance regulations creates disuniformities for "national plans that enter into local markets to purchase insurance." Metropolitan Life, 471 U. S., at 747. As we have observed, however, "[s]uch disuniformities . . . are the inevitable result of the congressional decision to `save' local insurance regulation." Ibid.
[7] We discussed this issue in Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987). That case concerned Mississippi common law creating a cause of action for bad-faith breach of contract, law not specifically directed to the insurance industry and therefore not saved from ERISA preemption. In that context, the Solicitor General, for the United States as amicus curiae, urged the exclusivity of § 502(a), ERISA's civil enforcement provision, and observed that § 502(a) was modeled on the exclusive remedy provided by § 301 of the Labor Management Relations Act, 1947 (LMRA), 29 U.S. C. § 185. The Court agreed with the Solicitor General's submission. 481 U.S., at 52-56.
In the instant case, the Solicitor General, for the United States as amicus curiae, has endeavored to qualify the argument advanced in Pilot Life. See Brief 20-25. Noting that "LMRA Section 301 does not contain any statutory exception analogous to ERISA's insurance savings provision," the Solicitor General now maintains that the discussion of § 502(a) in Pilot Life "does not in itself require that a state law that `regulates insurance,' and so comes within the terms of the savings clause, is nevertheless preempted if it provides a state-law cause of action or remedy." Brief 25; see also id., at 23 ("[T]he insurance savings clause, on its face, saves state law conferring causes of action or affecting remedies that regulate insurance, just as it does state mandated-benefits laws."). We need not address the Solicitor General's current argument, for Ward has sued under § 502(a)(1)(B) for benefits due, and seeks only the application of saved state insurance law as a relevant rule of decision in his § 502(a) action. | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/2313685/ | 73 F. Supp. 2d 420 (1999)
SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
PRINCETON ECONOMIC INTERNATIONAL LTD., Princeton Global Management Ltd. and Martin A. Armstrong, Defendants.
Commodities Futures Trading Commission, Plaintiff,
v.
Princeton Economic International Ltd., Princeton Global Management Ltd. and Martin A. Armstrong, Defendants.
Nos. 99 Civ. 9667, 99 Civ. 9669.
United States District Court, S.D. New York.
October 28, 1999.
*421 Carmen J. Lawrence, New York City (Edwin H. Nordlinger, Andrew J. Geist, Dorothy Heyl, Helene Glotzer, David Rosenfeld, of counsel), for Securities and Exchange Commission, plaintiff.
Dennis M. O'Keefe, Vincent McGonagle, Lawrence H. Norton, Washington, D.C., for Commodities Futures Trading Commission, plaintiff.
Alan M. Cohen, Temporary Receiver, O'Melvey and Myers, Martin Glenn, New York City, for the Temporary Receiver.
Martin P. Unger, Lawrence S. Feld, Lawrence M. Rosenstock, Niral P. Kalaria, Tenzer Greenblatt LLP, New York City, for defendants.
OPINION AND ORDER
OWEN, District Judge.
The Securities and Exchange Commission ("SEC") alleges that Martin A. Armstrong, and his companies, Princeton Economic International Ltd. and Princeton Global Management Ltd. (collectively, "defendants") and their myriad of subsidiaries and affiliates of all stripes,[1] violated section 17(a) of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. § 77g(a), and section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, by fraudulently offering and selling promissory notes in the millions issued by a down-the-line subsidiary of defendant Princeton Economic International Ltd. ("PEIL"), Cresvale International, Limited (Tokyo) ("Cresvale"), to Japanese institutional investors, and misrepresenting the net asset value to the investors, thereby concealing large and mounting trading losses. The Commodities Futures Trading Commission ("CFTC") claims that defendants also violated sections 4b, 4m and 4o (1) of the Commodity Exchange Act, 7 U.S.C. §§ 6b, 6m, 6o (1), by engaging in this scheme as to futures.
In August and early September 1999, defendants began to transfer assets in an apparent effort to hide them against a day of reckoning appearing on the horizon. On September 13, 1999, Judge Kaplan of this Court granted a temporary restraining order restraining defendants from further violating securities laws, freezing defendants' assets, appointing a temporary receiver to collect the assets and report and granting other relief. However, shortly thereafter, Armstrong, with full knowledge of this order, and on the advice of at least one of his attorneys, covertly filed his own proceeding for receivers in the Turks and Caicos Islands to diminish, if not thwart, this Court's Temporary Receiver's powers and ability to act. On September 19, 1999, the Supreme Court, Providenciales, in the Turks and Caicos Islands appointed Joint Provisional Liquidators ("JPLs") of PEIL. (See infra at p. 425). As a result, this Court entered a second temporary restraining order on September 19, 1999 ordering defendants not to file any petition in bankruptcy on behalf of the corporate defendants or seek the appointment of a liquidator, receiver or other fiduciary without leave of this Court.[2] As of this moment, I have sanctioned *422 an accommodation (subject to defeasance) between the Temporary Receiver and the Turks JPLs. The SEC, CFTC and Temporary Receiver now move for preliminary injunctions.
The SEC's Motion for Preliminary Injunction
On October 14, 1999, the SEC, PEIL and Princeton Global Management entered into a Partial Consent Judgment of Permanent Injunction. Accordingly, the SEC seeks a preliminary injunction only against Armstrong as heretofore temporarily restrained as provided in Judge Kaplan's order. This would put Armstrong under court restraint against future violations of the securities law, freeze assets, prohibit the destruction of documents and further authorize the Temporary Receiver to act as specifiedexcept to the extent that the Memorandum of Agreement of October 7, 1999 ("MOA") is in force and modifies any provision of Judge Kaplan's and my orders.
In obtaining a statutory injunction, a government agency is not subject to the burdens borne by a private litigant, such as proof of irreparable injury or inadequacy of other remedies. CFTC v. British Am. Commodity Options Corp., 560 F.2d 135, 141 (2d Cir.1977). Section 20(b) of the Securities Act, 15 U.S.C. § 77t(b), and section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), entitle the SEC to a preliminary injunction upon "a substantial showing of likelihood of success as to both a current violation and the risk of repetition." SEC v. Cavanagh, 155 F.3d 129, 132 (2d Cir.1998); SEC v. Unifund SAL, 910 F.2d 1028, 1039-40 (2d Cir.1990).
The SEC contends that Armstrong violated section 17(a) of the Securities Act and section 10(b) of the Exchange Act and Rule 10b-5 thereunder, acting with scienter,[3] by making material misrepresentations (or material omissions if he had a duty to speak) or using a fraudulent device in connection with the purchase or sale of a security. SEC v. First Jersey Sec., 101 F.3d 1450, 1467 (2d Cir.1996).
I find jurisdiction here. Defendant Armstrong's contention in his memorandum to the Court that "the Princeton Notes were issued by foreign entities outside the United States" (Def.'s Br. at 21) is patently and facially contrary to the record. A Princeton Note for $10,420,000 issued by Cresvale to Kissei Pharmaceutical Co., Ltd. bears Armstrong's signature, (Decl. of Kristine Collins in Supp., Ex. 12), and counsel's guarded protestation at the hearing of the non-authenticity of Armstrong's signature evaporates in the comparison to Armstrong's nine admittedly genuine signatures on Exhibit 9 to the same declaration. This operation was, it is clear, all one ball of Armstrong's wax. The claim in his memorandum (Def.'s Br. at 21) that he "did not participate in the offer and sale of the Princeton Notes," is specious. Further, in penning the memorandum's language, "The SEC fails to allege any participation by the defendant [Armstrong] in the offer and sale of the Princeton Notes" (Def.'s Br. at 21-22), the writer appears not to have read ¶ 12 of the SEC's complaint.
Next, the Princeton Notes are securities. Finally, there is no question that the SEC, on this record, has put before this Court documentary and other evidence which shows that Armstrong and the entities under his control, having represented that the proceeds of their note sales would be kept in segregated accounts and used to purchase conservative investments, actually lost sums in the many millions in risky currency and commodities trading, and then commingled accounts prior to subsequent transactions to cover this up. From this, it appears that he and entities under his control used thereafter-acquired investor money to pay off maturing notes fostering the appearance that all was well, and arranged for the mailing of letters to investors containing false statements *423 which overstated the net asset value of the accounts (the "NAV letters"). These misrepresentations were material, and certainly were in connection with later "sales" as the law has in mind, and their contents would have unquestionably influenced an investor's decision. First Jersey, 101 F.3d at 1466. The SEC's evidence also demonstrates that defendants knowingly engaged in this conduct, satisfying the scienter requirement. This evidence not only shows current violations as required by the test for a preliminary injunction, but, upon an examination of the surrounding circumstances, it warrants the conclusion of the likelihood of future violations. See SEC v. Bonastia, 614 F.2d 908, 912 (3d Cir.1980); SEC v. Bausch & Lomb, Inc., 565 F.2d 8, 18 (2d Cir.1977).
Defendants have presented nothing but unsupported arguments and conjecture in their endeavor to put the foregoing in issue, and Armstrong invoked his Fifth Amendment privilege against self-incrimination to all questions on his deposition. I observe that the Court is permitted to, and I do draw an adverse inference from his refusal to testify. SEC v. Scott, 565 F. Supp. 1513, 1533 (S.D.N.Y.1983). Thus, on this record, the SEC has made a substantial showing of success on the merits as to both current and, if undeterred, a clear likelihood of future violations of the securities laws. The SEC's preliminary injunction against Armstrong is therefore granted in all respects. Judge Kaplan's order of September 13, 1999 continues in full force pending the submission and signing of an appropriate formal order(s) hereafter, and I observe that this Opinion and Order is in no way to be construed as in conflict with or conflicted by any other outstanding order(s) in this action. (See, e.g., Partial Consent J. of Permanent Inj. as to Defs. Princeton Economics International Ltd. and Princeton Global Management Ltd. at ¶ VI).
The CFTC's Motion for Preliminary Injunction
The CFTC seeks a statutory restraining order pursuant to section 6c of the Commodity Exchange Act, 7 U.S.C. § 13a-1, freezing defendants' assets, prohibiting the destruction of, and giving the CFTC access to, defendants' books and records, and continuing the receivership. To obtain a preliminary injunction, the CFTC, like the SEC, must show a substantial likelihood of success as to both violation and repetition. Cavanagh, 155 F.3d at 132; Unifund, 910 F.2d at 1039. The CFTC alleges that Armstrong and the corporate defendants have engaged in fraud in violation of sections 4b(a)(i)-(iii) and 4o (1) of the Commodity Exchange Act and have failed to register with the CFTC as Commodity Pool Operators ("CPOs")[4] and Commodity Trading Advisors ("CTAs")[5] in violation of section 4m.
Sections 4b(a)(i)-(iii) prohibit any person from cheating, defrauding, or deceiving or attempting to cheat, defraud or deceive any person in connection with commodity futures trading and from willfully entering or causing the entry of any false report or record concerning such trading. *424 In an enforcement proceeding, the CFTC can show a violation of this anti-fraud provision by establishing that the defendant intended to make and did make a material misrepresentation with scienter. CFTC v. American Metals Exch. Corp., 775 F. Supp. 767 (D.N.J.1991), aff'd in part and vacated, 991 F.2d 71 (3d Cir.1993); see JCC, Inc. v. CFTC, 63 F.3d 1557, 1565 n. 23 (11th Cir.1995) (stating that reliance is not a necessary element in an enforcement proceeding). Here, the evidence, particularly the NAV letters, supports the CFTC's contention that defendants intended to conceal large trading losses from pool participants and misrepresented the size of the remaining assets, and then knowingly made these representations to the investors in violation of section 4b of the Commodity Exchange Act.
As to the claim that defendants have violated section 4m of the Act, by failing to register as CPOs or CTAs, the CFTC presented evidence that defendants, since at least November 1997, have commingled the proceeds derived from the sale of notes to customers in a commodity pool, and that defendants and/or their agents issued trading advice and direction and maintained authority and discretion over the funds. These are functions of a CPO and CTA, respectively, and a failure to register with the CFTC constitutes a violation of section 4m.[6]
Finally, the CFTC claims that defendants have violated section 4o (1) of the Commodity Exchange Act, which prohibits CTAs and CPOs from engaging in conduct constituting a violation of section 4b(a). Section 4o (1) has some significant differences, however: it requires "use of the mails or any means or instrumentality of interstate commerce"; it concerns only CTAs and CPOs; and it does not expressly require scienter as a prerequisite for liability under section 4o (1)(B). In re Kolter, [1994-1996 Transfer Binder] Comm. Fut.L.Rep. (CCH) ¶ 26,262 at 42,198 (CFTC Nov. 8, 1994). The CFTC's evidence also complies with these additional requirements. As discussed above, the CFTC has put before me evidence that defendants have acted as CTAs and CPOs, despite their failure to register with the CFTC. The CFTC's evidence also demonstrates that defendants have used the mails and other instrumentalities of interstate commerce to defraud, specifically in mailing the NAV letters.
Again, defendants make no presentation putting in issue the CFTC's showing. Thus, on this record, the CFTC has demonstrated that there is a substantial likelihood that it will succeed in showing a current violation of sections 4b(a)(i)-(iii), 4m and 4o (1) of the Commodity Exchange Act and that the risk of repetition exists as well. The CFTC's motion for a preliminary injunction is therefore granted.
The Temporary Receiver's Motion for Preliminary Injunction
The Temporary Receiver, whose status, power and duties as provided by Judge Kaplan are confirmed and continued by this Order, seeks to enjoin defendants from filing any petition in bankruptcy on behalf of or against any of the corporate defendants, or seeking the appointment of a liquidator, receiver or other fiduciary without first seeking leave of this Court.[7] It is well established in this Circuit that a preliminary injunction requires a showing of (1) irreparable harm and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions about the *425 merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting relief. Brenntag Int'l Chems., Inc. v. Bank of India, 175 F.3d 245, 249 (2d Cir. 1999).
A party can show irreparable harm by demonstrating that without the preliminary injunction, there is a substantial likelihood that the judgment will be uncollectible, so the parties can not be returned to the positions previously occupied. Id.; see Pashaian v. Eccelston Properties, Ltd., 88 F.3d 77, 85 (2d Cir.1996). Defendants' covert conduct in securing the appointment of the JPLs in the Turks and Caicos Islands to separately deal with and thus injure and frustrate this Court's Temporary Receiver not only defied this Court's temporary restraining order, but also shows that defendants have already attempted to transfer or dispose of assets. At 10:00 in the morning of Friday, September 17, 1999, this Court's Temporary Receiver, in speaking with a London lawyer for PEIL, Nigel Barnett, told him there were to be no actions or transfers in light of this Court's already-existing order, to which Barnett replied, "I understand ... we will take no actions." That afternoon, however, the Temporary Receiver learned that subsequent to that telephone call. Armstrong had obtained the appointment of the JPLs in the Turks and Caicos Islands to take possession of all of PEIL's assets and books away from the Temporary Receiver. Barnett, when confronted with this, acknowledged that before his telephone conversation with the Temporary Receiver, he had advised Armstrong to make the filing and Armstrong told him to prepare the papers, and he did not tell this to the Temporary Receiver when he spoke of "no actions" (see supra) because Armstrong had told him not to. This conduct by Armstrong and the false statement by Barnett are more than sufficient to warrant the preliminary injunction the Temporary Receiver seeks. Haggiag v. Brown, 728 F. Supp. 286, 290 (S.D.N.Y. 1990). This is the kind of effort that could render an eventual judgment here unenforceable. Thus, the Temporary Receiver has made an adequate showing of irreparable harm.
The Temporary Receiver is also likely to succeed on the merits of his claim. Again, defendants' defiance of this Court's temporary restraining order interfered with the work and responsibilities of the Temporary Receiver, if nothing else, forcing the presently-accommodating MOA with the JPLs. This blatant disregard entitles this Court to issue a preliminary injunction restraining defendants from engaging in other activities that would defy this Court and thwart the efforts and work of the Temporary Receiver. Accordingly, the Temporary Receiver's motion is granted.
The foregoing is so ordered. Any party may submit any further perceived appropriate and necessary formal order for signature on notice.
NOTES
[1] One such company, Princeton Economics Institute, Inc., is used and controlled by Armstrong, although it may or may not be nominally owned by two of his children, one of whom is a full-time college student.
[2] This TRO was further modified on September 24, 1999 to permit the JPLs to file papers or take other necessary or appropriate actions to appoint liquidators outside the United States only.
[3] Scienter is not a requirement under section 17(a)(2) or section 17(a)(3). Aaron v. SEC, 446 U.S. 680, 697, 100 S. Ct. 1945, 64 L. Ed. 2d 611 (1980).
[4] A CPO is defined as "any person engaged in a business that is of the nature of an investment trust, syndicate, or similar form of enterprise, and who, in connection therewith, solicits, accepts or receives from others, funds, securities, or property, either directly or though capital contributions, the sale of stock or other forms of securities, or otherwise, for the purpose of trading in any commodity for future delivery on or subject to the rules of any contract market." 7 U.S.C. § 1a(4).
[5] A CTA is defined as any person who "(i) for compensation or profit, engages in the business of advising others, either directly or indirectly or through publications, writings, or electronic media, as to the value of or the advisability of trading in (I) any contract of sale of a commodity for future delivery made or to be made on or subject to the rules of a contract market; (II) any commodity option authorized under section 6c of this title; or (III) any leverage transaction authorized under section 23 of this title; or (ii) for compensation or profit, and as part of regular business, issues or promulgates analyses or reports concerning any of the activities referred to in clause (i)." 7 U.S.C. § 1a(5).
[6] Defendants claim that the evidence is insufficient to show that they were CTAs or CPOs, which would preclude the preliminary injunction. Even if I agree with this position, which I do not, the CFTC has produced evidence showing a violation of sections 4b(a)(i)-(iii) of the Commodity Exchange Act, which is sufficient to issue a preliminary injunction under section 6b.
[7] It must be noted that the Temporary Receiver and the JPLs have entered into an accommodating MOA (see supra p. ___) which governs the relationship between them, conditions for termination, and the JPL's obligations to this Court in this action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568917/ | 94 F. Supp. 2d 294 (2000)
Tonia CUSH-CRAWFORD, Plaintiff,
v.
ADCHEM CORP., Defendant.
No. 98-CV-676 (ADS).
United States District Court, E.D. New York.
April 14, 2000.
*295 *296 Law Offices of Charmaine M. Stewart & Assoc., Rosedale, NY (Charmaine M. Stewart, George B. Lewis, of counsel), for Plaintiff.
Ciarelli & Dempsey, Melville, NY(John L. Ciarelli, Patricia Dempsey, of counsel), for Defendant.
MEMORANDUM OF DECISION AND ORDER
SPATT, District Judge.
In what is apparently a case of first impression in this circuit, this Court must decide whether, in a Title VII sexual harassment case, a jury verdict of punitive damages can be sustained where no compensatory damages were awarded.
This case concerns allegations of sexual harassment and retaliation by the Plaintiff, Tonia Cush-Crawford, against the Defendant, Adchem Corp. ("Adchem"). Following a trial, the jury returned a verdict in favor of the Plaintiff on her claim of hostile environment sexual harassment under Title VII, and a verdict in favor of Adchem on the Plaintiff's claims of quid pro quo sexual harassment and retaliation. The jury awarded no compensatory damages to the Plaintiff on the hostile environment claim, but awarded $100,000 in punitive damages against Adchem on that claim. Presently before the Court are the Plaintiff's motion for a new trial on damages pursuant to Fed.R.Civ.P. 59 and for an award of attorney's fees, and a motion by Adchem pursuant to Fed.R.Civ.P. 50(b) to set aside the jury's verdict on the hostile environment claim and the award of punitive damages.
BACKGROUND
Briefly stated, the Plaintiff alleges that, while employed at Adchem, she suffered repeated unwelcome sexual advances and comments from her supervisor, Collin Mars. The Plaintiff claims that she repeatedly complained to Adchem about the advances, but that no action was taken on her complaints. Eventually, the Plaintiff was able to secure a transfer from Adchem's facilities in Westbury, N.Y. to its plant in Riverhead, N.Y., and thus escape Mars. However, she soon grew dissatisfied with the Riverhead facility and asked to return to the Westbury plant. Adchem returned the Plaintiff to Westbury, and to the supervision of Mars, although the company did place an intermediate layer of supervision between Mars and the Plaintiff. A few months later, the Plaintiff suffered an unrelated on-the-job injury, and never returned to Adchem.
The Plaintiff then commenced this action, alleging various state and federal claims sounding in sexual harassment and retaliation. Following a six-day trial, the Plaintiff presented three causes of action *297 to the jury under Title VII and the New York State Human Rights Law: (i) hostile environment sexual harassment; (ii) quid pro quo sexual harassment; and (iii) retaliation. The jury returned a verdict in favor of the Plaintiff on the hostile environment claim, and in favor of Adchem on the quid pro quo and retaliation claims. The jury awarded the Plaintiff $0 in compensatory damages, and $100,000 in punitive damages. Neither party requested a jury instruction on nominal damages, nor has the Plaintiff in this motion requested that, based on the verdict, the Court award nominal damages as a matter of law.
DISCUSSION
A. As to Adchem's motion "to set aside the verdict"
Adchem's motion for judgment as a matter of law seeks to set aside the jury's verdict in favor of the Plaintiff on the hostile environment harassment claim and the award of punitive damages. A court decides a motion for judgment as a matter of law under Fed.R.Civ.P. 50(a)(1) using the same standard that applies to motions for summary judgment. Alfaro v. WalMart Stores, Inc., 210 F.3d 111 (2d Cir. 2000). Specifically, the motion must be denied unless the court finds that there is such a complete absence of evidence supporting the verdict that the jury's finding could only have been the result of sheer surmise and conjecture, or if the evidence is so overwhelming that reasonable and fair minded persons could only have reached the opposite result. Ryduchowski v. Port Authority of New York, 203 F.3d 135, 141-42 (2d Cir.2000); see also This Is Me, Inc. v. Taylor, 157 F.3d 139 (2d Cir. 1998); Concerned Area Residents for the Environment v. Southview Farm, 34 F.3d 114 (2nd Cir.1994); Weldy v. Piedmont Airlines, 985 F.2d 57 (2d Cir.1993). In making this determination, the court is required to view the evidence in the light most favorable to, to draw all reasonable inferences in favor of, and to resolve all credibility disputes to the benefit of the non-moving partyin this case, the Plaintiff. Ryduchowski, 203 F.3d at 142; Martinelli v. Bridgeport Roman Catholic Diocesan Corp., 196 F.3d 409, 425 (2d. Cir. 1999); Stagl v. Delta Air Lines, Inc., 117 F.3d 76, 79 (2d Cir.1997).
1. The verdict on the hostile environment claim
To establish a claim for sexual harassment based on a hostile working environment, a plaintiff must show that her workplace was permeated with "discriminatory intimidation, ridicule, and insult" that is "sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment." Harris v. Forklift Sys., Inc., 510 U.S. 17, 21, 114 S. Ct. 367, 126 L. Ed. 2d 295 (1993); Quinn v. Green Tree Credit Corp., 159 F.3d 759, 765 (2d Cir. 1998); Distasio v. Perkin Elmer Corp., 157 F.3d 55, 62 (2d Cir.1998). Whether an environment is "hostile" or "abusive" depends on the totality of circumstances. Harris, 510 U.S. at 23, 114 S. Ct. 367.
Courts must consider a variety of factors including "the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance." Id. These factors must be evaluated from both a subjective and an objective viewpoint. Id. at 21-22, 114 S. Ct. 367. In addition, in order to hold her employer liable for hostile environment harassment, a plaintiff must also show that the conduct which created the hostile environment should be imputed to the employer. Kotcher v. Rosa & Sullivan Appliance Center, Inc., 957 F.2d 59, 63 (2d Cir.1992). However, employers are presumptively liable for all acts of harassment perpetrated by an employee's supervisor. Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 118 S. Ct. 2257, 141 L. Ed. 2d 633, (1998); Faragher v. City of Boca Raton, 524 U.S. 775, 118 S. Ct. 2275, 141 L. Ed. 2d 662 (1998), unless the employer proves that it exercised reasonable care to prevent and *298 promptly correct any sexual harassment by such a supervisor, and that the employee unreasonably failed to avail herself of any corrective or preventative opportunities provided by the employer or to otherwise avoid harm. Id.
While many of the facts in this case are in dispute, viewing the evidence at trial in the light most favorable to the Plaintiff, the Court finds that the jury could reasonably have reached a verdict in her favor on the hostile environment claim. The Plaintiff testified that, shortly after her hiring in June 1993, she was subjected to numerous unwelcome and upsetting suggestive comments and advances from her supervisor, Collin Mars. She testified that this behavior commenced almost immediately after she was hired, when Mars began telling her how beautiful she looked and would ask her to go to the gym with him after work. She also testified that, when she turned down his advances, Mars began complaining about her work performance.
Mars twice invited the Plaintiff on overnight trips to Toronto and Boston. The Plaintiff initially declined the invitations, and eventually agreed to go only because Mars would remind her that he was responsible for evaluating her performance. On both trips, Mars rented a single room for both of them to occupy, and attempted to kiss and fondle the Plaintiff, saying he wanted to make love to her. The Plaintiff rejected these advances and ended both evenings in tears. Mars propositioned the Plaintiff for sex a third time at a dinner with her mother on her birthday. In addition, the Plaintiff testified that Mars made numerous unwelcome comments about her appearance throughout the course of her employment. From this evidence, the jury reasonably found that the Plaintiff has been subjected to an unwelcome, sexually charged working environment.
In addition, the jury could reasonably find that Adchem had failed to carry its burden of proof under Ellerth and Faragher so as to avoid liability for Mars' actions. The Plaintiff testified that in September of 1993, she complained to Tom Rauen, a Production Control Supervisor, that "Collin Mars was coming onto me and he was calling me and he kept asking me out and ... if I didn't go out with him he would get upset." In September of 1993, the Plaintiff spoke to Adchem's Vice President Rob Pufahl, who indicated that he had talked to Rauen about the Plaintiff's complaints and that he was "aware of the situation." The Plaintiff also testified that she complained about similar matters to Pufahl on July 14, 1994 and in November of 1994. It does not appear that Adchem investigated any of these complaints nor took any substantial actions to prevent additional harassment of the Plaintiff until the November 1994 complaint, at which point a person named Robert Kneur was used to relay work assignments from Mars to the Plaintiff. The Plaintiff then transferred to the Riverhead facility for a short period of time, but returned to work at the Adchem facility in Westbury, where she was again placed under the supervision of Mars and Kneur.
Given the Plaintiff's repeated complaints about Mars' conduct, and the failure of Adchem to take immediate steps to investigate and remedy the Plaintiff's allegations, the Court finds that the jury's verdict against Adchem on the hostile environment claim is supported by the record. Therefore, Adchem's motion for judgment as a matter of law on the hostile environment claim is denied.
2. As to the award of punitive damages
The jury awarded the Plaintiff $0 in compensatory damages and $100,000 in punitive damages. Adchem moves for judgment under Rule 50 vacating the punitive damage award on the grounds that, as a matter of law, punitive damages cannot be awarded in the absence of compensatory damages. As an initial matter, although the Plaintiff's sexual harassment claims were alleged under both Title VII and the New York State Human Rights Law, the propriety of the punitive damage award *299 must be assessed only under federal law, as punitive damages are not available under the State Human Rights Law. Thoreson v. Penthouse Intl., 80 N.Y.2d 490, 591 N.Y.S.2d 978, 606 N.E.2d 1369 (1992).
The issue of whether punitive damages can be awarded in the absence of any compensatory damages in a case under Title VII appears to be one of first impression in this circuit, and a matter that has engendered conflict in other circuits. For example, the Seventh Circuit does not require compensatory damages to be awarded as a precondition to a Title VII plaintiff receiving punitive damages. Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1009 (7th Cir. 1998); see also Hennessy v. Penril Datacomm Networks, Inc., 69 F.3d 1344, 1349, 1351-52 (7th Cir.1995). On the other hand, the First Circuit in Kerr-Selgas v. American Airlines, Inc., 69 F.3d 1205, 1214-15 (1st Cir.1995), held that an award of punitive damages under Title VII must, at a minimum, be accompanied by an award of nominal damages. Notably, Kerr-Selgas, among other cases, makes clear that while an award of nominal damages is permitted under Title VII, it is not mandatory. Id.; see also Buckner v. Franco, Inc., 1999 WL 232704 (6th Cir. 1999) citing Walker v. Anderson Elec. Connectors, 944 F.2d 841, 845 (11th Cir. 1991). The Plaintiff here made no request, before or after the verdict, for a nominal damage instruction or judgment, and thus, this Court need not decide whether the Plaintiff was entitled to a nominal damage award, as a matter of law.
Although the Second Circuit has yet to weigh in on this issue, upon considered reflection, this Court finds the Seventh Circuit's approach to be correct. Nothing in 42 U.S.C. § 1981a(b), the statute that allows punitive damages to be awarded in Title VII cases, can be read to imply a requirement that a punitive damage award be accompanied by an award of compensatory damages. Moreover, the First Circuit's analysis in Kerr-Selgas springs from an examination of common-law tort principles, see 69 F.3d at 1214, citing inter alia Restatement (Second) of Torts, § 908, while the Seventh Circuit, in this Court's view, more correctly equates a Title VII civil rights claim with civil rights claims under Section 1983. See Timm, 137 F.3d at 1009; see also Meritor Savings Bank v. Vinson, 477 U.S. 57, 72, 106 S. Ct. 2399, 91 L. Ed. 2d 49 (1986) ("common-law principles may not be transferable in all their particulars to Title VII"); Paciorek v. Michigan Consol. Gas Co., 179 F.R.D. 216, 221 (E.D.Mich.1998) ("this Court finds the reasoning for the sharp distinction between state common law and statutory federal civil rights claims by the Seventh Circuit to be more persuasive").
It is a long-standing doctrine in this circuit that, in Section 1983 cases, an award of compensatory damages is not a prerequisite to the jury awarding punitive damages. See Robinson v. Cattaraugus County, 147 F.3d 153, 161 (2d Cir.1998) citing King v. Macri, 993 F.2d 294, 298 (2d Cir.1993) and Stolberg v. Members of Board of Trustees, 474 F.2d 485, 489 (2d Cir.1973); see also Beckford v. Irvin, 49 F. Supp. 2d 170, 182 (W.D.N.Y.1999). Like the Seventh Circuit in Timm, this Court sees "no reason ... for reading a compensatory-punitive link into ... Title VII but not Section 1983." 137 F.3d at 1009.
Therefore, this Court holds that there is no requirement that an award of punitive damages under Title VII be accompanied by an award of compensatory or nominal damages. To the extent that this Court's jury instruction implied such a requirement, the Court finds that this error was harmless in light of the jury's decision to award punitive damages nonetheless.
Adchem also argues that it is entitled to judgment as a matter of law vacating the punitive damage award on the grounds that the Plaintiff failed to prove the elements necessary for such damages. 42 U.S.C. § 1981a(b)(1) states that a plaintiff may recover punitive damages by demonstrating "that the respondent engaged in a discriminatory practice or discriminatory *300 practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual." The "reckless indifference" formulation of this language indicates that a Title VII plaintiff seeking punitive damages need not show "egregious" behavior by an employer, but merely demonstrate that the employer knew that it may have been acting in violation of federal law. Kolstad v. American Dental Assoc., 527 U.S. 526, 119 S. Ct. 2118, 2124, 144 L. Ed. 2d 494 (1999); Luciano v. Olsten Corp., 110 F.3d 210 (2d Cir.1997).
Viewing the evidence in the light most favorable to the Plaintiff, the Court observes that the Plaintiff experienced repeated unwelcome harassment at the hands of Mars, her supervisor throughout her employment. Further, the Plaintiff complained of that harassment to Adchem management as early as August 1993, and repeated those complaints for more than a year before action was finally taken on her complaints in November 1994. Also, although Adchem Vice President Rob Pufahl testified that Adchem lacked any corporate policies for dealing with sexual harassment in 1993 and 1994, he never testified that he was not aware during this period that sexual harassment was unlawful. Moreover, after the Plaintiff returned to the Westbury facility from her transfer to Riverhead, Adchem again placed her, at least indirectly, under the supervision of Mars, thus exposing her to the potential of further harassment. Based on all of this evidence, this Court cannot say that the jury's finding that Adchem was recklessly indifferent to the Plaintiff's right to a workplace free of unlawful harassment is not supported by the record.
Therefore, the Court denies Adchem's motion for judgment as a matter of law vacating the jury's award of punitive damages. Because Adchem does not argue that the amount of punitive damages awarded to the Plaintiff "shocks the conscience," Luciano, 110 F.3d at 222, the Court deems that argument waived.
B. As to the Plaintiff's motion for a new trial on damages
The Plaintiff moves, pursuant to Fed. R.Civ.P. 59(a), for a new trial on damages. The Plaintiff's motion is apparently premised on two grounds: (i) that the Court erroneously prevented the Plaintiff's counsel from referring to the Plaintiff's treating physician in summation, even though he had no intention of mentioning the Plaintiff's irritable bowel syndrome that the Court had held was not caused by the harassment; and (ii) that the Court erred in its jury instruction on punitive damages.
The Plaintiff's first argument is somewhat unclear. In the affirmation supporting the motion, the Plaintiff claims that "During summation plaintiff's counsel was abruptly cut off from mentioning plaintiff's treating physician's name. Plaintiff's counsel had not mentioned irritable bowel syndrome and had no intention of doing so ... The jury was instantaneously ordered by the trial judge that they could not consider the testimony of the treating physician. Yet, defendant's counsel was allowed to capitalize on the testimony of the treating physician and constantly demonize it in his summation." However, in the memorandum of law supporting her motion for a new trial, the Plaintiff contends that the Court's instruction to the jury concerning the Plaintiff's treating physician, Dr. Gallo, confused the jury over whether emotional distress should be addressed in a compensatory or a punitive damage award.
In either event, the Plaintiff's argument is unavailing. To the extent that the Plaintiff alleges that this Court improperly restricted the Plaintiff's counsel's summation, the Court finds no error in its instruction. During the Plaintiff's summation, counsel stated that he wished to point out that Dr. Gallo "diagnosed [the Plaintiff] as suffering from stress." The Court, however, stated that "there is no testimony that Dr. Gallo mentioned anything related to stress in this situation, to this employment environment." This ruling was correct. *301 Dr. Gallo's testimony mentioned "stress" only twice: once when he was reciting the initial complaints that the Plaintiff presented, and again when he recommended that the Plaintiff seek to "reduce stress." In light of the complete lack of any testimony by Dr. Gallo that he determined the Plaintiff to be suffering from stress related to her working environment, as opposed to any other source, the Court's instruction to the Plaintiff's counsel during summation was correct. In any event, the Court notes that its instruction to the Plaintiff's counsel did not prohibit him from referring to any other part of Dr. Gallo's testimony, nor did Adchem make any significant mention of Dr. Gallo in its summation, other than to indicate that Dr. Gallo suspected the Plaintiff's use of Advil might have contributed to her stomach problems.
To the extent that the Plaintiff's motion contends that the Court's ruling regarding Dr. Gallo's testimony somehow confused the jury into believing that their award for punitive damages would encompass her claims for emotional distress as well, the Court finds no merit in such a claim. Besides being uncertain of precisely how the former is alleged to have caused the latter, the Court finds that the Plaintiff raised no objection to the compensatory damage instruction at either the initial charging conference, or when the charge was actually given to the jury. Thus, the Court finds no error occurred regarding the Plaintiff's summation that warrants a new trial on damages.
The Plaintiff's second argument, that the Court erred in instructing the jury on punitive damages, is irrelevant. Under 42 U.S.C. § 1981a(b)(1)(3), the combined total of compensatory and punitive damages a Title VII claimant may recover is capped based on the size of the employer. Here, the only evidence in the record of Adchem's size is Pufhal's testimony that Adchem had approximately 140 employees in 1993 and 1994. Accordingly, the maximum amount that the Plaintiff could recover in punitive damages would be $100,000, 42 U.S.C. § 1981a(b)(1)(3)(b), exactly the amount the jury awarded for such damages. Thus, even if the Court had given a more correct jury instruction and the jury had returned a higher punitive damage award, the Court would nevertheless have reduced the award to $100,000. Moreover, as stated above, no punitive damages are available under the Plaintiff's state law claims. Thoreson, supra. Therefore, even assuming that the Court gave an incorrect jury instruction on punitive damages, the error is harmless and the Plaintiff received the maximum verdict she can obtain under Title VII.
For these reasons, the Plaintiff's motion for a new trial on damages is denied.
C. As to the Plaintiff's application for attorney's fees
A prevailing party in a case brought pursuant to Title VII is entitled to an award of reasonable attorney's fees. 42 U.S.C. § 2000e-5(k). Because of the district court's familiarity with the quality of the representation and the extent of the litigation, the decision whether to award fees and the amount of fees awarded are issues generally confined to the sound discretion of the court. Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir.1998).
The well-known formula for calculating attorney's fees is the "lodestar" method described in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106 S. Ct. 3088, 92 L. Ed. 2d 439 (1986). Under this method, the court makes an initial calculation of a lodestar amount by multiplying the number of hours reasonably spent on the litigation by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983); LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763-64 (2d Cir. 1998); Gierlinger, 160 F.3d at 876; Luciano v. Olsten Corp., 109 F.3d 111 (2d Cir.1997). If the court finds that certain claimed hours are excessive, redundant, or otherwise unnecessary, the court should exclude those hours from its lodestar calculation. Hensley, 461 U.S. at 434, 103 S. Ct. 1933; Luciano, 109 F.3d at 116. *302 Once the initial lodestar calculation is made, the court should then consider whether upward or downward adjustments are warranted by factors such as the extent of success in the litigation and the degree of risk associated with the claim. Hensley, 461 U.S. at 434 and n. 9, 103 S. Ct. 1933, citing Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir.1974).
Adchem first contests whether the Plaintiff is a "prevailing party," arguing that the jury's verdict did not find Adchem directly guilty of any act, but merely held it vicariously liable for Mars' harassment. However, in Burlington Industries v. Ellerth, 524 U.S. 742, 759, 118 S. Ct. 2257, 141 L. Ed. 2d 633 (1998), the Supreme Court explained that an employer is directly liable for its own negligence in failing to stop known workplace sexual harassment. Thus, the jury's finding in favor of the Plaintiff on the hostile environment claim is a finding of direct liability against Adchem. Moreover, in light of the jury's award of punitive damages to the Plaintiff, there can be no argument that she has received an enforceable judgment against Adchem, thus satisfying the prevailing party test set forth in Farrar v. Hobby, 506 U.S. 103, 113 S. Ct. 566, 121 L. Ed. 2d 494 (1992). Therefore, the Court finds that the Plaintiff is a prevailing party and entitled to an award of reasonable attorney's fees.
However, in making the initial lodestar calculation, the Court finds that the hourly rates requested by the Plaintiff's counsel are excessive. The rate to be used in the calculation must be the rate "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Luciano, 109 F.3d at 111, citing Blum v. Stenson, 465 U.S. 886, 896 n. 11, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). The Second Circuit has recently held that rates of $200 for partners, $135 for associates, and $50 for paralegals are reasonable hourly rates for legal services in the Eastern District. Savino v. Computer Credit, Inc., 164 F.3d 81, 87 (2d. Cir.1998); Luciano, 109 F.3d at 111-112 (collecting cases); Cruz v. Local Union No. 3, Int'l. Brotherhood of Electrical Workers, 34 F.3d 1148, 1160 (2d Cir.1994). Therefore, the Court will apply those rates in making the initial lodestar calculation.
Next, the Court must determine the number of hours that were reasonably expended in this litigation. Upon reviewing the time sheets submitted by Plaintiff's counsel, and based upon this Court's own knowledge of the issues tried in the case, the Court concludes that many of the hours sought by the Plaintiff are unnecessary and excessive. For example, three attorneys were present at the Plaintiff's counsel table throughout most of the trial. Given that this was a fairly simple case, involving no novel issues of law or complex documentary evidence, the Court finds that overstaffing of the case by the Plaintiff to be unreasonable. At most, trial of the Plaintiff's claims required the services of one partner and one associate, and thus, the Plaintiff's claimed trial hours (including jury selection) will be reduced to 65 hours each for one partner and one associate. Given the lack of complexity of the issues for trial, the Court finds that the additional 135 hours claimed by the Plaintiff for "trial preparation" are also excessive, and the Court reduces those hours to 60 hours at a partner rate and an additional 25 hours at an associate rate. The Court finds the remaining hours claimed by the Plaintiff's counsel to be generally reasonable.
Based on these findings, the Court determines that the initial lodestar calculation should be as follows:
Pre-trial: 18.8 hours at $50 per
hour (S.Stewart) = $940
16 hours at $135 per
hour (T. Eskridge) = $2160
137.5 hours at $200 per
hour
(C. Stewart, R. Bielski,
R. Iaannacone) = $27,470
Trial prep.: 60 hours at $200 and 25
hours at $135 = $15,375
Trial time: 65 hours at $200 and 65
hours at $135 = $21,775
In addition, the Plaintiff's application contains 33.65 hours attributed to a "T.A." *303 who is not identified. However, the task descriptions for this individual indicate paralegal-type work, and thus, an additional 33.65 hours at $50 per hour will be included in the initial calculation. Therefore, the total initial lodestar figure is $69,402.50.
However, as the Supreme Court in Hensley observed, calculation of the lodestar figure "does not end the inquiry." Hensley, 461 U.S. at 434 and n. 9, 103 S. Ct. 1933. In its opposition to the Plaintiff's request for fees, Adchem points out that the Plaintiff achieved limited success on her claims. Specifically, the jury found against her on her retaliation and quid pro quo harassment claims, and found that she suffered no compensable damages resulting from the hostile environment at Adchem. The Court agrees that a reduction of the lodestar figure is warranted in light of the Plaintiff's partial success. Nevertheless, the Court also observes that the Plaintiff was successful in her ultimate claim that Adchem was responsible for the maintenance of a hostile working environment, and, in light of the facts presented, recovered a very generous punitive damage award. Therefore, the Court finds that a general lodestar reduction of 25% is appropriate to reflect the partial lack of success achieved by the Plaintiff. See e.g. Quinn v. Nassau County, 75 F. Supp. 2d 74, 79 (E.D.N.Y.1999) (10% reduction in case involving a much greater degree of success). In addition, the Court awards the Plaintiff an additional 10 hours at $200 per hour for time spent opposing Adchem's post-trial motions and preparing the application for attorney's fees.
Therefore, the Court finds that the Plaintiff should be awarded attorney's fees in the total sum of $54,052.
As to the Plaintiff's requested disbursements and expenses, only those costs enumerated under 28 U.S.C. § 1920 may be taxed. Parties can recover costs for deposition transcripts under 28 U.S.C. § 1920(2) when the depositions appear to have been reasonably necessary to the litigation at the time they were taken, even if those transcripts are not used during trial. Sim v. New York Mailers' Union No. 6, 1999 WL 674447 (S.D.N.Y.1999). As Adchem does not contend that the five depositions taken in this case are non-taxable, the Court grants the Plaintiff's request for the transcript costs. However, the Plaintiff's unitemized request for $1,200 in "photocopies" is neither supported by receipts nor reasonable. 28 U.S.C. § 1920(4) entitles a party seeking costs to recover costs of photocopying "papers necessarily obtained for use in the case." Here, the Plaintiff offered only a handful of exhibits at trial, and thus, the Court estimates that the total cost of photocopying the documents necessarily used in this case is no more than $250. United States v. Merritt Meridian Constr. Corp., 95 F.3d 153, 173 (2d Cir.1996) (reduction of claim for photocopying where costs were not itemized). In addition, the Court denies the Plaintiff's request for a $300 "witness fee" for her expert, Dr. Gallo. Expert witness fees may be taxed only where the expert is appointed by the court. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442, 107 S. Ct. 2494, 96 L. Ed. 2d 385 (1987).
Therefore, the Plaintiff is awarded costs in the amount of $ 2,026.
CONCLUSION
For the foregoing reasons, Adchem's motion for judgment as a matter of law dismissing the hostile environment claim and vacating the jury's award of punitive damages is DENIED. The Plaintiff's motion for a new trial on the issue of damages is DENIED. Based on the jury's verdict, the Clerk of the Court is directed to enter a judgment in favor of the Plaintiff, Tonia Cush-Crawford, against Adchem Corp. in the amount of $ 100,000, together with $54,052 in attorney's fees pursuant to 42 U.S.C. § 2000e-5(k) and $2,026 in costs. The Clerk is directed to close this case.
SO ORDERED | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2577172/ | 113 F. Supp. 2d 770 (2000)
Katherine L. TAYLOR, Plaintiff,
v.
PHOENIXVILLE SCHOOL DISTRICT, Defendant.
No. CIV. A. 96-CV-8470.
United States District Court, E.D. Pennsylvania.
September 19, 2000.
*771 Joseph A. Ryan, Ryan, Wochock & Ryan, Ltd., Paoli, PA, for Plaintiff.
Michael I. Levin, Michael W. Jones, Michael I. Levin & Assoc., PC, Huntingdon Valley, PA, for Defendant.
MEMORANDUM
JOYNER, District Judge.
This is an employment discrimination case presently before the Court on remand from the United States Court of Appeals for the Third Circuit. Plaintiff Katherine L. Taylor ("Plaintiff" or "Taylor") brought this action against her former employer, Defendant Phoenixville School District ("Defendant" or "the School District"), on December 19, 1996. In her Complaint, Taylor claimed that the School District discriminated against her in violation of the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq. ("the ADA") and the Pennsylvania Human Relations Act, 43 P.S. § 951, et seq. ("the PHRA"). The essence of Taylor's claims was that the School District failed to provide reasonable accommodations for her mental illness.
Defendant moved for summary judgment pursuant to Fed.R.Civ.P. 56 on September 17, 1997. On March 20, 1998, we granted Defendant's Motion for Summary Judgment in our opinion reported at 998 F. Supp. 561 (E.D.Pa.1998). Plaintiff appealed. On appeal, the Third Circuit reversed our order, concluding that Taylor's unmedicated condition demonstrated that she had a disability. In addition, the court found that genuine factual issues existed as to whether the School District participated in the interactive process required by the ADA. See Taylor v. Phoenixville Sch. Dist., 174 F.3d 142 (3d Cir. Apr.5, 1999).
Shortly thereafter, Defendant petitioned for rehearing. The Third Circuit ultimately granted Defendant's petition and vacated its earlier opinion in light of the recent United States Supreme Court decisions in Sutton v. United Airlines, Inc., 527 U.S. 471, 119 S. Ct. 2139, 144 L. Ed. 2d 450 (1999) and Murphy v. United Parcel Svc., 527 U.S. 516, 119 S. Ct. 2133, 144 L. Ed. 2d 484 (1999). In Sutton and Murphy, the Supreme Court held that when a court evaluates whether a plaintiff has a disability *772 under 42 U.S.C. § 12102(A), it must take into account any mitigating measures the plaintiff uses. Based on these decisions, the Third Circuit on August 18, 1999 issued a new opinion, in which it applied the updated law.
In its August 1999 opinion, the Third Circuit again reversed the grant of summary judgment, concluding that genuine issues of fact existed as to whether Taylor continued to be substantially limited in a major life activity even while taking her medication. The court also restated its previous conclusions regarding the interactive process, which were unaffected by Sutton and Murphy. The case was then remanded to this Court for further proceedings. Taylor v. Phoenixville School District, 184 F.3d 296 (3d Cir.1999).
Upon remand, we granted the parties time to perform additional discovery. Having completed that additional discovery, Defendant now moves again for summary judgement on all counts. For the reasons that follow, we will grant Defendant's Motion in part and deny it in part.
BACKGROUND
As both this Court and the Third Circuit have previously stated the facts of this case at length, we need not duplicate those efforts here. The essential facts of the case are as follows. Plaintiff was employed by Defendant as the principal's secretary for the East Pikeland Elementary School ("East Pikeland") from September 1974 until her termination on October 28, 1994. During her tenure as secretary, Plaintiff worked for several different principals, each of whom gave Plaintiff consistently positive work reviews. In August 1993, a new principal, Christine Menzel ("Menzel"), was assigned to East Pikeland. Unfortunately, after working with Menzel for only one week, Plaintiff became ill and was forced to take a leave of absence from work.
Plaintiff's leave of absence began on August 30, 1993. The next day she was admitted to the Coastal Plains Hospital and Counseling Center in North Carolina ("Coastal Plains") where she was diagnosed with bipolar disorder. While under care at Coastal Plains, Plaintiff was treated with the prescription drugs Navane and Lithium Carbonate. She remained hospitalized until September 20, 1993, at which time she was discharged to the care of Louise Sonnenberg, M.D. ("Dr. Sonnenberg"), a psychiatrist practicing in Phoenixville, Pennsylvania. Plaintiff currently remains under the care of Dr. Sonnenberg and continues to take Lithium.
With her doctor's permission, Plaintiff returned to work in mid-October 1993. Almost immediately upon her return, Plaintiff encountered difficulties performing her job. These problems were exacerbated by a number of changes in office procedure that had been implemented by Menzel during Plaintiff's absence. As a result of the problems, Menzel became dissatisfied with Plaintiff's performance, and the working relationship between the two women became strained. Over the next year, Menzel documented Plaintiff's errors in a series of disciplinary memoranda that culminated with Plaintiff being placed on probation for unsatisfactory performance on September 8, 1994. Finally, on October 28, 1994, Plaintiff was informed that she had failed to improve her performance during the probationary period and that she was being terminated from her position.
After Plaintiff's termination, her union representatives negotiated with the School District to allow her to "retire" in substitution for her discharge, thereby allowing her to receive retirement benefits. Several months later, Plaintiff filed this action.
DISCUSSION
I. Legal Standard
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that *773 there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the initial burden of showing the basis for its motion for summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Once the moving party meets this burden pursuant to Fed.R.Civ.P. 56(c), the burden shifts to the non-moving party to go beyond mere pleadings and to demonstrate, through affidavits, depositions or admissions, that a genuine issue exists for trial. Id. at 324, 106 S. Ct. 2548. In so doing, the non-moving party must raise "more than a mere scintilla of evidence in its favor" and may not merely rely on unsupported assertions, conclusory allegations, or mere suspicions. Willmore v. American Atelier, Inc., 72 F. Supp. 2d 526, 527 (E.D.Pa.1999) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)).
Put simply, the summary judgment standard requires the non-moving party to create a "sufficient disagreement to require submission [of the evidence] to a jury." Liberty Lobby, 477 U.S. at 251-52, 106 S. Ct. 2505. When the non-moving party fails to create such disagreement, "[t]he moving party is `entitled to a judgment as a matter of law' because the non-moving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex, 477 U.S. at 323, 106 S. Ct. 2548.
II. The ADA
The ADA prohibits discrimination against qualified people with disabilities. To create a prima facie case under the ADA, a plaintiff must "establish that he or she (1) has a disability (2) is a qualified individual and (3) has suffered an adverse employment action because of that disability." Deane v. Pocono Med. Ctr., 142 F.3d 138, 142 (3d Cir.1998) (citing Gaul v. Lucent Techs., Inc., 134 F.3d 576, 580 (3d Cir.1998)). Because there is no legitimate dispute in this case that Taylor suffered an adverse employment action, we limit our analysis to the first two elements of the prima facie case.
A. Disability
The ADA defines a disability as: "(A) a physical or mental impairment that substantially limits one or more of the major life activities of [an] individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment." 42 U.S.C. § 12102(2); 29 C.F.R. § 1630.2(g)(1999).[1] Plaintiff argues that she satisfies all three prongs of this definition. We address each in turn.
1. Substantial limitation of a major life activity
First, Taylor argues that her condition is an "actual disability," that is, a physical or mental impairment that substantially limits her in a major life activity. It is undisputed that Taylor's bipolar disorder qualifies as an impairment under the ADA; the question is whether that disorder substantially limits a major life activity.
Defendant argues that, despite Taylor's impairment, she is not substantially limited in any major life activity. In doing so, Defendant reiterates many of the arguments it made to this Court in its first summary judgment motion. In addition, Defendant now claims that the Supreme Court's decision in Sutton mandates summary judgment on this issue. As noted above, the Supreme Court in Sutton held that courts must take into account any mitigating measures used by a plaintiff when determining if that plaintiff is disabled *774 under the ADA. See Sutton, 119 S.Ct. at 2147-49. In view of that holding, Defendant argues that there is no evidence that Taylor was substantially limited in any major life activity while taking Lithium.
Defendant's argument need not detain us long. In its August 18, 1999 opinion, the Third Circuit evaluated Defendant's argument in light of the Supreme Court's announcements in Sutton and Murphy. The Third Circuit began by accepting Plaintiff's argument that "thinking" could be a major life activity. Taylor, 184 F.3d at 307 ("We accept that thinking is a major life activity."); see generally 29 C.F.R. § 1630.2(i) & App. (describing characteristics of major life activities). Then, applying the new analytical framework of Sutton, the court concluded that: "[Taylor] has presented sufficient evidence to require a trial on whether she continued to be substantially limited even while receiving treatment." Taylor, 184 F.3d at 309; see generally 29 C.F.R. § 1630.2(j) (defining "substantially limited"). The Third Circuit's findings on these issues are clear, and we remain bound by their holding.
We recognize that, since the Third Circuit's decision, Defendant has engaged in further discovery on this issue, including deposing Plaintiff, her son, and several physicians. This intervening discovery, however, does not change the fundamental nature of this case, nor does it render the Third Circuit's findings inapposite. Taken in the light most favorable to Taylor, we find that there are still genuine issues of material fact as to whether Taylor is substantially limited in any major life activities even while receiving treatment. Accordingly, Defendant's Motion will be denied with respect claims premised on actual disability.
2. Record of Impairment
Next, we consider whether Taylor is disabled under the ADA by virtue of having a "record of impairment." See 42 U.S.C. § 12102(2)(B). To meet this definition, an individual must have a history of, or been misclassified as having, an impairment that substantially limited a major life activity. 29 C.F.R. § 1630.2(k).[2]
Taylor blends her "record of impairment" claim and her "regarded as" claim together into a single argument. In doing so, she fails to offer any specific evidence that she has a record of an impairment that substantially limits a major life activity. To the contrary, her argument, and the evidence in support of that argument, appear to apply solely to whether Defendant regarded her as disabled. As described infra, "regarded as" disability is a distinct way to establish a disability under the ADA, and we will consider Taylor's evidence in support of that claim in turn. However, for purposes of meeting the definition of a disability by virtue of a "record of impairment," Taylor has failed to provide sufficient evidence to support her claim. To the extent a record of an impairment exists at all, nothing in that record suggests that the impairment substantially limited a major life activity. Such a showing is insufficient to establish disability based upon a record of impairment. See 29 C.F.R.App. § 1630.2(k); see also Sorensen v. University of Utah Hosp., 194 F.3d 1084, 1087 (10th Cir.1999) (noting that, to demonstrate record of impairment, impairment must substantially limit a major life activity); Howell v. Sam's Club # 8160/Wal-Mart, 959 F. Supp. 260, 268 (E.D.Pa.1997) (same), aff'd, 141 F.3d 1153 (3d Cir.1998). As a result, we will grant Defendant's Motion with respect to claims premised on "record of impairment" disability.
*775 3. Regarded as Disabled
Finally, we examine whether Plaintiff has established a disability by virtue of having been "regarded as" disabled. See 42 U.S.C. § 12102(2)(C). Under the ADA, a person is regarded as having a disability if the person:
(1) has a physical or mental impairment that does not substantially limit major life activities but is treated by the covered entity as constituting such limitation;
(2) has a physical or mental impairment that substantially limits major life activities only as a result of the attitudes of others toward such impairment; or
(3) has [no such impairment] but is treated by a covered entity as having a substantially limiting impairment.
29 C.F.R. § 1630.2(1).
In the instant case, we find that there is adequate evidence for Plaintiff to withstand summary judgment on her "regarded as" claim. Genuine issues of material fact exist concerning the School District's initial notice of Taylor's ailment, its understanding of Taylor's medical condition when she returned to work, and its later conduct toward Taylor based on that understanding. Viewing these facts in the light most favorable to Taylor, we find that a reasonable jury may be able to conclude that the School District regarded Taylor as disabled when she was discharged. See, e.g., Deane, 142 F.3d at 145 (holding that summary judgment inappropriate where factual disputes exist over degree of impairment compared with perception thereof); see also Taylor v. Pathmark Stores, Inc., 177 F.3d 180, 191 (3d Cir.1999) (noting that "regarded as" plaintiff can make out a claim even if employer is innocently wrong about extent of impairment). Accordingly, we will deny Defendant's Motion with respect to claims based upon regarded as disability.
B. Qualified Individual
Having found that factual disputes exist over whether Taylor is disabled under the ADA, we must now examine the second element of the prima facie case: whether Taylor is a "qualified individual." The ADA defines a qualified individual as one "who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires." 42 U.S.C. § 12111(8). The applicable regulations divide this inquiry into two prongs: (1) whether the individual has the requisite skill, experience, education and other job requirements of the position and (2) whether the individual, with or without reasonable accommodation can perform the essential functions of the position. See 29 C.F.R.App. § 1630.2(m). No question exists about whether Taylor satisfies the prerequisites of her position. Rather, the dispute centers on whether Taylor could, with reasonable accommodations, perform the essential functions of her job after returning from her hospitalization.
In examining this issue, the Third Circuit focused its analysis on the interactive process engaged in by Taylor and the School District. The ADA's regulations state that:
To determine the appropriate reasonable accommodation it may be necessary for the [employer] to initiate an informal, interactive process with the [employee] in need of accommodation. This process should identify the precise limitations resulting from the disability and potential reasonable accommodations that could overcome those limitations.
29 C.F.R. § 1630.2(o)(3). The Third Circuit analyzed the interactive process in two steps: first, whether sufficient notice was given to the School District to trigger its obligations under the interactive process, and second, whether the School District fulfilled its duties once the interactive process was initiated. Taylor, 184 F.3d at 312-13. Addressing these two inquires, the court found that sufficient notice was given to the School District to trigger the interactive process and that the School District later failed to fulfill its duties in *776 that process. Based on that finding, the court concluded that "a reasonable jury could conclude, based on the evidence presented thus far, that the school district did not meet its burden under the interactive process." Id. at 315. The court further stated that "a reasonable jury could conclude that the school district did not engage in an interactive process of seeking accommodations and is responsible for the breakdown in the process." Id.
In its current motion, Defendant argues again that it neither had notice of Plaintiff's need for accommodation, nor failed to engage in the interactive process. However, as noted above, the Third Circuit has already determined that factual disputes exist with respect to those issues. Moreover, nothing in the subsequent discovery resolves any of the factual disputes surrounding the interactive process. As a result, summary judgment is inappropriate, and we will deny Defendant's Motion with respect to this issue.
In sum, we find that Plaintiff has produced sufficient evidence that she (1) has a disability by virtue of being "actually disabled" or having been "regarded as" disabled; (2) is a qualified individual; and (3) has suffered an adverse employment action. Accordingly, Plaintiff has made out a prima facie case on her failure to accommodate claim.[3]
III. Punitive Damages
Finally, Defendant argues that Plaintiff's request for punitive damages cannot, as a matter of law, be granted. We agree.
*777 It is clear that punitive damages under the ADA are not available against a municipality. 42 U.S.C. §§ 1981a(a)(2), (b)(1). See also City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 267-71, 101 S. Ct. 2748, 69 L. Ed. 2d 616 (1981) (holding that punitive damages not available against municipalities in case brought under 42 U.S.C. § 1983), Bolden v. Southeastern Pa. Transp. Auth., 953 F.2d 807, 811 (3d Cir.1991) (holding that punitive damages not available against SEPTA in case brought under 42 U.S.C. § 1983); Waring v. City of Philadelphia, Civ. A. No. 96-1805, 1996 WL 208348, at *3 (E.D.Pa. Apr. 26, 1996) (stating that, under the ADA, "it is clear that a party may not seek punitive damages from a municipal entity."). Similarly, punitive damages under the PHRA are not available against municipalities. Hoy v. Angelone, 554 Pa. 134, 720 A.2d 745, 751 (1998) ("we hold that punitive damages are not available under the [PHRA]."); see also Feingold v. Southeastern Pa. Transp. Auth. 512 Pa. 567, 517 A.2d 1270, 1276-77 (1986) (concluding that it would be "inappropriate to assess punitive damages against SEPTA given its status as Commonwealth agency."). In this case, it is undisputed that the School District is a municipal entity. As a result, punitive damages are not, as a matter of law, available against the School District. See § 1981a(a)(2); Newport, 453 U.S. at 270, 101 S. Ct. 2748; Hoy, 720 A.2d at 751. Accordingly, we will grant Defendant's motion on the issue of punitive damages.[4]
CONCLUSION
For the foregoing reasons, Defendant's Motion for Summary Judgment will be granted in part and denied in part. Defendant's Motion will be granted with respect to claims premised upon "record of impairment" disability and with respect to punitive damages. Defendant's Motion will be denied in all other respects. An appropriate order follows.
ORDER
AND NOW, this 19th day of September, 2000, upon consideration of Defendant's Motion for Summary Judgment, and the replies thereto, it is hereby ORDERED that Defendant's Motion is GRANTED in part and DENIED in part.
Defendant's Motion is GRANTED with respect to claims premised on 42 U.S.C. § 12102(2)(B) ("record of impairment") and on the issue of punitive damages. Defendant's Motion is DENIED in all other respects.
NOTES
[1] "Because the ADA does not define many of the pertinent terms, we are guided by the Regulations issued by the Equal Employment Opportunity Commission (`EEOC') to implement Title I of the Act." Deane, 142 F.3d at 143 n. 4 (citing 42 U.S.C. § 12102(2) and 29 C.F.R. § 1630.2).
[2] The EEOC guidelines further state: "This part of the definition is satisfied if a record relied on by an employer indicates that the individual has or has had a substantially limiting impairment. The impairment indicated in the record must be an impairment that would substantially limit one or more of the individual's major life activities." 29 C.F.R.App. § 1630.2(k).
[3] We note that by making out her prima facie case, Plaintiff has done all that is required to withstand summary judgment. There appears to be some confusion among the parties about the applicability of the burden-shifting test first announced in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 793, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973); see also Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981). The McDonnell Douglas test "established an allocation of the burden of production and an order for the presentation of proof in Title VII discriminatory treatment cases." St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993). In such cases, McDonnell Douglas allows a plaintiff to show discrimination through indirect evidence in a now-familiar three-step process. First, the plaintiff must establish a prima facie case of discrimination. Second, if the plaintiff succeeds, a presumption of discrimination is created that the employer must then rebut by stating a legitimate non-discriminatory reason for the adverse employment action. Third, if a legitimate non-discriminatory reason is provided, the plaintiff has the chance to show that the stated reasons were not the true reasons for the dismissal, but were a mere pretext for discrimination. See McDonnell Douglas, 411 U.S. at 802-04, 93 S. Ct. 1817. This burden-shifting test was first announced in a Title VII racial discrimination case, but has since been utilized in a variety of contexts, including under the ADA. See Walton v. Mental Health Ass'n of Southeastern Pa., 168 F.3d 661, 667-68 (3d Cir.1999); Krouse v. American Sterilizer Co., 126 F.3d 494, 500-01 (3d Cir.1997). Although the McDonnell Douglas burden-shifting test can apply to certain ADA claims, it does not apply to all claims under the Act. There are two distinct types of claims under the ADA disparate treatment claims and failure to accommodate claims. In the former type of claim, a plaintiff without direct proof of discrimination may use the McDonnell Douglas test to meet his burden indirectly. In the latter type of claim, however, the McDonnell Douglas test does not apply. If a plaintiff alleges facts that, if proven, would show that an employer should have reasonably accommodated an employee's disability and failed to, the employer has discriminated against him. There is no need for indirect proof or burden-shifting. See Bultemeyer v. Fort Wayne Community Schs., 100 F.3d 1281, 1283-84 (7th Cir.1996); Walton v. Mental Health Ass'n of Southeastern Pa., No. Civ. A. 96-5682, 1997 WL 717053, at *10 (E.D.Pa. Nov.17, 1997), aff'd, 168 F.3d 661 (3d Cir. 1999); Brown v. Lankenau Hospital, No. Civ. A. 95-7829, 1997 WL 277354, at *8 n. 9 (E.D.Pa. May 19, 1997).
In our first opinion, we observed that it was difficult to ascertain from the pleadings and briefs whether Plaintiff was raising a disparate treatment or failure to accommodate claim. Because of this lack of clarity, we chose to analyze both types of claims. See Taylor, 998 F.Supp. at 565. On her appeal, however, Plaintiff represented that she only intended to bring a failure to accommodate claim. See Taylor, 184 F.3d at 320 n. 11. As a result, no disparate treatment claim exists in this case, and we need not perform the McDonnell Douglas analysis.
[4] Plaintiff cites Smith v. Wade, 461 U.S. 30, 103 S. Ct. 1625, 75 L. Ed. 2d 632 (1983) and Keenan v. City of Philadelphia, 983 F.2d 459 (3d Cir.1992) for the proposition that punitive damages under the ADA are available against state actors. Plaintiff badly misreads the law. Smith involved an action brought against a prison guard in his individual capacity. Indeed, the Supreme Court in Smith recognized its prior holding in Newport that municipalities are immune from punitive damages. Smith, 461 U.S. at 36 n. 5, 103 S. Ct. 1625. Similarly, Keenan involved the assessment of punitive damages not against the City, but against police officers as individuals a distinction that the Third Circuit explicitly stated in its opinion. Keenan, at 463-64 n. 3 ("As we discuss infra, juries cannot impose punitive damages against directly [sic] municipalities under 42 U.S.C. § 1983."). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568935/ | 94 F. Supp. 2d 1034 (2000)
Frankie Leigh LEYEN, Plaintiff,
v.
WELLMARK, INC. d/b/a Wellmark Blue Cross and Blue Shield of Iowa, Defendant.
No. 4-98-CV-90648.
United States District Court, S.D. Iowa, Central Division.
April 18, 2000.
*1035 Brian L. Wirt, Des Moines, IA, for Plaintiff.
David M. Swinton, Elizabeth G. Kennedy, Des Moines, IA, for Defendant.
ORDER
PRATT, District Judge.
Before the Court is Defendant's Partial Motion for Summary Judgment filed September 16, 1999. Plaintiff filed her Resistance on December 22, 1999. Defendant filed its Reply on December 29, 1999. Because disposition of this Motion turns on conclusions of law, oral argument, which Defendant requested, will not be necessary. The matter is fully submitted.
I. Facts
The current Motion grows out an action for gender discrimination filed in this Court on December 1, 1998, by Plaintiff Frankie Leigh Leyen ("Leyen") against her current employer, Defendant Wellmark, Inc., d/b/a Blue Cross and Blue Shield of Iowa ("Wellmark"). Leyen, who is female, alleges that Wellmark discriminated against her on the basis of gender, in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., and the Iowa Civil Rights Act of 1965, as amended, Iowa Code § 216. Leyen also alleges that Wellmark paid similarly qualified male employees at a higher rate of pay than the Plaintiff for performing similar and/or equal work in violation of the federal Equal Pay Act, 29 U.S.C. §§ 201-209 and the Iowa counterpart at § 216 of the Iowa Code. Plaintiff also brings pendent claims for breach of express and/or implied agreements.
Leyen alleges that Wellmark's wrongful employment practices began as early as 1983, when she was first hired by Wellmark. Her claims for back pay relief under federal and Iowa law stem from 1990 or 1991, when she became an account executive with Farm Bureau, which is one of Wellmark's insurance brokers. At about the time Leyen became an account executive, Wellmark hired another account executive (Tim Boardman) and allegedly paid him more for performing substantially the same job as Leyen. On May 12, 1998, Leyen filed an administrative charge with the Iowa Civil Rights Commission ("ICRC") which was cross-filed with the Equal Employment Opportunity Commission ("EEOC") claiming gender discrimination. Leyen obtained administrative releases from both the ICRC and EEOC. On December 1, 1998, she filed this lawsuit.
The substance of the Partial Motion does not take aim at the merits of the lawsuit. Nor does it seek dismissal based on a statute of limitations defense namely, that Leyen's claims are barred for her failure to file a timely charge with the appropriate administrative agency. Chapter 216 requires the filing of an administrative charge with the ICRC within 180 days of the alleged discriminatory act, *1036 Iowa Code § 216.15(12). Title VII requires that Leyen file an administrative charge with the EEOC within 300 days of the alleged discriminatory act if she has initially filed with a state agency, 42 U.S.C. § 2000e-5(e)(1). Wellmark concedes in fact that the Complaint is timely under the "continuing violations" doctrine. Ashley v. Boyle's Famous Corned Beef Co., 66 F.3d 164, 168 (8th Cir.1995) (en banc) (claims that are otherwise time-barred under the statute of limitations are nonetheless timely if "ongoing discriminatory acts" are alleged). Wellmark's Motion is not directed toward these substantive matters. Rather, it focuses on determining the proper recovery for back pay under federal and state law should Leyen prevail on the merits.
II. Summary Judgment Standard
"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." Handeen v. Lemaire, 112 F.3d 1339, 1345 (8th Cir. 1997) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). Thus, summary judgment is properly granted when the record, viewed in the light most favorable to the nonmoving party and giving that party the benefit of all reasonable inferences, shows that there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Harlston v. McDonnell Douglas Corp., 37 F.3d 379, 382 (8th Cir.1994). The court does not weigh the evidence nor make credibility determinations, rather the court only determines whether there are any disputed issues and, if so, whether those issues are both genuine and material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253-54, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). An issue is "genuine," if the evidence is sufficient to persuade a reasonable jury to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248, 106 S. Ct. 2505. "As to materiality, the substantive law will identify which facts are material." Id.
III. Analysis
A. Back pay under the Equal Pay Act
Although they briefed the issue, the parties do not actually dispute the proper calculus when determining recovery under the federal Equal Pay Act. Wellmark concedes this is a "continuing violation" case. Thus, Leyen "may recover for unequal paychecks received within two years of commencing the action, or within three years if the violations were willful. See 29 U.S.C. §§ 206(d)(1), 255(a) ...." Ashley, 66 F.3d at 168 (case citation omitted). Therefore, if Leyen prevails on her Equal Pay claim, she is entitled to relief back to December 1, 1996 (which is two years prior to the filing of this Complaint). If the jury finds Wellmark acted willfully, Leyen is entitled to relief back to December 1, 1995 (which is three years prior to this filing). This Equal Pay analysis is not contested by either party. See Def.'s Br. in Supp. at 4 & n. 1; Pl.'s Br. in Resistance at 3. The Court will treat this as an uncontested Partial Motion for Summary Judgment and grant the Motion.
What is contested is the proper measure of recovery under Title VII and Iowa Code § 216.
B. Back pay under Title VII
Relying on the Eight Circuit's en banc decision in Ashley, Wellmark claims that Leyen is only entitled to back pay relief dating back to the beginning of the applicable statute of limitations period: 300 days (10 months) prior to the filing of an EEOC claim. Leyen, on the other hand, relying on the Tenth Circuit's decision in Estate of Pitre v. Western Electric Co. Inc., 975 F.2d 700 (10th Cir.1992), cert. denied, 510 U.S. 972, 114 S. Ct. 459, 126 L. Ed. 2d 391 (1993), argues that she is entitled to recover back pay up to two years prior to the filing of her federal administrative claims. After careful examination *1037 of the relevant case law, the Court holds that with respect to the Title VII claim, Leyen may only recover back pay damages coinciding with events that occurred within the applicable limitations period 300 days prior to the filing of her EEOC claim.
As the Defendant states in its brief, an en banc court of the Eighth Circuit clarified the rule with respect to a plaintiff's ability, in a "continuing violation" context, to recover back pay under Title VII. Relief in this context, said the Eighth Circuit, is measured "back to the beginning of the limitations period." Ashley, 66 F.3d at 168. In Ashley, the plaintiff filed a charge with the EEOC in 1992 based on acts by her employer that occurred at or around the time she was hired in 1985. The district court dismissed all plaintiff's claims brought under Title VII and the Missouri Human Rights Act as barred by laches or the applicable statutes of limitations. Id. at 167. With respect to plaintiff's claim for back pay under Title VII, the Eighth Circuit reversed, holding the back pay claim to be timely filed under the "continuing violation doctrine." Id. at 168. As to damages, the Court awarded her "[r]elief back to the beginning of the limitations period." In its view, this was a remedy that "strikes a reasonable balance between permitting redress of an ongoing wrong and imposing liability for conduct long past." Id. (citing Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 502 & n. 15, 88 S. Ct. 2224, 20 L. Ed. 2d 1231 (1968)). The Ashley rule limiting recovery to the period within the relevant statute of limitations has been affirmed by subsequent Eighth Circuit panels. See Kline v. City of Kansas City, 175 F.3d 660, 665-67 (8th Cir.1999) (at least five references to Ashley's general rule that plaintiff in a continuing violation case can only re-cover for incidents that occurred within the limitations period); Kimzey v. Wal-Mart Stores, Inc., 107 F.3d 568, 572 (8th Cir.1997) (plaintiff filed state and federal administrative charges in June 1993; under Ashley, plaintiff can recover for acts reaching back to August 1992 (10 months prior to filing) under Title VII and to December 1992 (6 months prior to filing) under the Missouri Human Rights Act); Gipson v. KAS Snacktime Co., 83 F.3d 225, 230 (8th Cir.1996) (noting that Ashley forecloses any argument that plaintiff in a continuing violation case can recover damages for a period outside the relevant statute of limitations).
To avoid the holding in Ashley, Plaintiff argues that permitting her to recover a full two years of back pay from the date she filed the administrative claim would be consistent both with Title VII's back pay provision, 42 U.S.C. § 2000e-5(g), and the twin aims of Congress in passing Title VII namely, to deter discriminatory conduct and to make Title VII plaintiffs whole. See Pitre, 975 F.2d at 705-06 (discussing Albemarle Paper Co. v. Moody, 422 U.S. 405, 415-22, 95 S. Ct. 2362, 45 L. Ed. 2d 280 (1975)). There is some appeal to this argument, especially since § 2000e-5(g) vests discretionary power in the district court to award Title VII plaintiffs back pay at most two years prior to the date of administrative filing. However, notwithstanding authorization by Congress to grant up to two years in back pay, this Court is constrained by judicial holdings from the Eighth Circuit which expressly limit back pay recovery in continuing violation cases to the statute of limitations period. Ashley, 66 F.3d at 168; Kline, 175 F.3d at 665-67; Kimzey, 107 F.3d at 572; Gipson, 83 F.3d at 230; see also Ford Motor Co. v. E.E.O.C., 458 U.S. 219, 226, 102 S. Ct. 3057, 73 L. Ed. 2d 721 (1982) (observing that in granting back pay under Title VII, a court "must be guided by meaningful standards enforced by thorough appellate review") (internal quotes and citations omitted). Confining back pay damages to the limitations period reflects, in the Title VII context, a "reasonable balance" between allowing redress of an "ongoing wrong" and imposing liability in the first instance for "conduct long past." Ashley, 66 F.3d at 168.
*1038 Consistent with the above analysis, there is no genuine issue of material fact that if Leyen prevails on her Title VII claims she is entitled to back pay measured 300 days from the date federal administrative charges were filed, i.e., relief back to July 16, 1997. The Court grants this aspect of Wellmark's Partial Motion for Summary Judgment.
C. Back pay under § 216
Leyen's back pay recovery rights under § 216 of the Iowa Code are less certain. Wellmark assumes that the rule announced in Ashley limiting back pay under Title VII to the beginning of the limitations period extends to claims under § 216. On policy grounds, Leyen urges the adoption of the flat 2-year rule, measured two years from the date she filed state administrative charges.
Both sides miss the mark. While Iowa law has adopted the federal "continuing violation" doctrine in job discrimination cases, it is not true that Iowa courts determine back pay using federal standards, let alone those announced by the Eighth Circuit. First, there is no analogous state provision capping back pay damages at two years. The relevant state law section, Iowa Code § 216.15(8), provides in relevant part that the ICRC or the district court if the plaintiff, as in this case, obtains an administrative release, see § 216.16(5) can "take the necessary remedial action as in the judgment of the commission will carry out the purposes of this chapter." In addition to a range of damages, the ICRC or district court may order the "[h]iring, reinstatement or upgrading of employees with or without pay," § 216.15(8)(a)(1).
Second, the Iowa Supreme Court has interpreted this remedies provision broadly, recognizing that the ICRC has "considerable discretion in fashioning an appropriate remedy that will accomplish the purposes of chapter 601A [now chapter 216]." Hy-Vee Food Stores, Inc. v. Iowa Civil Rights Comm'n, 453 N.W.2d 512, 531 (Iowa 1990). In Hy-Vee Food, the plaintiff, a woman of Vietnamese descent, sued her employer alleging sex and race discrimination in violation of the Iowa Civil Rights Code § 601A (currently § 216). Plaintiff began working for Hy-Vee in 1975, id. at 519, and did not file charges against the store until sometime in 1983, id. at 524. The ICRC, acting pursuant to powers granted to it under § 601A.15(8), adopted a "continuing violation" theory of the case and awarded plaintiff, among other things, "backpay with full time status to 1977" and "backpay at an increased rate to 1983." Id. at 515, 532. The Iowa Supreme Court ultimately affirmed the ICRC's decision with respect to back pay, noting that such a result was consistent with the "ultimate goal of compensating an injured person" and "our obligation to construe chapter 601A liberally to effectuate its purpose." Id. at 531-32.
In light of Hy-Vee Food, the Court will not assume that Ashley's Title VII rule on recovery of back pay is the same under Iowa law.[1]Hy-Vee Food makes clear that the analysis is different: the district court or Commission has "considerable discretion," consistent with its grant of authority under § 216.15(8), to fashion "an appropriate remedy" that will effectuate the purposes of chapter 216. Hy-Vee, 453 N.W.2d at 531.
Therefore, the Court denies Defendant's Partial Motion for Summary Judgment with respect to back pay relief under Iowa Code § 216. Reading the record in the light most favorable to Leyen as the nonmoving party, the Court finds that Leyen, *1039 if she prevails on the merits of her Iowa discrimination claim, can recover back pay under § 216 from the date she began to receive unequal pay which, according to the pleadings, began in 1990 or 1991 when Tim Boardman was hired as account executive.
IV. Conclusion
Based on the foregoing, the Court
(1) grants Defendant's uncontested Partial Motion for Summary Judgement with respect to back pay relief under the Equal Pay Act, 29 U.S.C. §§ 201-209;
(2) grants Defendant's Partial Motion for Summary Judgment with respect to back pay relief under Title VII, 42 U.S.C. 2000e et seq.;
(3) denies Defendant's Partial Motion for Summary Judgment with respect to back pay relief under Iowa Code § 216.
IT IS SO ORDERED.
NOTES
[1] In fact, the Eight Circuit has disavowed equating its federal holding under Title VII with state law. See Gipson v. KAS Snacktime Co., 171 F.3d 574, 576 n. 3 (observing that the federal rule announced in Ashley could vary under Missouri law depending on subsequent decisions by the Missouri Supreme Court); Ashley, 66 F.3d at 167 n. 2 ("The parties have assumed without citation to authority that Missouri courts construe the [Missouri Human Rights Act] as incorporating Title VII statute of limitations and laches principles. We adopt that assumption but do not foreclose the issue on remand."). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1371350/ | 966 F. Supp. 260 (1997)
Nathan EPSTEIN, a Shareholder of National Machinery Exchange, Inc., Suing in the Right of National Machinery Exchange, Inc., Plaintiffs,
v.
Joseph EPSTEIN, Elissa Epstein, as Executor of the Estate of Herbert Epstein, Lawrence Epstein and Jerome Kamerman, Defendants,
v.
NATIONAL MACHINERY EXCHANGE, INC., Nominal Defendant.
No. 86 Civil 9589 (JSR).
United States District Court, S.D. New York.
June 25, 1997.
Franklin H. Snitow, Charles D. Cunningham, New York City, for Plaintiff.
Michael M. Rosenbaum, Short Hills, NJ, G. Robert Blakey, Notre Dame, IN, Nina Epstein, New York City, for Defendants.
RAKOFF, District Judge.
This ancient case involves civil RICO claims filed derivatively by one shareholder of the Epstein family business against his co-shareholder brothers and nephew, alleging, inter alia, that they fraudulently siphoned the company's funds into their personal ventures through a pattern of racketeering. When the case was reassigned to this Court on February 26, 1997, motions for summary judgment and dismissal had been pending since 1995. After hearing oral argument and receiving voluminous supplemental submissions from the parties, the Court denied the parties' motions by order dated May 23, 1997 and set the case down for trial on July 15, 1997. Earlier this week, however, counsel brought to the Court's attention a possible ground for disqualification that, while previously unknown to the Court, raises the specter that this oft-reassigned case may once again be in danger of reassignment. Accordingly, before the Court is called upon to determine the disqualification issue later this week, it seems provident briefly to memorialize the grounds for the aspect of the Court's summary decision of May 23, 1997 that involved an arguably unsettled issue of law, viz, whether the RICO claim against defendant Herbert Epstein survives his death and thus is properly continued against his estate.
Neither the statutory language nor the legislative history of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., specifically addresses whether a private civil claim survives a party's death. Nor, although survival of a federally created claim is a matter of federal substantive law, does the United States Code contain a general survival statute. See Abrams, The Law of Civil RICO ¶ 2.9. Accordingly, the issue is governed in the first instance by principles of federal common law, which generally prescribe that a claim survives a party's death if it is "remedial" rather *261 than "punitive." See Carlson v. Green, 446 U.S. 14, 23, 100 S. Ct. 1468, 1474, 64 L. Ed. 2d 15 (1980); see also Moore's Federal Practice ¶ 25.04[1] ("The general rule under federal common law is that an action survives the death of a party if it is remedial and not penal in nature").
However, as the Supreme Court has had repeated occasion to observe in recent years, terms like "remedial" and "punitive" are neither self-defining nor mutually exclusive. See, e.g., United States v. Ursery, ___ U.S. ___, ___, 116 S. Ct. 2135, 2142, 135 L. Ed. 2d 549 (1996); Austin v. United States, 509 U.S. 602, 610, 113 S. Ct. 2801, 2805-06, 125 L. Ed. 2d 488 (1993); United States v. Halper, 490 U.S. 435, 447-48, 109 S. Ct. 1892, 1901-02, 104 L. Ed. 2d 487 (1989). The criminally-predicated civil provisions of a hybrid civil/criminal statute like RICO mix remedial and punitive elements in varying quantities, and the determination that a particular provision or application of civil RICO is "remedial" or "punitive" thus inevitably turns on differences of degree rather than kind. See Faircloth v. Finesod, 938 F.2d 513, 518 (4th Cir.1991) ("civil RICO is a square peg, and squeeze it as we may, it will never comfortably fit in the round holes of the remedy/penalty dichotomy").
Perhaps for these reasons, the district courts that have grappled with whether a civil RICO cause of action survives a defendant's demise have not always reached the same conclusion. Compare Holford USA Ltd., Inc. v. Harvey, 169 F.R.D. 41 (S.D.N.Y. 1996) (holding that a private civil RICO claim is remedial and does not abate upon a defendant's death); First American Corp. v. Al-Nahyan, 948 F. Supp. 1107 (D.D.C.1996) (same), with Confederation Life Ins. Co. v. Goodman, 842 F. Supp. 836 (E.D.Pa.1994) (holding that a private civil RICO claim is punitive and does not survive a defendant's death); Ball v. Marshall Field V, 1993 WL 101485 (N.D.Ill. Apr.2, 1993) (same). Inferring from this division that the result depends on the particular facts of each case, the Estate now urges the Court to eschew any "bright-line" rule altogether and, instead, determine whether a RICO claim survives a defendant's death through application of a multi-factor case-specific test involving (1) the character of the defendant's death, (2) the relative culpability of other defendants, if any, (3) whether the goals of deterring RICO violations and encouraging RICO lawsuits are promoted if the RICO claim survives and (4) whether the defendant's estate would be unjustly enriched by the deceased's RICO violations if the RICO claim abates. See Estate Of Herbert Epstein's Supplemental Reply Memorandum In Support Of Its Motion For Summary Judgment, at 3-5.
Despite the facial appeal of this creative solution, the Court in the end is not persuaded it makes good law, or good sense. To begin with, multi-factor case-specific tests suffer from certain inherent drawbacks:
On the one hand, by emphasizing certain a priori factors over others, such tests, if conscientiously applied, may artificially skew outcomes in a way that a general "all the facts and circumstances" test would not. For example, is the Estate's proposed factor # 2 the relative culpability of other defendants really relevant to the survivorship of a claim that is, after all, a joint and several liability of all defendants? Or, conversely, is the contributory culpability (if any) of the plaintiff not a materially relevant factor that should be included in the list?
On the other hand, because the prescribed factors in such tests are both numerous and unweighted (as well as, usually, broad and vague), they provide a facade behind which a court can reach almost any result without appearing to depart from the application of the test. Thus, as Professor Sunstein has noted, "a judge might seem able in every [such] case to find a suitably weighted set of relevant-sounding factors to justify any conclusion he wants." C. Sunstein, Legal Reasoning And Political Conflict 30 (1996); cf., Itel Containers Inter. Corp. v. Huddleston, 507 U.S. 60, 79-80, 113 S. Ct. 1095, 1106-08, 122 L. Ed. 2d 421 (Scalia, J., concurring) (multi-factor and balancing tests are "so uncertain in their application ... that they can hardly be said to foster stability or engender reliance deserving of stare decisis protection").
A multi-factor case-specific test, in short, provides neither reasonable guidance to the *262 courts nor reasonable certainty to the litigants. These drawbacks, moreover, are especially severe in the context of survival of a claim after death, for how can a party make reasonable provision for his or her estate if the survival of a claim is so intrinsically unpredictable?
In any case, resort to a multi-factor case-specific test is not only unadvisable but, in the Court's view, unlawful with respect to the issue at bar. For Congress' silence with respect to the survival of a civil RICO claim cannot reasonably be read as a warrant to the courts to fashion unprecedented multi-factor case-specific tests of the kind the Estate urges. Rather, it seems obvious that Congress did not specifically address claim survival in RICO because it had no need to: established principles of federal common law already provided that remedial claims survive, and Congress made plain that its purpose in creating RICO's private right of action was to provide victims with a remedy.
Thus, Congress not only placed RICO's private action provision within the section of the Act entitled "Civil Remedies,"[1] but also modeled it closely on the parallel treble damage provisions of the antitrust laws that have repeatedly been held to be remedial in nature. See, e.g., Pfizer v. Gov't of India, 434 U.S. 308, 313, 98 S. Ct. 584, 587-88, 54 L. Ed. 2d 563 (1978); Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 485-86, 97 S. Ct. 690, 695-96, 50 L. Ed. 2d 701 (1977). As the Court explained in Brunswick,:
[The treble damage provision of the Clayton Act] ... is in essence a remedial provision. It provides treble damages to `[a]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws ...' Of course, treble damages also play an important role in penalizing wrong doing, as we have also frequently observed. It nevertheless is true that the treble-damage provision, which makes awards available only to injured parties, and measures awards by a multiple of the injury actually proved, is designed primarily as a remedy.
Brunswick, 429 U.S. at 485, 97 S.Ct. at 696 (citations omitted). Everything in RICO's own language and history supports the view that Congress viewed RICO's treble damage remedy as similarly remedial to the Clayton Act provision on which it was so closely patterned. See, e.g., Klehr v. Smith Corp., ___ U.S. ___, ___-___, 117 S. Ct. 1984, ___-___, 138 L. Ed. 2d 373 (1997); Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 150, 107 S. Ct. 2759, 2764, 97 L. Ed. 2d 121 (1987); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 241, 107 S. Ct. 2332, 2345, 96 L. Ed. 2d 185 (1987).
Accordingly, both the Supreme Court and the Second Circuit have repeatedly described RICO's private right of action as remedial in nature. See, e.g., Shearson/American Express, Inc., 482 U.S. at 240-41, 107 S.Ct. at 2344-45 ("The legislative history of § 1964(c) reveals the same emphasis on the remedial role of the treble damage provision."); Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 851 (2d Cir.1987) ("§ 1964(c) is primarily a compensatory and secondarily a deterrent measure."). As the Estate itself implicitly recognizes, there is nothing about the general nature of claim survival that should disturb this conclusion.[2] To be sure, Congress' remedial purpose may be found in some contexts to create effects so punitive as to transform the character of the claim into an essentially penal cause of action. Cf., Ursery, ___ U.S. ___, 116 S. Ct. 2135; Halper, 490 U.S. 435, 109 S. Ct. 1892. But, on the other hand, there are no constitutional provisions applicable to the instant context that require a court to pay special heed to the punitive effects of a RICO provision in derogation of the remedial aspects. Id.
In short, Congress viewed the private civil RICO claim as a victim's remedy, first *263 and foremost, and so it has proven to be. By operation of settled principles of federal common law, it follows a fortiori that such claims survive a party's demise, whether the party be a plaintiff, see Faircloth, 938 F.2d at 518; Costello v. Cooper, 1990 WL 9856 (S.D.N.Y. Jan.31, 1990), or, as here, a defendant. See, Holford USA Ltd., Inc., 169 F.R.D. at 43; First American Corp., 948 F.Supp. at 1122; County of Oakland by Kuhn v. City of Detroit, 784 F. Supp. 1275, 1285 (E.D.Mich. 1992).
NOTES
[1] 18 U.S.C. § 1964. Furthermore, the Act provides overall that "the provisions of this title shall be liberally construed to effectuate its remedial purpose." Pub.L. No. 91-452, § 904(a), Title IX, 84 Stat, 947, reprinted in 18 U.S.C.A. § 1961 note.
[2] Thus, while the Estate originally argued that a private civil RICO action was inherently punitive in this context, its shift to the multi-factor case-specific approach bears tacit witness to its recognition that the higher courts have effectively rejected this view. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1503667/ | 791 F. Supp. 1042 (1992)
Amy DeLUCA, an infant by her guardian ad litem, Cindy DeLUCA, and Cindy DeLuca and Ronald DeLuca, Plaintiffs,
v.
MERRELL DOW PHARMACEUTICALS, INC., et al., Defendants.
Civ. No. 87-226 (GEB).
United States District Court, D. New Jersey.
April 29, 1992.
As Amended May 11, 1992.
*1043 Susan Scott, Riker, Danzig, Scherer, Hyland & Perretti, Morristown, N.J., Frank C. Woodside, III, Dinsmore & Shohl, Cincinnati, Ohio, for defendant Merrell Dow Pharmaceuticals, Inc.
John R. Connelly, Jr., Drazin and Warsaw, P.C., Red Bank, N.J., for plaintiffs.
OPINION
GARRETT E. BROWN, Jr., District Judge.
This action arises out of birth defects suffered by the plaintiff Amy DeLuca. Amy DeLuca brought suit through her mother and guardian ad litem, Cindy DeLuca, who with her husband, joined as plaintiffs in their individuals capacities. Plaintiffs allege that the birth defects (limb reduction) suffered by Amy DeLuca were caused by her mother's exposure to Bendectin, an anti-nausea drug produced by the Defendant Merrell Dow Pharmaceuticals, Inc. ("Merrell Dow").
PROCEDURAL HISTORY
By Memorandum and Order dated June 7, 1990, this Court granted defendant Merrell Dow's motion for summary judgment.[1] This Court held that the testimony of Dr. Alan Done, who was offered as an expert in pediatric pharmacology, was inadmissible because it was not based on data of a type reasonably relied upon by experts in the relevant fields as is required by Federal *1044 Rule of Evidence 703. Because Dr. Done's testimony was the only evidence offered by plaintiffs to show a causal link between Bendectin exposure and birth defects, the Court entered summary judgment in favor of Merrell Dow. DeLuca v. Merrell Dow Pharmaceuticals, Inc., 131 F.R.D. 71 (D.N.J.1990).
Plaintiffs appealed and the Court of Appeals reversed and remanded the action for further proceedings. DeLuca by DeLuca v. Merrell Dow Pharmaceuticals, Inc., 911 F.2d 941 (3d Cir.1990). The issues presently before this Court are three: (1) whether Dr. Done's testimony should be excluded under Rule 703 because the data upon which he relies are not of a type that experts in the field of epidemiology would rely upon, id. at 952-54; (2) whether Dr. Done's testimony should be excluded from evidence under Rule 702 on the grounds that (a) his methodology is unreliable, or (b) it would overwhelm, confuse or mislead the jury, id. at 954-57; and (3) if Dr. Done's testimony is admissible, whether under applicable New Jersey law the evidence relevant to causation would permit a jury finding that Amy DeLuca's birth defects were caused by her mother's exposure to Bendectin. Id. at 957-59.
Consistent with that opinion, this Court conducted a hearing held on five separate days, followed by extensive post-hearing submissions of the parties, in order to determine whether Dr. Done's testimony is admissible under the criteria set forth in United States v. Downing, 753 F.2d 1224 (3d Cir.1985). The record before this Court consists of written direct testimony submitted by the parties and oral cross-examination and re-direct examination of the witnesses. Plaintiffs' experts were Dr. Alan K. Done, M.D. and Dr. Shanna Swan, Ph.D. Defendants submitted the expert testimony of Dr. Richard R. Monson, M.D., Sc.D, Dr. Nicholas H. Wright, M.D., M.P.H., Dr. Steven H. Lamm, M.D., Dr. Gerald A. Faich, M.D., M.P.H., Dr. Pauline Brenholz, M.D. and Dr. Paul Stanley Lietman, M.D., Ph.D. This Opinion constitutes my Findings of Fact and Conclusions of Law.
FACTUAL FINDINGS
I. Causes and Incidence of Birth Defects
A. Causes of Birth Defects
1. The majority (approximately 65%) of birth defects in general are of unknown origin. Brenholz Direct at 3; Done Test., Tr. 7/10/91, at 29.
2. Possible causes of birth defects include genetic factors (chromosomal abnormalities or mutant genes) and environmental factors (diet, drug exposure, infections, x-rays and the like). Malformations may be multifactorial, meaning they are likely caused by a combination of genetic and environmental factors. Brenholz Direct at 4.
3. Genetic factors are etiological agents that initiate mechanisms of malformation by biochemical or other means at the sub-cellular level. Genetic factors typically are inherited or arise as a new gene mutation or new chromosomal abnormality, but do not necessarily manifest themselves in each pregnancy or in every generation. Brenholz Direct at 4.
4. Environmental factors, or teratogenic agents, may induce congenital malformations when the tissues and organs are developing. Brenholz Direct at 4.
5. The fact that a chromosomal study is normal does not rule out genetic defects. Medical science has not yet developed tests for most genetic defects. Brenholz Test., Tr. 9/19/91, at 78-79.
6. Family history is similarly not determinative, as recessive genes can be inherited from generation to generation, but do not manifest themselves unless there is a union with a partner who also carries the same recessive gene. There is a one in four chance that such a condition will appear. Brenholz Test., Tr. 9/19/91, at 79-80.
B. Incidence of Birth Defects
7. Congenital malformations are as old as recorded medical history. There have been countless instances of similar limb defects reported prior to Bendectin's first having been sold in this country in 1957. Since the time that Merrell Dow *1045 ceased the marketing of Bendectin, limb defects of the type suffered by Amy DeLuca have continued to be observed and reported. Brenholz Direct at 8.[2]
8. An analysis comparing the incidence of birth defects to the sale of Bendectin has shown that there is no association between the two. Lamm Direct at 5-6; Defendant's Ex. 50.[3]
9. Data collected by the Centers for Disease Control ("CDC") in Atlanta, Georgia show that after Bendectin ceased to be marketed (when Bendectin had been off the market for about three years) there was a slightly greater increase in birth defects than when Bendectin was prescribed in approximately 25% of all pregnancies. Wright Direct at 48; Defendant's Ex. 45.[4]
C. Evaluation of Possible Teratogens
10. Geneticists use the Catalog of Teratogenic Agents, written by Thomas H. Shepard, M.D., as a source of reference when consulting patients as to the probable outcome of a pregnancy. In the Catalog, Dr. Shepard characterizes substances as "proven", "possible" or "unlikely" teratogens. Bendectin is listed as "unlikely" to be a teratogen. Cigarette smoking is listed as a "possible teratogen." The question of whether an induced abortion affects subsequent pregnancies has been debated. Brenholz Direct at 5-6; Defendant's Ex. 51.[5]
11. Geneticists also use Reprotox, a computerized teratogen registry of the Reproductive Toxicology Center in Washington, D.C. Reprotox contains accurate, objective, comprehensive information regarding potential teratogenic agents and offers summaries of relevant and important articles. The registry states that animal and epidemiologic studies demonstrate no association between Bendectin and adverse pregnancy outcomes in general, and limb defects specifically. Brenholz Direct at 7; Defendant's Ex. 53.[6]
12. Dr. Done has offered no materials on teratogenicity which state to the contrary.[7]
13. Dr. Done has failed to explain how he himself ruled out Mrs. DeLuca's prior abortion and cigarette smoking as possible causes of Amy DeLuca's birth defects. Done Aff.; Done Test., Tr. 7/10/91; Brenholz Direct at 6-7.
14. Dr. Brenholz testified that pregnancy and smoking are always factors to be considered in determining the etiology of a birth defect. She also testified that a prior recent abortion and cigarette smoking could not be linked with a definite birth defect. Brenholz Test., Tr. 9/19/91, at 66-69.
II. Epidemiologic Studies on Bendectin
A. Principles of Epidemiology
15. Dr. Done placed emphasis in this case on epidemiologic studies, as there is almost universal agreement that the effects of drugs in human beings can best be evaluated by studying data concerning how those drugs did in fact affect persons who ingested them.
16. Plaintiffs originally relied secondarily on animal studies as well as epidemiologic studies. However, Magistrate Judge John Devine entered an order, which this Court affirmed on appeal, excluding from evidence all in vivo and in vitro animal studies. Plaintiffs have not challenged that ruling. Dr. Done also stated in his affidavit that he relied on structural activity considerations as well. His direct testimony, *1046 however, did not address this theory, but instead exclusively treated epidemiologic studies.
17. Epidemiologic studies typically express their results in terms of relative risks or odds ratios. The relative risk or odds ratio compares the rate of disease in the exposed population to the rate of disease in the unexposed population. If the two rates are the same, then the ratio is one. Where there is no association between exposure and disease, one would expect to find studies yielding relative risks grouped around the number 1.0 some less than 1.0 and some more than 1.0. Monson Direct at 20-22; Wright Direct at 11-12.
18. The size of a study is one measure of its stability and power; thus, other things being equal, the larger the study, the greater its strength. Monson Direct at 22-24.
19. A confidence interval is a statistical calculation which provides information as to the stability of a relative risk calculation. A 95% confidence interval means that there is a 95% probability that the "true" relative risk falls within the interval. Monson Direct at 25; Wright Direct at 18. Most epidemiologists use a 95% interval; some use a 90% interval. Wright Direct at 21.
B. The Bendectin Studies
20. Bendectin is one of the most extensively studied drugs in history. Dr. Done listed forty-two entries on Table 1 included as part of Exhibit B to his affidavit. That list contained thirty-one published studies or reports on Bendectin, six studies that did not address Bendectin, one unpublished reanalysis of an existing work, two unpublished preliminary drafts, one additional unpublished report, and one unpublished analysis of Food & Drug Administration ("FDA") "adverse drug reaction reports" or "drug experience reports" ("ADRs" or "DERs") conducted by Dr. Done himself. Done Aff., Ex. B.
21. Dr. Done conceded that there are no published studies showing a statistically significant association between Bendectin exposure and the development of limb reduction defects. Done Test., Tr. 7/10/91, at 27.
22. Dr. Done conceded that in the medical literature there is no established association to a statistically significant degree between exposure to Bendectin and an increased incidence of the specific type of Amy DeLuca's birth defects. Done Test., Tr. 7/10/91, at 29.
23. None of the authors of the thirty-one published studies included by Dr. Done on his chart concluded that a causal association between Bendectin ingestion and birth defects had been shown, and none of the published literature found any statistically significant association between Bendectin and the type of birth defects suffered by Amy DeLuca. See Plaintiffs' Exs. 1-43.
24. Dr. Done conceded that the authors of the published epidemiologic literature have concluded that their studies failed to demonstrate an association between Bendectin and limb reduction defects. Done Test., Tr. 7/10/91, at 27.
25. In 1982 and 1983, the FDA conducted a detailed review of Bendectin and released a report, continuing to approve the sale of Bendectin. The FDA concluded: "We do not however, believe available information supports a conclusion that Bendectin is teratogenic in humans." Defendant's Ex. 20, at 34.
26. In 1984, the court-appointed expert in the multi-district Bendectin litigation concluded that there was no evidence upon which to conclude that Bendectin caused birth defects. Lamm Direct at 4-5.
27. In the Notice of Proposed Rulemaking included in the Federal Register at Volume 52, No. 163 (August 24, 1987), the FDA concluded: "The agency has reviewed extensive data concerning the possible teratogenicity of doxylamine succinate and concludes that it is unlikely that this ingredient is a teratogen." Defendant's Ex. 19, at 31905.
28. Dr. Done concluded, based on his methodology, that a grouping of the data from all studies conclusively established that there was in fact an association between *1047 Bendectin and birth defects. Done Aff. at 2-3.
III. The Done Methodology: Dr. Done's Reanalysis of Epidemiologic Studies
29. In his affidavit, Dr. Done stated the bases for his conclusion that Bendectin caused the congenital limb defect suffered by Amy DeLuca were his "knowledge of the properties of Bendectin, the compatibility of the timing of Bendectin exposure in this case with the particular defect, the fact that the defect is of the type for which there is substantial evidence of Bendectin causation, the absence of another more likely cause in this case, evidence of teratogenicity of Bendectin from animal teratogenicity and in-vitro mechanistic studies, and the ample evidence of human teratogenicity of Bendectin from the epidemiologic studies analyzed in Exhibit "B"." Done Aff. at 2. With the exception of epidemiologic studies, Dr. Done provided no supporting data or explanations for the other bases upon which he relied.[8]
30. In his affidavit, Dr. Done stated: "Proof of causation can never come from epidemiologic studies, even with extensive replication." Done Aff. at 3.
A. Dr. Done's Data Sheets
31. Dr. Done purports to have taken the numbers he entered in the boxes on his chart from either the underlying studies themselves, or in the articles where no calculations were made, Dr. Done claims to have calculated the numbers himself. In many cases, this is simply not true.
32. Dr. Shanna Swan, plaintiffs' other expert, did not independently verify the data included on Dr. Done's chart, did not check his calculations and did not check to see if Dr. Done correctly extracted the data from the articles as to which he made no calculations. Swan Test., Tr. 7/12/91, at 7-14.[9] Dr. Swan merely commented on Dr. Done's methodology as he described it and "took as a given that he did what he said he did." Swan Test., Tr. 7/12/91, at 9-21.
B. Dr. Done's Methodology of Calculation
33. The calculation of a relative risk is a simple arithmetic calculation of the rate of occurrence in the exposed population compared to the rate of occurrence in the unexposed population. Done Test., Tr. 7/10/91, at 142; Wright Direct at 11; Monson Direct at 21-22. Relative risk calculations are not subject to variations other than those attributable to round-off techniques, provided the correct data is selected. Monson Direct at 11. The calculation of confidence intervals, on the other hand, is a more difficult calculation and may vary depending on the type of computer program used. Monson Direct at 11; Done Aff., Ex. B.
34. During cross-examination, Dr. Done explained how he obtained the data he used in making the calculations he entered on the chart. Done Test., Tr. 7/10/91, at 114-34. With respect to the Newman and Greenberg studies, Dr. Done admitted that the numbers were transposed. Done Test., Tr. 7/10/91, at 130.
35. Defense experts, Drs. Monson, Wright and Lamm, have itemized numerous errors made by Dr. Done in the calculation of the "data sets"[10] he included on his *1048 chart.[11] Monson Direct at 10-28; Wright Direct at 4-28; Lamm Direct at 15-18. The defense experts as well as Dr. Swan testified that the precise method used by Dr. Done in making some of his calculations was a mystery and was not in conformance with any known methodology.
36. Drs. Monson, Wright, Lamm and Swan, all qualified epidemiologists, in many cases could not replicate Dr. Done's recalculations. Monson Direct at 27-28; Wright Direct at 33; Lamm Direct at 15-18; Swan Test., Tr. 7/12/91, at 12, 20, 25-26, 28-29 & 33.
37. Dr. Done's chart listed a relative risk of 8.8 with confidence intervals of 2.0 to 3.9 with respect to limb reduction defects for the Jick '80 study (fourth entry on Dr. Done's chart). Done Aff., Ex. B. This is incorrect since the relative risk must fall between the confidence limits. Done Test., Tr. 7/10/91, at 93-95; Swan Test., Tr. 7/12/91, at 11-12.
38. The Shapiro and Heinonen publications of the same study presented a standardized relative risk of 1.15 for musculoskeletal malformations. Plaintiffs' Ex. 13, Table 2, at 482; Plaintiffs' Ex. 14, Table 23.5, at 327. Dr. Done's chart listed two separate non-standardized[12] relative risks of 1.4 and 1.6, calculations which are at odds with his claimed procedure of using the authors' calculations where possible. Dr. Swan could not explain how Dr. Done calculated two different relative risks when the data from the underlying studies were the same. Swan Test., Tr. 7/12/91, at 33.
39. Dr. Done calculated the 1.6 figure in the Shapiro '77 study by adding club feet to the author's category of musculoskeletal defects. Done Test., Tr. 7/10/91, at 122-25; Monson Direct at 14.
40. Although Dr. Swan listed a relative risk of 0.67 to 1.0 in her reanalysis for women under the age of thirty who ingested the same two-ingredient Bendectin as did Mrs. DeLuca, Dr. Done listed a relative risk of 2.4 on his chart. Compare Done Aff., Ex. B. with Plaintiffs' Ex. 28. Dr. Swan admitted that she would not place much weight on this portion of her reanalysis because the numbers are so small. Swan Test., Tr. 7/12/91, at 44.
41. The Bannister study did not contain adequate information on control subjects to calculate a relative risk. Wright Direct at 37. Even if one were to make certain assumptions regarding the data, there is no known methodology which could yield a relative risk of 13, the number which Dr. Done entered on his chart. Monson Direct at 12; Lamm Direct at 16. Dr. Done testified that he calculated the relative risk of 13 by taking 3/23 as the numerator and dividing by 1/28. Done Test., Tr. 7/10/91, at 116-18. Simple arithmetic reveals, however, that 3/23 divided by 1/28 equals 3.65, not 13. Possible relative risks are either 1.2 or 1.4. Monson Direct at 12-13. Dr. Done previously testified in another trial that the relative risk was 1.4. Done Test., Tr. 7/10/91, at 118-19.
42. Dr. Swan could not explain how Dr. Done calculated a relative risk of 13 for the Bannister study. Swan Test., Tr. 7/12/91, at 20-26.
43. For the Saxen study, Dr. Done listed a relative risk of 4.6 for all defects. Done Aff., Ex. B; Plaintiffs' Ex. 8. The data for all defects were not presented in the underlying study. Lamm Direct at 16; Defendant's Ex. 48. Dr. Done explained, however, that the "all" category included all defects of other kinds occurring in people who also had cleft lip or palate. Done Test., Tr. 7/10/91, at 97.
*1049 44. With respect to the RCGP study, Dr. Done testified that he calculated the relative risk of 11.4 by dividing 40.7% by 3.58%. Done Test., Tr. 7/10/91, at 115. The data contained in the underlying study did not, however, provide a basis for this calculation. Lamm Direct at 16; Plaintiffs' Ex. 8.
45. Dr. Swan could not give an opinion as to whether Dr. Done used an accepted methodology in calculating his relative risk of 11.4. Swan Test., Tr. 7/12/91, at 34-36.
46. With respect to the Nelson study, Dr. Done calculated a relative risk of 7.0 for the all defects category, a number arrived at by adding one defect to the unexposed group (since there were no actual defects reported and dividing by zero would yield infinity). Done Test., Tr. 7/10/91, at 115-16.
47. Dr. Monson testified that there are no choices of data which would yield a relative risk of 7.0. Monson Direct at 27; Defendant's Ex. 48.
48. Dr. Swan could not confirm Dr. Done's relative risk of 7.0 and in fact herself calculated a relative risk of 0.91. Swan Test., Tr. 7/12/91, at 29.
49. Dr. Done admitted that he transposed the entries for the Newman and Greenberg studies on his chart and so noticed during cross-examination. Done Test., Tr. 7/10/91, at 130-32.
50. The odds ratio of 3.3 reported by Dr. Done for limb reduction defects in the Kullander study related to women who took promethazine (an ingredient not found in Bendectin) and only to children with congenital dysplasia of the hip (a condition Amy DeLuca does not have). Lamm Direct at 16-17.
51. Dr. Wright similarly pointed out that the Kullander study dealt with the study of all antiemetics and not with Bendectin at all. Wright Direct at 29.
52. Dr. Done calculated an odds ratio of 2.0 for the all defects category in the Smith study. Although Dr. Done claimed to have compared the normal controls with the anomalous controls, Done Test., Tr. 7/10/91, at 96, Dr. Lamm testified that there were no data from which to make this calculation in the underlying study. Lamm Direct at 17; Monson Direct at 27; Defendant's Ex. 48. In addition, Dr. Lamm testified that the Smith study did not specifically address Bendectin and should have been excluded. Lamm Direct at 17; Monson Direct at 27; Defendant's Ex. 48.
53. The Porter study gave an odds ratio of 1.83 for malformations and Bendectin, Plaintiffs' Ex. 43, at 1430 Table 3, while Dr. Done recalculated an odds ratio of 2.3 for all defects. Done Test., Tr. 7/10/91, at 134. Dr. Lamm confirmed the author's odds ratio of 1.83 and did not know how Dr. Done calculated the number 2.3. Lamm Direct at 18; Wright Direct at 27-28.
54. Dr. Swan could not confirm Dr. Done's calculation of 2.3, but rather herself calculated an odds ratio of 1.82 using unmatched controls. Swan Test., Tr. 7/12/91, at 20.
C. Methodology of Presentation
55. Dr. Done presented percentage numbers of studies that are compatible with an increased risk of birth defects, but failed to inform the reader that the same studies were also compatible with a decreased risk of birth defects. Wright Direct at 34-35.
i. Inclusion of Data
56. Although Dr. Done has prepared an amended graph excluding those studies which did not address Bendectin, his original chart included studies which did not specifically address Bendectin. Done Aff., Ex. B.; Plaintiffs' Exs. 4, 6, 8, 9, 11 & 12; Monson Direct at 5; Wright Direct at 6; Lamm Direct at 12.
57. Dr. Swan, plaintiffs' other expert, agreed with defendant's experts that studies not specifically addressing Bendectin should have been excluded from any consideration of Bendectin's alleged teratogenicity. Swan Aff., ¶ 3(c).
58. Dr. Done admitted that exclusion of non-Bendectin studies would be more reliable in considering the risks of Bendectin. Done Test., Tr. 7/10/91, at 90.
*1050 59. Dr. Done included on his chart the Nelson study which dealt only with dicyclomine, an ingredient not found in the two-ingredient formula of Bendectin Mrs. DeLuca ingested. Lamm Direct at 12. Dr. Done acknowledged that the only component of Bendectin referred to in the article was dicyclomine, an ingredient not ingested by Mrs. DeLuca. Done Test., Tr. 7/10/91, at 89-90.
60. Dr. Done included the Shapiro/Heinonen study twice, although it is only one single study printed in two separate versions. Plaintiffs' Exs. 13 & 14; Monson Direct at 6; Defendant's Ex. 46. He also listed different relative risks for limb defects, although the two papers were based on the same data. Done Aff., Ex. B. Dr. Done claims to have separated out limb reduction defects. Done Test., Tr. 7/10/91, at 121-26.
61. Dr. Done included on his chart a number of preliminary drafts that were later replaced by finalized published studies. Compare Plaintiffs' Ex. 19 with Plaintiffs' Ex. 31; Compare Plaintiffs' Ex. 20 with Plaintiffs' Ex. 39; Monson Direct at 6-8.
62. The Jick draft included by Dr. Done on his chart was specifically labelled as a preliminary draft by the author himself. Plaintiffs' Ex. 20 (emphasis in original); Wright Direct at 32-33. A subsequent affidavit submitted by Dr. Jick explained that his preliminary draft contained errors that had a tendency to create a bias and those errors were later corrected. Defendant's Ex. 49. Dr. Done admitted the unreliability of the Jick draft. Done Test., Tr. 7/10/91, at 130.
63. Dr. Done relied on preliminary drafts in spite of his admission that his own earlier reanalysis submitted at his deposition contained numerous errors that were corrected in his final version. Done Test., Tr. 7/10/91, at 53-54.
64. Dr. Done's earlier draft contained variances in "data sets" for at least twenty of the studies on his chart. Done Test., Tr. 7/10/91, at 53-80. Dr. Done attributed the changes on his chart to the fact that he obtained a computer in the interim, obtained additional studies, etc. Done Test., Tr. 7/10/91, at 78-80.
65. Neither Dr. Swan's reanalysis of the Cordero data nor Dr. Done's analysis of DERs or ADRs has ever been submitted for publication. Monson Direct at 7. Neither Dr. Swan nor Dr. Done provided any explanation for not having published their respective analyses.
66. Dr. Done entered a relative risk of 2.0 for limb defects in the Michaelis '83 study, but there were no data given in that article from which to make such a calculation. Monson Direct at 18; Plaintiffs' Ex. 31.
67. Dr. Done calculated a relative risk of 3.3 for musculoskeletal defects for the Kullander study, which did not address Bendectin specifically and did not separately break out musculoskeletal defects. Wright Direct at 29; Plaintiffs' Ex. 11.
68. Dr. Done's review of DER surveillance data did not constitute a finished epidemiologic study. Wright Direct at 33. It cannot be used by itself to prove causation, but rather is merely a stimulus for further study. Done Test., Tr. 7/10/91, at 101.
69. With respect to Dr. Done's DER analysis (or ADR analysis), even if ADR or DER information were accurately reported, ADRs have inherent biases as they are second-or-third hand reports, are affected by medical or mass media attention, and are subject to other distortions. Faich Direct at 5.
70. At the time when Dr. Done reviewed the ADRs for Bendectin, there were inaccuracies, inconsistencies and duplications in the FDA records. Faich Direct at 6-7.
71. Dr. Done conceded that DERs generally can include lawsuits, medical journal articles and news accounts, and that the reporting of DERs by physicians is far more complete and total, and in fact less than 10% of what should be reported is in fact reported. Done Test., Tr. 7/10/91, at 99-101.
*1051 72. Dr. Done admitted that DERs are anecdotal reports which cannot alone be used to prove causation. Done Test., Tr. 7/10/91, at 101.
73. Dr. Done further admitted that he cannot now reproduce lists of the DERs he reviewed, and thus, cannot verify his data. Done Test., Tr. 7/10/91, at 101-02.
74. An FDA report has concluded that "ADR reports have in fact not been useful beyond a role as stimulators of interest. Defendant's Ex. 20, at ¶ 2.
75. ADRs or DERs are not of a type of data that are reasonably relied upon by experts in the fields of epidemiology and public health to make a determination of the causal relationship between a given substance and human birth defects. Faich Direct at 6 & 10.
ii. Exclusion of Data
76. Dr. Done did not include data from a large recent study by Shiono, which concluded there was no demonstrated association between Bendectin and birth defects. Done Aff., Ex. B.; Lamm Direct at 11; Wright Direct at 10-11; Defendant's Ex. 38.[13]
77. Dr. Done also did not include any data from the 1991 Erickson article, which yielded an odds ratio of 0.87 for all defects. Wright Direct at 10-11; Defendant's Ex. 40, Table 3, at 46.
78. Dr. Done did not know of any post-1986 studies such as Shiono and Erickson, as he testified that he included all he knew about. Done Test., Tr. 7/10/91, at 67. Both articles were published in Teratology, a peer-reviewed scientific journal. Defendant's Exs. 38 & 40.
79. Dr. Done did not include on his chart the relative risk for limb defects (the type of defects suffered by Amy DeLuca) from the Gibson study, even though it was presented in the published article. Done Aff., Ex. B., Lamm Direct at 11; Plaintiffs' Ex. 25.
80. Dr. Swan confirmed that the Gibson article contained data for a relative risk of 0.84 for limb reduction defects, although the relative risk was not included by Dr. Done on his chart. Swan Test., Tr. 7/12/91, at 29-31.
iii. Selectivity of Data
81. Although the Jick '80 draft, Plaintiffs' Ex. 20, contained at least four data sets, Dr. Done, with no explanation, ignored the one most favorable to a lack of association. Monson Direct at 14-16; Done Aff., Ex. B.
82. Dr. Done testified that he included club feet in the Heinonen study, thus raising the non-standardized relative risk from 1.4 to 1.6. Done Test., Tr. 7/10/91, at 124-25. Dr. Done did not, however, use that same method and similarly include club feet in deriving the relative risk of 4.2[14] for the Eskenazi study. Monson Direct at 17-18.
83. In the Aselton '83 study, Plaintiffs' Ex. 36, the possible relative risks from the two data sets are 1.4 and 0.67, or a combined value of 0.9. Dr. Done selected only the highest value of 1.4 for his chart. Monson Direct at 19; Wright Direct at 39.
iv. Weighing of Data
84. One important consideration in analyzing a study's power is the number of exposed defects. Monson Direct at 23. The study having the largest number of exposed defects is the McCredie study. Monson Direct at 23; Defendant's Ex. 47. The relative risk for this study is 1.1, an almost perfect example of a lack of an association. Dr. Done does not give this study any more weight than any of the other studies.
85. The study showing the second largest number of exposed limb defects is the Gibson study. Defendant's Ex. 47. Dr. *1052 Done has not included the 0.8 relative risk calculation for limb defects on his chart. Done Aff., Ex. B.; Monson Direct at 23. Dr. Done gave this study no weight at all since he chose not to include it on his chart.
86. The next two strongest studies in terms of the number of exposed defects are Cordero and Shapiro/Heinonen, with exposed defects of 43, 24, 14 and 13. Cordero listed a relative risk of 1.2, and the Shapiro/Heinonen study listed a standardized relative risk of 1.15 and a non-standardized relative risk of 1.4. Monson Direct at 24. Dr. Done has not given these studies any more weight than the Eskenazi or Aselton '85 studies, which have only one exposed defect in each study. Monson Direct at 24.
87. The 106 data sets presented in Dr. Done's chart do not represent 106 studies, but rather calculations from approximately forty individual studies. If a particular study calculates or presents information for a number of different classes of birth defects, then Dr. Done considers that to be that number of different data sets. Thus, a weak study in which the author presents data on five different categories of birth defects will be given five times as much weight on Dr. Done's chart as a study where the author evaluated only one type of birth defect. Wright Direct at 30.
88. Dr. Done gave equal weight to his data and calculations concerning birth defects not at issue here and to data concerning limb reduction defects at issue here. Wright Direct at 32; Done Aff., Ex. B.
89. There is nothing in the record indicating that Dr. Done has considered study design or control for bias and confounding, although he indirectly considered statistical power through presentation of confidence intervals. Dr. Swan confirmed that she did not know whether Dr. Done considered study design and control for bias and confounding. Swan Test., Tr. 7/12/91, at 48-49.
90. Dr. Done espoused collective evaluation of data, that is, re-evaluating all the underlying data he gathered from the studies. Done Aff., Ex. B. Dr. Done, however, reached no quantitative conclusion concerning his re-evaluation.
91. One possible quantitative collective conclusion, suggested by Dr. Lamm, is a combined relative risk called a "pooled odds ratio" calculated according to the Mantel-Haenszel statistical method. The pooled odds ratio calculated by Dr. Lamm for limb reduction defects is 1.08, and for all malformations is 0.98. Lamm Direct at 14. These results demonstrate an absence of an association between limb reduction defects or all malformations and maternal ingestion of Bendectin.
v. Presentation of Confidence Intervals
92. A study having a smaller confidence interval has more value than a study with a larger confidence interval. Done Test., Tr. 7/10/91, at 30.
93. Large confidence intervals show up as more black on Dr. Done's bar graph. This gives the reader the erroneous impression that the studies with large confidence intervals should be given more weight. Wright Direct at 46. The length of the line is, however, a measure of the lack of precision of a study. Lamm Test., Tr. 10/9/91, at 27.
94. In the analysis of Bendectin limb defect studies, the choice of a confidence interval of 90% or 95% does not change the result if that confidence interval contains the number 1.0. Wright Direct at 22; Defendant's Ex. 47.
95. Dr. Done's bar graph of confidence intervals mixed 90% and 95% confidence intervals without designating which were which. When presented visually on a bar graph, a 95% confidence interval will always be wider than a 90% confidence interval for the same study. This leads to an unclear and inconsistent presentation of data. Wright Direct at 21-22.
96. Dr. Done referred to studies in which the confidence intervals included 1.0 as "inconclusive." Although technically accurate, use of the word inconclusive may suggest to those unfamiliar with statistics and epidemiology that there was some deficiency in the study that makes one unable to form any conclusions whatsoever. *1053 Wright Direct at 19-20. A study that includes 1.0 in its confidence limits does, however, show that there is no statistically significant association between Bendectin and birth defects. Wright Direct at 19. It is misleading to suggest to a layperson that because a study is inconclusive it does not show a positive or negative effect. Wright Direct at 19-20.
97. Dr. Done's statement that 70% of his data sets have an upper confidence level above 2.0 is misleading without the corresponding information that 94% have lower confidence limits below 2.0 and only 30% of his data sets have a relative risk greater than 2.0. Wright Direct at 35-36.
vi. Inconsistencies Between Graphs and Chart
98. The bar graphs do not accurately portray all of the information contained on Dr. Done's chart.[15]
99. Dr. Done's chart contained an entry for the Eskenazi study showing a relative risk of 4.2 and a confidence interval of 0.5 to 36 for limb reduction defects. There was no entry on Dr. Done's bar graph corresponding to this data. Wright Direct at 7; Compare Done Chart with Done Bar Graph. The closest entry ranges from 0.5 to 44, thus skewing the data in favor of Dr. Done's opinion. Wright Direct at 6-7.
100. There was similarly no line accurately depicting Dr. Done's calculation for diaphragmatic hernia in the Heinonen study. Wright Direct at 8-9. Dr. Done's chart listed a relative risk of 11.0 with confidence limits of 4.3 to 28 for the Heinonen study. The corresponding line on the bar graph accurately portrayed the lower confidence limit, but exaggerated the upper confidence limit to well over 30. Compare Done Chart with Done Bar Graph.
101. At least one of the calculations in the Jick '80 draft included on Dr. Done's chart was not accurately portrayed on his bar graph. Wright Direct at 8. Dr. Done's chart listed a relative risk of 8.8 with confidence limits of 2.0 to 3.9 for limb reduction defects. While such a calculation is inaccurate (because 8.8 does not fall between 2.0 and 3.9), the corresponding line on the bar graph runs from a little under 2.0 to approximately 48. Compare Done Chart with Done Bar Graph.
102. Dr. Swan did not know which data points on Dr. Done's chart corresponded to which lines on his bar graph. Swan Test., Tr. 7/12/91, at 36-37.
103. On Dr. Done's own chart purporting to rank the studies by upper limit of confidence interval, Defendant's Ex. 42, there was no number 13, two numbers 14 (Jick '81 all defects and Cordero '81 CNS), two numbers 68 (Shapiro '77 eye and ear and Michaelis '83 musculoskeletal), no number 69, two numbers 82 (Saxen '74 all and Eskenazi '82 esophageal), no number 85, and no number 94. Wright Direct at 9.
D. Dr. Done's Qualifications
104. Dr. Done has had no formal training in a degree program in epidemiology. Done Test., Tr. 7/10/91, at 12.
105. Dr. Done does not have a Bachelor or Doctorate degree in epidemiology nor has he undertaken any fellowship in epidemiology. Done Test., Tr. 7/10/91, at 12.
106. Dr. Done is not a member of the American College of Epidemiology or the Society for Epidemiologic Research. Done Test., Tr. 7/10/91, at 12.
107. Dr. Done is not board certified in obstetrics or genetics. Although he is board certified in pediatrics, Done Test., Tr. 7/10/91, at 7, Dr. Done has never had a private practice in pediatrics, and he has not had admitting privileges in any hospital since 1983. Done Test., Tr. 7/10/91, at 8 & 13.
E. Dr. Done's Conclusions and Worksheets
108. Although Dr. Done stated in his report that "92% of the studies are compatible with an increase," he did not mention in his report that the studies were also compatible with a decrease (a proposition which he readily admits). Done Test., Tr. 7/10/91, at 46.
*1054 109. Where there is no association between an exposure and an effect, one would expect to see relative risks all grouped around the number 1.0. Done Test., Tr. 7/10/91, at 20; Wright Direct at 15. Use of a 95% confidence interval means that the chance that the true value of relative risk will fall outside of the interval is 1 in 20, and use of a 90% confidence interval means that the true value of relative risk will be outside the interval 1 out of 10 times.
110. On one of Dr. Done's charts, he ranked the studies by length of confidence interval as a measure of the strength of the data the shortest confidence intervals indicating the strongest data. Defendant's Ex. 42; Wright Direct at 15.
111. The studies Dr. Done considered to be the strongest all yielded relative risks grouped around the number 1.0. Wright Direct at 15.
112. With respect to the all defects category, Dr. Done rated the Shapiro study as the strongest study, followed by the Gibson study and the GPRG study. Defendant's Ex. 42; Wright Direct at 15. The relative risks for these studies are 1.1, 1.1 and 0.7 respectively. Done Aff., Ex. B.
113. In the category of limb reduction defects, putting aside Dr. Done's own unpublished preliminary study, Dr. Done rated the Shapiro study as the strongest with a rating of 82, followed by the Cordero study and the McCredie study. Defendant's Ex. 42; Wright Direct at 15-16. The relative risks for these studies are 1.15 (according to the author, 1.6 according to Dr. Done), 1.2 and 1.1. Done Aff., Ex. B.
IV. The Done Methodology: Dr. Done's Structure Activity Theory
114. Dr. Done claims that (1) because the structure of Bendectin is chemically similar to the structure of antihistamines generally; and (2) because some antihistamines have been associated with birth defects; and (3) because Bendectin is an antihistamine, all are suggestive of a connection between Bendectin and birth defects. Dr. Done has offered no evidence or data to support the above mentioned theory.
115. Small changes in chemical structure can cause very different human effects. Lietman Direct at 10. For example, methanol and ethanol are chemically similar. Compare Defendant's Ex. 59 with Ex. 60. Yet, while ethanol is found in most alcoholic beverages, ingestion of methanol produces blindness. Lietman Direct at 10-11.
116. Experts in pharmacology do not rely upon structure activity relationships in making determinations as to causation of birth defects, as such information is highly unreliable for drawing conclusions about teratogenicity. Lietman Direct at 14.
V. Exclusion of Other Causes of Amy DeLuca's Birth Defects
117. In Dr. Done's affidavit, he stated that his opinion was based in part on "the absence of another more likely cause in this case." Done Aff. at 2.
118. There is no evidence in the record showing that Dr. Done himself ruled out any other likely cause of Amy DeLuca's birth defects.
119. Although chromosomal studies in this case proved negative, Dr. Done did not address the possibility of causation from a genetic standpoint.
120. Although Dr. Brenholz testified that she has no direct evidence that smoking or Mrs. DeLuca's prior abortion were in any way related to Amy's birth defects, Brenholz Test., Tr. 9/19/91, at 67-68, the standardized texts and literature consulted by Dr. Brenholz in her practice list smoking as a possible teratogen and abortion as a subject of debate. Brenholz Direct at 6-7. In his testimony, Dr. Done failed to address either as another more likely cause of Amy's birth defects, did not consider any other cause, and did not explain his reasoning for ruling out any other cause. Brenholz Direct at 6-7.
CONCLUSIONS OF LAW
I. Jurisdiction
1. This Court has diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332.
*1055 II. The Downing Hearing
2. The hearing conducted by this Court on remand has produced a record sufficient under the criteria set forth in United States v. Downing, 753 F.2d 1224 (3d Cir. 1985) and DeLuca by DeLuca v. Merrell Dow Pharmaceuticals, Inc., 911 F.2d 941 (3d Cir.1990), to enable this Court to reach "the ultimate determination of whether [Dr. Done's testimony] is `helpful' and thus admissible," and to exercise its discretion in making that determination. DeLuca, 911 F.2d at 957 (citing United States v. Ferri, 778 F.2d 985, 989-91 (3d Cir.1985), cert. denied, 476 U.S. 1172, 106 S. Ct. 2896, 90 L. Ed. 2d 983 (1986)).
III. Federal Rule of Evidence 702
3. Federal Rule of Evidence 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.
Fed.R.Evid. 702.
4. Rule 702 embodies a strong and undeniable preference for admission of evidence having some potential to assist the trier of fact. DeLuca, 911 F.2d at 956.
5. Before a witness may testify under Rule 702, he or she must be sufficiently qualified.[16] Unless expert testimony is rendered by a qualified expert, it must be excluded. Hines v. Consolidated Rail Corp., 926 F.2d 262, 272 (3d Cir.1991).
6. Rule 702 permits the admission of expert testimony so long as that testimony is rendered by a qualified expert and is helpful to the trier of fact. DeLuca, 911 F.2d at 954 (citing American Technology Resources v. United States, 893 F.2d 651, 655 (3d Cir.), cert. denied, 495 U.S. 933, 110 S. Ct. 2176, 109 L. Ed. 2d 505 (1990); Habecker v. Copperloy Corp., 893 F.2d 49, 51 (3d Cir.1990); Breidor v. Sears, Roebuck & Co., 722 F.2d 1134, 1138-39 (3d Cir.1983)).
7. Expert testimony that is based on unreliable methodology is unhelpful and thus excludable. DeLuca, 911 F.2d at 954; Downing, 753 F.2d at 1224.
8. "The reliability of expert testimony founded on reasoning from epidemiological data is generally a fit subject for judicial notice." DeLuca, 911 F.2d at 954.
9. Where expert testimony is based on arguably unreliable techniques or novel scientific evidence, courts must conduct a preliminary inquiry, focusing on (1) the soundness and reliability of the process or technique used in generating the evidence; (2) the possibility that admitting the evidence would overwhelm, confuse, or mislead the jury; and (3) the proffered connection between the scientific research or test result to be presented, and particular disputed factual issues in the case.[17]Downing, 753 F.2d at 1237.
10. Where proffered statistical analysis is not novel, a Rule 702 hearing is not necessary to evaluate its reliability. DeLuca, 911 F.2d at 955 n. 15.
11. Simply because the great weight of scientific opinion leans against another opinion does not justify its exclusion. The degree to which adverse opinion dominates the relevant literature, however, is not wholly irrelevant. DeLuca, 911 F.2d at 955; Downing, 753 F.2d at 1238. Opinion contrary to Dr. Done's opinion that Bendectin is a teratogen clearly dominates the relevant literature, which almost universally finds no evidence of an increased risk of birth defects in conjunction with the use of Bendectin. See Finding of Facts supra at ¶¶ 20-28; see also DeLuca, 911 F.2d at 945-46 ("The great weight of scientific opinion, as evidenced by the FDA committee results, sides with the view that Bendectin use does not increase the risk of having a child with birth defects. Sailing *1056 against the prevailing scientific breeze is the DeLucas' expert Dr. Alan Done ... who continues to hold fast to his position that Bendectin is a teratogen."); Lynch v. Merrell-National Laboratories, 830 F.2d 1190, 1194 (1st Cir.1987) ("world-wide scientific investigations of Bendectin have produced no evidence establishing that Bendectin causes limb reduction").
A. The Process and Techniques Used by Dr. Done in Generating the Evidence
12. The court in Downing identified several factors to be considered when evaluating the reliability and soundness of a particular technique or methodology: (i) the novelty of the technique and its relationship to more established modes of scientific analysis; (ii) the existence of specialized literature; (iii) the qualifications and professional stature of expert witnesses; (iv) the non-judicial uses to which the scientific technique are put; and (v) the frequency with which a technique leads to erroneous results. Downing, 753 F.2d at 1238-39.
i. The Novelty of Dr. Done's Methodology and Its Relationship to More Established Modes of Scientific Analysis
13. Although the calculation of a relative risk is a simple arithmetic calculation, Done Test., Tr. 7/10/91, at 142; Wright Direct at 11; Monson Direct at 21-22, the defense experts as well as plaintiff's co-expert, Dr. Swan, testified that the precise method used by Dr. Done in making some of his calculations was a mystery and was not in conformance with any known methodology. Drs. Monson, Wright, Lamm and Swan, all qualified epidemiologists, in many cases could not replicate Dr. Done's calculations. Monson Direct at 27-28; Wright Direct at 33; Lamm Direct at 15-18; Swan Test., Tr. 7/12/91, at 12, 20, 25-26, 28-29 & 33. Accordingly, this Court is uncertain as to the precise technique or methodology employed by Dr. Done in making his calculations which he included on his chart, and thus, I conclude that his methodology is indeed novel. This factor weighs against admissibility.
14. The strength of an epidemiologic study should be evaluated in addition to its results. DeLuca, 911 F.2d at 955. Among the strongest studies on limb defects were the McCredie and Gibson studies, those being the two studies with the greatest number of exposed defects. See Findings of Fact supra at ¶¶ 84-85. Those studies yielded relative risks of 1.1 and 0.8 respectively. The next two strongest studies in terms of the number of exposed defects yielded relative risks of 1.2 and 1.15. See Findings of Fact supra at ¶ 86. Dr. Done's failure to weight these studies more strongly weighs against admissibility.
ii. The Existence of Specialized Literature
15. Dr. Done has not identified any specialized literature endorsing his particular methodology, nor has his methodology been endorsed by other experts. Accordingly, there is no likelihood that Dr. Done's methodology or technique has been exposed to critical scientific scrutiny. Downing, 753 F.2d at 1238-39. This factor weighs against admissibility.
iii. The Qualifications and Professional Stature of Expert Witnesses
16. Although Rule 702 establishes a liberal qualification standard, In re Paoli R.R. Yard PCB Litig., 916 F.2d 829, 856 (3d Cir.1990), cert. denied sub nom. General Elec. Co. v. Knight, ___ U.S. ___, 111 S. Ct. 1584, 113 L. Ed. 2d 649 (1991), this Court may nonetheless consider Dr. Done's qualifications in connection with the reliability of his methodology. Downing, 753 F.2d at 1239.
17. Dr. Done primarily relies upon the field of epidemiology in formulating his opinion. It is undisputed that Dr. Done has had no formal training in a degree program in epidemiology. Done Test., Tr. 7/10/91, at 12. It is further undisputed that Dr. Done does not have a Bachelor or Doctorate degree in epidemiology nor has he undertaken any fellowship in epidemiology. Done Test., Tr. 7/10/91, at 12. In addition, Dr. Done is not a member of the American College of Epidemiology or the Society for Epidemiologic Research. Done Test., Tr. 7/10/91, at 12.
*1057 18. Dr. Swan, plaintiffs' epidemiologist and statistician, could not verify the accuracy of Dr. Done's calculations. In addition, she testified that she was frequently unable to determine the precise methodology used by Dr. Done in selecting data to calculate relative risks and confidence intervals, and in actually calculating those intervals. See Findings of Fact supra at ¶¶ 35, 36, 38, 42, 45, 48 & 54.
19. Similarly, defense experts, Drs. Monson, Wright and Lamm, all qualified epidemiologists, in many cases could not replicate Dr. Done's calculations. Monson Direct at 27-28; Wright Direct at 33; Lamm Direct at 15-18.
20. Although Dr. Done's qualifications or lack thereof may not alone constitute a sufficient basis upon which to exclude his testimony, his lack of formal training in epidemiology weighs against admissibility.
iv. The Non-Judicial Uses to Which the Scientific Technique Are Put
21. Dr. Done has presented no evidence that his methodology has been put to any non-judicial use. Although "the Federal Rules of Evidence contain no requirement that an expert's testimony be based upon reasoning subjected to peer-review and published in the professional literature," DeLuca, 911 F.2d at 954, the fact that Dr. Done's methodology has not been used non-judicially weighs against its admissibility. Downing, 753 F.2d at 1239; see also Perry v. United States, 755 F.2d 888, 892 (11th Cir.1985) ("the examination of a scientific study by a cadre of lawyers is not the same as its examination by others trained in the field of science or medicine").
v. The Frequency with Which a Technique Leads to Erroneous Results
22. The "ultimate touchstone" of the soundness and reliability of a particular methodology or technique "is helpfulness to the trier of fact." DeLuca, 911 F.2d at 956. Helpfulness "turns on whether the expert's `technique or principle [is] sufficiently reliable so that it will aid the jury in reaching accurate results.'" Id. at 956 (quoting 3 J. Weinstein & M. Berger, Weinstein's Evidence ¶ 702[03], at 702-35 (1988)). In this regard, "Downing teaches that the frequency with which a scientific technique leads to erroneous results bears heavily on its reliability for evidential purposes." DeLuca, 911 F.2d at 956 n. 19 (citing Downing, 753 F.2d at 1239).
23. Dr. Swan, plaintiffs' other expert, did not independently verify the data included on Dr. Done's chart, did not check his calculations and did not check to see if Dr. Done correctly extracted the data from the articles as to which he made no calculations. Swan Test., Tr. 7/12/91, at 7-14.[18] Dr. Swan merely commented on Dr. Done's methodology as he described it and "took as a given that he did what he said he did." Swan Test., Tr. 7/12/91, at 9-21.
24. To the extent that Dr. Done used ADR or DER data as a basis for his conclusion that Bendectin is a teratogen, the methodology produces inaccurate and unreliable results because such data are unreliable for determining causation. See Findings of Fact supra at ¶¶ 69-75.
25. The testimony on remand established that Dr. Done's epidemiologic methodology yielded erroneous results so frequently that it is not helpful to the trier of fact. See Findings of Fact supra at ¶¶ 34-54. This factor most certainly weighs against admissibility.
26. Plaintiffs must "make more than a prima facie showing (e.g., the testimony of a single qualified expert) that a technique is reliable." Downing, 753 F.2d at 1240 n. 21. Plaintiffs have failed to make even a prima facie showing that Dr. Done's methodology is reliable.
27. The above Downing factors used in evaluating the reliability and soundness of Dr. Done's methodology weigh against the admissibility of his testimony.
B. The Possibility That Admitting the Evidence Would Overwhelm, Confuse, or Mislead the Jury
28. Testimony also should be excluded if it would overwhelm, confuse or mislead *1058 the jury. Thus, even if this Court did not conclude that Dr. Done's methodology is unreliable, the possibility that his testimony would overwhelm, confuse or mislead the jury warrants its exclusion. DeLuca, 911 F.2d at 957; Downing, 753 F.2d at 1237. In making that determination, the Court must keep in mind "the extent to which probative scientific evidence is capable of being properly utilized by the jury." DeLuca, 911 F.2d at 957. Specifically, will the jury be able to give Dr. Done's testimony appropriate weight, or will the evidence because of its scientific origins take on an importance beyond its probative value? Id.
29. Although Dr. Done's inclusion and exclusion of certain data may be nothing more than a matter for the experts to battle, when viewed in light of the numerous errors in calculation of that data and selectivity biases, this Court concludes that Dr. Done's testimony would serve to confuse and mislead a jury.
30. There is a danger that scientific evidence will mislead a jury "where the jury is not presented with the data on which the expert relies, but must instead accept the expert's assertions as to the accuracy of his conclusions." Downing, 753 F.2d at 1239. Here, Dr. Done has presented on his charts the post-selection and post-calculation numbers, without explaining the precise derivation of the numbers. Moreover, Dr. Done has not specifically ruled out Mrs. DeLuca's cigarette smoking or her prior abortion as possible causes of Amy's birth defects. The potential for confusion is evident.
31. Because I conclude that Dr. Done's methodology is novel and unreliable, and because his testimony has the potential of confusing and misleading a jury, Federal Rule of Evidence 702 requires its exclusion.
IV. Federal Rule of Evidence 703
32. Federal Rule of Evidence 703 states:
The facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing. If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence.
Fed.R.Evid. 703.
33. Rule 703 and Rule 104(a) require a district court to "`make a factual inquiry ... as to what data experts in the field find reliable.'" DeLuca, 911 F.2d at 952 (quoting In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 276 (3d Cir.1983), rev'd on other grounds sub nom. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). Generally, if an expert avers that his testimony is based on data experts in the field find reliable, then Rule 703's requirements are usually satisfied. DeLuca, 911 F.2d at 952.
34. "Rule 703 is satisfied once there is a showing that an expert's testimony is based on the type of data a reasonable expert in the field would use in rendering an opinion on the subject at issue; it does not address the reliability or general acceptance of an expert's methodology" as does Rule 702. Id. at 953.
35. Even if expert testimony is admissible under Rule 703, it may be excluded as unreliable under Rule 702.[19]In re Paoli, 916 F.2d at 854 n. 29.
36. Dr. Done purports to have taken the numbers he entered in the boxes on his chart from either the underlying studies themselves, or, in the articles where no calculations were made, from his own calculations. In many cases, as previously noted, this is simply not true. Dr. Done frequently used numbers of his own, even where calculations were available. Often, his "re-calculations" were wrong and could not be replicated by plaintiff's other expert, Dr. Swan, or the defense experts. See Findings of Fact supra at ¶ 36. The hearing conducted by this Court has revealed that the data used by Dr. Done is not, as was represented to the Court of Appeals, *1059 DeLuca, 911 F.2d at 953, the data used by Merrell Dow's own expert, Dr. Brenholz, in formulating her opinion. Rather, Dr. Done has re-calculated the data provided in the underlying studies and has used that "new data" in formulating his opinion that Bendectin is a teratogen. This "new data" has not and cannot in many instances be replicated by other experts in the field or even be explained.
37. In addition, Dr. Done specifically relied upon several types of data experts in the field would not use in forming their opinions: (i) his own analysis of the ADRs or DERs for Bendectin; (ii) the preliminary Jick drafts, as well as other drafts, see Findings of Fact supra at ¶ 61; and (iii) Dr. Swan's reanalysis of the Cordero data.[20] Faich Direct at 6 & 10. In fact, Dr. Done admitted the unreliability of the Jick draft during cross-examination. Done Test., Tr. 7/10/91, at 130.
38. Dr. Done thus has used data upon which no epidemiologist would rely. This is where Rules 702 and 703 intersect. As the Court of Appeals stated: "If a study's method of data collection is faulty, it may be that no expert would rely upon the data generated as a basis for drawing any inference about the studied subject." DeLuca, 911 F.2d at 955 n. 14.
39. Because I conclude that Dr. Done has used data experts in the field would not use in rendering their opinions on the subject, Federal Rule of Evidence 703 requires its exclusion.
V. Causation
40. Summary judgment is proper where a party fails to establish the existence of an element essential to his case and where he bears the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Because this Court has concluded that Dr. Done's testimony is inadmissible under Federal Rules of Evidence 702 and 703, I must conclude that plaintiffs have not met their burden under Celotex to produce evidence sufficient to raise a genuine issue of material fact as to whether Amy DeLuca's birth defects were caused by maternal ingestion of Bendectin during pregnancy. Id.; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Accordingly, summary judgment will be entered in favor of Merrell Dow.
VI. Sufficiency of the Evidence
41. Because I have concluded that Dr. Done's testimony is inadmissible under Federal Rules of Evidence 702 and 703, I do not reach the issue whether his testimony, if admitted, would meet the applicable burden of proof standard under New Jersey law.
For the foregoing reasons,
It is on this 29th day of April, 1992,
ORDERED that defendant Merrell Dow's motion for summary judgment be and is hereby GRANTED.
NOTES
[1] Prior to removal of this action from state court, summary judgment was entered on behalf of the other named defendants.
[2] Plaintiffs' objection on grounds of relevance is overruled. In making preliminary determinations of the admissibility of evidence, this Court is not bound by the Federal Rules of Evidence. See Fed.R.Evid. 104(a). Moreover, this evidence clearly is relevant even under the standard set forth in Federal Rule of Evidence 401.
[3] Plaintiffs' objection on grounds of relevance is overruled. See footnote 2 supra.
[4] Plaintiffs' objection on grounds of relevance is overruled. See footnote 2 supra.
[5] Plaintiffs' objection on grounds of relevance is overruled. See footnote 2 supra.
[6] Plaintiffs' objection on grounds of relevance is overruled. See footnote 2 supra.
[7] Plaintiffs' objection on grounds of relevance is overruled. See footnote 2 supra.
[8] Indeed, Dr. Done could not rely on in vivo and in vitro animal studies as they were excluded by order of Magistrate Judge John Devine and affirmed by this Court.
[9] Plaintiffs claim this was not her role.
[10] It is not disputed that the underlying data upon which Dr. Done relied in making his calculations are of a type reasonably relied upon by experts in the field of epidemiology. What is at issue here are the calculations (Dr. Done refers to those calculations as "data sets" although they are not data sets in the commonly used sense of the word) Dr. Done has made based upon his interpretation of the actual data provided in the underlying studies and his method in presenting those calculations (the charts and graphs). This is in essence the methodology employed by Dr. Done. See In re Paoli R.R. Yard PCB Litig., 916 F.2d 829, 856 (3d Cir.1990) ("DeLuca announces an important rule by making clear that when it is a scientist's methodology that is being attacked, in contrast to the data relied on, the court must analyze the reliability of that methodology under Downing (and Rule 702)."), cert. denied sub nom. General Elec. Co. v. Knight, ___ U.S. ___, 111 S. Ct. 1584, 113 L. Ed. 2d 649 (1991). Merrell Dow is attacking Dr. Done's methodology and not the underlying data he relied upon in making his calculations.
[11] Plaintiffs assert that the issue of whether the defense experts reached different results in making their calculations has no bearing on the issue of whether Dr. Done's testimony is admissible. The Court of Appeals, however, explicitly suggested that the defense might challenge particular data sets on remand, and thus, the issue is directly related to the admissibility of Dr. Done's testimony.
[12] Accepted epidemiologic methodology requires that where standardization can be performed, it should be performed. Monson Direct at 14.
[13] With respect to the exclusion of data, plaintiffs agree that Dr. Done was not aware of some of the studies, but claim that the exclusion is irrelevant in light of all the data he analyzed. Plaintiffs assert that the inclusion or exclusion of data is a legitimate dispute between the experts.
[14] This number is based on one occurrence of a mother who ingested Bendectin and gave birth to a child with limb reduction defects. Wright Direct at 29.
[15] Plaintiffs contend the information is accurately portrayed and the differentiations trivial.
[16] Merrell Dow does not argue that Dr. Done is unqualified as an expert, but rather indirectly attacks his qualifications when assessing the reliability of his methodology.
[17] The Court of Appeals has determined that this third factor has been satisfied, and thus, this Court need not address it in remand. DeLuca, 911 F.2d at 955.
[18] Plaintiffs claim this was not her role.
[19] In light of this Court's ruling on the 702 issue, I need not reach this issue. However, for purposes of completeness, the Court will nonetheless make the 703 analysis.
[20] Plaintiff conceded for purposes of this inquiry that Dr. Done's unpublished reanalysis of DER and ADR reports and his use of Dr. Swan's reanalysis may be disregarded. See Plaintiff's Proposed Finding of Fact 7. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1557883/ | 493 F. Supp. 554 (1980)
UNITED STATES of America
v.
Gilbert L. DOZIER.
Crim. No. 80-02-B.
United States District Court, M. D. Louisiana.
July 30, 1980.
Donald L. Beckner, U.S. Atty., Mitchell B. Lansden, Ian F. Hipwell, Asst. U.S. Attys., Baton Rouge, La., for plaintiff.
Camille Gravel, Alexandria, La., E. Drew McKinnis, McKinnis, Juban & Bevan, Baton Rouge, La., William H. Jeffress, Jr., Miller, Cassidy, Larroca & Lewin, Washington, D.C., for defendant.
POLOZOLA, District Judge.
The defendant, Gilbert L. Dozier, has filed a motion to dismiss Count I of the indictment on the grounds that the Department of Agriculture is not an "enterprise" as defined in the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, et seq. No oral argument is required on this motion.
The Court finds that the Louisiana Department of Agriculture is an enterprise within the meaning of 18 U.S.C. § 1961(4). Therefore, defendant's motion to dismiss Count I of the indictment must be denied. United States v. Bright, 78-5472 (5 Cir. July 11, 1980); United States v. Brown, 555 F.2d 407 (5 Cir.1977), certiorari denied 435 U.S. 904, 98 S. Ct. 1448, 55 L. Ed. 2d 494 (1978); United States v. Baker, 617 F.2d 1060 (4 Cir.1980); United States v. Grzywacz, 603 F.2d 682 (7 Cir.1979); United States v. Frumento, 563 F.2d 1083 (3 Cir. 1977); United States v. Bacheler, 611 F.2d 443 (3 Cir.1979); United States v. Vignola, 464 F. Supp. 1091 (E.D.Pa.1979), aff. mem., 605 F.2d 1199 (3 Cir.1979); United States v. Altomare, 625 F.2d 5 (4 Cir. July 17, 1980); United States v. Barber, 476 F. Supp. 182 (S.D.W.Va.1979).
Therefore:
IT IS ORDERED that defendant's motion to dismiss Count I of the indictment be and it is hereby DENIED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2259726/ | 777 F.Supp. 1493 (1991)
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, L-2110, et al., Plaintiffs,
v.
Edward J. DERWINSKI, Secretary of Veterans Affairs, U.S. Department of Veterans Affairs, et al., Defendants.
Jeffrey HANSEN, et al., Plaintiffs,
v.
Edward J. DERWINSKI, Secretary of Veterans Affairs, U.S. Department of Veterans Affairs, et al., Defendants.
Nos. C-88-20357-WAI, C-88-20361-WAI.
United States District Court, N.D. California.
July 31, 1991.
*1494 Cliff Palefsky, McGuinn, Hillsman & Palefsky, San Francisco, Cal., for plaintiffs.
Thomas Turnage, Washington, D.C., for defendants.
MEMORANDUM OF DECISION
INGRAM, District Judge.
These consolidated actions challenge and seek to enjoin the implementation of the testing components of the Veterans Administration Drug Free Workplace Plan adopted by the Veterans Administration, 53 Fed.Reg. 11970 (the "Plan") in response to the provisions of Executive Order 12564.51 Fed.Reg. 32889.
This court has previously granted preliminary injunctions restraining implementation of the Plan's testing provisions with *1495 respect to random, post-accident and reasonable suspicion testing. Now before the court are cross motions for summary judgment and defendants' motion to vacate preliminary injunctions.
Each of the motions are GRANTED in part and DENIED in part, as hereinafter provided.
There are six different categories of persons or situations which, under the Plan, can trigger urinalysis drug testing to discern the presence in the body of marijuana, cocaine, the opiates, the amphetamines and phencyclidine ("PCP"). These are random testing, reasonable-suspicion testing, post-accident testing, follow-up testing, applicant testing and voluntary testing.
Plaintiffs in Action No. 88-20361 challenge random, post-accident, reasonable-suspicion and follow-up testing. Plaintiffs in Action No. 88-20357 and the intervenors challenge all types of testing.
Plaintiffs in Action No. 88-20361 are five individuals: one physician; one pharmacist; one nurse; and two medical technician supervisors. Plaintiffs previously sought certification of a class. The motion was denied, largely upon the representation of defendants that the result with respect to the instant plaintiffs, who work at the Palo Alto and San Diego facilities of the Veterans Administration, will largely de facto determine the availability for testing of similarly situated employees within the agency. Plaintiffs in Action No. 88-20357 are labor unions: the American Federation of Government Employees; the Service Employees International Union; and the National Association of Government Employees. These unions represent on the order of more than 100,000 Veterans Administration employees. AFGE represents some professional, but mostly non-professional, employees including at least one member in each job classification which is non-managerial or non-supervisorial and is listed in Appendix A to the Plan. AFGE represents, in the words of declarant Charles Mintess "VA employees who will be subject to `reasonable-suspicion' and `accident or unsafe practice testing'." Declaration of C.S. Mintess. The Service Employees International Union represents over 10,000 Veterans Administration employees including persons who work as nurses and technicians and public safety and maintenance employees. Declaration of David Baker.
RANDOM TESTING
More than 90% of the Testing Designated Positions ("TDPs") designated under the Plan for random testing are medical positions alleged to be "safety-sensitive." The five plaintiffs in Action No. 88-20361 are: Jeffrey Hansen, Martin Hudson, Karen Russ, David Martin and Stephen Baird.
Jeffrey Hansen is a Clinical Specialist Pharmacist, GS-12/8, at Veterans Administration Hospital, Palo Alto, California. At the time of the commencement of this action Mr. Hansen was a Pharmacist, GS-11/6. He is licensed in the states of Oregon and California. He is not a member of a union.
At the time of initial hiring Mr. Hansen submitted to a physical examination, including urinalysis. No test for drugs was included in the urinalysis. He has not been required to take another physical examination since he was hired except for annual tuberculosis skin tests. He has never been questioned with respect to personal drug use, either at the time he was hired or since.
Mr. Hansen has stated in his declaration of June 16, 1988, that "street" drugs, such as heroin or PCP are neither stored nor used at the hospital. All narcotic drugs stored at the hospital are kept under lock and key, and there is a detailed "sign-in and sign-out" procedure under which drugs are dispensed from storage. There are locked medication carts on each ward to which nurses have keys. Drugs which are dispensed from storage, but which are not used, are "wasted" in front of a witness.
In his present position, Mr. Hansen works with a team of medical professionals, including physicians, nurses and other technicians, to develop treatment programs for individual patients. Hansen is aware of the job performance of other team members *1496 and they are aware of his performance. Declarations of Hansen: June 16, 1988; October 12, 1988.
Karen Russ, R.N., is a regular full-time employee of the Veterans Administration Hospital in Palo Alto, California. She is a graduate nurse and has been licensed in California since 1982.
Ms. Russ is not represented by any union. She commenced her employment as a regular part-time nurse in the Intensive Care Unit and subsequently became employed full-time in the Nursing Education Unit. Her job title as of November 14, 1990 was and has been since March 1989 Nursing Instructor, Gerontology. By Declaration dated November 14, 1990, Ms. Russ states that in her current job she does "occasionally perform services involving direct contact with patients when the hospital is short-staffed." Such activities occupy not more than five percent of her time. She has no access to narcotic drugs. Her current position is classified as intermediate grade, step 5, Registered Nurse. She works at both the Palo Alto, California and Menlo Park, California facilities of the Veterans Administration. The latter facility furnishes extended care, psychiatric and drug rehabilitation functions.
At the time of hiring Ms. Russ took a physical examination including urinalysis, which did not, she believes, include a drug test. She has never been questioned with respect to her personal use of drugs.
Ms. Russ stated in her declaration of October 13, 1990 that there is an "extensive" sign-in and sign-out procedure at the hospital for the dispensing of drugs and a requirement that any unconsumed dispensed drug be "wasted" in the presence of a witness.
In her present position, Ms. Russ does not handle medications or surgical instruments.
Medical personnel work in teams and observe each other's job performance, and any impairment in an individual job performance is detectable. Declaration of Russ, October 13, 1990; Supplemental Declaration of Russ, November 14, 1990.
David Martin is a regular full-time employee of the Veterans Administration Medical Center in San Diego, California, with an employment history with the Veterans Administration spanning fifteen years. His job classification is Medical Technologist GS-644. He is also Supervisor of Irregular Tours which covers the swing and graveyard shifts. He supervises six medical technologists in the Hematology, Blood Bank and Coagulation Departments of Laboratory Services. He is licensed by the State of California. He is not represented by any union.
When hired, Mr. Martin was given a physical examination including urinalysis, which did not, to his knowledge, cover testing for drugs. He has never been questioned about drug use. Since employment he has not been required to take further physical examinations, except for an annual tuberculosis skin test.
In his work he has no contact with narcotics or other drugs. Declaration of Martin, June 15, 1988.
Stephen Baird, M.D., is a physician and a regular, full-time employee of the Veterans Administration Medical Center, San Diego, California. He is Chief of Laboratory Services and head of the Hematology Division at the Medical Center. His job classification is Chief, GS-15. He is a pathologist licensed to practice in California, and has been certified by the American Board of Pathology. He has been certified in clinical and in anatomical pathology. He is not a member of any union.
A decline in performance such as a high rate of errors in results or failures to follow laboratory procedures are the subject of continuous documentation and review, as is poor performance which poses any threat to a patient. The Laboratory Division of which he is Chief includes the departments of Hematology, Blood Donor, Blood Bank, Microbiology, Surgical Pathology, Autopsy Pathology, Cytology, Immunology and Virology and Microscopy.
Dr. Baird was given a physical examination at the time of initial performance, and none since. He has never been questioned about drug use.
*1497 He has no contact with narcotics or other drugs in the course of his work in the Laboratory Services Division.
Declarations of Baird dated June 15, 1988 and October 12, 1990.
Martin Hudson is a regular employee of the Veterans Administration Hospital in Palo Alto, California, where he is a supervisor of the Dialysis Unit. He supervises the work of four dialysis technicians. As supervisor he hires, trains and supervises the technicians who perform the dialysis functions. He is on the Dialysis Unit constantly while at work and observes the work of the technicians whom he supervises. Also on the unit are a Renal Fellow, a resident physician or a medical student and the physician who is the director of the dialysis program. Patient treatment lasts three hours per treatment and requires monitoring of the dialysis instrument and of the patient's blood pressure. The dialysis machines are self-monitoring, in the sense that they emit visible and audible warnings when some mechanical problem arises. Technicians are also supervised by a charge nurse. All technicians have direct patient contact for a week at a time. When not so assigned, they maintain the machines, do lab work and order supplies.
Each of those five named plaintiffs in Action No. 88-20361 are alleged to be occupants of "safety-sensitive" positions and therefore to be subject to random testing. Those plaintiffs occupy positions which are listed within Categories I and II (Health Care Employees) in the Veterans Administration's compilation of safety-sensitive TDPs. Sixth Declaration of Egan, first attachment.
Plaintiff unions, in Action No. 88-20357, are alleged to represent at least one person within each of the remaining categories on that compilation. Those categories are:
III. Law Enforcement/Protection of Life and Property Employees.
IV. Other Public Safety Employees, Including Safety Engineer, Motor Vehicle Operator, Electrician (and several classifications of mechanics).
Thus all of "safety-sensitive" positions to be subject to random testing are alleged to be subject to the compelling, governmental interest of public safety, and as such require a showing of a direct nexus between the duties of each position so described and the nature of the feared violation. Harmon v. Thornburgh, 878 F.2d 484 (D.C.Cir. 1989), cert. denied, 493 U.S. 1056, 110 S.Ct. 865, 107 L.Ed.2d 949 (1990).
Aside from the declarations of the five plaintiffs in Action No. 88-20361, Responses to Second Set of Written Interrogatories, and to some extent the Declarations of Turnage and Egan, there is no evidence before the court which is descriptive of job duties in the relevant health care employees category other than Appendix A to the Drug Free Workplace Plan of the Veterans Administration dated October 15, 1987, which was modified in some particulars by the recent approval by the Secretary of Veterans Affairs of recommended modifications submitted by the VA Drug Free Workplace Task Force on October 10, 1990. See Fourth and Sixth Declarations of Egan.
The court must individually examine each of the safety-sensitive positions with a view to the determination of the requisite nexus, and in the context of compelling government need as compared with employee expectation of privacy.
The court has examined the Declarations of Sidney H. Schnoll, M.D., Ph.D. and the Declaration of Martha R. Harkey, Ph.D., each of which expresses the opinion that urine drug testing is an ineffective and inaccurate method of screening employees for drug abuse, is overbroad, and that the method of testing proposed by the Veterans Administration is not in accordance with accepted medical principles, and will not reveal whether or not a tested person is impaired by the ingestion of drugs.
The failure of a given test to measure actual employee impairment is not fatal to the propriety of its use. Skinner v. Railway Labor Executives' Ass'n, 489 U.S. 602, 109 S.Ct. 1402, 103 L.Ed.2d 639 (1989); American Fed. of Gov. Employees v. Skinner, 885 F.2d 884 (D.C.Cir.1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1960, 109 L.Ed.2d 321 (1990).
*1498 Dr. Schnoll has suggested alternative effective means of testing directly for impairment and for early identification of chronic drug users. Declaration of Schnoll, pages 6, 7. Such means constitute less intrusive and perhaps more efficacious alternatives. The existence of such means, however, does not diminish the force of the Agency's interest in requiring drug tests, nor does the constitutionality and reasonableness of mandated tests turn on the availability of alternative and less intrusive means for the identification of drug users. International Brotherhood of Teamsters v. Department of Transp., 932 F.2d 1292 (9th Cir.1991).
It is clear to the court that all of the named plaintiff health care professionals in Action No. 88-20361 have active patient care responsibilities, either directly or in the providing of necessary diagnostic or therapeutic care to patients. Ms. Russ devotes only five percent or less of her time to patient care and the rest of her time to instructional duties in the field of gerontology, but five percent is a significant portion of time considering the importance of the care then rendered.
The court finds that the nexus requirement articulated by Harmon v. Thornburgh, 878 F.2d 484, is fulfilled in the case of health professionals who are responsible for direct patient care, either with direct patient contact or in the performance of diagnostic testing or therapeutic functions or the preparation and dissemination of drugs and medicines. Even momentary lapses could cause serious consequences, or at a minimum, if undiscerned, might subject a patient to procedures which would not have otherwise been indicated.
Because required drug testing implicates fourth amendment interests, Bluestein v. Skinner, 908 F.2d 451 (9th Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 954, 112 L.Ed.2d 1042 (1991); Teamsters, 932 F.2d 1292, the reasonableness of the intrusion must be determined by balancing the Agency's interest in conducting the test against the Agency employee's expectation of privacy. Neither individualized suspicion of the persons to be tested nor the identification of a pre-existing "drug problem" within the Agency are necessary factors. National Treasury Employees Union v. Von Raab, 489 U.S. 656, 109 S.Ct. 1384, 103 L.Ed.2d 685 (1989); Bluestein, 908 F.2d 451; Teamsters, 932 F.2d 1292.
The compelling force of the governmental interest in the conduct of a testing program is measured by whether the interest in question falls within one or more of three specific governmental interests: (1) maintaining the integrity of workers in executing their essential mission; (2) enhancing public safety; and (3) protecting "truly sensitive" information. Harmon, 878 F.2d 484; American Fed. of Gov. Employees v. Cheney, 754 F.Supp. 1409 (N.D.Cal.1990).
In the case of the five named plaintiffs in Action No. 58-20361, it appears to the court that those plaintiffs, all regulated licentiates within their respective professional groups, are of legitimate and compelling concern to defendants. The maintenance of professional and personal integrity in the execution of their mission, the care and treatment of inpatients and outpatients, is of compelling concern. The paramount consideration of safety of members of the public who are eligible to use Veterans Administration hospitals and facilities is apparent on its face. Hospitals must exist for precisely that purpose. The gravity of the responsibilities of such medical professionals is at least as great as that of locomotive engineers, flight attendants, and pipeline workers, and the risks associated with drug-impaired performance equally catastrophic.
Random drug testing, as compared with other forms of testing, offers the best potential deterrent to drug use. This factor, coupled with the possibility of catastrophic accident, is sufficient to show a strong governmental interest in random testing.
While plaintiffs contend that those listed in categories I and II of the Plan have the same expectation of privacy that any federal employees would entertain, it seems to the court that persons presented to the relevant public as professional licentiates, *1499 and who have voluntarily subjected themselves to the licensing regulations applicable to their chosen calling have proportionately diminished their expectation. Those held out as medical professionals deservedly have the aura of professional competence. It is hard to see how such a person would reasonably hold the same expectation of privacy as that entertained by a clerical worker or other nonprofessional employee in federal service. Some support for this view is found in Plane v. United States, 750 F.Supp. 1358 (W.D.Mich.1990), where the court said with respect to nurses
(I) also find it reasonable to expect that someone who has chosen a profession such as nursing, where life and death situations can arise, has a lesser expectation of privacy in their ability to provide the services necessary to perform their duties.
Id. at 1368.
The public safety significance of the work of these medical and health care professionals is supported by the provisions with respect to them contained in Appendix A to the Plan as amended. Plaintiffs criticize these as speculative and assuming a worst case situation. Clearly all of the categories of persons previously found to be properly testable under similar plans such as locomotive engineers, pipeline workers, truck drivers and others have been considered in the light of the type of situation which it is most desirable to avoid, the type of situation in which a momentary lapse of attention can lead to the direst of consequences.
Furthermore, although deterrence of drug use, of itself, does not create a compelling government interest, Skinner, 489 U.S. at 634, 109 S.Ct. at 1422 (Stevens, J., concurring), deterrence is a factor to be considered by the court in evaluating the quantum of government interest, Connelly v. Newman, 753 F.Supp. 293 (N.D.Cal. 1990), and as a vital factor in performing a balancing of interests. Bluestein, 908 F.2d 451.
Because the positions occupied by the five named plaintiffs, those of physician, nurse, pharmacist, medical technician and dialysis technician, require the discharge of duties fraught with such risk of injury to others that even a momentary lapse of attention can have disastrous consequences, the court finds that defendants have a compelling interest in requiring the proposed random drug testing and that interest prevails over the expectation of privacy entertained by the incumbents of those five positions. As noted, as licensed members of professions subject to qualifications, examination and regulation, plaintiffs are entitled to expect less freedom from founded intrusion than other federal employees not so situated.
In this connection, it is appropriate to address a concern not previously dealt with in the decided cases because it is unique to a hospital environment. The constant presence and dispensing of medicinal preparations containing drugs is part of the currency of hospital life. While the precautions taken in the dispensing of drugs as reflected in plaintiffs' declarations are hopefully successful, opportunities for misuse of such preparations by those inclined to do so are patent. The propinquity to drugs is therefore a factor to be weighed in the balance.
Defendants in Action No. 88-20361 are entitled to summary judgment on the issue of the propriety of random testing, and the preliminary injunction heretofore entered is dissolved and set aside. While the denial of class certification precludes consideration of the circumstances of similarly situated persons who are not named plaintiffs, the court is of the opinion that what has been said with respect to the random testing of named plaintiffs is equally applicable to other category I and II employees as set forth in Exhibit L appended to the Sixth Declaration of Egan.
In Action No. 88-20357, the American Federation of Government Employees does not represent persons who occupy positions designated as subject to random testing. Affidavit of Charles Mintess, November 14, 1990, at 5, paragraph 7. The Service Employees International Union represents persons in a wide variety of positions including nurse, technician, public safety and maintenance *1500 positions, Declaration of David Baker, October 11, 1990, and apparently challenges the implementation of the Plan with respect to all persons affected thereby who are represented by it.
With respect to random testing what has been said with respect to positions within categories I and II is equally applicable to the plaintiffs in Action No. 88-20357. The court now turns to a consideration of those positions falling within categories III and IV with respect to random testing.
The court has carefully considered each of the descriptions of positions and proffered justifications for inclusion in random testing as set forth in Appendix A to the Plan.[1] This consideration is primarily to determine whether the proffered position fulfills the nexus requirement of Harmon, 878 F.2d 484; Guiney v. Roache, 873 F.2d 1557 (1st Cir.), cert. denied, 493 U.S. 963, 110 S.Ct. 404, 107 L.Ed.2d 370 (1989); Policeman's Benevolent Ass'n of N.J., Local 318 v. Township of Washington, 850 F.2d 133 (3d Cir.1988), cert. denied, 490 U.S. 1004, 109 S.Ct. 1637, 104 L.Ed.2d 153 (1989). That is, there must be a showing of a direct nexus or connection between the duties of the position in question and the nature of the feared violation, which in this case is a failure of duty performance attributable to drug impairment.
The court finds an adequate showing of that nexus with respect to each of the following positions:
Group 1.
Firefighter
Police Officer/Detective
Guard
Protection Officer
Criminal Investigator
Motor Vehicle Operator
Automotive Mechanic
There is a supportable nexus with respect to motor vehicle operators who carry passengers (Appendix A) and the mechanics who maintain the vehicles so employed. AFGE v. Skinner, 885 F.2d 884; AFGE v. Cheney, 754 F.Supp. 1409.
Automotive mechanics who maintain vehicles used in the transportation of persons are indistinguishable from the maintenance personnel found to be subject to testing in Bluestein, 908 F.2d 451. The safety interests are the same whether a mechanic be employed by a federal agency or by a common carrier.
Of the law enforcement positions included in Group 1, only Criminal Investigators are authorized to be armed. (Second Response to Interrogatories). However, Guards, Protection Officers and Police Officers/Detectives who work in an environment partly devoted to the care and treatment of those suffering from drug-related problems, who perform security and regular inventories of drugs and controlled substances and who are charged with the investigation of drug-related crimes on VA premises are clearly performing functions akin to drug interdiction. Cf. Von Raab, 489 U.S. 656, 109 S.Ct. 1384.
A satisfactory nexus has been demonstrated with respect to those positions, as it has also for Firefighters. AFGE v. Cheney, 754 F.Supp. 1409.
The court finds no supportable nexus between the duties of each of the following positions and the nature of the feared violation when viewed from the perspective of compelling governmental interest.
Group 2.
Safety and Occupational Health Specialist/Manager
Industrial Hygienist/Safety Manager
Safety Engineer
Boiler Plant Operator
Utility System Repairer
Utility System Operator
*1501
Electric Power Controller
Air Conditioning Equipment Mechanic
Air Conditioning Equipment Operator
Electronics Mechanic
Electrician
Electrician (High Voltage)
Welder
Pipefitter
Pest Controller
Boiler Plant Equipment Mechanic
Elevator Mechanic
Industrial Equipment Mechanic
Heavy Mobile Equipment Mechanic
Instrument Maker
Accordingly, defendants are entitled to summary judgment with respect to those positions listed in Group 1 and the preliminary injunction heretofore entered is dissolved and set aside with respect to the random testing of the incumbents of those positions. Plaintiffs are entitled to summary judgment with respect to the positions listed within Group 2.
REASONABLE-SUSPICION TESTING
Reasonable-suspicion testing is applicable under the Plan to all employees of the Veterans Administration.
The Plan provides that reasonable suspicion testing may be based on:
1. Observable phenomena, such as direct observation of drug use or possession and/or the physical symptoms of being under the influence of a drug.
2. A pattern of abnormal conduct or erratic behavior.
3. Arrest or conviction for a drug related offense, or the identification of an employee as the focus of a criminal investigation into illegal drug possession, use, or trafficking.
4. Information provided either by reliable and credible sources or independently corroborated, or
5. Newly discovered evidence that the employee has tampered with a previous drug test.
The Plan provides that supervisors receive training to recognize facts which give rise to reasonable suspicion and requires that at least two supervisors concur in the ordering of a test.
Reasonable suspicion rests upon something demonstrated by the employee's own act or conduct and is therefore less intrusive than is random testing. Cf. International Brotherhood of Electrical Workers, Local 1245 v. Skinner, 913 F.2d 1454, 1464 (9th Cir.1990) (pre-employment and post-accident testing are less intrusive than random testing because they are triggered by a definable event or the employee's own act).
Language identical to that used in the Veterans Administration Plan was considered in National Treasury Employees Union v. Yeutter, 918 F.2d 968 (D.C.Cir. 1990), and reasonable-suspicion testing as therein outlined was held unconstitutional with respect to employees not occupying "safety-sensitive" positions because the reasonable-suspicion criteria were not confined to on duty drug use or drug impaired work performance.
Furthermore the "pattern of abnormal conduct or erratic behavior" contemplated by the second criterion is overbroad, in that it does not specify that the type of conduct or behavior be consistent with the use of drugs in a workplace setting. American Fed. of Gov. Employees v. Sullivan, 744 F.Supp. 294 (D.D.C.1990).
Accordingly, because the Plan as drawn does not distinguish between "ordinary employees" and occupants of "safety-sensitive positions," plaintiffs are entitled to summary judgment with respect to reasonable-suspicion testing, and defendants are enjoined from implementing reasonable-suspicion testing in its present form, except with respect to those employees who occupy "safety-sensitive" positions which this court has herein found to be subject to random testing.
POST-ACCIDENT TESTING
The Veterans Administration Plan as amended provides
VA is committed to providing a safe and secure work environment. Employees who apparently cause on-the-job accidents or who engage in unsafe on-duty *1502 job-related activities that pose a danger to others or the overall operation of VA may be subject to testing. Based on the circumstances of the accident or unsafe act, the immediate or higher level supervisor may initiate testing when:
1. An accident or unsafe act involves personal injury or death.
2. An accident or unsafe act results in more than $2000 damage.
3. The same employee has more than one accident or unsafe act during a twelve month period.
Drug tests ordered under this provision should be conducted as soon as possible after the accident or unsafe practice occurs.
Plaintiffs attack the amended standards on the grounds that:
1. The threshold standard is too low.
2. The testing is not limited to safety-sensitive employees, and is to be undertaken on a discretionary basis.
Plaintiffs point out also that the provision exempting "minor employee accidents or on-the-job injuries" has been eliminated from the Amended Plan.
The court agrees with plaintiffs that the standards as amended are not sufficiently certain as to the magnitude of a personal injury sufficiently grave to trigger a drug test. In International Brotherhood of Teamsters v. Department of Transp., 932 F.2d 1292 (9th Cir.1991), the Ninth Circuit approved a standard which required, inter alia, "an injury demanding medical treatment away from the scene of an accident."
The instant standard leaves the decision with respect to the initiation of testing wholly in the hands of the immediate or higher supervisor, who shall decide whether "(t)he circumstances of the accident or unsafe act" justify testing. This leaves an impermissibly broad spectrum of the exercise of judgment, particularly with respect to the quantum of personal injury.
Accordingly, the court grants summary judgment to plaintiffs and enjoins and restrains defendants from enforcing post-accident testing in accordance with the standards as written.
FOLLOW-UP TESTING
Defendants are entitled to summary judgment on this issue, and the preliminary injunction heretofore issued is dissolved with respect to follow-up testing.
The attack on this aspect of the Plan is mounted upon the assertion that the Plan permits unlimited testing in the undefined discretion of local administrators. This court's reading of the Plan reveals that the employee may be subject to unannounced testing either with the frequency provided for in the abeyance contract or at an increased rate of frequency at least six times per year. If the latter alternative is selected, the selection for testing is accomplished by means of a separate random pool. Since random testing is implemented under the Plan on a monthly basis, Plan, Section IX, E, the defendants are correct in their argument that the maximum number of times in a year that a given individual can be tested is twelve.
By its terms the Plan does not mandate unlimited follow-up testing at the unguided discretion of local administrators, but rather provides testing in accordance with the abeyance contract, or for testing between six and twelve times on a random basis for a period of one year, in addition to EAP testing.
The court finds that the Plan with respect to follow-up testing does not run counter to the Fourth Amendment by failure to provide sufficiently guiding and restrictive standards, particularly since frequency of testing between the minimum of six and the maximum of twelve is controlled not by the unilateral decision of an individual, but by a process of random selection.
CIVIL SERVICE REFORM ACT
Defendants are entitled to summary judgment on the issue of whether the Plan violates the Civil Service Reform Act of 1978 and 5 U.S.C. § 2302(b)(10).
Plaintiffs argue that no court which has considered this issue has addressed the question of whether a positive urinalysis *1503 result, of itself, supplies the required nexus between the employee's alleged misconduct and the efficiency of government service. 5 U.S.C. § 7513(a) (1976 & Supp. V 1981).
Whether that be so or not, this court is of the opinion that when and if a disciplinary question arises stemming from testing undertaken pursuant to the Plan, and remedy is sought pursuant to § 2302(b)(10), the question is more properly addressed in that factual context than now. This court can express no opinion based on the record in this case as to whether in every possible situation which may be factually presented the Plan conflicts or does not conflict with the CSRA, nor should it attempt to until a case or controversy is presented.
CONCLUSION
Plaintiffs are entitled to summary judgment with respect to the random testing of employees listed in category IV of the listing of "safety-sensitive" positions (Exhibit to Sixth Declaration of Egan) except Automotive Mechanics, and defendants are permanently enjoined and restrained from randomly testing the occupants of such positions.
Defendants' motion for summary judgment on this issue is DENIED.
Plaintiffs are entitled to summary judgment with respect to reasonable-suspicion testing as set forth in the Plan as written insofar as it applies to employees not occupying "safety-sensitive" positions as the same are defined in this Memorandum, and defendants are permanently enjoined from subjecting occupants of such non-safety-sensitive positions to reasonable-suspicion testing as presently provided in the Plan.
Defendants' motion for summary judgment on this issue is DENIED.
Plaintiffs are entitled to summary judgment with respect to post-accident testing in the Plan as written, and defendants are permanently enjoined from subjecting employees to post-accident testing as presently provided in the Plan.
Defendants' motion for summary judgment on this issue is DENIED.
Defendants are entitled to summary judgment with respect to the random testing of all persons occupying positions listed in Categories I, II and III in the listing of "safety-sensitive" positions attached as an exhibit to the Sixth Declaration of Egan and with respect to occupants of the positions of Motor Vehicle Operator and Automotive Mechanic, which positions are listed in Category IV of said exhibit, and the preliminary injunction heretofore issued is dissolved and set aside with respect to all such positions.
Plaintiffs' motion for summary judgment is DENIED as to these positions.
Defendants are entitled to summary judgment with respect to follow-up testing as described in the Plan, and the preliminary injunction heretofore issued is dissolved and set aside as to follow-up testing.
Plaintiff's motion for summary judgment is DENIED with respect to follow-up testing.
Defendants are entitled to summary judgment with respect to contentions involving the Civil Service Reform Act and plaintiff's motion for summary judgment is DENIED as to those contentions.
NOTES
[1] The positions examined are: Firefighter, Police Officer, Detective, Guard, Protection Officer, Criminal Investigator, Safety and Occupational Health Specialist/Manager, Industrial Hygienist/Safety Manager, Safety Engineer, Boiler Plant Operator, Utility Systems Operator, Electric Power Operator, Air Conditioning Equipment Operator, Motor Vehicle Operator, Electronics Mechanic, Electrician, Electrician (High Voltage), Welder, Pipefitter, Utility System Preparer/Operator, Pest Controller, Air Conditioner Equipment Mechanic, Elevator Mechanic, Automotive Mechanic, Heavy Mobile Equipment Mechanic, Instrument Maker. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2577133/ | 113 F.Supp.2d 879 (1999)
UNITED STATES of America,
v.
Kemba Niambi SMITH, Defendant.
No. CRIM.A.2:93CR162-11, No. CIV. A. 2:97CV411-2.
United States District Court, E.D. Virginia, Norfolk Division.
August 4, 1999.
*880 *881 *882 *883 Fernando Groene, Asst' U.S. Attorney, Office of the U.S. Attorney, Norfolk, VA, for US.
Gerald Thomas Zerkin, Gerald T. Zerkin & Associates, Richmond, VA, for Defendant.
ORDER
DOUMAR, District Judge.
Petitioner, Kemba Niambi Smith (hereinafter "Smith"), has filed a petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2255. In her petition, Smith alleges the following: (1) her guilty plea was not knowing and voluntary; (2) the government breached the terms of her plea agreement; (3) her sentence was unlawful and excessive; (4) her sentence is illegal because it is based upon an unconstitutional distinction between crack cocaine and cocaine hydrochloride; (5) she received ineffective assistance of counsel; and (6) her defense lawyers were laboring under a conflict of interest.
Smith requests that the Court conduct an evidentiary hearing and she has submitted numerous interrogatory and other discovery requests. See Rule 6 & Rule 8, Rules Governing Section 2255 Proceedings. For the reasons set forth, Smith's motion is DENIED.
I. Background
Cocaine Ring
Smith was a college student at Hampton University in Hampton, Virginia when she got involved in a drug ring that distributed cocaine and crack cocaine from New York City to the District of Columbia, Virginia, North Carolina, and elsewhere. Presentence Report ("PSR") ¶ 14; Detention Hearing Transcript ("Detention Tr.") 36. Smith was raised in a middle class family *884 in Richmond, Virginia. PSR ¶¶ 114-115. Smith's father is an accountant and her mother is a school teacher. Id. Smith enrolled as a freshman student at Hampton University in the fall of 1989. The following spring, in May of 1990, she met Peter Michael Hall (hereinafter "Hall") at a party. PSR ¶ 94. Hall was the principal leader of the cocaine network along with his brother, Wainsworth Marcellus Hall. Detention Tr. 36.
Hall had moved from the New York area to Hampton, Virginia in late 1988 or early 1989. PSR ¶ 18. Once there, Hall devised a scheme for transporting money and drugs along the eastern corridor. PSR ¶ 22. Hall recruited Hampton University students, most of whom were female, to serve as drug couriers. PSR ¶ 22. Typically, cars would be driven to New York City and would be met by Wainsworth Hall and other ring members. Id. The cars would be taken to another location, loaded with drugs in secret compartments, and then driven back south. Id. Once received, the drugs would be sold on the streets. PSR ¶ 14. Originally, cocaine was brought down from New York and sold in its powder form. By the spring of 1990, however, Hall began to cook the powder into cocaine base or "crack" cocaine and the distilled product would be sold. PSR ¶ 14; Guilty Plea Hearing Transcript ("Plea Tr.") 29. Money would be collected and sent to New York by way of drug courier. Detention Tr. 37. In New York, there would be an exchange of money for drugs, and the process would be repeated. Detention Tr. 37.
The cocaine network was profitable and generated at least $4,000,000 in receipts based on distribution of over 200 kilograms of cocaine. PSR ¶ 17. The remunerative rewards came at a high price to human life. Two murders were committed by members of the ring, and two co-conspirators were murdered. PSR ¶¶ 54, 64; Detention Tr. 37.
Smith was not a leader in the drug conspiracy, but her involvement was substantial. Detention Tr. 42; PSR ¶ 94. In fact, Smith obtained apartments for Peter Hall under false names, she flew to New York to drop off money, and she drove vehicles concealed with drugs from New York to North Carolina.[1] Sentencing Hearing Transcript ("Sentencing Tr.") 105-108; PSR ¶ 49; Detention Tr. 39-44. Also, Smith purchased a 1992 Jeep Wrangler in her name for the benefit of Peter Hall and his brother Wainsworth Hall.[2] PSR ¶¶ 79, 84. From time to time, Smith delivered money to Hampton University students who had been recruited as drug couriers for transport to New York City. Plea Tr. 31.
When Peter Hall was incarcerated under alias names in Newport News, Virginia for money-laundering charges, in Virginia Beach for selling cocaine, and in New York City for selling cocaine, Smith posted bond through other co-conspirators or through Peter Hall's lawyers. Plea Tr. 31; Sentencing Tr. 118-20. Smith utilized alias names in aiding and abetting the conspiracy. She utilized the name Candace McGhee, Jeanette Morris, and Kemba Maynard to post bond for Peter Hall, to obtain phony driver's licenses, to lease automobiles, and to rent a storage locker to hide incriminating evidence. Plea Tr. 31-32; PSR ¶¶ 58, 65; Sentencing Tr. 107-108. In addition, Smith manufactured a fraudulent birth certificate on behalf of a drug member so the member could drive with a false license between New York City and Virginia. PSR ¶ 48; Sentencing Tr. 104-106.
By early 1992, law enforcement authorities were zeroing in on Hall and his situation had grown desperate. Indeed, in January or February 1992, bounty hunters *885 arrived at the home of Smith's parents in Richmond, Virginia and inquired about Hall's whereabouts. Sentencing Tr. 80. Smith was home at the time and spoke with the bounty hunters. Id. After the bounty hunters left, Smith called Hall and told him that bounty hunters were looking for him. Sentencing Tr. 80-81.
In the fall of 1992, Hall moved his end of the drug operation to Charlotte, North Carolina. Sentencing Tr. 82-83. Rather than matriculating at Hampton University for another semester, Smith moved to Charlotte and enrolled in Johnson C. Smith College in Charlotte that fall. Sentencing Tr. 83. In early 1993, Smith withdrew from Johnson C. Smith College and enrolled in Central Piedmont College in Charlotte, North Carolina. Sentencing Tr. 94. Around this time, Smith became pregnant with Hall's baby. Sentencing Tr. 84. Smith suffered a miscarriage and did not carry the baby to term. Id.
In May 1993, Hall returned to Charlotte, North Carolina from New York and learned that law enforcement authorities had searched an apartment he shared with Smith. PSR ¶ 63. Hall was edgy and nervous that a member of the network was cooperating with authorities. Id.; Sentencing Tr. 85. On May 24, 1993, Hall instructed Smith to contact her attorney in Richmond, Virginia to ascertain what law enforcement authorities knew about the cocaine ring. PSR ¶ 63; Sentencing Tr. 85.
Hall became increasingly convinced that a co-member of the ring, Derrick Taylor, was an informant for the federal authorities. Sentencing Tr. 92. On May 25, 1993, Hall and Taylor drove a van to Charlotte, North Carolina with another female, who was driving in a separate car. Sentencing Tr. 41. After stopping for lunch in Greensboro, the three individuals switched cars. Sentencing Tr. 41-42. The female and Hall drove in the van and Taylor followed in the other vehicle. Sentencing Tr. 41-42. While in the van, Hall told the female that he was going to kill Taylor. Sentencing Tr. 42. Eventually, the cars pulled off the road and Hall, who was armed with a gun, got out of the van and into the car driven by Taylor. Id. The female drove ahead to a store and waited for Hall, who arrived by himself fifteen to twenty minutes later. Sentencing Tr. 42-43. On the drive back to Charlotte, Hall instructed the female to toss his gun out of the van window. Sentencing Tr. 43. Taylor was later found dead. Id.
Hall phoned Smith on the way back to Charlotte. Sentencing Tr. 43. Either on the phone or shortly thereafter, Hall admitted to Smith that he had shot Taylor.[3] Smith met up with Hall and the female at a hotel in Charlotte. Sentencing Tr. 43. Smith delivered a "getaway" car, a white Acura that Hall used to drive to Atlanta. Id.; PSR ¶ 64. Two days later, on May 28, 1993, Hall called Smith and told her to clear the house in Charlotte of incriminating material and other items belonging to Hall. PSR ¶ 65; Sentencing Tr. 111-112. Smith leased a storage locker in the name of Kemba Maynard and stored weapons, scales, drug trafficking paraphernalia, and implements used to create false identification documents. Id.
Once Smith completed her spring finals, she traveled to Atlanta and delivered the storage locker key to Hall. Sentencing Tr. 112. On June 9, 1993, Smith told Hall that federal authorities were interested in interviewing her. PSR ¶ 66; Sentencing Tr. 85-86. Hall instructed Smith to meet with the agents and find out what they knew about the drug ring. Id. Hall further instructed Smith to tell federal agents that *886 she did not know his brother Wainsworth and that she was being supported financially by other men. Id.
Smith met with agents from the Drug Enforcement Administration and Internal Revenue Service in Richmond, Virginia on June 28, 1993. PSR ¶ 68; Sentencing Tr. 92, 137-140. Federal agents proffered a letter of immunity in exchange for truthful information Smith could provide about the cocaine network. Id. Smith was specifically asked about the murder of Derrick Taylor and her involvement and knowledge of the conspiracy. Id. Smith failed to provide information about the activities of the organization. Id. Smith also lied to federal authorities and misled them into believing that she did not know Wainsworth Hall or his role in the ring. Id. Additionally, she lied and told authorities that she knew nothing about Derrick Taylor's murder, and she lied and told federal agents that she was a prostitute. Id. Shortly after the interview, Smith reported back to Hall about her interview. Id.
In August 1993, Smith registered at Virginia Commonwealth University in Richmond, Virginia. Sentencing Tr. 94; PSR ¶ 124. Smith lived with her parents in Richmond and attended classes. Sentencing Tr. 93-94. During the fall term, Smith called Hall repeatedly and wired him around $200 on three or four occasions, and she visited Hall in Atlanta on two occasions. Sentencing Tr. 94-96.
Grand Jury Indictment
On December 8, 1993, the Grand Jury for the Norfolk Division of the Eastern District of Virginia returned a sealed, multi-count Indictment against Smith and eleven other co-conspirators including Hall. The Grand Jury charged Smith and the other defendants with numerous violations of the federal narcotics and money laundering laws, operation of a continuing criminal enterprise, murder in furtherance of a continuing criminal enterprise, weapons charges, and substantive drug-related charges. The Court directed warrants to be issued on Smith and the other defendants named in the Indictment. On December 30, 1993, the Court ordered that the Indictment be unsealed.
At the time the Indictment was returned, Smith fled her parents' home and became a fugitive. PSR ¶ 70; Sentencing Tr. 95-97. She followed Peter Hall to Houston, Texas, and for the next nine months, the two eluded authorities. Sentencing Tr. 95-97. While on the lamb, Smith again became pregnant with Hall's child.[4] Sentencing Tr. 99.
In their absence, a jury trial commenced on June 14, 1994 against three co-conspirators in the drug ring.[5] One of the defendants pled guilty during the first week of the trial. On June 27, 1994, the jury returned a guilty verdict against Wainsworth Hall for the following offenses: 1) conspiracy to possess with intent to distribute and to distribute, in violation of 21 U.S.C. § 846; 2) engaging in a continuing criminal enterprise, in violation of 21 U.S.C. § 848; and 3) conspiracy to launder money, in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 371. PSR ¶ 3. Codefendant Derrick Kelly was acquitted of all counts. PSR ¶ 7. Wainsworth Hall received a life sentence and his convictions and sentence were affirmed on appeal. See United States v. Hall, 93 F.3d 126 (4th Cir.1996).
In late August 1993, Smith and Hall were holed up in Seattle, Washington. Sentencing Tr. 98-99; Detention Tr. 10. Smith was almost six months pregnant and she made the decision to come back home. Id. Smith took a train from Seattle to Richmond and arrived at her parent's home. Sentencing Tr. 98-100. Smith lied to her parents and told them that she had *887 left Richmond because an unidentified associate of Hall's had beaten her, extorted money from her, and threatened her with physical harm. Detention Tr. 10-11; Sentencing Tr. 124. Once in Richmond, Smith contacted federal agents and the United States Attorney's office through her lawyer, Robert Wagner.[6] Sentencing Tr. 101-102.
Grand Jury's Superseding Indictment
On August 25, 1994, the Norfolk Division of the Grand Jury returned a sixteen-count Superseding Indictment against Smith and Hall and two other fugitives from the original Indictment.[7] The Grand Jury charged the fugitives with narcotics and money laundering offenses, murder in furtherance of a continuing criminal enterprise, and a firearms offense. The Grand Jury charged Smith under Counts 1, 2, 14, 15 & 16 of the Superseding Indictment. Under Count 1, Smith was charged with conspiracy to possess with intent to distribute and to distribute in excess of five (5) kilograms of cocaine, and in excess of fifty (50) grams of crack cocaine, in violation of 21 U.S.C. § 846. Under Count 2 and Count 14, Smith was charged with conspiracy to launder money and money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i), 371 and 2. Under Count 15, Smith was charged with making false statements to federal agents, in violation of 18 U.S.C. § 1001. Finally, under Count 16, Smith was charged with forfeiture under 21 U.S.C. § 853.
Detention Hearing
Based on the Superseding Indictment, a new warrant was issued for Smith's arrest on August 25, 1994. On September 1, 1994, Smith surrendered to federal authorities and made an initial appearance before United States Magistrate Judge Tommy E. Miller. Smith pled not guilty and requested a jury trial. On the same day, a detention hearing was held before Judge Miller, who denied bond and ordered detention. Smith's father testified on behalf of his daughter and relayed his daughter's fictitious story that an unnamed drug associate had beaten her up and extorted money from her. Detention Tr. 10-11, 21-22. Smith would later admit at sentencing that this tale of threats and extortion was a fabrication. Sentencing Tr. 124-125.
On September 30, 1994, Smith and her attorney Robert Wagner met with federal agents and Assistant United States Attorney Fernando Groene. Sentencing Tr. 124-125. On that occasion, Smith failed to disclose Peter Hall's location in Seattle, even though she knew he was living there under the alias Curtis Lamont Saunders. Sentencing Tr. 103-104, 125-126. On October 1, 1994, Hall was found murdered in his apartment in Seattle. Sentencing Tr. 125; Plea Tr. 42. Smith found out about Hall's death on October 2, 1994 or October 3, 1994. Sentencing Tr. 104; Plea Tr. 42. Smith and her attorney set up another meeting with federal authorities on October 4, 1994. See Smith's Amended Habeas Petition, at 25.
Guilty Plea Hearing
On October 17, 1994, a guilty plea hearing was held before this Court (the Honorable Richard B. Kellam, presiding). Smith pleaded guilty to Count 1 (narcotics conspiracy), Count 2 (money laundering conspiracy), and Count 15 (false statements to federal agents) of the Superseding Indictment. As part of the plea agreement, the Government promised to dismiss the remaining counts of the Superseding Indictment and original indictment if Smith entered a plea of guilty. Plea Tr. 7. The Court conducted a thorough Rule 11 colloquy and accepted Smith's plea as being *888 voluntarily and knowingly made. Plea Tr. 3-28.
The Court presented the outline of the plea agreement and the counts to which Smith was pleading guilty. Plea Tr. 7-24. The Court also informed Smith about the maximum statutory penalties, fines, and supervised release terms resulting from conviction of those offenses. Plea Tr. 9-12. In addition, the Court informed Smith about the Sentencing Guidelines and how they generally operate in calculating a sentence. Plea Tr. 10. The Court informed Smith about her right to a jury trial, her right to plead not guilty, her right to be confronted by her accusers, her right against self-incrimination, her right to raise defenses, the presumption of innocence at any trial, and the burden of proof on the government to prove her guilt beyond a reasonable doubt. Plea Tr. 12-19. Smith indicated that she understood those rights. Id. Smith stated that she had discussed the charges and had read the indictment with her counsel and was so satisfied with his advice and assistance. Plea Tr. 6-8. The Court asked Smith a second time whether she was satisfied with the advice and assistance of counsel:
Court: Have you had any trouble in communicating with your counsel? That is having your lawyer understand what you had to say about the case, and you understanding what he has had to say about the case?
Smith: No, I haven't had any trouble.
Court: Again, are you satisfied with the advice and assistance which he has given you up to this time?
Court: Yes, I am.
Plea Tr. 20-21.
The Court reminded Smith that in the plea agreement, she was waiving her right to appeal her sentence:
Court: In the plea bargain and agreement, you have agreed that you will give up any right of appeal that you would have as to any sentence imposed upon you in this case, if the sentence is within the provisions of the statute or law.... The only time you would have a right to appeal is if the sentence that is imposed is not in accordance with the statute, within the limits provided by statute. Do you understand that?
Smith: Yes, I do.
Plea Tr. 19-20.
The Court asked Smith whether the Government had promised to move for the Court to depart from the guidelines or otherwise promise a reduction in her sentence based on her cooperation. Plea Tr. 24. Smith responded that "[i]t has been indicated that it may happen. No promises have been made." Plea Tr. 24. The Court then advised Smith of her rights under the plea agreement and the consequences of a plea:
Court: Now, they reserve the right, of course, to move for ask the court to give you a lesser sentence than provided by the guidelines. They reserve that right. And when the matter is presented to the court, they have agreed that they will bring your cooperation to the attention of the court.
But I want you to understand this. They have a perfect right to move for a lesser sentence. They are not compelled to do so, and there is nothing in the plea bargain agreement which requires them to do so. So while you may have in you mind that they are going to do so or you want them to do so, I want you to understand there is nothing in the plea bargain agreement which requires them to do so. They reserve the right to do it.... The court can't compel them to do it. Do you understand that?
Smith: Yes, I do.
*889 Court: I just want you to understand, they make the recommendation. The court is not compelled to follow it. So that they may make a recommendation to give you, instead of the minimum sentence under the guidelines, to give you half of the minimum sentence or any portion of it. The court is not compelled to follow that .... That is a matter that the judge has the discretion on whether he will or will not follow it, and I make no suggestion to you that the court would not follow it or that it would follow it....
Your counsel is going to ask the court in all probability to give you some reduction in sentence or to make it as light as the guidelines will permit. But that doesn't mean that the court has to do so. Do you understand that?
Smith: Yes, Your Honor.
Plea Tr. 24-26.
In order to make sure Smith understood her rights, the Court continued:
Court: I'm always concerned about it if a defendant comes into court and enters a plea of guilty, having a feeling that the United States attorney is going to move for some reduction of the sentence. And if you are entering a plea of guilty in the case because of your hope of that, you have a right to hope for it, but I want you to understand that is not a legal it is not legal and binding in any way on the United States attorney or upon this court, and if they have agreed to you privately they are going to do it, you'd better tell me about it now, because it won't make any difference when the time comes for sentencing.
If there has been any agreement that they are going to move for a reduction of sentence, this is the time to tell me about it, because I'm not going to accept your plea if that's a part of the plea bargain.
Smith: No, No promises have been made to me.
Court: No promise has been made.
Smith: No.
Plea Tr. 26.
The Court accepted the plea and then denied Smith's motion to release her in home detention pending sentencing. Plea Tr. 28, 43-45. The matter was continued for sentencing pending the preparation of a presentence report.
Presentence Report
A presentence report was prepared and distributed to the parties. On December 16, 1994, defense counsel Robert Wagner advised the probation officer of certain objections. Wagner also filed written objections on December 29, 1994, which incorporated his earlier objections and raised other objections. William Robinson, who was newly-retained defense counsel since the guilty plea hearing, also noted objections to the report and filed his own written objections on December 30, 1994. Taken together, defense counsel's objections were extensive.[8] Among the major *890 objections raised, defense counsel argued that Smith should be attributed with 5 kilograms of crack cocaine based on her alleged dates of involvement in the drug conspiracy, rather than 255 kilograms of crack cocaine as provided in the presentence report. See PSR ¶ 94. Second, defense counsel argued that Smith should be attributed with only $3,000 in laundered money based on her involvement in the conspiracy, rather than more than $1,000,000 as contained the presentence report. See PSR ¶ 94. Third, defense counsel asserted that Smith should be awarded at least a two level reduction for her minor role in the ring, as provided under U.S.S.G. § 3B1.2(b). Fourth, defense counsel maintained that Smith should not be given an enhancement for obstruction of justice under U.S.S.G. § 3C1.1, or an enhancement for possession of a dangerous weapon under U.S.S.G. § 2D1.1(b)(1). Fifth, defense counsel claimed that Smith should be given a sentence reduction based on duress or coercion under U.S.S.G. § 5K2.12.
January 30, 1995 Hearing
The sentencing hearing was originally scheduled for January 30, 1995. Hearing Transcript ("Tr.") 1. On the same day, Smith filed a motion to withdraw her guilty plea. Id. at 2-3. In addition, the Government petitioned to remove Smith's lawyer William Robinson as counsel based on a potential conflict of interest. Id. at 3. The Government indicated that Robinson had been representing William Foreman, an unindicted co-conspirator who had pled guilty in return for his cooperation. Id. at 3-4, 19. The Government also stated that Robinson had tried to represent co-conspirator Wainsworth Marcellus Hall at his arraignment hearing. Id. at 4. On that prior occasion, the Government had made a similar motion to have Robinson withdrawn.[9]Id. Robinson subsequently withdrew from Wainsworth Hall's case. Id. at 11-13.
In this matter, the Government stated that William Foreman had been a witness before the Grand Jury and could be a government witness at Smith's trial. Id. at 25. The Government stated that if Mr. Robinson had learned anything from his prior representation, it could affect Smith's substantive rights. Id. at 12-13. The Court had Smith sworn and the Government questioned Smith and made sure she understood Robinson's potential conflict of interest. Id. at 15-19. The Government's questioning ended this way:
Gov't: And do you understand that in the course of that representation, Mr. Robinson might find out something which directly implicates you in this case?
Smith: Yes, I understand.
Gov't: You understand that the Sixth Amendment to the Constitution of the United States provides that you have a right to effective assistance of counsel and that *891 that effective assistance means that your counsel, your lawyer, must not shall not have any conflict of interest?
Smith: I understand that, yes.
Gov't: And that you can waive that conflict after you are knowingly, voluntarily, and intelligently advised of the possibility of a conflict of interest?
Smith: I understand.
Gov't: Do you want to continue these proceedings with Mr. Robinson as a lawyer, even if he might have information regarding your criminal activity in this case?
Smith: Yes, I would like to continue.
Hearing Tr. 18.
The Court decided that on the motion to withdraw the guilty plea, Smith was entitled to separate counsel. Id. at 39. The Court determined that present counsel was a potential witness on the matter. Id.
April 20, 1995 Sentencing Hearing
The matter was continued until April 20, 1995, at which time Smith indicated that she wanted to withdraw her earlier motion to withdraw the guilty plea. Sentencing Tr. 4. The Court conducted a thorough examination of Smith and inquired whether she conferred with counsel on the matter and was satisfied with counsel's advice and assistance. Sentencing Tr. 4-25. As part of that examination, the Court inquired whether Smith had been threatened or coerced into withdrawing her motion to withdraw her plea. Id. The Court also reminded Smith that at the original sentencing hearing, she had waived her right to a conflict of interest involving her attorney Robinson:
Court: At that time I believe you said you had no objection at all to his [Robinson's] appearing, that you waived any right that you might have as to any conflict that might result. Do you remember that?
Smith: Yes.
Court: Now, ... do you have any objection today to his participating in the sentencing?
Smith: No, I do not, Your Honor.
Court: Do you want him to participate in the sentencing?
Smith: Yes, I do.
Court: Even though it should appear at some subsequent time that someone suggests there was a conflict of interest on his part, you want to waive any right to raise that as an objection to anything that occurs during the time of sentencing?
Smith: Yes, I do.
Sentencing Tr. 27-28.
Smith also was asked about her earlier comment at the Rule 11 colloquy about an alleged promise of a reduced sentence. Id. at 6. The exchange went as follows:
Smith: Indirectly I was told that I would get some type of assistance, but later I am finding out that I wouldn't.
Court: Who told you that?
Smith: My attorney, Robert Wagner.
Court: Did the United States Attorney ever make anyone from the United States Attorney's office or anyone connected with the prosecution of this case ever suggest to you or indicate to you or make any promise to you that they would ask the court to give you a reduced sentence other than what was called for by the guidelines?
Smith: No. Not directly to me, no.
Court: Well, do you know whether any such comment to your attorney or anyone connected with your defense in the matter?
Smith: Yes, that comment was made.
Court: All right. And how do you know that?
Smith: Because my attorney told me so.
*892 Court: But you did not hear it?
Smith: No, I didn't.
Sentencing Tr. 6.
The Court refreshed Smith's recollection by reading from the plea hearing transcript. Id. at 7-8. In particular, the Court read where Smith had stated that no promises had been made to her. Id. at 8.
Court: Is that correct that you answered that no promises had been made?
Smith: Yes, that's correct.
Court: Well, you were telling the truth then, weren't you?
Smith: Yes, I was telling the truth. There were no promises, but there was just an understanding, that's all.
Court: Well, tell me what the understanding was?
Smith: Just that I would receive some type of reduction, a possibility of reduction after I pled guilty.
Court: Possibility of reduction, is that what was said to you?
Smith: No, that I would receive a reduction after I pled guilty.
Court: Well, if that was the promise that was made to you, since the time you have entered the plea have you had any discussions with anyone in the United States Attorney's office, anyone at all dealing with the prosecution of this case wherein they made any statements to you concerning your sentence?
Smith: No, I have not.
Court: Have there been any discussions so far as you know between your counsel and the United States Attorney's office concerning the making of any motion for a reduction of your sentence?
Smith: Yes, there has been.
Court: All right. And what is that?
* * * * * *
Smith: Just that the prosecutor said that he wouldn't have any objections to going outside of the sentencing guidelines.
* * * * * *
Smith: My responsibilities are to assist the government, and after my assistance that they would be willing to offer me a sentence reduction.
Court: Now, is that the reason that you have withdrawn your motion to withdraw the plea?
Smith: No, that's not the complete reason, no. Because of counsel also.
Court: Was that a part of the reason?
Smith: Yes.
Court: Now, as I understand what you are saying, the United States Attorney's office agreed they would make a motion to the court saying they had no objections to the court going outside of the guidelines. Is that what you said?
Smith: Yes.
Court: And is that the total of any promise or understanding which you have had with them?
Smith: Yes.
Court: No other condition o[r] provision?
Smith: No.
Sentencing Tr. 9-10.
The Court read from the guilty plea transcript concerning Smith's rights under the plea agreement and the consequences of her plea. Id. at 10. The Court continued:
Court: You [] understand that while the United States Attorney may make the motion for a reduction of sentence or it may say it has no objection to reduction of the *893 court going outside of the guidelines, I want you to understand that after time of sentencing the mere fact that they have no objection to the court going outside of the guidelines has no meaning whatsoever because the court could not bring you back for any change of sentencing except upon a motion made by the United States Attorney for cooperation which has occurred since that time. And it's not merely a statement that he has no objection to it; he must make the motion. Otherwise, the court has no authority whatsoever to do it.... Do you understand that?
Smith: Yes, I do.
Court: Now, understanding all of that, are you sure that you want to withdraw your motion to withdraw the plea of guilty which you previously entered?
Smith: Yes.
Court: Other than your statement as to what your counsel has told you that the [government] at a Rule 35 motion will make no objection to the court going outside of the guidelines, other than that statement has there been any offer or any inducement of any kind made to you in order to have you agree to withdraw your plea of guilty ...?
Smith: No, sir.
* * * * * *
Court: That's the sole offer that's been made to you?
Smith: Yes.
Court: Well, I want you to understand this: It is absolutely an illegal motion. It has no meaning whatsoever. The court could not act upon it even if it wanted to do so. So if that is any inducement to you to withdraw your motion to withdraw the plea, I want you to understand now that you are wasting your time because it has no meaning whatsoever. The court could not grant it even if it wanted to.
Sentencing Tr. 11-14.
Smith's lawyer Robinson represented to the Court that the motion to withdraw the motion to withdraw the plea was not based on this understanding with the Government. Id. at 14-21. Rather, the motion to withdraw was based solely on an understanding that Smith would cooperate with authorities in the hope that they would consider a substantial assistance motion. Id. The Court proceeded to question Robinson and then Smith and Wagner:
Court: Well, to be certain that I understand exactly what you say the agreement is, there is no agreement on the part of the United States Attorney at the time of sentencing to make any motion or to unoppose any motion that be made for a reduction of sentence?
Robinson: Correct.
Court: Your understanding or hope is that because of cooperation which you expect the defendant will give to the United States Attorney's office and/or to the prosecution in this case, that will lead them to file a Rule 35 motion, but there is no agreement by the United States Attorney's office that regardless of what cooperation she may give, that they will file a Rule 35 motion.
Robinson That is correct.
Court: Am I correct?
Robinson: That is correct.
* * * * * *
*894 Court: Okay. Now, Ms. Smith, do you thoroughly understand what we have been discussing?
Smith: Yes, I do.
Court: Do you understand there is no agreement by the United States Attorney's office, no representation by the United States Attorney's office, no representation by the United States Attorney's office or indication by the United States Attorney's office that regardless of what cooperation you may give from this day forward that they will make a Rule 35 motion for a reduction of your sentence? Do you understand that?
Smith: Yes, I do.
Court: It is only a hope on your part?
Smith: Right. Yes, your honor.
* * * * * *
Court: You want the court to permit you to withdraw, then, the motion to withdraw your guilty plea?
Smith: Yes.
Court: Is that what you want?
Smith: Yes, I do, Your Honor.
Court: You feel you thoroughly understand what you are doing today?
Smith: Yes, I do.
Court: You realize that you are surrendering a right which you may have or the right that you have under the law and the constitution? You are giving up that right in asking the court to permit you to withdraw the plea of guilty. Do you understand that?
Smith: Yes, I do, Your Honor.
Court: And the only promise or indication of any assistance that you would get is your hope that what information you furnish to the prosecution or to the United States Attorney's office or its official will lead them to file the Rule 35 motion. Is that your understanding?
Smith: Yes, Your Honor.
Court: Mr. Robinson, Mr. Wagner, is that your understanding of it, too?
Robinson: It is, Your Honor.
Wagner: Yes, Your Honor.
Sentencing Tr. 20-23.
At this point, the Court allowed the Government to make any objection to the withdrawal of Smith's motion. Id. at 23. The Government had no objection and made the following statement:
Gov't: I just want the record to be clear in reflecting that contrary to what Ms. Smith inferred or let the court infer, there is no quid pro quo as to why she is withdrawing her plea. The government has not promised her anything now, will not promise her anything later, and did not promise her anything [not contained in] the plea agreement where it states that the parties agree that the United States reserves its options to seek any departure from the applicable sentencing guidelines pursuant to Section 5K or Rule 35(b) of the Federal Rules of Criminal Procedure ....
[I]f the government files the motion, it's because the government is satisfied that Miss Smith has complied with the terms of the plea agreement in the paragraphs I cited. So I just want the court to be clear there's no quid pro quo in the motion to withdraw the motion to set aside the plea agreement.
Sentencing Tr. 24.
Accordingly, the Court permitted Smith to withdraw her motion to withdraw her guilty plea. Sentencing Tr. 24.
*895 At sentencing, Smith's lawyers introduced mitigating evidence that Smith had suffered from "battered woman's syndrome". In support of this defense, Smith's lawyers called numerous experts and lay witnesses, and introduced medical records and other documentary evidence. Among those who testified, Smith's lawyers called Caira Clever Cephas and Candace R. Jeter to the witness stand. Both Ms. Cephas and Ms. Jeter had attended Hampton University with Smith and were members of the cocaine ring.[10] Sentencing Tr. 28-65. Both agreed that Hall was a charismatic man who women found attractive and exciting to be around. Sentencing Tr. 56-57, 59; see also Detention Tr. 71. Both also testified, as did Smith, that Hall had a violent streak and was known to be physically and emotionally abusive. All the witnesses concurred that Smith's relationship with Hall was marked by episodes of brutal rage. According to the witnesses' testimony, Hall slapped, beat, or choked Smith on many instances, and he would often yell and scream at her.
For instance, in the summer of 1991 at a party in Philadelphia, Hall spied Smith talking to another man on the street. Sentencing Tr. 69-71. Hall became upset and, later that night in their hotel room, Hall grabbed Smith by the throat. Sentencing Tr. 71. When Smith tried to defend herself, Hall punched Smith in the face. Id. Smith's face was swollen from the beating and she was treated at a local hospital. Id. at 72-73. Smith lied to doctors and told them that she had hit her head on the windshield during a car accident.[11]Id.; Sentencing Exhibit 1.
On another occasion, Smith met Hall in Newport News in January or February of 1992 after she had been questioned by authorities at her parent's home. Sentencing Tr. 80. Hall interrogated Smith about the incident and, becoming nervous, Smith stammered with the details. Id. In a mad fury, Hall began to kick and beat Smith with a belt. Sentencing Tr. 81. Hall's beating caused swelling to Smith's face and body, and Hall told Smith to soak in the bathtub. Id. While in the tub, Hall continued to question her and hit and beat her with a brush. Id. Ms. Cephas was in a nearby room and could hear Hall yelling. Sentencing Tr. 30-31, 80. When Hall left the bedroom where the beating took place, Ms. Cephas went to check on Smith and found her bruised and beaten. Id.
Ms. Cephas also was a girlfriend of Hall. She and Smith both testified that Hall forbid them to use birth control. Sentencing Tr. 48, 81-82. As a result, both Smith and Ms. Cephas got pregnant and had children by Hall. Sentencing Tr. 36, 37.
*896 Smith's lawyers also called expert witnesses to testify about battered woman's syndrome. Lawyers called Dr. Jo Ann Marie Wilson, who was Smith's treating psychologist. Sentencing Tr. 156-57. In 1990, Smith went to see Dr. Wilson for counseling at a time when she had not yet met Hall. Sentencing Tr. 157, 184. Around the time of her arrest, Smith called Dr. Wilson and resumed her therapy. Sentencing Tr. 158. At the sentencing hearing, Dr. Wilson testified that Smith had suffered from depression, battered woman's syndrome, and post-traumatic stress syndrome around the time of her arrest. Sentencing Tr. 159. Dr. Wilson also testified that Smith was suicidal initially and suffered from poor confidence and low self-esteem, although Smith had become a much "healthier" person after resuming her therapy. Sentencing Tr. 159-60, 171-172.
Dr. Wilson commented on battered woman's syndrome in the context of Smith's relationship with Hall. Dr. Wilson testified that the batterer seeks to control all aspects of a person's life. Sentencing Tr. 166. Dr. Wilson believed there was substantial evidence that Hall sought to control all facets of Smith's life. Id. Dr. Wilson noted that Hall forbid Smith to use birth control. Id. Dr. Wilson noted that Smith had been raised in a home with a dominant father figure and a caretaker mother. Sentencing Tr. 184. Dr. Wilson testified that women raised in such homes sometimes will bond with dominant and abusive men. Id. Dr. Wilson also stated that in an abusive relationship, as she believed Smith's relationship with Hall had been, the batterer's influence is total and complete. Sentencing Tr. 189-197.
Defense counsel also called Dr. Alice L. Twining to testify about battered woman's syndrome theory. Dr. Twining is a licensed psychologist who offered her expert opinion based on a conversation with Dr. Wilson and on the testimony presented at the hearing. Sentencing Tr. 142-43, 153-154. In her testimony, Dr. Twining maintained that a battered woman forms an intense attachment, or "traumatic bonding", when subject to alternating episodes of abuse and kindness. Sentencing Tr. 143-44. According to Dr. Twining, the batterer becomes both abuser and rescuer. Sentencing Tr. 146. Dr. Twining thought that Smith's relationship with Hall fit this pattern of a battered woman. Id. As support for this diagnosis, Dr. Twining claimed that younger women are more susceptible to this pattern of behavior, and the coercion exerted knows no geographical or temporal bounds. Sentencing Tr. 145-49. Dr. Twining concluded that in her expert opinion, Smith was not acting under her own free will. Sentencing Tr. 149-51.
At the close of all the evidence, the Court sentenced Smith to 294 months imprisonment on Count 1 for drug conspiracy. This feil into the middle of the guideline range of 262 327 months. The Court also sentenced Smith to sixty (60) months on Count 2 for money laundering, and sixty (60) months for making or concealing materially false statements or facts on Count 15, all of which sentences were to run concurrently. Upon the Government's motion and pursuant to the plea agreement, the Court dismissed Counts 14 and 16 of the Superseding and original indictment. The Court also informed Smith about her right to appeal her sentence notwithstanding the fact that she had waived that right in the plea agreement. Sentencing Tr. 263.
Before imposing sentence, the Court spoke at length about the complicated nature of Smith's case. Ultimately, however, the Court rejected a downward departure on the grounds that Smith had been under duress or had been coerced. The Court could not accept such a defense when Smith had dated Hall for such a long time and had witnessed Hall's violent nature. In the Court's view, Smith understood and appreciated the criminality of Hall's actions. The Court did not believe that Smith committed the offenses solely out of fear. In this sense, the Court rejected the *897 notion that Hall's will over Smith had no geographical or temporal bounds. Sentencing Tr. 251-257.
The Court also concluded that Smith had understood and appreciated the wrongfulness of her own actions. The Court noted that Smith was a college-educated woman who had a sense of right and wrong. In fact, the Court pointed out that Smith grew up in a strong, middle class family with parents who by all indications loved and cared for her. Sentencing Tr. 251-257.
Appeal and Habeas Petition
On April 27, 1995, by counsel William Robinson, Smith filed a notice of appeal to the judgment of the Court. The Government filed a motion to dismiss the appeal on the grounds that Smith knowingly and voluntarily waived her right to appeal her sentence. Smith filed a response to the Government's motion. In the response, Smith argued that her offense conduct was the product of coercion and duress and the trial-court should have departed downward from the Sentencing Guidelines. On July 19, 1995, the Fourth Circuit Court of Appeals dismissed Smith's appeal on the motion of the Government. See United States v. Smith, CA No. 95-5344. Smith filed a petition for writ of certiorari to the United States Supreme Court which was denied.
On April 23, 1997, Smith filed a motion for habeas relief under 28 U.S.C. § 2255. On June 5, 1997, this Court dismissed the habeas petition as untimely. Smith applied for a certificate of appealability with this Court, and her application was granted on July 11, 1997. Thereafter, Smith filed a notice of appeal to the denial of her habeas petition on July 24, 1997.
On September 15, 1998, the Fourth Circuit Court of Appeals held that the habeas petition was not time-barred. The Court of Appeals therefore vacated this Court's order and remanded the matter for further proceedings. On December 4, 1998, this Court directed the United States to file an answer or other pleadings to Smith's habeas motion. On January 13, 1999, Smith filed an amended habeas motion. On February 2, 1999, the Government filed a response to Smith's habeas motion. On February 24, 1999, Smith filed a traverse to the Government's response. This matter is ripe for decision.
II. Analysis
Smith alleges numerous violations of her constitutional rights. Smith believes that her allegations raise questions of material fact that require an evidentiary hearing and support her request for certain discovery.
Section 2255 provides for an evidentiary hearing unless the evidence conclusively shows that the petitioner is not entitled to relief. 28 U.S.C. § 2255; United States v. Magini, 973 F.2d 261, 264 (4th Cir.1992). Evidentiary hearings are not mandated in every § 2255 proceeding. See Rule 8(a) of the District Court Rules Governing Section 2255 Cases. In fact, where the record, transcripts, files and affidavits are sufficiently adequate, the district court may resolve these disputes without the need for a hearing. See Fontaine v. United States, 411 U.S. 213, 215, 93 S.Ct. 1461, 36 L.Ed.2d 169 (1973).
A habeas petitioner is not entitled to discovery in the ordinary course of proceedings. See Bracy v. Gramley, 520 U.S. 899, 117 S.Ct. 1793, 1796-1797, 138 L.Ed.2d 97 (1997). Rule 6 of the Rules Governing § 2255 Proceedings provides that a habeas petitioner must demonstrate good cause in order to obtain discovery. Under the rule, the petitioner must make a preliminary showing that requested documents contain exculpatory or impeaching information in order to compel production. United States v. Roach, 28 F.3d 729, 734 (8th Cir.1994).
1. Knowing and Voluntary Plea
Smith argues that her guilty plea was not knowing and voluntary. A plea of guilty is constitutionally valid if it is made *898 on a "voluntary" and "intelligent" basis. Brady v. United States, 397 U.S. 742, 748, 90 S.Ct. 1463, 1469, 25 L.Ed.2d 747 (1970). Thus, the defendant must receive "real notice of the true nature of the charge against him". Smith v. O'Grady, 312 U.S. 329, 334, 61 S.Ct. 572, 574, 85 L.Ed. 859 (1941). The "manner of ensuring that the defendant is properly informed is committed to the good judgment of the district court, to its calculation of the relative difficulty of comprehension of the charges and of the defendant's sophistication and intelligence." United States v. Reckmeyer, 786 F.2d 1216, 1221 (4th Cir.1986).
In this case, the plea agreement waived Smith's right to appeal and did not provide for waiver of collateral remedies under § 2255. The Government could have included a waiver of collateral rights in the plea agreement and chose not to do so. In such event, Smith did not expressly waive her rights to habeas review under the plea agreement. See United States v. Tayman, 885 F.Supp. 832, 834 (E.D.Va. 1995).
All the same, the plea agreement does not bar application of the procedural default rule. Because Smith failed to raise this issue on direct appeal, she is forbidden to recast the issue in her habeas petition unless she can show "cause" and "actual prejudice" or a fundamental miscarriage of justice. United States v. Frady, 456 U.S. 152, 165, 102 S.Ct. 1584, 1593, 71 L.Ed.2d 816 (1982); Davis v. United States, 417 U.S. 333, 342, 94 S.Ct. 2298, 2303, 41 L.Ed.2d 109 (1974); see also Bousley v. United States, 523 U.S. 614, 118 S.Ct. 1604, 1610, 140 L.Ed.2d 828 (1998) (petitioner's failure to challenge the validity of his plea is subject to procedural default); United States v. Maybeck, 23 F.3d 888, 890, n. 1 (4th Cir.1994). Of course, Smith's plea agreement waived her right to appeal and her notice of appeal was dismissed by the court of appeals on those grounds. Other courts have found that this is not sufficient "cause" for a petitioner's procedural default. See United States v. Pipitone, 67 F.3d 34, 37-38 (2d Cir.1995) (plea agreement as bar to appealing sentence not "cause" justifying collateral review); United States v. Jones, 56 F.3d 62, No. 94-6209, 1995 WL 321263, at *1 (4th Cir. May 30, 1995) (per curiam) (unpublished opinion).
In any event, there has been no constitutional dereliction by virtue of the fact that Smith's plea was voluntarily and knowingly made. The Court presented the outline of the plea agreement and the counts to which she was pleading guilty. Plea Tr. 7-24. The Court also informed Smith about the maximum statutory penalties, fines, and supervised release terms resulting from conviction of those offenses. Plea Tr. 9-12. The Court told Smith about the Sentencing Guidelines and how they generally operate in calculating a sentence. Plea Tr. 10. The Court informed Smith about her right to a jury trial, her right to plead not guilty, her right to be confronted by her accusers, the right against self-incrimination, the presumption of innocence at any trial, and the burden of proof on the government to prove her guilt beyond a reasonable doubt. Plea Tr. 12-19.
Smith indicated that she understood those rights. Id. Smith stated that she had discussed the charges and had read the indictment with her counsel and was so satisfied with his advice and assistance. Plea Tr. 6-8. The Court also reminded Smith that she had waived her right to appeal in the plea agreement and Smith so acknowledged. Plea Tr. 19-20. The Government then recited the facts that it would prove were the case to go to trial. Plea Tr. 28-35. Thereafter, the Court asked Smith whether the facts were true and she admitted that they were. Plea Tr. 39-40.
The Court's inquiry was sufficient and Smith was properly informed as to the charges and the consequences of her guilty *899 plea.[12] The procedural dialogue establishes that Smith understood the consequences of accepting a plea. Smith's answers do not amount to "empty gestures" that may be disregarded at a future date. See Little v. Allsbrook, 731 F.2d 238, 240, n. 2 (4th Cir.1984). In the context of this matter, Smith must be bound by her statements at the plea hearing.
a. Competency
Nonetheless, Smith argues that she was legally incompetent at the time of the Rule 11 hearing to make a voluntary and intelligent plea of guilty. Such a claim, if true, may be sufficient to overcome the significant hurdle of procedural default. In fact, due process requires that a defendant be legally competent before entering a plea of guilty. Shaw v. Martin, 733 F.2d 304, 314 (4th Cir.1984). The guilty plea is rendered invalid if the defendant's mental faculties were so impaired that the defendant could not appreciate the charges and consequences of her plea, and could not comprehend her constitutional rights. Id.
Smith believes that an evidentiary hearing and discovery are required because she was under psychological treatment at the time of her guilty plea. The Fourth Circuit has held that a habeas petitioner is not entitled to an evidentiary hearing on mental competency claims unless the evidence casts a "real, substantial, and legitimate doubt with respect to the petitioner's mental capacity and ability to assist his counsel ...." Lawson v. Dixon, 3 F.3d 743, 753-754 (4th Cir.1993). "Such evidence must be both positive and unequivocal." Id. at 754.
In this matter, Smith has not cleared this "lofty hurdle" by simply pointing out that she had been seeing a psychologist at the time of the plea hearing. Lawson, 3 F.3d at 754. Such evidence does not rise to the level of legal incompetency. The uncontroverted facts are that Smith was alert and in full control of her faculties at the guilty plea hearing. Smith understood the nature of the proceedings and appreciated the charges and consequences of her plea. Plea Tr. 6-40. Although markedly depressed at the time she was arrested, Smith's emotional health had steadily improved from that time forward. In fact, Smith's treating psychologist testified at sentencing that Smith had become a much "healthier person" in the intervening time since she was arrested. Sentencing Tr. 171-172. Smith's arguments add nothing to the factual mix and her claims may be resolved without the need for an evidentiary hearing or discovery.
b. Battered Woman's Syndrome
Smith alleges that at the time she pled guilty, she was not informed of the availability of a complete defense.[13] According to Smith, she was a battered woman and lacked the specific intent necessary to support her conspiracy convictions. Relatedly, Smith contends that she had been acting under duress or had been coerced by Hall into committing the offenses.
Smith failed to raise this issue on appeal and is subject to the procedural default rule on collateral review. Frady, 456 U.S. at 165, 102 S.Ct. at 1593; Davis, 417 U.S. at 342, 94 S.Ct. at 2303; see also Boeckenhaupt v. United States, 537 F.2d 1182 (4th Cir.1976); Moore v. United States, 934 F.Supp. 724 (E.D.Va.1996). Smith waived her right to pursue any defenses in pleading guilty. Plea Tr. 17-19. Her waiver of appeal in the plea agreement may not be sufficient "cause" to overcome the procedural default rule. Pipitone, 67 F.3d at 38-39; Jones, 56 F.3d 62, 1995 WL 321263, at *1.
*900 In any event, Smith's claim that she lacked the statutory intent necessary for conviction has no bearing on the determination that Smith entered a voluntary and knowing plea. See United States v. Wilson, 81 F.3d 1300, 1308-1309 (4th Cir. 1996). Smith chose to avoid the risk of presenting her case to a jury, who could have reasonably found that she possessed the requisite "mens rea." See id. Rather than face that risk, Smith entered a guilty plea and benefitted from the government's written promise to move to dismiss the remaining counts of the Superseding Indictment and original indictment.
2. Plea Agreement Breach
Smith claims that the Government breached the terms of their plea agreement. Smith failed to raise this issue on appeal and her collateral attack is controlled by the procedural default rule. Frady, 456 U.S. at 165, 102 S.Ct. at 1593; Davis, 417 U.S. at 342, 94 S.Ct. at 2303; see also Boeckenhaupt, 537 F.2d at 1182; Moore, 934 F.Supp. at 724. Smith's waiver of appeal in the plea agreement may not be sufficient cause to overcome the formidable barrier of procedural default. Pipitone, 67 F.3d at 38-39; Jones, 56 F.3d 62, 1995 WL 321263, at *1.
Nevertheless, Smith asserts that the Government made unfair promises that induced her to sign the plea agreement and to withdraw her motion to withdraw her guilty plea. The integrity of the plea bargaining process requires that the plea agreement be given great weight. United States v. Garcia, 956 F.2d 41, 44-45 (4th Cir.1992). Yet the outside possibility of a constitutional deficiency means that the courts do not review plea agreements under strict contract interpretation. United States v. Carter, 454 F.2d 426 (4th Cir.1972). A guilty plea may be rendered involuntary if the evidence shows "misunderstanding, duress, or misrepresentation by others" demonstrating a constitutional deficiency. Blackledge v. Allison, 431 U.S. 63, 76, 97 S.Ct. 1621, 1630, 52 L.Ed.2d 136 (1977).
a. Release Pending Sentencing
First, Smith maintains that the Government breached its promise not to oppose releasing her on bond after she pled guilty. Smith was pregnant at the time of the guilty plea hearing and wanted to remain at home until her sentencing. In Smith's view, the Government misled the Court when it stated that the Court had little discretion under the statute to release Smith on bond. In relevant part, 18 U.S.C. § 3143 provides:
(2) The judicial officer shall order that a person who has been found guilty of an offense in a case described in subparagraph (A), (B), or (C) of subsection (f)(1) of section 3142 and is awaiting imposition or execution of sentence be detained unless
(A)(i) the judicial officer finds there is a substantial likelihood that a motion for acquittal or new trial will be granted; or
(ii) an attorney for the Government has recommended that no sentence of imprisonment be imposed on the person; and
(B) the judicial officer finds by clear and convincing evidence that the person is not likely to flee or pose a danger to any other person or the community.
In this case, Smith pleaded guilty to a drug trafficking charge which is described in 18 U.S.C. § 3142(f)(1)(C); an offense for which a maximum term of imprisonment of ten years or more is prescribed in the Controlled Substances Act, 21 U.S.C. § 801 et seq. Clearly the Government did not recommend that no sentence of imprisonment be imposed, and the Court could not do so under the Sentencing Guidelines.
At the plea hearing, attorney Wagner told the Court that the Government did not object to Smith's release pending sentencing. Plea Tr. 38. Wagner also understood *901 that the Court had little discretion under the statute:
Your Honor, I know that there are certain rules governing the court under 18 USC Section 1343, that when someone is to plead guilty to such an offense as this, there may be very little discretion a judge has. But, Your Honor, what I'm asking the court to do is to release Ms. Smith on home detention, and in effect she remains in detention, pending her the period of time between now and her sentencing....
Plea Tr. 39.
The Government informed the Court that it had no objection and also confirmed attorney Wagner's understanding that the Court has little discretion by the terms of the statute. In the Government's own words:
[I]t is true, the government has no objection. The government has no objection to Ms. Smith being released. However, I told Mr. Wagner, and the government will be remiss if we didn't point out to the court that whether the government has any objection or not, it is academic, because under United States Code Title 18, Section 3143, subsection (a)(2), it appears that once a plea of guilty or a person has been found guilty in a case like this, there is no discretion....
Plea Tr. 41.
Both attorney Wagner and the Government correctly informed the Court that under 18 U.S.C. § 3143, there is little discretion for the Court to release a defendant pending sentencing. Smith has not successfully attacked the constitutional validity of her plea on this basis.
b. substantial assistance
Second, Smith contends that the Government breached its oral and written promise to move for a downward departure based upon substantial assistance. Smith claims that she was induced to withdraw her motion to withdraw her guilty plea based on governmental promises.
As a preliminary matter, the written plea agreement did not obligate the Government in this matter to move for a downward departure based upon substantial assistance. The plea agreement provides in relevant part:
6. The defendant agrees to cooperate fully and truthfully with the United States, and provide all information known to the defendant regarding any criminal activity. In that regard:
a. The defendant agrees to testify truthfully and completely at any grand juries, trials or other proceedings.
b. The defendant agrees to be reasonably available for debriefing and pre-trial conferences as the United States may require.
c. The defendant agrees to provide all documents, records, writings or materials of any kind in the defendant's possession or under the defendant's care, custody, or control relating directly or indirectly to all areas of inquiry and investigation.
d. The defendant agrees that, upon request by the United States, the defendant will voluntarily submit to a government polygraph examination.
* * * * * *
8. The parties agree that the United States reserves its option to seek any departure from the applicable sentencing guidelines, pursuant to Section 5K of the Sentencing Guidelines and Policy Statements, or Rule 35(b) of the Federal Rules of Criminal Procedure, if in its sole discretion, the United States determines that the defendant has provided substantial assistance and that such assistance has been completed.
The Fourth Circuit has held that this exact language does not give rise to an enforceable promise as a matter of contract law. United States v. Wallace, 22 F.3d 84, 87 (4th Cir.1994). According to *902 the Wallace court, the United States retains discretion to conclude whether the defendant cooperated "fully and truthfully" and whether the assistance given was "substantial." Id. Thus, in this case, there was no enforceable promise arising from the plea agreement itself. In its discretion, the Government could refuse to move for a downward departure.
Furthermore, the files and records in this case show conclusively that there were no hidden promises by the Government. At the guilty plea hearing, the Court asked attorney Wagner about the plea agreement:
Court: Does the plea bargain agreement in this case set forth each and every term[] of any agreement negotiated by you with the United States Attorney's office concerning this case?
Wagner: Yes, it does, Your Honor.
Court: Has the defendant been made fully aware of each of those terms?
Wagner: Yes, she has, Your Honor.
Plea Tr. 21.
The Court then asked the Government the same basic question:
Gov't: It does, Your Honor.
Plea Tr. 22.
The Court then quizzed Smith about what had been discussed:
Court: Ms. Smith, did you hear and understand the questions I asked of your counsel and of the United States Attorney?
Smith: Yes.
Court: Did you hear and understand their answers?
Smith: Yes, I did.
Court: So far as you know, did they answer correctly?
Smith: Yes, Your Honor.
Plea Tr. 22-23.
The Court asked Smith if, independent of the plea agreement, she had been promised that the Government would move for a reduction of her sentence. Smith indicated that the Government said "it may happen" but that "[n]o promises have been made." Plea Tr. 24. The Court explained the terms of the plea agreement, the role of the Court, and the overall consequences of her plea. Plea Tr. 25-26. After explaining these matters in considerable detail, the Court concluded:
Court If there has been any agreement that they are going to move for a reduction of sentence, this is the time to tell me about it, because I'm not going to accept your plea if that's a part of the plea bargain.
Smith: No, No promises have been made to me.
Court: No promise has been made.
Smith: No.
Plea Tr. 26.
After the plea hearing, Smith's attorneys filed a motion to withdraw her guilty plea. Subsequent to that, Smith moved to withdraw her motion to withdraw her guilty plea. At the sentencing hearing, the Court asked Smith about her earlier suggestion at the Rule 11 colloquy about a promise of a reduced sentence. Sentencing Tr. 5-6. Smith indicated that her attorneys had told her that there had been a promise for a reduction of sentence in exchange for her cooperation. The exchange went as follows:
Smith: Indirectly I was told that I would get some type of assistance, but later I am finding out that I wouldn't.
Court: Who told you that?
Smith: My attorney, Robert Wagner.
Court: Did the United States Attorney ever makeanyone from the United States Attorney's office or anyone connected with the prosecution of this case ever suggest to you or indicate to you or make any promise to you that *903 they would ask the court to give you a reduced sentence other than what was called for by the guidelines?
Smith: No. Not directly to me, no.
Court: Well, do you know whether any such comment to your attorney or anyone connected with your defense in the matter?
Smith: Yes, that comment was made.
Court: All right. And how do you know that?
Smith: Because my attorney told me so.
Court: But you did not hear it?
Smith: No, I didn't.
Sentencing Tr. 6.
The Court read from the guilty plea transcript where Smith had stated that "[n]o promises have been made" to her. Id. at 8. The Court also reminded Smith about the terms of the plea agreement and the consequences of pleading guilty. Id. at 8-10.
Smith iterated to the Court that there had been an understanding "that I would receive some type of reduction" after she pled guilty. Id. at 8. Smith elaborated:
Smith: My responsibilities are to assist the government, and after my assistance that they would be willing to offer me a sentence reduction.
Court: Now, is that the reason that you have withdrawn your motion to withdraw the plea?
Smith: No, that's not the complete reason, no. Because of counsel also.
Court: Was that a part of the reason?
Smith: Yes.
Court: Now, as I understand what you are saying, the United States Attorney's office agreed they would make a motion to the court saying they had no objections to the court going outside of the guidelines. Is that what you said?
Smith: Yes.
Court: And is that the total of any promise or understanding which you have had with them?
Smith: Yes.
Court: No other condition o[r] provision?
Smith: No.
* * * * * *
Court: You [] understand that while the United States Attorney may make the motion for a reduction of sentence or it may say it has no objection to reduction of the court going outside of the guidelines, I want you to understand that after time of sentencing the mere fact that they have no objection to the court going outside of the guidelines has no meaning whatsoever because the court could not bring you back for any change of sentencing except upon a motion made by the United States Attorney for cooperation which has occurred since that time. And it's not merely a statement that he has no objection to it; he must make the motion. Otherwise, the court has no authority whatsoever to do it.... Do you understand that?
Smith: Yes, I do.
Court: Now, understanding all of that, are you sure that you want to withdraw your motion to withdraw the plea of guilty which you previously entered?
Smith: Yes.
Court: Other than your statement as to what your counsel has told you that the [government] at a Rule 35 motion will make no objection to the court going outside of the guidelines, other than that statement has there been any offer or any inducement of any kind *904 made to you in order to have you agree to withdraw your plea of guilty ....
Smith: No, sir.
* * * * * *
Court: That's the sole offer that's been made to you?
Smith: Yes.
Court: Well, I want you to understand this: It is absolutely an illegal motion. It has no meaning whatsoever. The court could not act upon it even if it wanted to do so. So if that is any inducement to you to withdraw your motion to withdraw the plea, I want you to understand now that you are wasting your time because it has no meaning whatsoever.
Sentencing Tr. 9-13.
All the parties represented that there was no hidden agreement that the Government would not object to the Court's departure from the Sentencing Guidelines. Id. at 19, 24. The Court then made sure this was Smith's understanding and her lawyers' understanding of the situation:
Court: Now, Ms. Smith, do you thoroughly understand what we have been discussing?
Smith: Yes, I do.
Court: Do you understand there is no agreement by the United States Attorney's office, no representation by the United States Attorney's office or indication by the United States Attorney's office that regardless of what cooperation you may give from this day forward that they will make a Rule 35 motion for a reduction of your sentence? Do you understand that?
Smith: Yes, I do.
Court: It is only a hope on your part?
Smith: Right. Yes, your honor.
* * * * * *
Court: And the only promise or indication of any assistance that you would get is your hope that what information you furnish to the prosecution or to the United States Attorney's office or its official will lead them to file the Rule 35 motion. Is that your understanding?
Smith: Yes, Your Honor.
Court: Mr. Robinson, Mr. Wagner, is that your understanding of it, too?
Robinson: It is, Your Honor.
Wagner: Yes, Your Honor.
Sentencing Tr. 20-23.
In the end, Smith's allegation of a hidden oral agreement adds nothing to the original record before the Court and an evidentiary hearing or additional discovery is not warranted. The issue of whether an oral agreement existed was asked and answered in the passing of sentence. All the parties represented that there was no oral agreement separate and apart from the plea agreement. In addition, the Court corrected or clarified an earlier misunderstanding by Smith and cured any possibility of prejudice. See Lambey, 974 F.2d at 1394-1395 (attorney's error in advice to his client may be corrected or clarified by the court). In fact, at her guilty plea hearing, the Court warned Smith about her rights under the plea agreement and the collateral results of pleading guilty. When Smith sought to withdraw her motion to withdraw her plea, the Court again admonished Smith about her rights and the implications of withdrawing her motion to withdraw the plea. On both occasions, Smith acknowledged that she understood the Court's statements.
When voluntarily and intelligently made, a criminal defendant's plea of guilty is not a mere tentative decision on whether to proceed to trial. In reviewing this matter, this Court can not ignore the fact that Smith is a college-educated woman who *905 grew up in a solid, middle class family. At some point, the Court must be able to rely on the representations of a criminal defendant. See Lambey, 974 F.2d at 1395. The criminal justice system demands the finality of the process when constitutional safeguards have been followed.[14]Hartman v. Blankenship, 825 F.2d 26, 28 (4th Cir. 1987).
c. Quantity of Drugs
Smith claims that the Government orally promised that she would be held attributable for only 5 to 15 kilograms of crack cocaine. At sentencing, the Court attributed 255 kilograms of crack cocaine to Smith. PSR ¶ 94. Smith argues that the final attribution amounts are in contravention of her purported oral agreement with the Government. Smith's claim is without foundation.
First, the Government flatly denies that it made any such promise for attribution of 5 to 15 kilograms of crack cocaine. Second, the attributable amounts are accurate. At the guilty plea hearing, the Government recited the facts it would seek to prove had the case gone to trial. The Government stated that by the middle of 1990, Hall and other ring members were converting powder cocaine into crack cocaine. Plea Tr. 29. Hall met Smith in May of 1990, and the Government stated that she became romantically involved with Hall in the summer of 1990. Plea Tr. 30; PSR ¶ 94. The Government also stated that during the life of the conspiracy, over 200 kilograms of crack cocaine were distributed. Plea Tr. 29. After the Government's recitation of the facts, the Court asked Smith whether the facts had been stated correctly and Smith indicated that they were. Plea Tr. 39-40.
Third, there has been no prejudice from an alleged breach of an oral promise. U.S.S.G. § 2D1.1(c)(1) provides for a base level of 38 for 1.5 kilograms or more of cocaine base, or crack cocaine. Thus, a finding that Smith is responsible for 5 to 15 kilograms, rather than 255 kilograms of crack cocaine has no effect on the applicable guideline range.
Smith insists that she would have been eligible for a reduction under U.S.S.G. § 3B1.2(a) as a minimal participant if she were attributed with 5 to 15 kilograms of crack cocaine. The plain facts contradict this assertion. Smith was certainly not the drug kingpin in the cocaine network. Yet her involvement in the network was direct and extensive. Smith obtained apartments for herself and Hall under false names; she made drug and cash runs to New York City; she manufactured fraudulent birth certificates for drug ring members; she posted bond for Hall; *906 she used aliases for other ends of the drug conspiracy; she lied to authorities about Hall's whereabouts and the scope of the conspiracy; she reported to Hall about what federal agents knew about the drug ring; she provided a "getaway" car to Hall when he was evading arrest for the murder of Derrick Taylor; she removed incriminating evidence at an apartment she shared with Hall in Charlotte, North Carolina; and she fled the jurisdiction and became a fugitive with Hall after an indictment had been returned against them. In sum, Smith was involved in the drug ring, and her involvement was substantial. The actual amount of crack cocaine in this instance does not alter that determination or Smith's overall sentence.
d. Information Provided by Smith
Smith contends that the Government breached the terms of the plea agreement and used information provided by Smith to enhance her sentence. See Plea Agreement, at ¶ 7. Smith has made this blanket assertion without any evidentiary support. This claim must be dismissed.
3. Excessive and Unlawful Sentence
Smith claims that her sentence was unlawful and excessive and therefore in violation of her due process rights. In particular, Smith contends that the Court erred in (a) calculating the quantity of drugs; (b) awarding her a two-level enhancement for obstruction of justice; (c) failing to depart downward based on coercion and duress; (d) failing to grant a reduction based on a minimal or mitigating role; and (e) assessing a two-level enhancement for possession of a firearm.
Smith failed to raise these issues on direct appeal and may not collaterally attack them unless she can overcome procedural default. Frady, 456 U.S. at 165, 102 S.Ct. at 1593. Smith waived her right to appeal her sentence and such excuse may not be sufficient cause to carve an exception to the procedural default rule. Pipitone, 67 F.3d at 37-38; Jones, 56 F.3d 62, 1995 WL 321263, at *1. After reviewing the record and files in this matter, this Court finds that there was no actual prejudice and no errors amounting to a fundamental miscarriage of justice. See Davis, 417 U.S. at 346, 94 S.Ct. at 2305.
Also, this Court notes that a district court's technical application of the Sentencing Guidelines does not necessarily give rise to a constitutional issue. United States v. Vaughn, 955 F.2d 367, 368 (5th Cir.1992). The sentence imposed in this matter is well within the statutory limit and is therefore insulated from section 2255 review. Fernandez v. United States, 941 F.2d 1488, 1494 (11th Cir.1991); Vaughn, 955 F.2d at 368; United States v. Patterson, 739 F.2d 191, 196 (5th Cir. 1984); United States v.. Rowland, 848 F.Supp. 639, 642 (E.D.Va.1994).
4. Discrepancy in Penalties for Cocaine Base and Cocaine Powder
Smith argues that the disparity of sentences imposed for offenses involving crack cocaine and powder cocaine is unconstitutional. Smith contends that the relevant provisions of 21 U.S.C. § 841 and the Sentencing Guidelines are unconstitutionally vague and ambiguous, and the distinction in sentencing lacks a rational basis and has a disparate impact on racial minorities in violation of the Equal Protection Clause.
The Fourth Circuit has consistently rejected Smith's claim. United States v. Burgos, 94 F.3d 849, 876-877 (4th Cir. 1996) (en banc); United States v. Fisher, 58 F.3d 96, 99-100 (4th Cir.1995); United States v. Jones, 18 F.3d 1145, 1151 (4th Cir.1994); United States v. D'Anjou, 16 F.3d 604, 612 (4th Cir.1994); and United States v. Thomas, 900 F.2d 37, 39-40 (4th Cir.1990). Therefore, Smith's claim must be rejected.
5. Ineffective Assistance of Counsel
Smith alleges that her counsel were ineffective during all stages of her proceedings. *907 A client is entitled to "reasonably effective assistance" by her attorney. Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984). If claiming ineffective assistance, a petitioner must demonstrate that she received deficient legal representation and suffered actual prejudice from such representation. Poyner v. Murray, 964 F.2d 1404, 1425 (4th Cir.1992). The burden is on the petitioner to show that "absent the errors, the factfinder would have had a reasonable doubt respecting guilt." Strickland 466 U.S. at 695, 104 S.Ct. at 2069.
a. Guilty Plea
Smith asserts that she was denied reasonably effective representation at the guilty plea phase of her proceedings. In cases involving guilty pleas, a defendant must show that her counsel's representation was deficient and she would not have pled guilty but for her lawyer's inadequate representation. See Hill v. Lockhart, 474 U.S. 52, 106 S.Ct. 366, 88 L.Ed.2d 203 (1985); Fields v. Attorney Gen., 956 F.2d 1290 (4th Cir.1992).
1. Competency
Smith asserts that her lawyers were ineffective in failing to ask the Court to conduct a competency determination. Smith requests an evidentiary hearing and has submitted certain discovery requests. Due process requires that a defendant be legally competent before entering a plea of guilty. Shaw, 733 F.2d at 314. The guilty plea is rendered invalid if the defendant's mental faculties were so impaired that the defendant could not appreciate the charges and consequences of her plea, and could not comprehend her constitutional rights. Id.
Smith's arguments do not raise any factual disputes and therefore there is no need for an evidentiary hearing or discovery. The original record shows that Smith was not legally incompetent at her guilty plea hearing. At the hearing, the Court asked Smith and her trial counsel whether she understood the nature of the charges against her and her constitutional rights. The Court asked Smith and her trial counsel whether she understood the consequences of her plea and whether she was acting voluntarily. The Court asked Smith and her trial counsel about her understanding of the plea agreement and about any possible defenses. Smith provided coherent answers to the Court's questions and was in control of her faculties during the plea hearing. See Plea Tr. 6-40. The Court inquired about Smith's state of mind and her competency and Smith stated that she had never suffered from mental illnesses of any kind. Plea Tr. 17. Although Smith's treating psychologist testified at sentencing that Smith had been depressed around the time of her arrest, her psychologist also pointed out that Smith had become a much "healthier person" from that time forward. Sentencing Tr. 171-172. Accordingly, Smith's lawyers were not deficient in their representation when the facts and circumstances did not call into question Smith's legal competence.
2. Direct and Collateral Consequences of Pleading Guilty
Smith next argues that her lawyers failed to advise her about the direct and collateral consequences of pleading guilty. Smith maintains that her counsel failed to tell her about a possible and likely sentence, parole eligibility, and about the ability to withdraw her plea once she entered it. Smith also claims that her attorneys misled her and told her that she would receive a lenient sentence.
An attorney must correctly inform the defendant of the direct consequences of her plea. Manley v. United States, 588 F.2d 79 (4th Cir.1978); Hammond v. United States, 528 F.2d 15 (4th Cir.1975). Professional standards indicate that legal counsel should outline the terms of a proposed plea to his client. Jones v. *908 Murray, 947 F.2d 1106 (4th Cir.1991). Legal counsel should provide an opinion on probable outcomes and should advise his client as to the strengths and weaknesses of possible alternatives. Id. In some instances, legal counsel's gross misinformation on the indirect consequences of the plea may constitute ineffective assistance. Strader v. Garrison, 611 F.2d 61 (4th Cir. 1979).
Even so, an attorney's "bad guess" as to sentencing does not render a guilty plea involuntary. Little v. Allsbrook, 731 F.2d 238, 241 (4th Cir.1984). Additionally, an attorney's error in advice to his client may be corrected by the court at a subsequent hearing. Lambey, 974 F.2d at 1394-1395. The court may correct or clarify the earlier erroneous information by the defendant's lawyer. Id. When the court informs the defendant that her likely sentence is not capable of prediction and the defendant so acknowledges, a guilty plea is not rendered involuntary by virtue of an attorney's bad estimate of the likely sentence. Id.
In this case, the record of the guilty plea hearing shows that the Court explained the factual basis of Smith's plea and provided Smith with an opportunity to respond. Smith admitted that she had read and understood the plea agreement and the indictment. The Court informed Smith about her rights under the plea agreement including the waiver of the right to appeal and about the maximum statutory penalties, fines, and supervised release terms for the offenses listed in the indictment. The Court also informed Smith about her constitutional rights and admonished Smith about the consequence of entering a plea. Smith acknowledged that she understood the Court's comments. In addition, the Court warned Smith that her final sentence could not be predicted and Smith acknowledged that she understood that to be the case. The Court questioned Smith about whether anyone had advised her about what sentence she would receive:
Court: Has anyone told you what punishment you are going to receive in this case? Not what you can receive, but has anyone told you what punishment is going to be in this case?
Smith: No, they haven't.
Plea Tr. 10.
At the sentencing hearing, the Court fully questioned Smith on her reasons for withdrawing her motion to withdraw the guilty plea. The Court explained to Smith the consequences of withdrawing her plea. Smith admitted to understanding the Court's advice. Smith and her lawyers both acknowledged the same understanding of the consequences of withdrawing the motion.
The record and files in this matter do not show that the advice received fell below the range of competence demanded of criminal attorneys. There is no direct evidence that Smith was provided with erroneous legal advice. Moreover, the Court cleared up any misunderstanding on the part of Smith during the plea hearing and sentencing hearing. Once explained by the Court, Smith showed an understanding of the plea bargain and the rights and consequences of taking a plea. In the context of her family background and education, there can be no doubt but that Smith understood the ramifications of her decision.
3. Factual and Legal Investigation
Smith contends that her lawyers failed to conduct a reasonable and independent investigation of her role in the drug conspiracy. In this respect, Smith argues that her lawyers unduly relied on factual information compiled by the Government. Smith maintains that her lawyers failed to file any pre-trial motions and did not adequately investigate alternative defenses such as coercion or duress. An attorney has a duty to make a reasonable factual and legal investigation on behalf of his client. Sneed v. Smith, 670 F.2d 1348 (4th *909 Cir.1982). The reasonableness of the investigation is evaluated based on the totality of the circumstances facing the attorney. Bunch v. Thompson, 949 F.2d 1354 (4th Cir.1991).
Smith's claim that her lawyers failed to conduct a reasonable investigation is not supported by affidavits or other evidence. The records and transcripts in this case clearly show that Smith's lawyers were well-informed on the facts surrounding this matter. The guilty plea hearing transcript also reveals that Smith's lawyer Wagner investigated a mitigating defense of duress or coercion. Plea Tr. 36. Attorney Wagner informed the Court that such defense would "become critical at the sentencing here, that Kem Smith was beaten by Peter Michael Hall, beaten regularly by him, and that's one of the reasons that she did what he told her to do, because she feared him." Plea Tr. 36. There is no need for an evidentiary hearing or discovery on this issue where Smith's unsupported allegations are contradicted by the original record.
Nevertheless, Smith contends that her lawyers should have surmised that evidence of duress or coercion supported a complete defense.[15] With psychiatric defenses, the Fourth Circuit has held that trial counsel's failure to explore an insanity defense amounts to ineffective assistance when counsel's action was unreasonable and there was a reasonable probability that the defense would succeed. Becton v. Barnett, 920 F.2d 1190 (4th Cir.1990).
In this case, the lawyers' tactical decision to present evidence of battered woman's syndrome as a mitigating defense was eminently reasonable and prudent. The Fourth Circuit has not directly ruled on the issue of battered woman's syndrome evidence. Nonetheless, Smith's lawyers were guided by case precedent from other circuits which suggests that the proper place for such evidence is at sentencing. United States v. Willis, 38 F.3d 170, 174-177 (5th Cir.1994); United States v. Johnson, 956 F.2d 894, 898-907 (9th Cir.1992). Indeed, battered woman's syndrome evidence relies on the subjective feelings of the defendant. Id. Thus, such evidence is not relevant in determining guilt or innocence, but it may be helpful in determining an actual sentence. Id.; see also United States v. Smith, 987 F.2d 888, 890-891 (2d Cir.1993) (subjective evidence not relevant to duress defense in terms of criminal liability). Without explicit guidance from the Fourth Circuit on a novel issue of law, Smith's lawyers chartered a prudent course of action.
Additionally, Smith's lawyers reasonably concluded that the evidence did not meet the elements for a complete defense of duress. In order to establish a claim of duress, the defendant must show that: (1) she acted under an immediate threat of serious bodily injury; (2) she had a well-grounded belief that the threat would be carried out; and (3) she had no reasonable opportunity to avoid violating the law and the threatened harm. See United States v. King, 879 F.2d 137, 138-139 (4th Cir.1989). On the facts of this case, Smith did not have an affirmative defense of duress. It is not sufficient that Smith felt a generalized fear of serious bodily harm if she did not commit certain offenses. See United States v. Sixty Acres in Etowah County, 930 F.2d 857, 860-861 (11th Cir.1991). Smith was not acting under fear of imminent harm when she violated numerous federal laws. She could have discontinued her criminal activity and avoided the feared injury. Therefore, Smith's lawyers sought a downward adjustment in Smith's sentence at the sentencing phase of the proceedings. The attorneys' strategic decision did not fall below the bar of reasonable legal competence. When the alternative legal strategy is reasonable, as is the case here, this Court will not engage in Monday morning *910 quarterbacking to second guess counsel's legal tactics.
4. Government Promises
Smith claims that her lawyers failed to incorporate oral promises made by the Government into the plea agreement. In Smith's view, there was an oral agreement for the Government to file a substantial assistance motion, for Smith to be released on bond pending sentencing, and for there to be an attribution amount of 5 to 15 kilograms of crack cocaine.
There is no merit to this claim. As discussed throughout this opinion, there were no oral promises apart from the written plea agreement. At the guilty plea hearing and at sentencing, the Court conducted an exhaustive inquiry to determine whether there were any oral agreements. The defense lawyers, the Government, and Smith all acknowledged that no promises had been made. There is no reason to conduct an evidentiary hearing or allow discovery on this issue. Smith has not submitted affidavits or other documentary evidence and has relied on the original records, files and transcripts in support of her claim. The original record conclusively shows that this matter was settled at Smith's guilty plea hearing and at sentencing. Given her family background and education level, Smith understood the charges against her and fully acknowledged the consequences of pleading guilty. No additional facts have been alleged necessitating a second hearing on this matter.
b. Withdrawal of Guilty Plea
Smith claims that her lawyers' advice to withdraw her motion to withdraw her guilty plea was erroneous and unreasonable. Smith argues that her lawyers unduly relied on an oral promise by the Government to file a substantial assistance motion or not to oppose a motion to depart from the Sentencing Guidelines. In some situations, legal counsel's erroneous advice on whether to withdraw the guilty plea may constitute ineffective assistance. United States v. DeFreitas, 865 F.2d 80, 82 (4th Cir.1989); United States v. Moore, 931 F.2d 245, 248 (4th Cir.1991). Generally speaking, there must be a reasonable probability that but for counsel's errors, the defendant would have pleaded not guilty and proceeded to trial. Id.
The files and transcripts in this case show that Smith's lawyers did not provide erroneous advice to their client. In response to the Court's questions, all the parties acknowledged that Smith merely hoped to receive a reduction in her sentence if she provided full, truthful, and substantial assistance. All the parties conceded that there was no oral understanding apart from the written plea agreement. For the sake of clarification, the Court asked Smith about her earlier statements at the Rule 11 colloquy concerning promises of leniency and the like. Smith indicated that her attorneys had told her that there had been such promises. Sentencing Tr. 6. The Court refreshed Smith's recollection by reading from the plea hearing transcript where Smith had stated that no promises had been made to her. Id. at 7-10. The Court also reminded Smith about the consequences of accepting a plea in relation to a motion for a reduced sentence. Sentencing Tr. 10-13. In that regard, the Court warned Smith of different consequences than what she indicated to be the case. Id.
After clarifying or correcting Smith's misunderstanding, the Court made sure that she wished to proceed with her motion to withdraw the motion to withdraw the guilty plea.[16]Id. Smith stated that she understood the Court's comments and wished to withdraw her motion. Id. Defense counsel and the Government agreed *911 with this clarified understanding and reiterated that there were no hidden agreements. Id. If there had been a prior event or advice, the Court untangled any misunderstanding on Smith's part. See Lambey, 974 F.2d at 1394-1395. Smith has not suffered any prejudice from alleged poor lawyerly advice. In the context of her family background and educational level, Smith understood the ramifications for withdrawing her motion. For this reason, Smith's request for an evidentiary hearing and discovery must be rejected. Smith has not raised any factual issues that, if true, would entitle her to relief and thereby require an evidentiary hearing or discovery.
c. Sentencing
Smith claims that her lawyers rendered ineffective assistance at sentencing. Smith contends that her lawyers failed to raise objections to the presentence report either by filing written objections or by making objections at the sentencing hearing.
A defendant is entitled to reasonably competent legal assistance at sentencing proceedings. Ineffective assistance may exist when counsel fails to object to an improper application of the Guidelines or to clear errors in the presentence report. United States v. Breckenridge, 93 F.3d 132, 135-136 (4th Cir. 1996); Smith v. United States, 871 F.Supp. 251, 255-256 (E.D.Va.1994). Similarly, counsel may be ineffective if he fails to present mitigating evidence at sentencing. Deutscher v. Angelone, 16 F.3d 981, 984 (9th Cir.1994); Kenley v. Armontrout, 937 F.2d 1298 (8th Cir.1991). A sentence imposed without such assistance must be vacated and reimposed to permit mitigating evidence to be fully and freely developed. See Breckenridge, 93 F.3d at 135-136; United States v. Burkley, 511 F.2d 47 (4th Cir.1975).
In this matter, a presentence report was prepared and distributed to the parties. On December 16, 1994, attorney Wagner advised the probation officer of certain objections. Wagner also filed written objections on December 29, 1994 incorporating his earlier objections and raising other objections. Attorney Robinson also noted objections to the report and filed his own written objections on December 30, 1994.
Taken together, defense counsel's objections were comprehensive in scope.[17] Among the major objections raised, first, defense counsel argued that Smith should be attributed with 5 kilograms of crack *912 cocaine, rather than 255 kilograms, based on her alleged dates of involvement in the drug conspiracy. Second, defense counsel argued that Smith should be attributed with only $3,000 in laundered money, rather than more than $1,000,000, based on her limited involvement in the conspiracy. Third, defense counsel asserted that Smith should be awarded at least a two level reduction under U.S.S.G. § 3B1.2(b) for her minor role in the ring. Fourth, defense counsel maintained that Smith should not be given an enhancement under U.S.S.G. § 3C1.1 for obstruction of justice or an enhancement under U.S.S.G. § 2D1.1(b)(1) for possession of a dangerous weapon. Fifth, defense counsel claimed that Smith should be given a reduction for duress or coercion under U.S.S.G. § 5K2.12. Accordingly, Smith's lawyers provided reasonably competent assistance on this aspect of sentencing.
At the sentencing hearing, Smith's lawyers called on lay witnesses and expert witnesses, and the lawyers introduced medical records and other documentary records in support of a mitigating defense based on coercion or duress under U.S.S.G. § 5K2.12. Defense counsel called expert psychologists to testify about battered woman's syndrome and how the theory applied to Smith's case.[18] Defense also called numerous members of the community to provide mitigating testimony. Such community members included the former mayor of Richmond, Virginia.
At the hearing, Smith's lawyer Robinson did make factual concessions to earlier written objections to the presentence report. Sentencing Tr. 220-222. Thus, Robinson conceded the fact that Smith was in possession of a firearm and had obstructed justice in relation to U.S.S.G. § 2D1.1(b)(1) and U.S.S.G. § 3C1.1. The records, files and transcript demonstrate unequivocally that Smith was in possession of a dangerous weapon and had obstructed justice. Indeed, at the guilty plea hearing, the Government recited the facts it would have sought to prove had Smith's case gone to trial. The Government's recitation included such facts as Smith's possession of a firearm and Smith's obstruction of justice by virtue of false statements and omissions to federal authorities. Plea Tr. 32, 34-35. When asked whether the Government had stated the facts correctly, Smith indicated that such was the case. Plea Tr. 39-40.
As to other written objections, Robinson did not specifically raise the objections at the sentencing hearing, but instead he treated them in the context of a duress or coercion defense. Sentencing Tr. 220-222. Among the objections, defense counsel had filed an objection to the attribution amount of 255 kilograms of crack cocaine. Defense counsel argued that Smith did not become involved in the conspiracy until 1992 and should be accorded an attribution amount as low as 5 kilograms. In addition, defense counsel had filed an objection to the attribution of more than $1,000,000 in laundered funds. Defense counsel had argued that Smith should only be attributed with $3,000 in laundered funds.
Smith's lawyers provided reasonably competent representation in the context of the situation. Defense counsel had already provided the Court with their written objections to the presentence report. The Court had an opportunity to review those written objections well in advance of the sentencing hearing. Defense counsel made a prudent decision to put forward mitigating evidence of duress and coercion *913 and make all of their arguments in the context of that defense. This Court may not impose the benefit of hindsight and conclude that since the strategy did not work, the lawyers' decision fell below the threshold of reasonable legal competence.
Most important, Smith has suffered no actual prejudice from her criminal lawyers' action. As to the drug attribution amounts, the facts show that Smith became involved with Hall in May of 1990. PSR ¶ 94. In the spring of 1990, the drug network began to convert cocaine powder to crack cocaine. PSR ¶ 14. At the guilty plea hearing, the Government recited the facts it would seek to prove had the case gone to trial. The Government stated that the drug conspiracy was responsible for over 200 kilograms of crack cocaine. When asked whether the Government's version of the facts was true and correct, Smith responded that it was. Plea Tr. 29-30.
In this case, U.S.S.G. § 2D1.1(c)(1) provides for a base offense level of 38 for conspiracy to distribute 1.5 kilograms or more of crack cocaine. Defense counsel had sought an attribution amount of 5 kilograms of crack cocaine. Either way, the difference in attribution amounts would have no material effect on the calculation of Smith's sentence. Smith would not have been eligible for a downward adjustment as a minor figure in the conspiracy based on lower drug amounts alone. The facts clearly show that Smith's involvement in the drug operation was substantial.
As to the laundered amounts, Smith's lawyers had argued that Smith should only be attributed with $3,000 in laundered funds. U.S.S.G. § 2S1.1(b)(2)(F) provides for a five point enhancement for value of funds of more than $1,000,000. Smith's money laundering conviction of sixty months runs concurrently with her drug conspiracy conviction of two hundred ninety-four months. The enhancement has had no material effect on the term of Smith's sentence. Moreover, there is a serious question whether the imposition of sentence would have been altered without the enhancement. The maximum statutory penalty for money laundering is 5 years or 60 months. See 18 U.S.C. §§ 1956(a)(1)(B)(i) and 371. The Sentencing Guidelines call for an imprisonment range of 78-97 months based on Smith's criminal history and offense level (28/I), and if the value of funds is more than $1,000,000. Since the statutory maximum was sixty months, the Court only imposed a sixty month sentence in this matter. Without the five level enhancement for laundered funds of more than $1,000,000, the Sentencing Guidelines call for a sentence ranging from 46-57 months. The three month differential between the statutory maximum (60 months) and the high end of the guideline range (57 months) is negligible.
d. Conflict of Interest
Smith asserts that her lawyers were laboring under a conflict of interest and therefore rendered ineffective legal assistance. In particular, Smith argues that her attorney Wagner was operating under a conflict of interest because Wagner and the Assistant United States Attorney, Fernando Groene, had worked as Assistant Commonwealth Attorneys in Arlington County, Virginia. See Detention Tr. 5. Also, Smith argues that her attorney Robinson was operating under a conflict of interest in his prior representation of William Foreman, who was an unindicted coconspirator and governmental informant, and in his prior representation of Wainsworth Hall.
Criminal defendants are entitled to the undivided loyalty of competent counsel. Strickland, 466 U.S. at 688, 104 S.Ct. 2052; Cuyler v. Sullivan, 446 U.S. 335, 346, 100 S.Ct. 1708, 64 L.Ed.2d 333 (1980). The possibility of a conflict of interest does not necessarily impinge on a defendant's constitutional rights. Cuyler, 446 U.S. at 346, 100 S.Ct. 1708; Magini, *914 973 F.2d at 264. Rather, the defendant must show that an actual conflict of interest existed and the conflict prejudiced counsel's performance. Id. Conflicts normally occur when an attorney represents multiple clients, although conflicts may occur with regard to prior representation of a client. See Hoffman v. Leeke, 903 F.2d 280, 285-286 (4th Cir.1990). A conflict may also arise when the attorney's "private interests" diverge with those of his client. Magini, 973 F.2d at 264.
Nonetheless, a criminal defendant may waive the right to conflict-free representation. Cuyler, 446 U.S. at 347, 100 S.Ct. 1708; Bridges v. United States, 794 F.2d 1189, 1193 (7th Cir.1986). As with the waiver of any constitutional right, the waiver must be voluntarily, knowingly, and intelligently made. Bridges, 794 F.2d at 1193. The waiver may be valid even though the defendant does not have specific knowledge or all the implications of such waiver. Bridges, 794 F.2d at 1194.
In this case, the facts demonstrate a valid waiver of Smith's right to conflict-free representation in regard to attorney Robinson. At the January 30, 1995 hearing, the Government objected to Robinson's representation of Smith. The Court allowed the Government to question Smith and make sure that she desired to give up her right to conflict-free representation. The Government informed Smith that Robinson represented William Foreman and probably had asked him about the offenses he allegedly committed. Hearing Tr. 16-17. The Government made sure that Smith understood that Robinson may have known about Hall and Wainsworth Hall's drug trafficking activities. Id. at 17. The Government made sure that Smith understood that Robinson had previously represented Wainsworth Hall. Id. Finally, the Government made sure that Smith understood that during the course of his prior representation, Robinson may have learned about events that directly implicated her. Id. at 17-18. The Government's questioning concluded as follows:
Gov't: And do you understand that in the course of that representation Mr. Robinson might find out something which directly implicates you in this case?
Smith: Yes, I understand.
Gov't: You understand that the Sixth Amendment to the Constitution of the United States provides that you have a right to the effective assistance of counsel and that that effective assistance means that your counsel, your lawyer, must not shall not have any conflict of interest?
Smith: I understand that, yes.
Gov't: And that you can waive that conflict after you are knowingly, voluntarily, and intelligently advised of the possibility of a conflict of interest?
Smith: I understand.
Gov't: Do you want to continue these proceedings with Mr. Robinson as a lawyer, even if he might have information regarding your criminal activity in this case?
Smith: Yes, I would like to continue.
Hearing Tr. 18.
At sentencing, the Court reminded Smith that she had waived her right to conflict-free representation:
Court: At that time I believe you said you had no objection at all to his appearing, that you waived any right that you might have as to any conflict that might result. Do you remember that?
Smith: Yes.
Court: Now, ... do you have any objection today to his participating in the sentencing?
Smith: No, I do not, Your Honor.
Court: Do you want him to participate in the sentencing?
Smith: Yes, I do.
*915 Court: Even though it should appear at some subsequent time that someone suggests there was a conflict of interest on his part, you want to waive any right to raise that as an objection to anything that occurs during the time of sentencing?
Smith: Yes, I do.
Sentencing Tr. 27-28.
The uncontroverted facts show that Smith voluntarily, knowingly, and intelligently waived her right to conflict-free counsel in regard to attorney Robinson. Criminal defendants have no inherent right to disavow their earlier statements when, as here, appropriate procedures have been followed.
Furthermore, attorney Wagner was not operating under a conflict of interest in this case. The record merely shows that Wagner and Assistant United States Attorney Groene had been Assistant Commonwealth Attorneys in Arlington County, Virginia. Without affidavits or other evidentiary support, however, Smith alleges that an evidentiary hearing and certain discovery are required to determine whether Wagner unduly relied on promises made by Groene.
Collateral proceedings are not an invitation to manufacture issues of fact where none truly exist. The pedestrian facts are that Smith's defense lawyer and the Assistant United States Attorney once worked in the same office. The records and transcripts unambiguously show that there were no secret promises or oral agreements between any parties in these proceedings. Additional discovery and an evidentiary hearing add nothing to the original record and are unwarranted.
III. Conclusion
Ms. Smith was advised time and again by the trial judge of the consequences of her decisions. She affirmatively and intelligently chose a particular course of action, and once her plea of mercy was not favorably received, she desired to reverse and change that course. Every defendant desires a lesser sentence. The finality of judgments requires the court to be wary of rejudging matters previously adjudicated unless clearly unconstitutional. The constitutional safeguards were scrupulously adhered to by the trial judge in this case. Accordingly, Smith's motion under 28 U.S.C. § 2255 is DENIED.
Smith is ADVISED that she may appeal from this final order by forwarding a written notice of appeal and a new application to the Clerk of the United States District Court, United States Courthouse, 600 Granby Street, Norfolk, Virginia 23510. Said written notice must be received by the Clerk within thirty (30) days of the date of this Order.
The Clerk is DIRECTED to mail a copy of this Order to Smith and to the United States Attorney, Eastern District of Virginia, World Trade Center, Suite 1800, 101 West Main Street, Norfolk, Virginia 23510.
IT IS SO ORDERED.
NOTES
[1] At sentencing, Smith testified that she did not know at the time that a van she had driven contained a hidden compartment. Sentencing Tr. 107.
[2] Apparently, Peter Hall gave the Jeep to his brother Wainsworth as a birthday present.
[3] Smith testified at her sentencing hearing that she did not know that Derrick Taylor had been killed when she met Hall in Charlotte. Sentencing Tr. 112. The Government stated that Hall had admitted to Smith that he had shot Taylor and had asked her to remove incriminating evidence from their apartment in Charlotte. Plea Tr. 32. When asked at the guilty plea hearing whether the Government's version of the facts was true and correct, Smith responded that they were. Plea Tr. 39-40.
[4] Once in Seattle, Smith used the alias Kia April Moore to receive prenatal care and to procure food stamps. Sentencing Tr. 132.
[5] The Honorable Raymond A. Jackson of the United States District Court for the Eastern District of Virginia (Norfolk Division) presided over the trial.
[6] At sentencing, Smith testified that during the time she was gone, she had no knowledge that an Indictment had been handed down and a warrant issued for her arrest. Smith claimed that her parents informed her about the outstanding warrant when she returned home. Sentencing Tr. 102.
[7] The other two fugitives were Eric Marshall and Dirk Ladson.
[8] Besides the objections outlined above, defense counsel objected to the reference that Smith was a member of a conspiracy or participated in any act that would further the conspiracy. See PSR ¶ 14. In this regard, defense counsel claimed that Smith's knowledge, actions, and intentions were dictated by Peter Hall. Defense counsel objected to the reference that Smith was knowledgeable of Peter Hall's cocaine network prior to September 1991. See PSR ¶ 25. Defense counsel objected to the fact that Smith had typed a false birth certificate as a means to further the conspiracy. See PSR ¶ 48. Defense counsel objected to the suggestion that Smith was aware that money and drugs were concealed in a hidden compartment in a vehicle she and another individual drove from New York to Charlotte, North Carolina in the summer of 1992. See PSR ¶ 49. Defense counsel objected to the suggestion that Smith obtained a false driver's license in order to conceal her true identity or to further the ends of the conspiracy. See PSR ¶ 58. Defense counsel objected to the notion that Smith contacted her attorney in Richmond, Virginia in an effort to find out what information law enforcement agents had gathered against Peter Hall and the ring. See PSR ¶ 63. Defense counsel objected to the notion that Smith was aiding Peter Hall's effort to evade law enforcement after the murder of Derrick Taylor when Smith delivered an Acura automobile to Hall. See PSR ¶ 64. Defense counsel objected to the suggestion that Smith met with law enforcement agents in June 1993 solely to gather information on behalf of Peter Hall. See PSR ¶ 66. Defense counsel objected to the suggestion that Smith had fled her parents' home after learning that the original indictment had been returned by the Grand Jury. See PSR ¶ 70. Finally, defense counsel objected to the suggestion that Smith acquired vehicles utilized in the conspiracy. See PSR ¶¶ 74 & 84.
[9] In that prior motion, the Government had argued that Robinson had a conflict of interest in representing Wainsworth Hall and William Foreman, since Foreman had provided information to the Grand Jury and was a potential witness at trial. Id. at 4, 19-20, 25.
[10] Ms. Cephas testified as a government witness at the trial of Wainsworth Hall and is currently in the Witness Protection Program. Sentencing Tr. 29, 36.
[11] To highlight other portions of the testimony, in the summer of 1991 at an apartment, Smith got up to get the door for co-conspirator Derrick Taylor. Sentencing Tr. 73. After Taylor left, Hall yelled at Smith and smacked her and told her "not to jump for anybody else." Sentencing Tr. 73.
On another occasion in the summer of 1992, Peter Hall became upset when he did not like the way a male co-conspirator said good-bye to Smith when leaving Ms. Jeter's apartment. Sentencing Tr. 54-55, 74. Smith voiced her opinion that Hall should speak to the other individual about the matter. Id. Hall smacked Smith and pushed her into the door of the apartment. Sentencing Tr. 54-55, 75. Hall then told Ms. Jeter to leave her apartment. Sentencing Tr. 55. Once she left, Hall threw Smith across the apartment and slapped and beat her, and grabbed her by the neck. Sentencing Tr. 75.
On another occasion, Hall became upset when, at a pool party, a man flirted with Smith and tried to take her bikini top off. Sentencing Tr. 78. Hall claimed that Smith had provoked the flirtation and he began to yell and beat Smith. Sentencing Tr. 79.
In the spring of 1993, Hall and Smith went to Wainsworth Hall's house in Charlotte, North Carolina. Sentencing Tr. 84. Hall became upset when Smith had a conversation with a woman Hall believed to be a lesbian. Id. Smith was pregnant at the time, and Hall hit Smith in the back of the head and in the face. Id.
[12] When, in this situation, the plea was knowingly and voluntarily made, there is a strong presumption that the plea is final and binding. United States v. Lambey, 974 F.2d 1389, 1394 (4th Cir.1992) (en banc).
[13] Smith's allegation of ineffective assistance of counsel is discussed in section 5(a)(3).
[14] This Court notes that Smith has not offered any evidence suggesting that the Government's refusal is irrational to any legitimate governmental end or is based on a discriminatory motive. See Wade v. United States, 504 U.S. 181, 186, 112 S.Ct. 1840, 118 L.Ed.2d 524 (1992). Indeed, the Government makes a determination based on whether the informant has complied "fully and truthfully" and whether such assistance has been "substantial." Prior to sentencing, Smith did not provide complete, truthful, and substantial information to the Government. Before she was indicted, Smith met with federal agents on June 28, 1993. Smith failed to provide federal agents with information concerning the activities of the cocaine network. Smith lied to federal agents and told them that she did not know Wainsworth Hall and that she knew nothing about Derrick Taylor's murder. Smith reported to Peter Hall after her meeting and reported on what the agents knew about the ring.
Smith was subsequently indicted. After her initial appearance in this matter, Smith and her attorney Wagner met with federal agents on September 30, 1994. At that meeting, Smith failed to disclose Peter Hall's location in Seattle. Smith knew that Peter Hall was living there under the alias Curtis Lamont Saunders. Sentencing Tr. 103-104, 125-26. On October 1, 1994, Hall was found dead at his apartment in Seattle. Only then, Smith met with federal authorities a second time and disclosed Hall's whereabouts and provided information about him. The Government indicates that the information Smith provided then and in subsequent meetings did not amount to substantial assistance.
[15] This allegation has also been discussed in section 1(b) of this opinion.
[16] The excerpts from this dialogue are provided in the statement of facts and under section 2(b) of this opinion.
[17] Indeed, besides the objections outlined above, defense counsel objected to the reference that Smith was a member of a conspiracy or participated in any act that would further the conspiracy. See PSR ¶ 14. In this regard, defense counsel claimed that Smith's knowledge, actions, and intentions were dictated by Peter Hall. Defense counsel objected to the reference that Smith was knowledgeable of Peter Hall's cocaine network prior to September 1991. See PSR ¶ 25. Defense counsel objected to the fact that Smith had typed a false birth certificate as a means to further the conspiracy. See PSR ¶ 48. Defense counsel objected to the suggestion that Smith was aware that money and drugs were concealed in a hidden compartment in a vehicle she and another individual drove from New York to Charlotte, North Carolina in the summer of 1992. See PSR ¶ 49. Defense counsel objected to the suggestion that Smith obtained a false driver's license in order to conceal her true identity or to further the ends of the conspiracy. See PSR ¶ 58. Defense counsel objected to the notion that Smith contacted her attorney in Richmond, Virginia in an effort to find out what information law enforcement agents had gathered against Peter Hall and the ring. See PSR ¶ 63. Defense counsel objected to the notion that Smith was aiding Peter Hall's effort to evade law enforcement after the murder of Derrick Taylor when Smith delivered an Acura automobile to Hall. See PSR ¶ 64. Defense counsel objected to the suggestion that Smith met with law enforcement agents in June 1993 solely to gather information on behalf of Peter Hall. See PSR ¶ 66. Defense counsel objected to the suggestion that Smith had fled her parents' home after learning that the original indictment had been returned by the Grand Jury. See PSR ¶ 70. Finally, defense counsel objected to the suggestion that Smith acquired vehicles utilized in the conspiracy. See PSR ¶¶ 74 & 84.
[18] Smith maintains that her lawyers failed to prepare the psychologists for the sentencing hearing. Smith's main argument is that Dr. Twining had not evaluated Smith prior to the hearing. The lawyers' tactical decision was mainly to use Dr. Twining to explain battered woman's syndrome theory. Defense counsel called Dr. Wilson, who was Smith's treating psychologist, to testify about Smith's mental condition. This Court can not conclude that the lawyers' actions fell below the threshold of reasonably competent representation. This Court also points out that Smith is not constitutionally entitled to the effective assistance of a psychiatrist expert. See Wilson v. Greene, 155 F.3d 396, 401 (4th Cir.1998). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2577134/ | 113 F.Supp.2d 1306 (2000)
Barbara E. LASUSA, Lawrence R. LaSusa, and Michael V. LaSusa, a minor, Plaintiffs,
v.
LAKE MICHIGAN TRANS-LAKE SHORTCUT, INC. d/b/a Lake Michigan Carferry, Defendant.
No. 99-C-1253.
United States District Court, E.D. Wisconsin.
September 21, 2000.
*1307 Lawrence R. LaSusa, Law Offices of Lawrence R. LaSusa, Barrington, IL, for Plaintiffs.
Geoffrey M. Herbon, Herbon, McLaughlin & Herbon, Milwaukee, WI, Steven B. Belgrade, Belgrade & O'Donnell, Chicago, IL, for Defendant.
ORDER
RANDA, District Judge.
This matter comes before the Court on a motion to remand by the plaintiffs, Barbara E. LaSusa, Lawrence R. LaSusa, and Michael V. LaSusa, who argue that 28 U.S.C. § 1332 ("Section 1332") does not confer upon this Court subject matter jurisdiction over their personal injury claims against Lake Michigan Trans-Lake Shortcut, Inc., d/b/a Lake Michigan Carferry ("Carferry") because the "amount in controversy" is $75,000 or less. The defendant opposes the motion, having removed this action from the Circuit Court for Manitowoc County pursuant to 28 U.S.C. § 1446. On the basis of the complaint, the notice of removal, and the briefs and supporting papers submitted by the parties, the Court is unable to conclude that the jurisdictional amount mandated by Congress for diversity cases has been established. Accordingly, the Court will allow the parties ninety days in which to conduct limited written discovery relating to the nature and scope of the plaintiffs' damages, after which time the plaintiffs may re-file their motion to remand. Until the threshold question of whether the Court has subject matter jurisdiction has been resolved, however, the Court will postpone a ruling on Carferry's pending motion to dismiss, which argues that the plaintiffs claims are time barred under 46 U.S.C.App. § 763a.[1]
BACKGROUND
The plaintiffs filed suit on or about September 20, 1999 in the Circuit Court for Manitowoc County, Wisconsin. The allegations of their complaint are straightforward. *1308 Lawrence and Barbara LaSusa allege that on September 22, 1995, in Manitowoc, Wisconsin, they and their minor son, Michael, boarded a vessel owned and operated by the defendant. The vessel, the S.S. Badger, was bound for Ludington, Michigan. Before the boat could leave the dock, however, an unfortunate accident befell Michael. The complaint alleges that Michael "entered a stairway for the purpose of descending a flight of stairs, when the door to the stairway closed behind him leaving him in near total darkness." When the boat unexpectedly "heaved," the movement of the vessel allegedly caused Michael to fall down the stairs, resulting in "a fractured jaw, broken teeth, abrasions and contusions about his face and other injuries." The plaintiffs, who maintain that Carferry's negligence was the direct and proximate cause of Michael's accident, seek money damages based on Michael's injuries, medical expenses, his parents' loss of consortium, and his parents' lost earnings and lost earnings capacity. Although tort claimants in Wisconsin are not supposed to specify the amount of money damages they seek in their pleadings, Wis. Stat. § 802.02(1m), the LaSusa complaint demands judgment against Carferry "for a sum in excess of FIFTY THOUSAND DOLLARS ($50,000)."
ANALYSIS
If a federal court could have exercised original jurisdiction over a case that was filed in state court, the defendant in the state-court case may remove the case to federal court, provided that the defendant is not a citizen of the state in which the case was filed. 28 U.S.C. § 1441. That is what Carferry (not a citizen of Wisconsin) has done here. "In a removal action, a district court is required to remand a case to state court if it determines, any time before final judgment, that it lacks subject matter jurisdiction over the case." Shumpert v. Amoco Oil Co., 782 F.Supp. 77, 79 (E.D.Wis.1991); see also 28 U.S.C. § 1447(c) & Fed. R.Civ.P. 12(h)(3). As there is no assertion of "federal question" jurisdiction in this case,[2] the defendant relies upon diversity jurisdiction, which requires that the parties be of completely diverse citizenship and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332. The plaintiffs, in their motion to remand, challenge only the amount in controversy.
The plaintiffs' motion to remand presents an anomalous but not entirely unprecedented situation: the defendant argues that the plaintiffs' tort claim should stay in federal court because it is probably worth more than $75,000, while the plaintiffs maintain that their case should be remanded because it is probably worth less than this amount. See Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993) (noting "comical" aspects of this situation). As the party seeking to invoke federal jurisdiction, Carferry bears the burden of demonstrating that both the complete diversity and "amount in controversy" requirements of Section 1332 were satisfied at the time of removal. Tylka v. Gerber Prods. Co., 211 F.3d 445, 448 (7th Cir.2000). A defendant meets this burden by supporting its allegations of jurisdiction with "competent proof," meaning "evidence which proves `to a reasonable probability that jurisdiction exists.'" Chase v. Shop N' Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir.1997) (quoting Dow Brands, supra). In other words, Carferry must show, to a reasonable probability, that the amount in controversy exceeds $75,000. Id.
*1309 In applying the "reasonable probability" standard, the Court is mindful that federal courts are courts of limited jurisdiction and that "policing the border of federal jurisdiction" is both a duty and a constitutional "necessity." Unified Catholic Schools of Beaver Dam Educ. Ass'n v. Universal Card Servs. Corp., 34 F.Supp.2d 714, 717 n. 2 (E.D.Wis.1999). As explained by the Third Circuit:
The policy of the [diversity jurisdiction] statute calls for its strict construction. The power reserved to the states, under the Constitution, to provide for the determination of controversies in their courts may be restricted only by the action of Congress in conformity to the judiciary sections of the Constitution. Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined.
Nelson v. Keefer, 451 F.2d 289, 294 (3rd Cir.1971).
The Court's starting point is the complaint itself, which seeks judgment against Carferry "for a sum in excess of FIFTY THOUSAND DOLLARS ($50,000)." This demand is based on Michael's injuries (i.e., a "fractured jaw, broken teeth, abrasions and contusions about his face and other injuries"), the costs (including future costs) of providing medical care for these injuries, the "loss of [Michael's] society and companionship," and, allegedly, a loss of earnings and earnings capacity suffered by Michael's parents, presumably as a result of having to provide extra care for their injured son. The Court does not believe that the allegations of the Complaint alone provide a sufficient basis for determining that there is a "reasonable probability" that the amount in controversy exceeds $75,000. See King v. Wal-Mart Stores, Inc., 940 F.Supp. 213, 216 (S.D.Ind.1996) ("when seeking a federal forum, a defendant must explain with factual detail that it is reasonable and probable that the plaintiff's particular injuries exceed [$75,000]"). Pleadings often overstate damages, and, while the demand of $50,000 or more in this case may or may not be exaggerated, the descriptions of Michael's injuries in the complaint make an objective assessment difficult. Even taking the demand at face value, the Court only knows for certain that the claim is worth $50,000 or more, it does not know how much more. In circumstances like this, the Court may look "outside the pleadings to other evidence of jurisdictional amount in the record," provided that it considers only "evidence of amount in controversy that was available at the moment the petition for removal was filed." Chase, 110 F.3d at 427-28; see also Harmon v. OKI Sys., 115 F.3d 477, 479 (7th Cir.), cert. denied, 522 U.S. 966, 118 S.Ct. 413, 139 L.Ed.2d 316 (1997). However, in this Circuit, neither post-removal stipulations (of the kind proposed by the defendant and rejected by the plaintiffs) nor post-removal affidavits (of the kind submitted by Lawrence LaSusa in an effort to force remand) will deprive the Court of jurisdiction. Chase, 110 F.3d at 429; Dow Brands, 994 F.2d at 376. By the same token, "[t]he mere failure to respond to a request for stipulation cannot be used as a basis for removal." McLain v. Am. Int'l Recovery, Inc., 1 F.Supp.2d 628, 631 (S.D.Miss.1998).[3] Mr. LaSusa's affidavit is particularly unhelpful because it merely states that he "do[es] not believe the matters in controversy will exceed $75,000." The affidavit of defense counsel, who "believes that Plaintiffs will be seeking in excess of $75,000," is not any more illuminating. Furthermore, if it is true, as the defendant argues in connection with the plaintiffs' offer of settlement (see n. 3 *1310 supra) that the defense has not even had an opportunity to review basic documents such as tax returns and medical records, how can the defendant say with confidence that there is a reasonable probability that the plaintiffs seek more than $75,000?
In an effort to meet its burden of establishing federal jurisdiction, the defendant has come forward with jury verdict and settlement figures in Wisconsin cases that involved injuries comparable to those allegedly suffered by Michael. However, this data is at best inconclusive. As the plaintiffs point out in their reply brief, the amounts of these verdicts or settlements range from $9,500 to $97,000, with the median amount being slightly more than $50,000. In short, these figures show that the amount in controversy in this case could be in excess of $75,000,[4] but not that a recovery of this much money is "reasonably probable."
While the Court acknowledges that Carferry has the burden of establishing jurisdiction, it also recognizes that this burden can be difficult to meet when the amount in controversy is not clear from the allegations of the complaint. Out-of-state defendants have a statutory right of removal, see 28 U.S.C. § 1441, and they should, in the Court's opinion, be given a fair opportunity to show that jurisdiction is proper. On the other hand, as previously noted, the Court may not transgress the boundaries of its limited jurisdiction by blithely assuming that the amount in controversy requirement has been satisfied. The Court will therefore allow limited, and somewhat expedited, discovery relating to the plaintiffs' claimed damages, as requested by Carferry in a separate (and unopposed) "alternative" motion under Local Rule 6.07. This Court "has a duty to make the inquiries necessary to establish its own jurisdiction" and the "blueprint [for] determining the length and breadth of the amount in controversy is entirely within [its] discretion ...." Foret v. S. Farm Bureau Life Ins. Co., 918 F.2d 534, 537 (5th Cir.1990); see also Gibbs v. Buck, 307 U.S. 66, 71-72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939) ("As there is no statutory direction for procedure upon an issue of jurisdiction, the mode of its determination is left to the trial court."); Zunamon v. Brown, 418 F.2d 883, 886 (8th Cir.1969) ("The scope of the pre-trial jurisdictional inquiry must of necessity turn on the specific pleadings and facts involved in each particular case," but it need not involve a "full-scale" evidentiary hearing). If the plaintiffs are truly playing "hide the ball" with respect to damages, i.e., sitting on evidence of significant damages in order to defeat federal jurisdiction, then limited discovery concerning damages will reveal them at their game. On the other hand, such discovery may disclose that the plaintiffs' damages fall demonstrably below the jurisdictional threshold for federal jurisdiction, in which case their action against Carferry will be remanded to state court.[5]
The Court is aware that further proceedings on the jurisdictional question will result in additional expense for the parties and that the end result may well be remand. However, while "[p]arties are always put to some expense when they litigate in the wrong court and then suffer a jurisdictional dismissal, ... this does not override the important principle that the federal courts are courts of limited jurisdiction." Wellness Community v. Wellness House, 70 F.3d 46, 50 (7th Cir.1995). It is in the interest of effectively "policing the border" of its limited jurisdiction that the Court permits discovery relating to the plaintiffs' claimed damages. Universal Card Servs., 34 F.Supp.2d at 717 n. 2. As for the bounds of this discovery, the Court trusts that counsel for the parties will be able to police themselves and determine *1311 what is and is not relevant for purposes of determining the amount in controversy, consistent with the foregoing.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY ORDERED THAT:
1. Defendant's motion under Local Rule 6.07 requesting leave to conduct discovery relating to damages is GRANTED with the following conditions:
(a) The plaintiffs shall provide the mandatory interrogatory answers specified in Local Rule 7.07 no later than thirty (30) days from the date of this order, and the defendants shall provide their mandatory interrogatory answers within thirty (30) days of service of the plaintiffs' mandatory interrogatory answers. L.R. 7.07; and
(b) The parties may conduct limited written discovery pursuant to Rules 33, 34 & 36 concerning the nature and scope of the damages claimed by the plaintiffs in their complaint, provided that all such discovery shall be completed within ninety (90) days of this order.
2. The plaintiffs' motion to remand is DENIED without prejudice to their ability to re-file the motion upon expiration of the 90-day period allowed for damages-related discovery.
3. Defendant's motion to strike the plaintiffs' offer of settlement is GRANTED;
4. Defendant's motion to strike the plaintiffs' supplemental brief in support of remand is GRANTED; and
5. Defendant's motion for sanctions is DENIED.
SO ORDERED.
NOTES
[1] The defendant makes a persuasive argument that this is a maritime tort case to which the three-year statute of limitations found in 46 U.S.C.App. § 763a applies regardless of whether this matter proceeds in federal or state court. See, e.g., Konrad v. South Carolina Elec. & Gas Co., 308 S.C. 167, 417 S.E.2d 557 (1992). If this argument is correct, the plaintiffs' claims are time-barred. However, in the event this case is remanded to state court for lack of subject matter jurisdiction, any opinion ventured by this Court concerning the statute of limitations issue raised by Carferry's motion to dismiss would be strictly advisory.
[2] Presumably, Carferry has not relied on federal question jurisdiction as a basis for removal because of the "saving-to-suitors" clause in Section 1333(1) of Title 28. "[S]aving-clause cases theoretically are removable only if the elements of diversity jurisdiction diversity of citizenship and the requisite amount in controversy or some other federal subject matter jurisdiction basis is present." 14A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure §§ 3672, 3674 (3d ed.1998).
[3] The plaintiff's post-removal "offer of settlement" (for $59,000) falls into the same category. Accordingly, the Court grants Carferry's motion to strike the offer of settlement and the plaintiff's "supplemental" brief that purports to rely on that offer of settlement as evidence of the amount in controversy. However, the Court does not agree with Carferry that the plaintiffs' reliance on the offer of settlement is sanctionable.
[4] The discussion above assumes, of course, that the plaintiffs are able to establish liability on the part of Carferry.
[5] Yet another possibility is that damages-related discovery will allow the parties to engage in meaningful settlement negotiations. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568534/ | 110 F.Supp.2d 597 (2000)
Terry W. HOCKENBERRY, Administrator of the Estate of Terry W. Hockenberry, Jr. Plaintiff,
v.
THE VILLAGE OF CARROLLTON, et al., Defendants.
No. 5:00-CV-127.
United States District Court, N.D. Ohio, Eastern Division.
August 3, 2000.
*598 *599 Alec Berezin, Dworken & Berstein, Painesville, Gordon S. Friedman, Friedman & Gilbert, Cleveland, OH, for Terry W. Hockenberry, Administrator of the Estate of Terry W. Hockenberry, Jr., Plaintiff.
Cari F. Evans, Pelini & Fischer, North Canton, Donald R. Burns, Carrollton, OH, John T. McLandrich, Mazanec, Raskin & Ryder, Cleveland, OH, Mark F. Fischer, Pelini & Fischer, North Canton, OH, Paul J. Cristallo, Mazanec, Raskin & Ryder Co., LPA, Solon, OH, for Carrollton, Village of, Michael S. Middleton, Various Unknown Officers, Defendants.
ORDER
GWIN, District Judge.
On July 10, 2000, Defendants Village of Carrollton and Officer Michael Middleton filed a motion seeking summary judgment on the federal and state claims asserted against them by Plaintiff Terry W. Hockenberry [Doc. 33]. For the reasons set forth below, the Court grants in part and denies in part the defendants' motion.
I. Background
The present dispute arises from a fatal automobile collision. In November 1998, Terry Hockenberry, Jr., was killed after his vehicle collided with a utility pole just outside the Village of Carrollton, Ohio. Representing the decedent's estate, Plaintiff Terry Hockenberry, Sr., alleges that this collision resulted from the unlawful conduct of Defendant Officer Michael Middleton and Defendant Village of Carrollton. Both defendants deny liability for the collision.
The collision followed a pursuit initiated by Officer Middleton while on patrol for the Village of Carrollton Police Department. Shortly after midnight on November 17, 1998, Middleton observed the decedent's vehicle traveling well in excess of the posted speed limit.[1] Middleton then began pursuing the vehicle. The pursuit continued beyond Village limits, but abruptly ended when the decedent's vehicle left the roadway and collided with a utility pole. The decedent was thrown from the vehicle, suffering fatal injuries.
The parties dispute the specific nature of this pursuit. Middleton testifies that he did not aggressively pursue the decedent's vehicle. Rather, Middleton insists that he followed the vehicle at only a moderate speed and stopped at stop signs during the pursuit. He says he lost sight of the vehicle several times, and did not actually witness the collision.
Plaintiff Hockenberry offers a much different account of the pursuit. Relying on the results of a crash reconstruction, the plaintiff alleges that Officer Middleton pursued the decedent's vehicle at a high rate of speed, collided with the vehicle on at least on occasion, and forced the vehicle off the road and into the utility pole.
The plaintiff brings suit under both federal and state law. The plaintiff's sole federal claim arises under 42 U.S.C. § 1983. This claim includes two general theories of liability.
First, the plaintiff contends that Officer Middleton's pursuit violated his son's Fourth, Fifth, Eighth, Ninth, and Fourteenth Amendments to the United States Constitution. He also attributes liability for these constitutional violations to the Village of Carrollton, based on its allegedly inadequate officer training.
Second, the plaintiff says Officer Middleton and the Village conspired to deprive his son's estate and next of kin their right *600 to seek redress for the defendants' allegedly unlawful conduct. This conduct, the plaintiff argues, violates the First Amendment's guarantee of a right of access to the courts.
Beyond his federal claim, the plaintiff asserts state-law claims for wrongful death, assault and battery, and intentional infliction of emotional distress.
The defendants now seek summary judgment on each of the plaintiff's claims. The Court considers the defendants' motion for summary judgment below.
II. Summary Judgment Standard
A court may grant summary judgment only if the materials properly before the court "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The moving party has the burden of showing conclusively that no genuine issue of material fact exists. See 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987). In deciding whether the moving party has met this burden, a court must view the facts and all inferences drawn therefrom in the light most favorable to the nonmoving party. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
A factual dispute precludes summary judgment only if it is material, that is, if it relates to a matter essential to adjudication. The dispute must concern facts that, under the substantive law governing the issue, might affect the outcome of the suit. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The factual dispute must also be genuine. The facts must be such that if they were proven at trial a reasonable jury could return a verdict for the nonmoving party. See id. at 248, 106 S.Ct. 2505. The disputed issue does not have to be resolved conclusively in favor of the nonmoving party, but that party is required to present significant probative evidence that makes it necessary to resolve the parties' differing versions of the dispute at trial. See 60 Ivy Street, 822 F.2d at 1435 (citing First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Thus, the judge's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue a proper jury question. "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." 60 Ivy Street, 822 F.2d at 1436 (quoting Anderson, 477 U.S. at 249, 106 S.Ct. 2505). Accordingly, viewing the evidence in the light most favorable to the nonmoving party, the court should determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251, 106 S.Ct. 2505.
III. Analysis
A. 42 U.S.C. § 1983
Plaintiff Hockenberry makes claim under 42 U.S.C. § 1983. Section 1983 imposes liability on a defendant who, while acting under color of state law, deprives another "... of any rights, privileges, or immunities secured by the Constitution...." According to the plaintiff, Defendant Middleton and Defendant Village of Carrollton have committed violations of the First, Fourth, Fifth, Eighth, Ninth, and Four-teenth Amendments of the Constitution.
1. Fourth Amendment
The Fourth Amendment preserves the right of citizens to be free from unreasonable seizures. Here, the plaintiff says Defendant Middleton acted unreasonably in *601 seizing his deceased son. He further claims that Defendant Village of Carrollton is liable for Officer Middleton's conduct by inadequately training its police officers.
a. Officer Middleton Unreasonable Seizure
To establish an unreasonable seizure, a plaintiff must show (1) that a seizure actually occurred and (2) that the seizure was unreasonable under the circumstances. In seeking summary judgment, Defendant Middleton argues that the plaintiff has not offered evidence sufficient to satisfy the first element of a Fourth Amendment claim.
Specifically, Defendant Middleton says that he merely pursued the plaintiff's son for a speeding violation. The defendants insist that such a pursuit, even when performed at high speed, is not a "seizure" for purposes of the Fourth Amendment.
The Court is not persuaded. The defendants correctly note that a high-speed chase, without more, is not a seizure. However, the defendants ignore the evidence suggesting that Officer Middleton did more than simply pursue the decedent.
The crash reconstruction report offered by the plaintiff details evidence suggesting that Officer Middleton's patrol car collided with the decedent's vehicle. In particular, the report sets forth the analysis of certain paint markings on the decedent's vehicle and Officer Middleton's patrol car. These paint transfers, along with undercarriage damage to the decedent's vehicle, lend support to the report's conclusion that Officer Middleton's vehicle hit the decedent's vehicle during the pursuit.
An officer effects a seizure when he forces a suspect to stop by colliding with the suspect's vehicle. See Brower v. County of Inyo, 489 U.S. 593, 597, 109 S.Ct. 1378, 103 L.Ed.2d 628 (1989) ("If, instead of [pursuing a suspect with flashing lights], the police cruiser had pulled alongside the fleeing car and sideswiped it, producing the crash, then the termination of the suspect's freedom of movement would have been a seizure."). The plaintiff has offered evidence showing that Office Middleton's vehicle collided with the decedent's vehicle. A reasonable jury could infer from this evidence that Officer Middleton used his vehicle to seize the decedent.
Of course, even if the jury concludes that Officer Middleton used his patrol car to stop the decedent's vehicle, a Fourth Amendment violation will arise only if the seizure was unreasonable. An application of force to effect a seizure must be "objectively reasonable" under the circumstances. Graham v. Connor, 490 U.S. 386, 396-97, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989). The test for objective reasonableness "is not capable of precise definition or mechanical application...." Id. Thus, determining whether an officer acted reasonably in applying force "requires careful attention to the facts and circumstances of each particular case...." Id.
Here, a reasonable jury may conclude that Officer Middleton's alleged seizure was unreasonable. Officer Middleton pursued the decedent simply to make a traffic stop. The decedent was not suspected of any serious criminal wrongdoing. Under such circumstances, the jury may very well conclude that Officer Middleton used excessive force in colliding with the decedent's vehicle. See Hawkins v. City of Farmington, 189 F.3d 695, 702 (8th Cir. 1999) (finding that jury could conclude officer acted unreasonably in colliding with speeding motorcycle).
Thus, the Court finds that Defendant Middleton is not entitled to summary judgment on the plaintiff's Fourth Amendment claim under § 1983.
b. Municipal Liability Inadequate Training
To establish municipal liability for an employee's unconstitutional acts, a plaintiff must do more than simply show the employee committed the constitutional violation within the scope of his government employment. A municipality cannot be held liable under § 1983 on a theory of *602 respondeat superior. See City of Canton v. Harris, 489 U.S. 378, 385, 109 S.Ct. 1197, 103 L.Ed.2d 412 (1989). Rather, a plaintiff must show that the municipality's own policies or customs proximately caused the constitutional violation.
Plaintiff Hockenberry insists that Defendant Village of Carrollton played an integral role in his deceased son's alleged constitutional deprivation. According to the plaintiff, the Village has maintained a policy of inadequately training its police officers. The plaintiff insists that this inadequate training directly contributed to Defendant Middleton's alleged unconstitutional conduct.
Municipal liability based on inadequate training arises only when "the failure to train amounts to deliberate indifference to the rights of the persons with whom the police come in contact." Harris, 489 U.S. at 388, 109 S.Ct. 1197. This occurs when "the need for more or different training is so obvious, and the inadequacy so likely to result in a violation of constitutional rights, that the policymakers of the city can reasonably be said to have been deliberately indifferent to the need." Id. at 390, 109 S.Ct. 1197.
The Village insists that the plaintiff has failed to offer evidence sufficient to show that the Village acted with deliberate indifference. The Court disagrees.
The plaintiff offers evidence suggesting that the Village provides relatively little training regarding the policies and procedures associated with pursuing a suspect. In particular, Officer Middleton testified that he received only one training course regarding the Village of Carrollton Police Department's policies and procedures. Officer Middleton also noted that he had not been tested on these procedures. Chief Ronald Yeager's deposition testimony substantiates Officer Middleton's account of the Village's training program.
In light of this evidence, the plaintiff has met his burden of showing a genuine issue of material fact with regard to the Village's liability. Accordingly, the Court finds that the Village is not entitled to summary judgment on the plaintiff's Fourth Amendment claim under § 1983.
2. Fourteenth Amendment
The Due Process Clause of the Fourteenth Amendment prohibits state actors from subjecting citizens to arbitrary government action. See Wolff v. McDonnell, 418 U.S. 539, 558, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974). A due process violation results when a state actor engages in arbitrary conduct so egregious that it "shocks the conscience." Rochin v. California, 342 U.S. 165, 172, 72 S.Ct. 205, 96 L.Ed. 183 (1952).
Plaintiff Hockenberry brings a due process claim against Defendant Middleton. The plaintiff alleges that Office Middleton's pursuit of and collision with the plaintiff's deceased son "shocks the conscience."
In the context of a police pursuit, "only a purpose to cause harm unrelated to the legitimate object of arrest will satisfy the shocks-the-conscience test." County of Sacramento v. Lewis, 523 U.S. 833, 835, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998). Defendant Middleton contends that the plaintiff has failed to offer evidence sufficient to make this showing. The Court agrees.
The plaintiff has not offered any admissible evidence from which the jury could conclude Officer Middleton acted with malice in pursuing the plaintiff's son. While the plaintiff claims that Officer Middleton had a vendetta against his son, the testimony used to support this contention is hearsay.
Specifically, the plaintiff offers his own deposition testimony in which he recounts statements his son made to him regarding various encounters with Officer Middleton. Offered for their truth, these out-of-court statements are hearsay. Hearsay, of course, is inadmissible unless subject to an exception. Finding no applicable exception, the Court will not consider the statements *603 in ruling on the defendants' summary judgment motion.
In the absence of any admissible evidence suggesting Office Middleton acted with malice, the Court finds that the defendants are entitled to summary judgment on the plaintiff's due process claim under § 1983.
3. First Amendment
The First Amendment guarantees each citizen the right "to petition the Government for a redress of grievances." Plaintiff Hockenberry contends that the defendants violated the First Amendment by conspiring to cover up their wrongdoing.
To prevail on a conspiracy claim under § 1983, a plaintiff must show that the defendants acted in concert and that some overt act was done in furtherance of the conspiracy that resulted in the deprivation of a constitutional right. See Hafner v. Brown, 983 F.2d 570, 577 (4th Cir.1992); Hooks v. Hooks, 771 F.2d 935, 943-44 (6th Cir.1985) (noting that civil conspiracy involves existence of a single plan between two or more persons who share a common objective that is furthered by the commission of an overt act that caused injury to the complaining party). The defendants argue that the plaintiff has failed to offer evidence sufficient to make such a showing. The Court agrees.
The plaintiff bases his conspiracy claim solely on the dual role he says Donald Burns, a solicitor for the Village of Carrollton, played in the events surrounding the pursuit. According to the plaintiff, Officer Middleton consulted with Burns prior to giving his statement concerning the pursuit to the Ohio State Highway Patrol. Burns later presented evidence to the grand jury charged with deciding whether Officer Middleton should be indicted for his conduct in pursuing the plaintiff's son. The grand jury did not indict Officer Middleton.
The plaintiff insists that this evidence would allow a reasonable jury to conclude the defendants conspired to cover up their alleged wrongdoing. The Court is not persuaded. The plaintiff has offered nothing more than an unfounded allegation of a conspiracy. There is simply no reasonable basis for inferring that Burns and Middleton shared the common objective of covering up material facts regarding the pursuit.
As a result, the Court grants summary judgment to the defendants on the plaintiff's First Amendment claim under § 1983.
4. Fifth Amendment
The Fifth Amendment prohibits the federal government from violating citizens' due process rights. Plaintiff Hockenberry insists that the defendants violated his deceased son's due process rights under the Fifth Amendment.
However, as noted, the Fifth Amendment only restrains acts by the federal government. Neither defendant acts on behalf of the federal government. As a result, the defendants cannot incur liability under the Fifth Amendment.
For this reason, the Court grants summary judgment to the defendants on the plaintiff's Fifth Amendment claim under § 1983.
5. Eighth Amendment
The Eighth Amendment prohibits cruel and unusual punishment. Plaintiff Hockenberry says the defendants violated this prohibition by causing his son's death in a high-speed pursuit based on a routine traffic violation.
The United States Supreme Court has made clear that only those convicted of crimes can bring claims under the Eighth Amendment. See Bell v. Wolfish, 441 U.S. 520, 535, 99 S.Ct. 1861, 60 L.Ed.2d 447 (1979); Ingraham v. Wright, 430 U.S. 651, 664, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977); Roberts v. City of Troy, 773 F.2d 720, 722-23 (6th Cir.1985). The plaintiff's son was not convicted of any crime related to the incident leading to his death. Thus, the *604 plaintiff does not have a cognizable Eighth Amendment claim.
The Court therefore grants summary judgment to the defendants on the plaintiff's Eighth Amendment claim under § 1983.
6. Ninth Amendment
The Ninth Amendment provides that "the enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people." Plaintiff Hockenberry insists that the defendants violated his son's rights under the Ninth Amendment.
The text of the Ninth Amendment does not specifically create any particular constitutional right. Rather, the Ninth Amendment was adopted to ensure that the explicit enumeration of rights in the Constitution did not implicitly deny the existence of unenumerated fundamental rights. With this understanding of the Amendment's purpose, the United States Court of Appeals for the Sixth Circuit has held that the Ninth Amendment "does not confer substantive rights in addition to those conferred by other portions of our governing law." Gibson v. Matthews, 926 F.2d 532, 537 (6th Cir.1991).
Because the Ninth Amendment does not provide the plaintiff's son with any particular constitutional right, the plaintiff cannot bring a Ninth Amendment claim against the defendants. The Court therefore grants summary judgment to the defendants on the plaintiff's Ninth Amendment claim under § 1983.
B. Wrongful Death
Next, Plaintiff Hockenberry asserts a state-law wrongful death claim against Defendant Middleton and Defendant Village of Carrollton. Both defendants say they are immune from this claim. The Court disagrees.
Under Ohio law, both Officer Middleton and the Village are generally immune from civil liability arising from governmental or proprietary functions. See OHIO REV. CODE 2744.03(A). However, this immunity has exceptions. Specifically, the plaintiff can recover from the defendants if he can show that Officer Middleton acted "with malicious purpose, in bad faith, or in a wanton or reckless manner...." See OHIO REV. CODE § 2744.03(A)(6)(b).
The plaintiff has offered evidence suggesting that Officer Middleton aggressively pursued and collided with the plaintiff's son solely to make a routine traffic stop. A reasonable jury may conclude that Officer Middleton's acted recklessly by engaging in such a pursuit.
Thus, the Court denies defendants' motion for summary judgment on the plaintiff's wrongful death claim.
C. Assault and Battery
Plaintiff Hockenberry also brings claims for assault and battery against Defendant Middleton and Defendant Village of Carrollton. The defendants say these claims are time barred. The Court agrees.
Ohio law sets a one-year statute of limitations for assault and battery claims. See OHIO REV. CODE 2305.111. Here, the alleged assault and battery occurred on November 17, 1998. The plaintiff filed his assault and battery claims on January 14, 2000. Because the plaintiff failed to file suit within one year of the alleged assault and battery, the claims are time barred.
For this reason, the Court grants the defendants' motion for summary judgment on the plaintiff's assault and battery claims.
D. Intentional Infliction of Emotional Distress
Finally, Plaintiff Hockenberry asserts a claim for intentional infliction of emotional distress. According to the plaintiff, the defendants' actions have caused him and his family to suffer serious emotional distress. The defendants contend that the plaintiff has not offered evidence showing that he or his family has suffered serious emotional distress. The Court agrees.
*605 A claim for intentional infliction of emotional distress arises against one "who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another...." Yeager v. Local Union 20, 6 Ohio St.3d 369, 374, 453 N.E.2d 666 (1983). Thus, to prevail on such a claim, a plaintiff must offer evidence showing "serious emotional distress" resulting from the defendant's conduct.
Here, the plaintiff has not pointed to any evidence suggesting that he or his family suffered the type of serious emotional distress necessary to sustain an action for intentional infliction of emotional distress. Indeed, the plaintiff does not address his intentional infliction of emotional distress claim in his motion opposing summary judgment.
Finding no evidence of serious emotional distress, the Court grants summary judgment to the defendants on the plaintiff's intentional infliction of emotional distress claim.
IV. Conclusion
For the reasons set forth above, the Court grants in part and denies in part the defendants' motion for summary judgment. The Court grants summary judgment to the defendants on the plaintiff's 42 U.S.C. § 1983 claim to the extent it is based on violations of the First, Fifth, Eighth, Ninth, and Fourteenth Amendments. The Court also grants judgment to the defendants on the plaintiff's state-law claims for assault, battery, and intentional infliction of emotional distress. However, the Court denies the defendants' motion with regard to the plaintiff's § 1983 claim based on violations of the Fourth Amendment, as well as the plaintiff's state-law wrongful death claim.
IT IS SO ORDERED.
NOTES
[1] Officer Middleton says he recorded the decedent's speed at 43 miles per hour. The posted speed limit was 25 miles per hour. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568895/ | 94 F.Supp.2d 787 (2000)
Esme J. HOLLAND, Plaintiff,
v.
UNITED STATES of America, Defendant.
No. CIV. A. H-98-4137.
United States District Court, S.D. Texas, Houston Division.
April 25, 2000.
*788 Thomas E. Redding and Teresa J. Womack, Redding & Associates, Houston, TX, for Plaintiff.
Michael D. Powell, United States Department of Justice, Tax Division, Dallas, TX, for Defendant.
ORDER
HITTNER, District Judge.
Pending before the Court is the Motion for Summary Judgment filed by Defendant, United States of America, and the Motion for Summary Judgment filed by Plaintiff, Esme J. Holland. Having considered the motions, submissions on file, and the applicable law, the Court determines that the motion for summary judgment filed by Defendant should be granted and the motion for summary judgment filed by Plaintiff should be denied.
BACKGROUND
This is a tax refund case. In 1989, Defendant Phillips 66 Company ("Phillips") entered into a sales and exchange contract with certain property owners to purchase a particular parcel of property (the "Holland Bannister Property") next to one of its commercial operations. The sales and exchange contract provided that Phillips would give the Holland Bannister Property owners $4,200,000.00 and 450 acres in Fayette County, Texas in exchange for the Holland Bannister property. At the time of the exchange, the Holland Bannister Property was valued at *789 $666,000.00 and the Fayette County property was valued at $600,000.00. The deal closed in 1990. Plaintiff Esme J. Holland ("Holland") received approximately one-third of the $4,200,000.00 through the William M. Holland Testamentary Trust (the "Trust").
On October 15, 1991, Holland filed a U.S. Individual Income Tax Return (Form 1040) for the year 1990. She reported a net Schedule E income of $1,078,572.00, which produced a tax liability of $315,033.00. On November 18, 1991, the Internal Revenue Service ("IRS") assessed the income tax liability shown on the return, plus penalties and interest.
On October 15, 1994, Holland filed an Amended U.S. Individual Income Tax Return (Form 1040X) for the year 1990. Due to Holland's recalculations, she requested a tax refund of $305,108.00. Holland claimed that the money she received through the Trust was to compensate her for the relinquishment of certain personal tort rights against Phillips and was thus not taxable as income pursuant to 26 U.S.C. § 104(a). The applicable release in the sales and exchange contract provided, in entirety:
XI.
RELEASE
As part of the consideration for this agreement and EXPRESSLY SUBJECT TO THE EXECUTION AND CONSUMMATION HEREOF AND THE EXCEPTIONS HEREAFTER SET FORTH, Sellers release and forever discharge Phillips, its successors and assigns, and the officers, employees and agents of all of them of and from any and all claims and causes of action which the undersigned Sellers, and each of them, have against Phillips, its officers, employees and agents, on account of or arising out of any emission release, pollution, property damage, noise, or disruption connected with the refinery operation conducted by Phillips as mentioned in paragraph VII. i. hereof, but only as the release in this paragraph relates to the annoyance, inconvenience, and unsightliness caused by any such emission release, pollution, property damage, noise, or disruption; PROVIDED, HOWEVER, AND NOT WITHSTANDING ANYTHING TO THE CONTRARY HEREIN, (1) Sellers do not release Phillips, or its successors and assignees to any extent, from, and Sellers expressly reserve and do not waive, any and all past, present, and future claims, causes of action, and liabilities of any and all kinds whatsoever, based on, because of, or arising out of or to arise out of personal injuries or damage to Sellers' bodies or health, including but not limited to, all rights to recover for pain and suffering, both mental and physical, loss of wages, income or earning capacity, medical expenses, death, loss of consortium, grief, or any other recovery which may be associated with such type of claim or liability; and (2) nothing in this paragraph XI shall ever be construed as (1) in any way limiting, diminishing or releasing the indemnity given by Phillips in paragraph VII. i. hereof or (ii) preventing Sellers from obtaining relief or recovery of any kind whatsoever against Phillips for any claim or cause of action brought or asserted by any third party, as a result of any such emission, release, pollution, property damage, noise or disruption connected with the refinery operation.
The IRS denied Holland's claim for a refund, arguing that the money received from the Trust was to compensate Holland for the relinquishment of certain property rights against Phillips, and therefore properly taxable as income pursuant to 26 U.S.C. § 61(a). Holland filed the instant suit against Defendant United States of America (the "Government") for her refund on December 10, 1998. Both parties have filed motions for summary judgment contending that each is entitled to judgment as a matter of law.
*790 LAW & ANALYSIS
Summary judgment is appropriate 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 judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990). Initially, the movant bears the burden of pointing out to the Court the basis for the motion and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Celotex, 477 U.S., at 323, 106 S.Ct. 2548. The burden then shifts to the non-movant to establish the existence of material fact. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts" by "com[ing] forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-7, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). "A dispute about a material fact is `genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Bodenheimer v. PPG Industries, Inc., 5 F.3d 955, 956 (5th Cir.1993) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
Section 61(a) of the Internal Revenue Code provides that "[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived, ...." 26 U.S.C. § 61(a) (West 1994). In other words, there is a presumption that income is taxable unless it is specifically excluded by the Internal Revenue Code. See Commissioner v. Glenshaw Glass, Co., 348 U.S. 426, 430, 75 S.Ct. 473, 99 L.Ed. 483 (1955) (citations omitted). "[E]xclusions from income must be narrowly construed." Commissioner v. Schleier, 515 U.S. 323, 328, 115 S.Ct. 2159, 132 L.Ed.2d 294 (1995) (citation omitted). Thus, in the instant case, Holland's income from the Trust is presumed to be includable in her gross income unless it is specifically excluded by some narrowly construed section of the Internal Revenue Code.
Section 104(a)(2) of the Internal Revenue Code provides, in pertinent part:
(a) In General. Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include
(2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness;
26 U.S.C. § 104(a)(2) (West 1994). The applicable regulation to § 104(a)(2) is § 1.104-1(c) of the Treasury Regulations, which provides:
(c) Damages received on account of personal injuries or sickness. Section 104(a)(2) excludes form gross income the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness. The term "damages received (whether by suit or agreement)" means an amount received (other than workmen's compensation) through prosecution of a legal suit or action based upon tort or tort type rights, or through a settlement agreement entered into in lieu of such prosecution.
26 C.F.R. § 1.104-1(c). The United States Supreme Court interpreted § 104(a)(2) and its accompanying regulation as establishing "two independent requirements that a taxpayer must meet before a recovery may be excluded under § 104(a)(2)[:]"
*791 (1) the taxpayer must demonstrate that the underlying cause of action giving rise to the recovery is "based upon tort or tort type rights"; and
(2) the taxpayer must show that the damages were received "on account of personal injuries or sickness."
Schleier, 515 U.S. at 336-37, 115 S.Ct. 2159. The foregoing test also applies to monies received through a settlement. See Id.
In her motion for summary judgment, Holland asserts that she is entitled to a tax refund on the grounds that the proceeds she received through the Trust were "for a release of claims for personal injury against Phillips 66 Company ...." Holland contends that as such, the payment satisfies the two part Schleier test and is therefore excludable from income pursuant to § 104(a)(2) of the Internal Revenue Code. The Government counters in its motion for summary judgment that the proceeds Holland received through the Trust were to compensate her for "the loss of use or enjoyment of land [which] is an injury to property." Thus, the payment does not fall within the purview of § 104(a)(2) and is taxable under § 61(a). The Court must therefore apply the undisputed facts to the Schleier test.
The parties agree that Holland's sole tort or tort type right articulated as the basis for exclusion pursuant to § 104(a)(2) is the tort of nuisance under Texas law. In Texas, a nuisance can occur in one of three ways:
(1) by physical harm to property, such as by the encroachment of a damaging substance or by the property's destruction; or
(2) by physical harm to a person on his or her property, such as by an assault on his or her senses or by other personal injury; or
(3) by emotional harm to a person from the deprivation of the enjoyment of his or her property, such as by fear, apprehension, offense, or loss of peace of mind.
Maranatha Temple, Inc. v. Enterprise Products Co., 893 S.W.2d 92, 99 (Tex. App. Houston [1st Dist.] 1994, writ denied). The first option, "physical harm to property," is not at issue in the instant case because § 104(a)(2) requires that the damages received be on account of "personal injuries," not property damage. The second option, "physical harm to a person," is not at issue because Holland expressly retained all causes of action that may arise from physical harm to the person in the Release. Thus, the money could not be in exchange for the release of such a right because Holland expressly retained the right. Holland therefore argues that Phillips's commercial operation next to the Holland Bannister Property qualified as a nuisance via the third option, "emotional harm to a person from the deprivation of the enjoyment of her property, such as by fear, apprehension, offense, or loss of peace of mind." However, her proffered evidence belies such a claim.
In her brief, Holland states that the Phillips operation "created foul odors and other pollution." During his deposition, William Holland, Jr., one of the Holland Bannister Property owners, testified that "[y]ou couldn't go down there [to the Holland Bannister Property] without being physically assaulted by the sounds and emissions from their [Phillips's] plant. Now, as far as I was concerned, that was what was being released." Moreover, Frank Cromer, a Phillips executive, testified in his deposition that John Bannister, another of the Holland Bannister Property owners, complained about the noise, smell, and emission releases from the Phillips commercial operation. In fact, all of the proffered evidence speaks to either noise, odors, or emission releases.
Noise, odors, and emission releases are assaults on the senses. See Maranatha, 893 S.W.2d at 99. See also Bay Petroleum Corp. v. Crumpler, 372 S.W.2d 318 (Tex.1963) (plaintiffs claimed noxious gases from salt dome harmed them); City of Temple v. Mitchell, 180 S.W.2d 959, 962 *792 (Tex.Civ.App. Austin 1944, no writ) (plaintiffs claimed they were nauseated by odors form the plant). In Texas, assaults on the senses under the tort of nuisance qualify as physical harm to the person, not emotional harm. See Id. Hence, Holland has not presented any evidence to the Court in support of her argument for nuisance via emotional harm.[1]
Holland tries to circumvent the foregoing by stating that "[t]he question is not whether the Sellers could have successfully sued Phillips for nuisance, but whether such a claim existed." However, from the evidence before the Court, a reasonable juror could only conclude that Holland's alleged nuisance arising from emotional harm never existed.
Moreover, a "nuisance in fact cause of action based on fear, apprehension, or other emotional reaction," as asserted by Holland, cannot lie against a defendant such as Phillips, where the alleged nuisance "results from the lawful operation of industries in Texas." See Maranatha, 893 S.W.2d at 100. Holland has not presented any evidence that Phillips was not simply conducting the lawful operation of industry. Holland therefore has not alleged a tort under Texas law. Further, unless the damage that would result from the alleged nuisance was "a severe mental injury or a physical injury caused by an emotional trauma," any annoyance and discomfort suffered as a result of the impairment of the use and enjoyment of property would qualify only as property damage, not emotional harm. See Callaway et ux. v. City of Odessa, 602 S.W.2d 330, 334 (Tex. App. El Paso 1980, no writ). Holland has not asserted any facts that would support a finding of severe mental injury or a physical injury caused by an emotional trauma.
Holland's only asserted injury is the emotional harm that allegedly resulted from the deprivation of the use and enjoyment of the Holland Bannister Property. In support of her allegation, Holland relies solely upon the terms "annoyance" and "inconvenience" as used in the Release. Interestingly, Holland conveniently ignores the third descriptive used in the applicable clause of the Release, "unsightliness." It is hard, if not impossible, to imagine how "unsightliness" could qualify as "personal injury." Although "personal injuries or sickness" can refer to non-physical as well as physical injuries, See Schleier, 515 U.S. at 330, n. 4, 115 S.Ct. 2159; United States v. Burke, 504 U.S. 229, 235, n. 6, 112 S.Ct. 1867, 119 L.Ed.2d 34 (1992), Holland has failed to produce any evidence to support her allegation that she suffered non-physical injuries. Rather, as discussed supra, Holland's proffered evidence only supports a finding that the property was subject to noise, odors, and emissions, all of which qualify as physical harm to the person under Texas nuisance law. Because Holland retained all causes of action that may arise from physical harm to the person, Holland's proffered evidence in the instant case cannot be the basis for exclusion from income pursuant to § 104(a)(2) of the Internal Revenue Code. Holland has failed to establish that the money received from Phillips qualifies as excludable from income pursuant to the test enumerated in Schleier. Accordingly, the Court hereby
ORDERS that Defendant's Motion for Summary Judgment is GRANTED and Plaintiff's Motion for Summary Judgment is DENIED. Plaintiff's claim is DISMISSED.
NOTES
[1] Indeed, the only evidence that might qualify as support for Holland's nuisance via emotional harm theory is the testimony that John Bannister experienced fear of developing cancer due to the emissions from Phillips. However, such testimony alone would not save Holland's claim because John Bannister's fear of cancer is the Holland Bannister Property owners' articulated reason for the retention of the rights to pursue all personal injury causes of action that may arise against Phillips as set forth in the Release. Thus, the money at issue was not in exchange for the relinquishment of such rights. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568748/ | 346 F.Supp.2d 394 (2004)
UNITED STATES of America, Plaintiff,
v.
John Anthony ALONGI, Defendant.
No. 04 V 0141(ADS).
United States District Court, E.D. New York.
December 6, 2004.
*395 Mullen & Iannarone, P.C. by Joel D. Medvin, Esq., Liberatore J. Iannarone, Esq., Smithtown, NY, for plaintiff.
John Anthony Alongi, New York City, Defendant Pro Se.
ORDER
SPATT, District Judge.
On January 24, 2004, the United States of America ("Government" or the "Plaintiff) commenced this action on the basis of federal question jurisdiction against John Anthony Alongi ("Alongi" or the "Defendant") seeking monetary damages for the Defendant's alleged default on a student loan.
Because the Defendant failed to answer the complaint, a default judgment was entered against him on April 20, 2004. Nine days later, on April 29, 2004, the Defendant, appearing pro se, filed an answer to the complaint and moved to vacate the default judgment pursuant to Rules 55(c) and 60(b) of the Federal Rules of Civil Procedure ("Fed. R. Civ.P."). In the papers, the Defendant states that he sought advice from a law firm on February 19, 2004, but states that nobody advised him to file anything with the Court. Also, the Defendant states that he has recently filed for bankruptcy and has no assets to pay the loan.
Rule 55(c) provides, "For good cause shown, the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)." Fed.R.Civ.P. 55(c). Where a default judgment has already been entered, Rule 60(b) authorizes a court to vacate the judgment on the basis of, among other things, "mistake, inadvertence, surprise or excusable neglect... [or if] the judgment is void." Fed. R.Civ.P. 60(b)(1), (4). Whether to grant a motion to vacate a default judgment is within the sound discretion of the district court. State Street Bank and Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158 (2d Cir.2004).
In deciding a motion to vacate, a court is guided by three principal factors: "(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice." Id. (quoting S.E.C. v. McNulty, 137 F.3d 732, 738 (2d Cir.1998)); see also American Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 59 (2d Cir.1996).
The first factor involves whether the default was willful. The Defendant's failure to answer does not appear to be willful in this case. The Defendant contacted a law firm on February 19, 2004 seeking advice on how to proceed. Apparently, the Defendant was either given the wrong advice or did not understand the advice that the law firm gave him. Upon his learning of the default judgment, the Defendant took immediate action and filed an answer nine days later. Thus, it appears the Defendant did not willfully avoid responding to the lawsuit, but failed to respond because of mistake, inadvertence, or excusable neglect.
The second factor requires the Court to analyze whether the Defendant has demonstrated a viable defense. The Court is required to liberally construe a pro se defendant's papers "`and interpret them to raise the strongest arguments that they suggest.'" Soto v. Walker, 44 F.3d 169, 173 (2d Cir.1995) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir.1994)). *396 In the Defendant's answer, he states that he filed for bankruptcy under chapter 13 and that he is unable to pay the loans.
A brief overview of the Bankruptcy Code is required to determine whether the Defendant has a meritorious defense. Generally, student loans are excepted from discharge through bankruptcy. See 11 U.S.C. § 523(a)(8)(B). However, student loans may be discharged if the failure to discharge the loans would cause undue hardship to the debtor and dependents of the debtor. Id. In the instant case, it is unclear whether the Defendant's loans were discharged or if they may be discharged for undue hardship. The Defendant also claims that he has no assets and cannot pay the loans. In liberally construing the Defendant's answer, it appears that a meritorious defense may exist.
The plaintiff opposes the instant motion but does not claim that vacating the judgment will cause any prejudice. Based on the foregoing, including the defendant's excusable mistake and the existence of a meritorious defense, the Court finds that the Defendant is entitled to defend this suit on the merits. The Court therefore vacates the default judgment against the Defendant on the ground that the Defendant defaulted by mistake, inadvertence, or excusable under Fed.R.Civ.P. 60(b). Accordingly, it is hereby
ORDERED, that the Defendant's motion to vacate the default judgment is GRANTED; and it is further
ORDERED, that the parties are directed to report forthwith to United States Magistrate Judge Michael L. Orenstein to set a schedule for discovery.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567951/ | 44 F.Supp.2d 666 (1999)
COALITION OF NEW JERSEY SPORTSMEN, INC., Bob's Little Sportshop, Inc., Springfield Inc., Armalite, Inc., Robert L. Viden, Jr., Stephen D. McClure, John Does I, II, III, IV, V, VI, VII, VIII, and IX, Plaintiffs,
v.
Christine Todd WHITMAN, Governor, State of New Jersey, Peter Verniero, Attorney General, State of New Jersey, Harris Y. Cotton, Prosecutor of Gloucester County, New Jersey, Patricia Kunchynski, Chief of Glassboro, NJ, Police Department, Carl A. Williams, Colonel, Division of New Jersey State Police, Defendants.
No. Civ.A. 96-3037(JHR).
United States District Court, D. New Jersey.
March 31, 1999.
*667 *668 Gary Jay Needleman, Needleman & Schocket, Montville, NJ, for plaintiffs.
*669 Michael John Williams, Deputy Attorney General, Office of New Jersey Attorney General, Divison of Criminal Justice-Appellate Section, Trenton, NJ, for defendants Whitman, Poritz, Williams.
Bruce C. Hasbrouck, Dianne Herland Sloane, Hasbrouck & Uliase, Woodbury, NJ, for defendant Cotton.
Timothy Scaffidi, Ragonese, Scaffidi & Albano, Woodbury, NJ, for defendant Kunchynski.
OPINION
RODRIGUEZ, District Judge.
Plaintiffs, the Coalition of New Jersey Sportsmen, Inc., Bob's Little Sportshop, Inc., Springfield, Inc., ArmaLite, Inc., Robert L. Viden, Jr., Stephen D. McClure, and nine other New Jersey residents identified simply as John Does I through IX (collectively "plaintiffs"), bring this action for declaratory judgment and injunctive relief against the Governor of New Jersey, the state's Attorney General[1], Colonel Carl A. Williams of the New Jersey State Police, the Prosecutor of Gloucester County as prosecutor, and the Chief of Police of the Glassboro Police Department in New Jersey ("collectively Defendants")[2]. At issue is New Jersey's assault weapons law, passed and signed into law in 1991, and now codified at N.J.S.A. 2C:39-1 et seq.
Plaintiffs raise the following federal constitutional challenges to this state law: (1) it is unconstitutionally vague, and thus void (Counts III, V, VIII, X, XI, and XIV); (2) it violates equal protection (Counts I, II, IV, VI, IX, XII, and XIII); (3) it violates their rights to free association (Count I); (4) it infringes on their right to free speech (Count IV); and (5) it constitutes a bill of attainder (Count VII). The complaint also seeks a declaratory judgment that certain firearms are not "assault firearms" within the meaning of the statute, and that plaintiffs who register their weapons and possess "large capacity ammunition magazines" are not required under N.J.S.A. 2C:39-3j to actually participate in competitive shooting matches sanctioned by the Director of Civilian Marksmanship.
This matter is now before the court on motions for summary judgment filed by both plaintiffs and defendants. For the reasons set forth below, plaintiffs' motion for summary judgment is denied, and defendants' motion is granted.
FACTUAL BACKGROUND
On May 17, 1990, the New Jersey Legislature passed a bill restricting the possession, sale, and transport of "assault firearms" and "large capacity ammunition magazines." L.1990, c. 32. Governor James Florio signed the bill into law on May 30, 1990, N.J.S.A. 2C:39-1 et seq. (the "Act"), saying at the time, "[t]hese are weapons of war designed to kill as many people as possible in the least amount of time. They have no place on our streets, where too often our police find themselves outgunned." N.J. Lawmakers Approve Nation's Toughest Ban on Assault Weapons, L.A. TIMES, May 18, 1990, at 4.
Beyond the obvious objective of removing assault weapons from New Jersey streets and from the hands of criminals, the rationale for this law can also be found in then Attorney General Robert Del Tufo's testimony concerning Senate Bill 166. Testifying before the Senate Judiciary Committee on March 12, 1990, the Attorney General explained that the intent of the law did not touch upon any firearms used for legitimate hunting or target *670 shooting purposes. Rather, the law would only prohibit semi-automatic (ie. self-loading) shotguns with excessive magazine capacities, or with other prohibited characteristics such as a pistol grip designed for hand-held firing. According to this testimony, "[a]ny person who possesses a shotgun with a magazine capacity of more than 5 rounds intends to hunt something other than game." (Plaintiffs' Exh. 18, Del Tufo Testimony).[3]
New Jersey's gun control statute accomplishes its prohibition by defining the term "assault firearm" to include five separate categories of firearms: (1) certain firearms listed by make and model, series or type; (2) "[a]ny firearm manufactured under any designation which is substantially identical to any of the firearms listed above"; (3) a semi-automatic[4] shotgun with either a magazine capacity exceeding six rounds, a pistol grip[5], or a folding stock; (4) a semiautomatic rifle with a fixed magazine capacity exceeding 15 rounds; and (5) "a part or combination of parts designed or intended to convert a firearm into an assault firearm, or any combination of parts from which an assault firearm may be readily assembled if those parts are in the possession or under the control of the same person." N.J.S.A. 2C:39-1w(1-5).
Under the statute, "any person who knowingly has in his possession" such a firearm is guilty of a third degree crime[6], unless certain very narrow exceptions apply. N.J.S.A. 2C:39-5(f). Possession of large capacity ammunition magazines[7] is also prohibited, subject to some of the same exceptions. N.J.S.A. 2C:39-3(j). Exceptions to the general prohibition include if a weapon is among the types certified by the Attorney General as a `legitimate' target-shooting firearm and the owner has registered the weapon with the state and proven his or her membership in a valid rifle or pistol club, see N.J.S.A. 2C:58-12, or if the weapon has been rendered permanently inoperable, see N.J.S.A 2C:58-5, 13. There are also exemptions within the law for certain government employees, such as member of the Armed Forces and federal law enforcement officials. N.J.S.A. 2C:39-6. A one-year grace period was provided for individuals who currently owned prohibited weapons to comply with the law or surrender the firearm. N.J.S.A. 2C:58-13. There was no grandfather clause for those individuals who legally possessed assault weapons at the time this law was enacted.
The law's prohibitions extend beyond merely possessing such weapons; the challenged law also provides that "[a]ny person who manufactures, causes to be manufactured, transports, ships, sells or disposes of an assault firearm without being registered or licensed to do so pursuant to N.J.S.A. 2C:58-1 et seq. is guilty of a crime of the third degree." N.J.S.A. 2C:39-9g.
The law also touches upon the civil liability of individuals who legally possess assault weapons that are later used in the commission of a crime. Under N.J.S.A. 2C:58-5(h), if a registered assault firearm is used in a crime, "the holder of the *671 license for that assault firearm shall be civilly liable for any damages resulting from that crime." An exemption from liability applies if the weapon was stolen and reported within 24 hours of discovering such theft. N.J.S.A. 2C:58-5(h). Presumably this provision in the law discourages individuals from owning assault firearms, or it at least encourages quick reporting of theft.
The gravamen of plaintiffs' complaint can be found in their brief in the following paragraph:
Plaintiffs cannot determine whether they possess "assault firearms" or "large capacity ammunition magazines" because those terms are vague. They are threatened with prosecution if they possess firearms and magazines in New Jersey, and incur costs and are deprived of their use when stored outside of New Jersey. Plaintiffs who were not members of a club could not register assault firearms the Attorney General labeled "legitimate." Plaintiffs ArmaLite, Springfield, and Bob's Little Sportshop have lost profits because they cannot market numerous firearms in New Jersey.
(Plaintiffs' Br., 7/24/98, at 3).
Based on these and other allegations, plaintiffs filed suit on June 28, 1996, asserting as grounds for the action 28 U.S.C. งง 2201, 2202 and 42 U.S.C. งง 1983 and 1988, and the United States Constitution. Defendants first filed a pre-Answer motion urging this court to abstain from deciding state law questions under the doctrine of Pullman abstention. In the alternative, defendants sought dismissal or summary judgment. Plaintiffs responded by filing a cross-motion to stay defendants' motion for summary judgment.
In an Order entered on June 24, 1997, this court denied defendants' motion for abstention, finding instead that defendants demonstrated only one of three circumstances which might have counseled for Pullman abstention. See Order dated June 24, 1997. The court also denied defendants' motion to dismiss or for summary judgment, and accordingly held that plaintiffs' motion to stay summary judgment was moot. After further discovery ensued, both sides filed these motions for summary judgment. This court has jurisdiction over this action under 28 U.S.C. งง 1331 and 1343.
STANDARD OF REVIEW
The entry of summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" if it is supported by evidence such that a reasonable jury could return a verdict in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if, under the governing substantive law, a dispute about it might affect the outcome of the suit. Id. In determining whether a genuine issue of material fact exists, the court must view the facts and all reasonable inferences drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The moving party has the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its opening burden, the non-moving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id. at 324, 106 S.Ct. 2548. The non-moving party may not rest upon the mere allegations or denials of its pleading. Id.; Maidenbaum v. Bally's Park Place, Inc., 870 F.Supp. 1254, 1258 (D.N.J.1994). "[T]he plain language of Rule 56(c) mandates the *672 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." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
However, in deciding the motion, the court does not "weigh the evidence and determine the truth of the matter, but [instead] determine[s] whether there is a genuine issue for trial." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. If the non-movant has provided evidence exceeding the "mere scintilla" threshold in demonstrating a genuine issue of material fact, the court cannot weigh the evidence and credit the movant's interpretation of the evidence. This is so even if the movant's evidence far outweighs the non-movant's evidence. Credibility determinations are the province of the factfinder. Big Apple v. BMW of North America, 974 F.2d 1358, 1363 (3d Cir.1992), cert. denied, 507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993).
DISCUSSION
A. JURISDICTIONAL ISSUES
Defendants first contend that the Eleventh Amendment and abstention doctrines[8] requires this court to stay this action to permit state court resolution of disputed interpretations of this assault weapons ban. In particular, defendants allege that there are at least 17 different issues of state law, the resolution of which would obviate or at least impact the federal analyses necessary under this federal constitutional challenge to this New Jersey law.[9] According to the defendants, plaintiffs seek from this court `binding' constructions on matters of state law. This, according to the defendants, is prohibited by the Eleventh Amendment as construed by the Supreme Court in Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) ("Pennhurst II").
In Pennhurst II, the Supreme Court held that the Eleventh Amendment bars federal injunctive relief against a state official if (1) "`the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration' or if the effect of the judgment would be to `restrain the Government from acting, or to compel it to act,'" 465 U.S. at 101 n. 11, 104 S.Ct. at 908 n. 11 (quoting Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15 (1963)), and if (2) the conduct to be restrained is within the scope of authority delegated to the official by state law, see id. 465 U.S. at 102, 104 S.Ct. at 909. The suit in Pennhurst II was barred because it involved a pendent claim against state agencies and officers seeking prospective injunctive relief for a violation of state law:
In such a case the entire basis for the doctrine of Young and Edelman disappears. A federal court's grant of relief against state officials on the basis of *673 state law, whether prospective or retroactive, does not vindicate the supreme authority of federal law. On the contrary, it is difficult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law. Such a result conflicts directly with the principles of federalism that underlie the Eleventh Amendment.
Id. at 106, 104 S.Ct. at 911.
Defendants seek to characterize plaintiffs' causes of action as arising under state law. This characterization is designed presumably to strengthen the case for abstention based on the presentation of a Pennhurst II-type action. Nonetheless, this clearly is a mischaracterization of this action.
Every count of plaintiffs' complaint alleges violations under the United States Constitution, actionable under 42 U.S.C. ง 1983. Federal jurisdiction over this claim was based on the existence of a federal question, not, as in Pennhurst II, on principles of pendent jurisdiction. While the resolution of these constitutional issues necessarily requires this court to ascertain what state law means, this is a far cry from a prohibited Pennhurst II-type action which seeks injunctive relief on the basis of state law. The Third Circuit was presented with, and soundly rejected, a similar argument in the case of Everett v. Schramm, where the Court instructed as follows:
Though it is true that [deciding the case] required the district court to ascertain what the standard of need was under Delaware law, ascertaining state law is a far cry from compelling state officials to comply with it. The ascertainment of state law is an everyday function of the federal court, in cases ranging from those falling within our diversity or pendent jurisdiction, to those brought under section 1983 which claim deprivation of a state-created property right. Indeed, section 1983 would be rendered almost nugatory if federal courts are prohibited, by the eleventh amendment, from deciding matters of state law in cases brought against state officials.
772 F.2d 1114, 1119 (3d. Cir.1985); see also Piecknick v. Commonwealth of Pennsylvania, 36 F.3d 1250, 1255 n. 7 (3d. Cir.1994) ("Pennhurst II did not address the Eleventh Amendment's bar of suits against state officials in federal court when the claims are based on deprivation of federal constitutional or statutory rights."); Barnes v. Cohen, 749 F.2d 1009, 1018 (3d. Cir.1984).
Nothing in the Pennhurst II case and its interpretation of the Eleventh Amendment causes this court to rethink its Order not to stay this action pending state court resolution of related issues. Accordingly, this court will proceed to decide whether or not portions of the disputed statute violate the Federal Constitution.[10]
*674 B. VAGUENESS
Plaintiffs primary allegation is that several aspects of the assault firearms ban are unconstitutionally vague and thus should be struck down by this court. Specifically, in Count III of the complaint the term "assault firearm" and components of its definition[11] are attacked as both facially vague and vague as applied to particular plaintiffs. (Compl. ถถ 48-81). Count V seeks a declaration that ten specific weapons, produced by either the plaintiffs Springfield or ArmaLite, are not "assault firearms," or, in the alternative, that the definition of "assault firearms" is vague as applied to such rifles. (Compl. ถถ 90-96). Count VIII attacks the definition of "large capacity ammunition magazine," by opining that "as applied to tubular magazines which may be loaded with different amounts of rounds of ammunition depending on cartridge length, this definition is vague." (Compl. ถ 111). Count X alleges that the act's prohibition on the possession of large capacity ammunition magazines unless "maintained and used in connection with participation in competitive shooting matches ..." is vague because there are *675 not standards as to how often one must compete, or what actually qualifies as competition, and because the agency which sanctions qualifying shooting matches no longer exists in the same organizational framework as specified in the Act. (Compl. ถถ 119-124). Similarly, plaintiffs seek in Count XI a declaration that weapons previously registered pursuant to the shooting competition exception need not be surrendered if no longer used in competition, or, in the alternative, that this aspect of the law is vague. (Compl. ถถ 126-127). Finally, in Count XIV, plaintiffs allege that the term `inoperable' is vague as applied to the unique circumstances of two plaintiffs, who claim to legally possess (under an exception) an assault firearm, as well as other assault firearms which they have rendered `inoperable.' These plaintiffs question whether they violate the law because they are in `possession' of weapon components[12] (on the legally-owned weapons) which conceivably could be used to render the inoperable weapons operable. (Compl. ถถ 135-140).
The Due Process Clause of the Fourteenth Amendment to the United States Constitution, upon which the plaintiffs rely for this vagueness challenge, can render a statute unconstitutional based on notions of fairness. Colten v. Kentucky, 407 U.S. 104, 110, 92 S.Ct. 1953, 1957, 32 L.Ed.2d 584 (1972). Vague laws offend the assumption that "man is free to steer between lawful and unlawful conduct," and thus "we insist that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly." Grayned v. Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 2298-99, 33 L.Ed.2d 222 (1972); see also Connally v. General Constr. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322 (1926) ("[A] statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law."); Bradley v. Pittsburgh Bd. of Educ., 910 F.2d 1172, 1177 (3d Cir.1990). A second justification for vagueness challenges also exists: to prevent arbitrary and discriminatory enforcement. "A vague law impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory applications" Grayned, 408 U.S. at 108-109, 92 S.Ct. at 2298; Kolender v. Lawson, 461 U.S. 352, 358, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983).
In the criminal context, vagueness attacks are based on lack of notice, and "they may be overcome in any specific case where reasonable persons would know their conduct puts [them] at risk" of punishment under the statute. Maynard v. Cartwright, 486 U.S. 356, 361, 108 S.Ct. 1853, 1857, 100 L.Ed.2d 372 (1988). Thus, to be constitutional, criminal statutes need only give "fair warning" that certain conduct is prohibited, Colten, 407 U.S. at 110, 92 S.Ct. at 1957, and statutes meet this constitutional standard if the language employed conveys a sufficiently definite warning as to the proscribed conduct when measured by common understanding and practices. United States v. Wise, 550 F.2d 1180, 1186 (9th Cir.), cert. denied, 434 U.S. 929, 98 S.Ct. 416, 54 L.Ed.2d 290 (1977). The mere fact that a statute could have been written more precisely does not mean the statute as written is unconstitutionally vague. United States v. Powell, 423 U.S. 87, 94, 96 S.Ct. 316, 321, 46 L.Ed.2d 228 (1975).
1. Facial Vagueness[13]
An initial determination must be made as to whether or not the disputed law *676 touches upon significant constitutionally protected conduct. See Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494-95, 102 S.Ct. 1186, 1191, 71 L.Ed.2d 362 (1982). The import of this inquiry is to discern the level of scrutiny to which this law should be subjected on this facial vagueness challenge. Although the complaint seeks to invalidate portions of the law which require membership in gun clubs based on the First Amendment's freedom of association, the void for vagueness arguments center on multiple phrases in the law which do not implicate constitutionally protected conduct. In other words, the alleged vagueness of the law is attacked in a pre-enforcement review action based on due process, not, as in many cases, the First Amendment, which would heighten judicial scrutiny.
Accordingly, the facial vagueness challenge can succeed "only if [plaintiffs] demonstrate that the law is impermissibly vague in all of its applications." Hoffman Estates, 455 U.S. at 495, 497, 102 S.Ct. at 1191-92, 1193. So long as the disputed law encompasses some of the `core' conduct in which plaintiffs wish to engage, a court will not entertain a facial vagueness challenge to other hypothetical conduct. Id. See also Richmond Boro Gun Club, Inc. v. City of New York, 97 F.3d 681, 684 (2d. Cir.1996) ("Plaintiffs could perhaps succeed on a facial vagueness challenge if they could show that the law is impermissibly vague `in all of its applications.'") (quoting Hoffman Estates).[14] Courts will rarely invalidate a statute on its face so long as it provides "minimally fair notice" of what is prohibited. See Rotunda & Nowak, Treatise on Constitutional Law: Substance and Procedure, 2nd ง 17.8 n. 22.
(a) The Defining of `Assault Firearms'
Plaintiffs first challenge how the statute defines prohibited assault firearms. The Act prohibits the possession, sale or transport of `assault firearms,' and weapons come within the purview of this statute in one of four ways. The first way in which weapons are defined as `assault firearms is by reference to a specific list of prohibited weapons,[15] which plaintiffs challenge *677 on vagueness grounds. According to the plaintiffs, firearm owners do not have notice of what weapons are actually prohibited, because the lists do not correspond exactly to the manufacturer and model specifications actually engraved on the firearms, pursuant to 18 U.S.C. ง 923(I) and 27 C.F.R. ง 178.92. (Plaintiffs' Exh. 1, Johnson Aff., ถ 11). Further, several models specified in the statute allegedly do not even exist, or are named in an "inaccurate, oxymoronic, or otherwise vague manner." (Id.)[16]
One egregious example of these misnomers is the prohibition on `Avtomat Kalashnikov type semi-automatic firearms' because, according to the plaintiffs' expert, this listing is not engraved on any existing firearm. Moreover, "[n]umerous semiautomatic rifles have been imported with a cosmetic appearance similar to the above rifle but with redesigned, [Bureau of Alcohol, Tobacco and Firearms] โ approved receiver and internal parts, and with markings such as `AKS' or `AK-47S'. Other rifles have been imported with a receiver outwardly similar to the above rifle but internal parts redesigned, and with other parts dissimilar to it." (Plaintiffs' Exh. 1, Johnson Aff. ถถ 17-18). Confusion arises, according to this expert, because "[n]o expert would ever classify these semiautomatic rifles as `Avtomat Kalashnikov,' nor would an ordinary person have notice that such rifles are considered to be `Avtomat Kalashnikov.'" (Id.)[17]
Plaintiffs arguments as to the antiquated or erroneous listings of prohibited firearms, and their objections to the use of the words `type' and `series,' fails to establish that the listings in the Act are vague in light of the standard which this court applies in a facial vagueness challenge. Even accepting as true all of the expert's testimony concerning the misnomers throughout the listings, his analysis of such listing fatally undermines the facial vagueness challenge. In other words, his testimony, while certainly indicative of confusion in their applications to multiple *678 variations on literally thousands of weapons, also confirms that each listing has a `core' to its content. At the very least, each listing sufficiently puts on notice a person of ordinary intelligence that a weapon he or she possess, may be prohibited by the terms of the list itself, or at least possibly by the `substantially identical' prohibition of N.J.S.A. 2C:39-1w(2), considered infra.
The example of the `Avtomat Kalashnikov type semi-automatic firearms' prohibition is demonstrative of each of the challenged listings. Plaintiffs' expert knows, with very few exceptions,[18] that to which each listing refers, at least in very general terms. Likewise, Richard Miller, the Chairman of the Coalition of New Jersey Sportsmen, confirmed that "[e]veryone knows that the `Avtomat Kalashnikov' is a full automatic machine gun designed by the Russian Michael Kalashnikov." (Plaintiffs' Exh. 2, Miller Aff., ถ 17). While `Avtomat Kalashnikov' might not be engraved on any existing weapon, such a listing provides notice to an owner of an `AK-47S' to at least inquire further. Indeed, the regulation of firearms is hardly new to our society. See e.g., In re Two Seized Firearms, 127 N.J. 84, 88, 602 A.2d 728, cert. denied sub. nom., Sholtis v. New Jersey, 506 U.S. 823, 113 S.Ct. 75, 121 L.Ed.2d 40 (1992) (quoting McIntosh v. Washington, 395 A.2d 744, 756 (D.C.1978)) ("[W]here dangerous or deleterious devices or products are involved, the probability of regulation is so great that anyone who is aware that he is either in possession of or dealing with them must be presumed to be aware of the regulation.")
Similarly, the prohibition on `Uzi type semi-automatic firearms' has a `core' to its meaning; Uzi semiautomatic firearms marked Model A and Model B and which were produced at the time of this Act's passage are prohibited. An expert's postulation that a subsequently produced `Uzi-Eagle' pistol, which is not banned under the Act, renders the original designation vague, ignores the proper analysis applied to this facial challenge. The analysis does not concern whether confusion arises upon the production of similarly-designated weapons. Indeed, the record confirms that the manufacturing of weapons is hardly a static industry, and that weapons manufacturers quickly respond to changes in the law. (See e.g., Defendants' Exh. F, Treasury Study, p. 25) (explaining manufacturer modifications in response to a 1989 federal ban on semiautomatic assault rifles). Rather, the question is whether the statute has at least one valid application.
Nor does the inclusion of the terms `type' or series' render specific listings vague. In this specific context, these words merely expand upon listings which themselves have a sufficient `core' for this vagueness challenge. See Benjamin v. Bailey, 234 Conn. 455, 485-86, 662 A.2d 1226, 1241-42 (Conn.1995) (because the AK-47 and the MAC weapons are identifiable, "the statutory phrases `AK-47 type' and `MAC-10, MAC-11 and MAC-11 Carbine type' are not facially vague). The addition of these words to the `core' definitions does not eviscerate the `core;' they simply expand their meanings.[19]
*679 The example of the Uzi listing is again instructive. As plaintiffs' expert essentially concedes in his testimony cited supra, the confusion concerning what falls within prohibited `Uzi type semi-automatic firearms' stems from newly manufactured weapons such as the `Uzi Eagle' pistol. (Plaintiffs' Exh. 1, Johnson Aff., ถถ 55-56). Thus, this vagueness challenge essentially alleges that too many weapons come within such a definition due to the phrase `type,' which then renders the phrase unconstitutionally vague. This ignores the `core' which is still there. This court declines to read a statute broadly in order to render it unconstitutional. See United States v. Edmonds, 80 F.3d 810, 819 (3d. Cir.), cert. denied, 519 U.S. 927, 117 S.Ct. 295, 136 L.Ed.2d 214 (1996); United States v. Navarro, 145 F.3d 580, 589 (3d. Cir. 1998). Moreover, New Jersey has determined that the example used above, the `Uzi Eagle' pistol, is not an assault firearm prohibited under state law. (See Plaintiffs' Exh. 2, Letter from Eugene Lewis, dated 1/8/98). This was in response to an inquiry from one of the plaintiffs in this case. Thus, put on notice that an Uzi weapon may be prohibited, this particular plaintiff submitted an inquiry and determined that the weapon was not so prohibited. This belies the notion that the term `type' lacks any `core' to at least put citizens on notice of their possible prohibition.
Plaintiffs also attack the phrase `substantially identical,' contained in N.J.S.A. 2C:39-1w(2), which expands the definition of `assault firearm' to include a weapon "manufactured under any designation which is substantially identical to any of the firearms listed above." Plaintiffs provide a host of examples demonstrating the confusion surrounding this phrase. For example, John Doe IX owned a Charter Arms AR7 rifle, which the State Police opined was not an assault firearm. Then, in 1994, the same State Police charged him with possession of two assault firearms, one of which was the AR7 rifle. These charges were disposed of through PTI. (Plaintiffs' Exh. 15, Doe IX Aff., ถถ 3-4). Other examples are also provided, which tend to show an inconsistent application of the law based on the confusing `substantially identical' standard used to define what is prohibited. (See Plaintiffs' Exh. 12, Doe VI Aff., Exh. 3, Viden Aff., Exh. 13, Doe VII Aff., Exh. 14, Doe VIII).
Defendants point out that assault weapons by any other name are just as dangerous, and consequently need to be banned. Nonetheless, it is inconceivable that any legislator could list all prohibited weapons, given their sheer numerosity and the ever evolving development of new weapons, often based on old designs. For example, defendants note that an April, 1998 Department of Treasury study found that 39 models of semiautomatic rifles were based on the AK47 design alone. (Defendants' Exh. F, Treasury Study, p. 2). According to the defendants, facts such as these necessitated the prohibition on "substantially identical" weapons.
The phrase `substantially identical,' while the subject of much confusion, does not so lack a `core' such that it should be declared facially vague at this time. Standing alone, the phrase is without meaning. But by reference to the prohibited list of weapons, the prohibited characteristics contained in the other definitions of assault firearms, and just a cursory examination of pictures of prohibited weapons, this court cannot conclude that the law is vague `in all of its applications.' See State v. Elrose, 277 N.J.Super. 548, 556, 649 A.2d 1351, 1355 (App.Div.1994) (Inoperability provision not vague, in part because "legislative intent can be gleaned by reading statutes in pari materia, and by reviewing related sections as a whole."); see also State v. Sharkey, 204 N.J.Super. 192, 198, 497 A.2d 1291, 1294-95 (1985) ("It is clear to us that persons of ordinary intelligence would understand this legislation to proscribe the distribution of, or possession or control with the intent to distribute, substances which are represented as, or substantially similar in physical *680 appearance to, controlled dangerous substances. That the Legislature chose not to set forth a detailed listing of all proscribed activity relating to the distribution of look-alike substances, but instead utilized a general approach in describing the illegal conduct, does not render the legislation void for vagueness.") (citations omitted). Significantly, as well, the Attorney General has issued guidelines available to the general public regarding this phrase. (Defendants' Exh. B, Attorney General Guidelines). While the Legislature may not have been perfectly clear in its definitions, the Attorney General negated some of the confusion. A court should consider limiting constructions of the law offered by enforcement agencies. See Hoffman Estates, 455 U.S. at 494, 102 S.Ct. at 1191. Under these circumstances, the phrase `substantially identical' cannot be said to completely lack a core.
Another definition attacked as vague defines a prohibited `assault firearm' as "a semiautomatic shotgun with either a magazine capacity exceeding six rounds, a pistol grip, or a folding stock." N.J.S.A. 2C:39-1w(3). The plaintiffs confess confusion from the application of either/or to three prohibited characteristics: "[m]ust the shotgun have two or only one of the three characteristics [to be prohibited]?" (Plaintiffs' Br., 7/24/98, p. 32). The reference to `pistol grips' and its definition as a `well-defined handle' and `protrud[ing] conspicuously' beneath the action of the weapon, is also criticized for failing to define in inches or degrees what this actually means. Plaintiffs also claim that they have no way of knowing whether, hypothetically, the magazine capacity of the weapons they own could exceed six rounds of non-standard, shorter, shot-gun shells.[20]
These arguments, however, are unavailing and disingenuous. Grammatical inaccuracies like the one alleged here do not make the law vague. It is clear that only one characteristic renders the weapon prohibited. Moreover, a failure to specify in inches what `well-defined' or `conspicuously protruding' handles means is irrelevant when a review of pictures of the weapons so obviously portrays what prohibited characteristics the law was referring to. (See, e.g., Defendants' Exh. Q and T, Weapon's Advertisements; Exh. F, Treasury Study, Exh. 3). The law cannot be vague in all of its applications when it obviously applies to some of these weapons. Moreover, Congress employed much the same terminology itself in federal legislation which then caused manufacturers to alter weapon designs, see 18 U.S.C. ง 921(a)(30)(B)(ii), which lends substantial credence to defendants' claim that the definition is not vague in all of its applications. Finally, the possibility of shorter, nonstandard shells, which may or may not be in existence for many of the weapons cited by the plaintiffs, is irrelevant when the statute's prohibition clearly encompasses the standard shells intended for the magazine. In other words, the definition is not vague in all of its applications.[21]
With respect to the definition of `assault firearms,' N.J.S.A. 2C:39-1w(5) includes "any combination of parts from which an assault firearm may be readily assembled." *681 According to the plaintiffs, the terms `readily' does not inform a person of the time (in hours and minutes) it must take to assemble such an assault firearm, or whether that time is intended for an average person or an expert in such weapons. Moreover, fault is found in the fact that the legislation does not specify whether "a full machine shop or only common hand tools make the parts capable of being readily assembled." (Plaintiffs' Exh. 1, Johnson Aff. p. 19). The court agrees with plaintiffs' description of the law, but disagrees with the conclusions drawn therefrom.
Plaintiffs cite to Peoples Rights Organization v. City of Columbus, in which a District Court determined that virtually identical language in the City of Columbus' assault weapons ban law was void for vagueness. 925 F.Supp. 1254, 1268-69 (S.D.Ohio 1996). This portion of the District Court's opinion was affirmed by the Sixth Circuit, Peoples Rights Organization, Inc. v. City of Columbus, 152 F.3d 522, 538 (6th Cir.1998) (phrase `may be readily assembled' does not provide sufficient information to an average person to determine whether a particular combination of parts is within city ordinance's scope), which ultimately found that all definitions of prohibited assault firearms were unconstitutionally vague. Id. at 538.
Despite this persuasive authority to the contrary, this court does not find the reasoning employed therein to be persuasive. These courts invalidated Columbus' assault weapons law based upon a heightened standard of review, which this court will not apply in this facial vagueness challenge. For the reasons explained above, this court does not believe that a heightened level of scrutiny should apply to this facial challenge of a criminal law, especially when the statute neither reaches significant constitutionally-protected conduct, nor provides unfettered discretion to "policemen, prosecutors, and juries to pursue their personal predilections." Kolender, 461 U.S. at 358, 103 S.Ct. at 1858 (internal citations omitted).
While the record demonstrates difficulties in application, nothing indicates the use of arbitrary, unfettered discretion in applying the statute. Under these circumstances, the court seeks guidance from the Second Circuit, and its consideration of a similar challenge to New York City's ban on certain assault weapons and ammunition feeding devices. See Richmond Boro Gun Club, Inc. v. City of New York, 97 F.3d 681, 684-86 (2d. Cir.1996) (law not facially vague because "it is obvious in this case that there exist numerous conceivably valid applications of Local Law 78.") Similar to the phrase "designed ... for use with illegal cannabis or drugs," which was upheld by the Supreme Court in the Hoffman Estates case, the disputed phrase here โ "any combination of parts from which an assault firearm may be readily assembled" โ is not vague in all of its applications because it would surely apply to an otherwise prohibited weapon which was merely altered by removing a single design feature. That plaintiffs can posit ambiguous applications is again, not the issue. Surely the Legislature, intent on reaching assault weapons which could be altered in minor ways or disassembled to avoid the purview of the other assault weapon definitions, did not have to specify in hours and minutes and with reference to specific tools and degrees of knowledge the parameters of what `readily assembled' means. The precision in drafting which plaintiffs demand is neither constitutionally required nor perhaps even possible or advisable given the confines of language in which we all operate. "The Constitution does not require impossible standards." United States v. Petrillo, 332 U.S. 1, 7, 67 S.Ct. 1538, 1542, 91 L.Ed. 1877 (1947). The issue then is whether the statute completely lacks a core, which plaintiffs have failed in this challenge to demonstrate.
(b) Inoperable Weapons
Plaintiffs also challenge, on vagueness grounds, the constitutionality requirements *682 relating to inoperable weapons. Nonetheless, these challenges fail for much the same reason as above. This court has no difficulty upholding the provision relating to inoperable weapons. It has a core to its meaning as is evident from John Does IV and V's voluntary compliance with it. (See Defendants' Exh. 10, John Doe IV Aff. ถ 2; Exh. 11, John Doe V Aff., ถ 2). Their apprehension of prosecution for legally owning weapons which might have interchangeable parts, and thus render a weapon operable, is misplaced. Without evidence that such prosecutions have happened or are likely to happen, and confident that were they to happen an `as applied' vagueness challenge would likely be viable against this obscure application of the law, this court concludes that this challenged section is not facially vague.
In conclusion, the challenged sections are not facially vague in all of their applications because the law clearly encompasses at least some of the core conduct in which plaintiffs wish to engage or weapons which plaintiffs wish to or do own. The mere conjecture and hypotheticals that plaintiffs posit with this court as evidence of the vagueness of the statute do not undermine its facial validity. A statute challenged for vagueness does not depend on whether the challengers can posit some obscure and difficult application of the legislation which causes confusion. It is doubtful whether any criminal statute could survive such scrutiny. Indeed, the specific instances and circumstances which plaintiffs point out may suggest difficult applications of the law; but they do not raise these issues as a defense in a criminal prosecution context. The issue then is whether all applications are impermissibly vague. They are not in this case and thus plaintiffs' facial vagueness challenge fails.
2. As Applied Vagueness
The plaintiffs also challenge the law as it applies to their particular circumstances, some of which have been explained in the facial challenge analyzed supra. To determine whether a statute is unconstitutionally vague as applied, the Supreme Court applies a two-part test: the court must first determine whether the statute "give[s] the person of ordinary intelligence a reasonable opportunity to know what is prohibited" and then consider whether the law "provide[s] explicit standards for those who apply [the law]." Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 2299, 33 L.Ed.2d 222 (1972) (footnote omitted); see also Gentile v. State Bar of Nevada, 501 U.S. 1030, 111 S.Ct. 2720, 2732, 115 L.Ed.2d 888 (1991); Hoffman Estates, 455 U.S. at 498, 102 S.Ct. at 1193. As noted, "[t]he degree of vagueness that the Constitution tolerates โ as well as the relative importance of fair notice and fair enforcement โ depends in part on the nature of the enactment." Hoffman Estates, 455 U.S. at 498, 102 S.Ct. 1186, 71 L.Ed.2d 362. When criminal penalties are at stake, for instance, a relatively strict test is warranted. Id. at 498-99, 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d 362. Nonetheless, "perhaps the most important factor affecting the clarity that the Constitution demands of a law is whether it threatens to inhibit the exercise of constitutionally protected rights." Id. Thus, while the challenged statute at issue here is criminal in nature, the concern over constitutionally protected rights is notably absent in this case.
Another factor this court must consider is whether or not the law contains any scienter requirement, or whether it imposes strict liability. Id. at 499, 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d 362. Indeed, "[i]n the absence of a scienter requirement ... [a] statute is little more than `a trap for those who act in good faith.'" Colautti v. Franklin, 439 U.S. 379, 395, 99 S.Ct. 675, 685, 58 L.Ed.2d 596 (quoting United States v. Ragen, 314 U.S. 513, 524, 62 S.Ct. 374, 86 L.Ed. 383 (1942)).
On the face of the statute, no level of scienter is required for conviction; mere possession or other dispositions of a prohibited weapon or magazine constitutes an *683 offense. At least one New Jersey court has interpreted a portion of the law as not requiring scienter. See State v. Pelleteri, 294 N.J.Super. 330, 683 A.2d 555, 556 (1996) (proof that defendant knew shotgun was prohibited under the law not required for conviction). Still, when evaluating this challenge to a state law, "a federal court must, of course, consider any limiting construction that a state court or enforcement agency has proffered." Hoffman Estates, 455 U.S. at 494, 102 S.Ct. at 1191.
The Attorney General offers a more limiting construction, at least with respect to weapons which are prohibited because they are `substantially identical' to listed weapons. In an August 19, 1996 directive issued to the Director of the Division of Criminal Justice, County Prosecutors, and all Law Enforcement Chief Executives, Attorney General Peter Verniero wrote that "prosecutors and police should remember that an assault firearms offense requires proof that the defendant knows he or she possesses an assault firearm, e.g., that the defendant knows that the firearm is `substantially identical' to one of the named assault weapons." (Defendants' Exh. B, p. 3).[22] In sum, the Attorney General seemingly claims that an element of scienter is required although neither the statute nor the cases interpreting it seemingly require knowledge.
In addition to this Attorney General directive, other guidelines have also been issued attempting to clarify confusing applications of the law. For example, after the law was signed by the Governor, then Attorney General Robert Del Tufo sent a memorandum to all county prosecutors, in an attempt to clarify certain aspects of the law. (Defendants' Exh. D, Memo of 5/29/91). Noted in that memo is N.J.S.A. 2C:39-12, which still permits, even today, one in unlawful possession of an assault firearm to voluntarily surrender such a weapon without fear of criminal prosecution. Also noteworthy was the directive that "New Jersey law protects citizens who, in good faith, diligently pursue all means available to comply with the law." (Id. at 2) (citing N.J.S.A. 2C:2-4(c)).
Even prior to that memorandum, however, the Attorney General also issued a determination of which assault firearms were legitimate under the statute for use in competitive shooting matches. The statement included the telephone number to the State Police Firearms Investigation Unit, from which citizens could obtain information. (Defendants' Exh. C, Memo of 8/7/90). This same unit continues to respond to citizen inquiries about assault firearms and also lectures to interested groups. (Defendants' Exh. H, Answers to Interrog. 9). Some of the John Doe plaintiffs used this number or other means in an effort to comply with the law, while others did not. (Defendants' Exhs. I-IX, Answers to Interrog. 2).
It is within this factual background and context that plaintiffs now ask this court to declare this state law unconstitutionally vague as applied to several circumstances particular to individual plaintiffs. This court refuses to do so. The particular disputed matters which plaintiffs raise are best left for the New Jersey courts to decide on an individualized case-by-case basis. Plaintiffs have initiated a pre-enforcement challenge to a state law. While significant constitutional questions were raised and thus addressed with respect to the statute as a whole, and although plaintiffs present enough of a controversy for standing and ripeness requirements, this federal court will exercise its discretion and refrain from attempting to decide this as-applied pre-enforcement challenge which is fraught with speculation. *684 For example, plaintiffs present the case of State v. Pelleteri, 294 N.J.Super. 330, 683 A.2d 555, 556 (1996), as evidence of the scienter requirement, and in support of striking down this law as vague. Yet the juxtaposition of this case and the contrasting Attorney General's guidelines militate in favor of abstention.
Refusing to rule on an as-applied challenge to an allegedly vague statute when the ordinance would otherwise be facially valid is not without precedent. See Richmond Boro Gun Club, 97 F.3d at 686; Brache v. County of Westchester, 658 F.2d 47, 52 (2d Cir.1981), cert. denied, 455 U.S. 1005, 102 S.Ct. 1643, 71 L.Ed.2d 874 (1982). Moreover, this conclusion is based upon principles of judicial restraint, principles that bear some resemblance to the doctrine of abstention. In the Third Circuit, it is still the "salutary rule that courts should avoid whenever possible a premature adjudication that duly enacted legislation is unconstitutional." NUI Corp. v. Kimmelman, 765 F.2d 399, 403 (3d Cir. 1985). While wholesale abstention was not appropriate in this case, restraint in this particular area is peculiarly warranted. "The doctrine ... contemplates that deference to state court adjudication only be made where the issue of state law is uncertain." Harman v. Forssenius, 380 U.S. 528, 534, 85 S.Ct. 1177, 1182, 14 L.Ed.2d 50 (1965). Limiting constructions of the law may render moot what would otherwise be broad pronouncements of state law based on federal constitutional questions.[23] The plaintiffs have not justified such overreaching in this instance. As the Supreme Court instructed recently in Arizonans for Official English v. Arizona:
Warnings against premature adjudication of constitutional questions bear heightened attention when a federal court is asked to invalidate a State's law, for the federal tribunal risks friction-generating error when it endeavors to construe a novel state Act not yet reviewed by the State's highest court. See Rescue [v. Municipal Court of Los Angeles], 331 U.S. [549,] 573-74, 67 S.Ct. [1409,] 1421-23, 91 L.Ed. 1666.
520 U.S. 43, 79, 117 S.Ct. 1055, 1074, 137 L.Ed.2d 170 (1997). See also Poe v. Ullman, 367 U.S. 497, 526, 81 S.Ct. 1752, 1768, 6 L.Ed.2d 989 (1961) (Harlan, J., dissenting) ("[N]ormally this Court ought not to consider the Constitutionality of a state statute in the absence of a controlling interpretation of its meaning and effect by the state courts.").
Plaintiffs' search for binding constructions on particular facets of a New Jersey law will not be supplied by this federal court when the law is, as in this case, facially valid.
C. EQUAL PROTECTION
In Counts II, IV, VI, IX, XII, and XIII, plaintiffs allege that in different ways New Jersey's assault weapons ban violates the equal protection of the laws, guaranteed under the Fourteenth Amendment to the United States Constitution. Plaintiffs brief explicates several instances where the law is allegedly irrational, and thus violates equal protection. For example, Count II appears to allege that because the Attorney General failed to name several weapons which plaintiffs own as `legitimate' for target shooting purposes, the classifications are violative of due process. Plaintiffs allege in Count IV that banning the use of certain names on products violates equal protection.[24] Count VI claims that banning firearms by reference to specifically named manufacturers, instead of by generic characteristics, is irrational and thus violates equal protection. *685 Count IX attacks the prohibition on large capacity magazines, by alleging that the one exception to this prohibition irrationally discriminates against plaintiffs who are non-registrants but who use the magazines in sanctioned marksmanship matches. Count X claims that the Director of Civilian Marksmanship of the United States Department of the Army, as referenced in the statute, is no longer affiliated with the Army, and thus the statute is impossible to comply with. Finally, counts XII and XIII allege equal protection violations based on the law's exemptions for certain government employees, and based on the civil liability which attaches to owners of registered weapons whose weapons are subsequently used in a crime. These challenges on equal protection grounds, while extensive in scope, are without merit and can be rejected as a matter of law.
The Equal Protection Clause of the Fourteenth Amendment commands that no State shall "deny to any person within its jurisdiction, the equal protection of the laws." In Nordlinger v. Hahn, 505 U.S. 1, 10, 112 S.Ct. 2326, 120 L.Ed.2d 1 (1992), the Supreme Court explained that "[t]he Equal Protection Clause does not forbid classifications. It simply keeps governmental decisionmakers from treating differently persons who are in all relevant respects alike." See also Vacco v. Quill, 521 U.S. 793, ___, 117 S.Ct. 2293, 2297, 138 L.Ed.2d 834 (1997) (the Equal Protection Clause "embodies a general rule that States must treat like cases alike"). If legislation neither burdens a fundamental constitutional right nor targets a suspect classification, it will withstand constitutional scrutiny so long as it bears a rational relationship to a legitimate state interest. Id. at ___, 117 S.Ct. at 2297, 138 L.Ed.2d 834 (1997); Romer v. Evans, 517 U.S. 620, 631, 116 S.Ct. 1620, 134 L.Ed.2d 855 (1996).
In this case, none of the alleged violations of equal protection violate a fundamental right or burden a suspect class. See e.g., San Antonio Independent School Dist. v. Rodriguez, 411 U.S. 1, 28, 93 S.Ct., 1278, 1294, 36 L.Ed.2d 16, reh'd denied, 411 U.S. 959, 93 S.Ct. 1919, 36 L.Ed.2d 418 (1973) ("The system of alleged discrimination and the class it defines have none of the traditional indicia of suspectness"); id. at 33-35, 93 S.Ct. at 1296- 1298 (courts must look to the Constitution, not the "importance" of the asserted right, when deciding whether an asserted right is "fundamental"). There is no fundamental right to weapon ownership here, and the plaintiffs in this case (weapon owners, manufacturers and sellers) are not a suspect class. Accordingly, rational basis review is warranted, and the challenged legislation is constitutionally permissible so long as it bears a rational relationship to a legitimate state interest. The law is also entitled to a "strong presumption of validity." Heller v. Doe, 509 U.S. 312, 319, 113 S.Ct. 2637, 2642, 125 L.Ed.2d 257 (1993).
The issue for this court then is not whether New Jersey can justify its enactment of the assault weapons ban and how that ban is effected; indeed "[t]he burden [of proof] is on the one attacking the legislative arrangement to negative every conceivable basis which might support it." Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 364, 93 S.Ct. 1001, 1006, 35 L.Ed.2d 351 (1973) (internal quotation marks omitted). This is the case even if the rational basis for the law has no foundation in the record. Heller, 509 U.S. at 320-21, 113 S.Ct. at 2643.
While rational basis review is highly deferential, it is not "toothless." Mathews v. Lucas, 427 U.S. 495, 510, 96 S.Ct. 2755, 49 L.Ed.2d 651 (1976). "[E]ven in the ordinary equal protection case calling for the most deferential of standards, we insist on knowing the relation between the classification adopted and the object to be attained. The search for the link between classification and objective gives substance to the Equal Protection Clause." Evans, 517 U.S. at 632, 116 S.Ct. 1620, 134 L.Ed.2d 855.
*686 Despite the alleged problems with the drafting of the assault weapons ban at issue here, plaintiffs cannot meet their heavy burden in showing that this law bears no rational relationship to a legitimate state interest. Clearly, and plaintiffs do not seriously dispute this, the government has a legitimate state interest in the regulation of assault weapons. It was estimated that as of ten years ago, in 1989, Americans owned approximately 1 million assault rifles. Keith R. Fafarman, State Assault Rifle Bans and the Militia Clauses of the United States Constitution, 67 Ind.L.J. 187, 189-90 (1991). The numbers of such weapons sought to be imported into this country has grown approximately tenfold over the last decade, to over 1,000,000 in October of 1997. See Richmond Boro Gun Club, 896 F.Supp. at 283; Defendants' Exh. F. Treasury Study at 1, n. 1. Such weapons are considered the weapons of choice for drug traffickers, violent offenders and members of organized crime. See Defendants' Exh. E, 5/9/91, Testimony of Col. Dintino at 22; Richmond Boro Gun Club, 896 F.Supp. at 282-83; Defendants' Exh. F, Treasury Study, at 3, 30-31. Many of these weapons fall into criminal hands when stolen from legitimate owners. Defendants' Exh. E, 5/9/91, Testimony of Winter, at 38.
The rational link between public safety and a law proscribing possession of assault weapons is so obvious that it would seem to merit little serious discussion. Still, it is particular aspects of the law which plaintiffs allege are irrational. For example, in their brief, plaintiffs' claim that "[t]he Attorney General arbitrarily failed to name plaintiffs' firearms, all of which are lawful for target shooting.... Many of these firearms are superior in accuracy and range than the M1 carbine, which shoots an inaccurate cartridge." (Plaintiffs' Br., 7/24/98, at 37). Nonetheless, what plaintiffs point out, however, does not establish an equal protection violation. At most, plaintiffs point out that the Attorney General should have named more weapons to the `legitimate' list. But mere underinclusiveness is not actionable. Katzenbach v. Morgan, 384 U.S. 641, 657, 86 S.Ct. 1717, 1727, 16 L.Ed.2d 828 (1966) ("[A] statute is not invalid under the constitution because it might have gone farther than it did [and] reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind."). Moreover, in so far as plaintiffs' complaint attempts to allege equal protection violations based on disparate classifications of similar weapons, such a claim is not cognizable. The equal protection clause applies only to persons, not products. U.S. Const., amend. XIV, ถ 1.
A similar analysis controls plaintiffs complaints that the ban on large capacity magazines, which applies to everyone except those who register weapons and use the magazines in competitive shooting matches, violates equal protection. Despite the fact that a registrant may possess unlimited quantities of large capacity magazines while a non-registrant is prohibited from possessing any, there is a rational connection between conditioning possession of such magazines on participation with otherwise banned assault firearms in shooting competitions. The rational link between the two is sufficient for this review. Courts are compelled under rational-basis review to accept a legislature's generalizations even when there is an imperfect fit between means and ends. A classification does not fail because it "`is not made with mathematical nicety or because in practice it results in some inequality.'" Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970) (quoting Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337, 340, 55 L.Ed. 369 (1911)).
A rational link also exists for each of the other challenged facets of the Act. For example, participation in sanctioned shooting competitions is rationally related to maintaining large capacity ammunition magazines. The exemptions in this law *687 for, among others, prosecutors, police officers and others authorized to possess other firearms, is likewise rational. The Legislature could have determined, for instance, that such individuals sometimes require such firearms in the performance of their duties. Possession of these weapons might also continue into off-duty hours, thereby necessitating the exemption. Whether or not this is true is irrelevant. It nonetheless is a rational basis for the distinctions. Finally, the civil liability provided for under N.J.S.A. 2C:58-12g is likewise not irrational. While the liability seemingly only attaches to registrants (ie. those who comply with the law), this underinclusiveness does not constitute an equal protection violation. The Legislature could have concluded that prospective purchasers of legal assault weapons, confronted by the civil liability provision and other registration requirements, would be dissuaded from consummating the purchase. The fact that the law, as written, could have the unintended effect of persuading individuals to not register weapons (and thus face possible criminal sanctions) out of fear for the civil liability provision, does not mean the law is irrational. Refining what is otherwise rational is a legislative, rather than judicial, function. Rational basis review involving an equal protection challenge "is not a license for courts to judge the wisdom, fairness, or logic of legislative choices." FCC v. Beach Communications, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 2100-2101, 124 L.Ed.2d 211 (1993). See, e.g., Dandridge, 397 U.S. at 486, 90 S.Ct. at 1162.
"The problems of government are practical ones and may justify, if they do not require, rough accommodations โ illogical, it may be, and unscientific." Metropolis Theatre Co. v. Chicago, 228 U.S. 61, 69-70, 33 S.Ct. 441, 443, 57 L.Ed. 730 (1913). The judiciary is not authorized to "sit as a superlegislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines." New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511 (1976) (per curiam). Mindful of the judiciary's limited role, this court cannot conclude that the law is irrational and thus violative of equal protection. Accordingly, plaintiffs' motion for summary judgment on Counts II, IV, VI, IX, XII, and XIII and alleging violations of equal protection is denied. Summary judgment is granted in defendants favor on these equal protection claims.
D. FREEDOM OF ASSOCIATION
In Count I of the complaint, plaintiffs maintain that the Act's requirement of membership in a rifle or pistol club as a condition of keeping operable registered assault weapons and large capacity ammunition magazines violates their freedom of association rights guaranteed under the United States Constitution. Plaintiffs specifically point to N.J.S.A. งง 2C:58-12b[25] and 2C:39-3j[26] as effectively *688 "precondition[ing] a continued liberty and property right not on lawful ownership of the property before a specified date, but on membership in certain private clubs before a specified date." (Compl. ถ 38). Plaintiffs support this argument with allegations that less than 5% of the members of currently registered clubs are women, and that noncitizens may not join some of the clubs. Furthermore, many of the registered clubs are affiliated with the National Rifle Association ("NRA") and promote hunting, an organization and an activity which individuals may be loathe to support. Nonetheless, the law as written requires membership in such clubs as a condition of maintaining property and a liberty interest.
This court does not disagree with plaintiffs' general description of the law and its requirement of a rifle or gun club membership, and participation in sanctioned shooting matches, in order to maintain, in operable form, certain assault weapons deemed `legitimate' by the Attorney General. The initial determination for this court, however, is the standard of scrutiny to apply to this provision. The plaintiffs do not address this question straightforward. However, from the citation to numerous cases, it appears they attempt to implicate a fundamental right, and thus argue that a heightened level of scrutiny, such as strict scrutiny, should apply. Defendants on the other hand claim that the membership requirement implicates no First Amendment rights, but that even if it did, the law is still a valid exercise of legislative power.
This court readily acknowledges that among the rights protected by the First Amendment is the freedom of association. NAACP v. Alabama, 357 U.S. 449, 460, 78 S.Ct. 1163, 1170, 2 L.Ed.2d 1488 (1958). The right to free association is correlative to an individual's right "to speak, to worship, and to petition the government for the redress of grievances." Roberts v. United States Jaycees, 468 U.S. 609, 622, 104 S.Ct. 3244, 3252, 82 L.Ed.2d 462 (1984). The Supreme Court has acknowledged that this right of association also has a necessary corollary; the right of nonassociation. In Wooley v. Maynard, the Court explained: "A system which secures the right to proselytize religious, political, and ideological causes must also guarantee the concomitant right to decline to foster such concepts. The right to speak and the right to refrain from speaking are complementary components of the broader concept of "individual freedom of mind."" 430 U.S. 705, 714, 97 S.Ct. 1428, 1435, 51 L.Ed.2d 752 (1977).
Plaintiffs suggest that this right not to associate is infringed by New Jersey's law which makes membership in private gun and rifle clubs a requirement of continued possession of certain assault weapons. In other words, plaintiffs allege that they are being coerced to associate with groups holding views with which they disagree. They liken this case to Gavett v. Alexander, in which a requirement of NRA membership to purchase, at cost, surplus army rifles was struck down because it violated the First Amendment's implicit right of non-association. 477 F.Supp. 1035, 1049 (D.D.C.1979).
Even though Gavett is not controlling on this court, it is nevertheless distinguishable from this case. First, in Gavett, the District Court concluded that the NRA membership requirement survived neither a strict scrutiny test (if indeed the law burdened a fundamental right) nor rational basis review. Id. at 1049 ("In short, there is no rational basis for the statute and it is invalid even under the less rigid test for determining constitutionality.") Thus, the court did not definitively conclude that NRA membership as a requirement of a *689 government benefit infringed on the fundamental right of non-association. Second, Gavett concerned a compelled club membership for the receipt of a governmental benefit โ ie. at cost purchases of surplus weapons which provided a significant monetary savings. See id. at 1039 n. 5. For the present case to be considered the same, retention of otherwise banned assault weapons and large capacity ammunition magazines must be akin to the privilege of purchasing governmental property at a discount. It is not the same, and this is constitutionally significant.
The former benefit is essentially legislative protection, albeit with conditions, of the ownership and/or reliance interests of assault firearm owners. This is a legitimate governmental interest. See City of New Orleans v. Dukes, 427 U.S. 297, 305, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976) (upholding a grandfather clause). The latter benefit challenged in the Gavett case was not the legitimate protection of a reliance interest; it was an arbitrary and irrational governmental preference for NRA members. The same cannot be said of the challenged statute here, which links retention of certain assault firearms with membership in organizations in which one could actually use such weapons for a legitimate purpose.
This distinction accords with other cases which have prevented the state from requiring association with a private entity as a prerequisite to receiving public benefits. These rights are quite different than the right to retain functioning assault firearms and large capacity magazines, a right which the Legislature could have abrogated completely. For example, patronage dismissals of public employees because of political affiliation may violate the First Amendment's right to association. See Branti v. Finkel, 445 U.S. 507, 100 S.Ct. 1287, 63 L.Ed.2d 574 (1980); Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976). The Supreme Court explained the underlying rationale in Perry v. Sindermann:
[The government] may not deny a benefit to a person on a basis that infringes his constitutionally protected interests, especially, his interest in freedom of speech. For if the government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalized and inhibited.
408 U.S. 593, 597, 92 S.Ct. 2694, 2697, 33 L.Ed.2d 570 (1972).
Plaintiffs attempt to fit into this rationale the `governmental benefit' of retaining otherwise banned assault firearms and large capacity ammunition magazines. But such a benefit, the protection of a reliance interest which need not have been granted, is not akin to employment.
Nor is the association required in this instance necessarily political or infused with beliefs which would be offensive to those wishing to retain certain weapons and compete in shooting matches. Despite plaintiffs' contentions that individuals did not join clubs for various reasons,[27] the record also reveals that many of these clubs are public in nature, and spread throughout New Jersey (Defendants' Eh. H, Answer to Interrog. 9 and Exh. M). Based on all of these considerations, rational basis review is warranted. See, e.g., *690 Besig v. Dolphin Boating and Swimming Club, 683 F.2d 1271 (9th Cir.1982) (requirement of membership in groups of "apolitical nature" which "advocate no special view or philosophy that appellants have identified as offensive" in order to receive favorable access to public land not in violation of First Amendment).
Having determined that no fundamental right is implicated in the club membership requirement, rational basis review is warranted. Not surprisingly, membership in a sanctioned shooting club as a requirement for maintaining, in operable form, otherwise prohibited assault weapons and large capacity ammunition magazines is rational. While the Legislature clearly intended that the law be broad enough to reach potentially deadly assault weapons, it was equally concerned with preserving the rights of individuals who legitimately use such weapons for shooting competitions. (See Plaintiffs' Exh. 18, Del Tufo Testimony). Thus, the nexus between ownership and shooting competitions is entirely rational. Accordingly, plaintiffs motion for summary judgment on this grounds is denied, while defendants motion is granted.
E. FREEDOM OF SPEECH
Count IV of the complaint contends that the law violates plaintiffs right to free speech. According to the plaintiffs
[b]y defining prohibited firearms based on their names, without regard to any generic definition and or the fact that firearms with different features may have a common name, N.J.S.A. ง 2C:39-1w(1) violates the rights to free speech and press of plaintiffs ArmaLite and Springfield, and denies the equal protection of the laws to all plaintiffs, contrary to the First and Fourteenth Amendments to the United States Constitution.
(Compl. ถ 89). The gravamen of this complaint appears to be that because the challenged statute prohibits certain weapons which were specifically-named in the Act, the ban applies not to specific prohibited characteristics that make the weapons dangerous, but rather to specific words. Springfield and ArmaLite protest that this is a prior-restraint on free speech because each company is limited to what it can name new weapons which may in fact not have any characteristics which this legislation was attempting to prohibit. Indeed, in 1994 a Federal Assault Weapons Law went into effect which caused many weapons manufacturers to reconfigure their products to comply with the new law. Nonetheless, the names on the weapon remained the same based on the marketing advantage given product name recognition. (See Plaintiffs' Exh. 2, Miller Aff., ถ 26; Exh. 5, Springfield Inc. Aff., ถ 12; Exh. 6, ArmaLite Aff., ถถ 10-11). Thus according to ArmaLite's President, "ArmaLite is discouraged in marketing [a modified ArmaLite AR-180] because of jurisdictions such as New Jersey which prohibit the sale or possession of any firearm with the term "ArmaLite AR-180" stamped on it." (Plaintiffs' Exh. 6, ArmaLite Aff., ถ 11).
Neither side of this issue squarely addresses the appropriate level of scrutiny to apply to this case. Plaintiffs describe the effect of the ban in an apparent attempt to implicate heightened scrutiny but they conclude that "[b]anning firearms by what is written on them has no rational basis. ..." (Plaintiffs' Br., 7/24/98, at 11). Defendants implicitly argue for rational basis review by writing that "[t]he statute bars no speech[,]" but the brief also concludes with an analysis of this case applied to the jurisprudence of commercial speech. (Defendants' Br., 7/24/98, at 46-48). An initial determination then, must be made as to what level of scrutiny should apply.
This court notes that this is not the typical commercial speech case which involves either speech "propos[ing] a commercial transaction," Pittsburgh Press Co. v. Pittsburgh Comm'n on Human Relations, 413 U.S. 376, 385, 93 S.Ct. 2553, 2558, 37 L.Ed.2d 669 (1973), or that is "related solely to the economic interests of *691 the speaker and its audience," Central Hudson Gas & Elec. Corp. v. Public Service Comm'n, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). This is not to say that this de facto restriction on certain product names does not implicate First Amendment concerns; it does because in many instances the name of the product can be as alluring a promotion as traditional advertising techniques which, if regulated, clearly would be commercial speech. Nonetheless, the Act in this case does not prohibit or criminalize the naming itself. The Act simply prohibits specific weapons which the Legislature deemed necessary to list specifically in the statute. Admittedly, the indirect effect of these listings are that manufacturers who wish to engage in business in New Jersey are restricted (in a very minor way) how they can name such a weapon. Erring on the side of caution, this court will scrutinize the disputed Act as if it proscribes commercial speech.[28]
In Central Hudson, the Supreme Court set forth a less protective standard for evaluating the constitutionality of regulations of commercial speech, holding that the Constitution requires only that (1) the state "assert a substantial government interest"; (2) "the regulatory technique be in proportion to that interest"; and (3) the incursion on commercial speech be "designed carefully to achieve the State's goal." 447 U.S. 557, 564, 100 S.Ct. 2343, 2350, 65 L.Ed.2d 341 (1980).
There is no doubt that the defendants' interest in regulating assault firearms is sufficient to support a suppression of commercial speech. In light of the evidence of record demonstrating the firepower of such weapons and their relation to crime, the state interest asserted is substantial.
The last two steps of the analysis "basically involve a consideration of the `fit' between the legislature's ends and the means chosen to accomplish those ends." Posadas de Puerto Rico Assoc. v. Tourism Co. of Puerto Rico, 478 U.S. 328, 341, 106 S.Ct. 2968, 2977, 92 L.Ed.2d 266 (1986). Thus, does this challenged statute and restriction on speech "directly advance" the government's substantial interest? This court believes the answer to this second question is yes. The Legislature obviously believed, and this belief was reasonable, that by listing specific weapons which would be banned in New Jersey would eliminate the most common, and perhaps most popular, firearms from the state. Listing such weapons was a proportionate means of advancing the state's interest.
Finally, the restrictions on speech in this case โ which are minimal to begin with โ are designed with enough precision required for such a regulation. In other words, "the restrictions on commercial speech are no more extensive than necessary to serve the government's interest," Posadas, 478 U.S. at 343, 106 S.Ct. at 2978, and the government has carried its burden on this issue, see Edenfield v. Fane, 507 U.S. 761, 113 S.Ct. 1792, 123 L.Ed.2d 543 (1993). The record demonstrates the very real harm assault weapons can cause; a ban on some of the most popular weapons can sensibly alleviate the problem. Significantly, it is of little consequence that the restrictive means chosen may not be the "least restrictive means" possible. All that is required is a "reasonable *692 fit" between the legislative end and the means chosen. See Board of Trustees of State University of New York v. Fox, 492 U.S. 469, 480, 109 S.Ct. 3028, 3034-35, 106 L.Ed.2d 388 (1989). This is not a case where the State of New Jersey attempted to ban all advertisements of assault firearms. Rather, it is a ban on a limited subset of weapons, some of which are specifically named in the statute. Such a means, while perhaps not the least restrictive means possible which could have in turn avoided these free speech questions, was permissible under each prong of the Central Hudson test.
Confined to words as we all are, the legislature was free to designate specific weapons and such designations do not implicate an impermissible restraint on plaintiffs' commercial free speech rights. Under these circumstances, plaintiffs' motion for summary judgment is denied, and defendants' motion on this matter is granted.
F. BILL OF ATTAINDER
In Count VII, plaintiffs final allegation is that N.J.S.A. งง 2C:39-1w, 5f, and 9g constitute bills of attainder because it is unlawful for Springfield and ArmaLite to sell products they have made while similar "[f]irearms ... manufactured by others may be freely sold and possessed." (Compl. ถถ 104-107). While it is true that certain models of Springfield and ArmaLite weapons are listed as prohibited weapons, their contentions that this constitutes bills of attainder are clearly without merit.
Art. I ง 10 of the United States Constitution provides in pertinent part that "[n]o state shall ... pass any Bill of Attainder ..." In essence, a bill of attainder is "a law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial." Nixon v. Administrator of General Services, 433 U.S. 425, 468, 97 S.Ct. 2777, 2803, 53 L.Ed.2d 867 (1977). A plaintiff challenging a legislative act on the ground that it is an unconstitutional bill of attainder must prove three elements: nonjudicial infliction of punishment; specificity as to the identity of individuals affected; and lack of a judicial trial. See 16B Am.Jur.2d Constitutional Law ง 671 (1998). These elements must be established by the "clearest proof." Communist Party of the United States v. Subversive Activities Control Bd., 367 U.S. 1, 83, 81 S.Ct. 1357, 1403, 6 L.Ed.2d 625 (1961).
The initial question this court must consider is whether or not the legislation constitutes punishment. Three inquiries are normally made to determine whether a statute inflicts punishment that implicates the Constitution: (1) whether the challenged statute falls within the historical meaning of legislative punishment; (2) whether the statute, "viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes"; and (3) whether the legislative record "evinces a[n] ... intent to punish." Selective Serv. Sys. v. Minnesota Pub. Interest Research Group, 468 U.S. 841, 852, 104 S.Ct. 3348, 3355, 82 L.Ed.2d 632 (1984) (statute denying federal student aid to males who fail to register for draft does not inflict punishment within meaning of Bill of Attainder Clause) (quoting Nixon, 433 U.S. at 473, 475-76, 478, 97 S.Ct. at 2806, 2807-08).
Traditional punishments include "imprisonment," "banishment," "punitive confiscation of property," and prohibition of "designated individuals or groups from participation in specified employments or vocations." Nixon, 433 U.S. at 474, 97 S.Ct. at 2806. The type of punishment about which Springfield and ArmaLite protest clearly is not of the type "traditionally judged to be prohibited by the Bill of Attainder Clause." Id. at 475, 97 S.Ct. at 2806. At most, the legislation is a form of economic punishment, not traditionally cognizable under the bill of attainder prohibition. Thus, the economic punishment about which the weapon manufacturers complain, even if cognizable, is indirect *693 and does not amount to punitive confiscation.
Likewise, the New Jersey weapons assault ban "reasonably can be said to further nonpunitive legislative purposes." Id. at 475-76, 97 S.Ct. at 2806-07. The comprehensive nature of the assault weapons ban evinces the Legislature's concern that assault weapons present a danger to human life, and thus should be banned. In other words, "legitimate justifications for passage of the Act are readily apparent." Id. at 476, 97 S.Ct. at 2807.
Finally, nothing in the weapons ban "evinces a[n] ... intent to punish." Id. at 478, 97 S.Ct. at 2808. There is no indication that the New Jersey Legislature's motivation was anything other than a legitimate desire to protect the safety and welfare of the citizens of the state. Despite plaintiffs' allegations that "[f]irearms with the same calibers and firing capacities manufactured by others may be freely sold and possessed," (Compl. ถ 106), it is quite significant that the legislation actually casts a much wider net, banning similar weapons by specific name, as well as banning weapons which are `substantially identical' to a listed weapon. See N.J.S.A. 2C:39-1w(2). As the Nixon Court concluded, "the Act's specificity ... does not automatically offend the Bill of Attainder Clause." Id. at 471-72, 97 S.Ct. at 2804-05. This court cannot say that the Legislature intended to punish Springfield and ArmaLite specifically; its intent was to control particular types of weapons.[29]
Because this court determines that the inclusion by name of Springfield and ArmaLite weapons on the list of banned weapons is not punishment, the court need not reach the other two facets of this doctrine. New Jersey's assault firearms ban does not constitute a prohibited bill of attainder.
CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment will be granted, while plaintiffs' motion is denied. An appropriate order bearing the date of this decision will be entered in accordance with this opinion.
NOTES
[1] Although Deborah T. Poritz, former New Jersey Attorney General, was originally named as a defendant, pursuant to Fed. R.Civ.P. 25(d)(1), Peter Verniero is automatically substituted in her place.
[2] The last two defendants responded to the complaint's allegations by writing, "[f]iles no response as has no independent information, knowledge or belief of the truth of the allegations or statements made so is incapable or admitting or denying." (See Answers of 7/25/97 & 8/7/97).
[3] Although the law that ultimately passed differed as to definitions from the Senate bill upon which the Attorney General was testifying, the rationale of the prohibitions cannot be said to differ between the two.
[4] "Semi-automatic" means a firearm which fires a single projectile for each single pull of the trigger and is self-reloading or automatically chambers a round, cartridge, or bullet. N.J.S.A. 2C:39-1(x).
[5] "Pistol grip" means a well-defined handle, similar to that found on a handgun, that protrudes conspicuously beneath the action of the weapon, and which permits the shotgun to be held and fired with one hand. N.J.S.A. 2C:39-1(z).
[6] Third degree crime convictions carry with them a sentence of imprisonment of between three and five years. N.J.S.A. 2C:43-6a(3).
[7] "Large capacity ammunition magazine" means a box, drum, tube or other container which is capable of holding more than 15 rounds of ammunition to be fed continuously and directly therefrom into a semi-automatic firearm. N.J.S.A. 2C:39-1(y)
[8] Defendants revisit the Pullman abstention issue which this court decided against them in the previous Order issued in this case. Defendants now claim that "the defense of sovereign immunity corrects the two Pullman deficiencies that this Court found in defendants' earlier motion." (Defendants' Br. p. 8). In other words, defendants argue that "this Court no longer has discretion" because unlike the normal Pullman context "the Eleventh Amendment and the Pennhurst doctrine are alternative bases for Pullman abstention. ..." (Id. at 13).
[9] These 17 state-law issues are listed in ถ 43 of Defendants' Statement of Material Facts, submitted in accordance with Local Civil Rule 56.1. In general, these statements note the defendants' and plaintiffs' contrasting interpretations of different portions of the statute, and then individual paragraphs conclude with the following or very similar boilerplate language: "If defendants [or plaintiffs] are correct, their state-law construction will substantially narrow plaintiffs' federal claim that the alleged absence of this requirement is unconstitutionally irrational and violative of plaintiffs' rights...." (Defendants' Material Facts, ถ 43(A)).
[10] Defendants have not challenged any of the plaintiffs' standing to bring this case, or the ripeness of this action. Of course, Article III, section 2 of the Constitution limits federal jurisdiction to actual "cases" and "controversies," U.S. Const.Art. III, ง 2, and since this is a jurisdictional requirement, it cannot be waived. To have standing, a litigant must have suffered an injury-in-fact that is fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed with the requested relief. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). Organizations can also have standing if they satisfy three requirements. See Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). Although the relief sought here is pursuant to the Declaratory Judgment Act, 28 U.S.C. ง 2201(a),
[t]he difference between an abstract question and a "controversy" ... is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.
Armstrong World Indus., Inc. v. Adams, 961 F.2d 405, 410 (3d Cir.1992) (quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941)).
Because of the timing of when a declaratory judgment is sought, that is, before an injury is necessarily established, there is an inherent tension between declaratory judgments and the concept of ripeness, which is another prerequisite of Article III jurisdiction. Presbytery of N.J. of Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1463 (3d Cir.1994) (noting that ripeness is properly understood as involving a question of when a party may seek pre-enforcement review of a statute or regulation) (citation omitted). To discern the ripeness of declaratory judgment actions the Third Circuit has held that a court should look to the following three factors, among others: (1) the adversity of interest between the parties; (2) the conclusiveness of a judicial judgment; and (3) the practical help, or utility, of a judgment. Pic-A-State Pa. Inc. v. Reno, 76 F.3d 1294, 1298 (3d. Cir.1996).
While the court felt it necessary to address these jurisdictional prerequisites, the court concludes that the plaintiffs have standing and that the present controversy is ripe for review. The weapons manufacturers and sellers which challenge the law are clearly economically affected by the law already. See National Rifle Ass'n of America v. Magaw, 132 F.3d 272, 280-84. The individually named plaintiffs also have standing because each is a weapons owner who wishes to engage in, or already is engaging in, conduct prohibited under the statute. Such individuals are in a bind with the assault weapons they now own; they can either illegally possess such weapons in New Jersey, or store them outside the state at financial costs and the loss of their use. Their membership in the organization, as well as the interests which are germane to it are sufficient for standing purposes. Moreover, on the face of the complaint, defendants' answer, and additional affidavits submitted, it is clear to this court that the alleged future harm is "real and substantial," or of "sufficient immediacy and reality." Presbytery, 40 F.3d at 1463; Armstrong, 961 F.2d at 412. While the named plaintiffs may not have been prosecuted yet for any violations under the statute, and indeed they may never be, the defendants insist that the disputed statute is and will continue to be enforced. See Presbytery, 40 F.3d 1454, 1463-68 (3d Cir.1994) (failure of state to disavow intent to prosecute sufficient to create adversity between the parties). Furthermore, this case involves primarily legal questions, where the need for `concrete' facts necessary to the conclusiveness inquiry is not as strong as often required to make a controversy ripe. Predominately legal controversies include whether a state or federal statute is constitutional on its face. Pic-A-State, 76 F.3d at 1300 (citations omitted). Finally, the parties need this decision to clarify their legal relationships such that the parties can "make responsible decisions about the future." Armstrong, 961 F.2d at 412 (citing Step-Saver, 912 F.2d at 649). This is the case here, where the plaintiffs wish to engage in conduct plainly prohibited on the face of the allegedly unconstitutional statute. See also Peoples Rights Organization, Inc. v. City of Columbus, 152 F.3d 522, 528-31 (6th Cir.1998).
[11] The plaintiffs allege that the terms `type,' `series,' `substantially identical,' and `combination of parts,' all of which illuminate what is and is not a prohibited `assault firearm,' are vague. Furthermore, they take issue with the act's definition (and its component parts) of particular prohibited shotguns, which are prohibited if one is "a semi-automatic shotgun with either a magazine capacity exceeding six rounds, a pistol grip, or a folding stock." N.J.S.A. 2C:39-1w(3).
[12] Under N.J.S.A. 2C:58-13.c, "`inoperable' means that the firearm is altered in such a manner that it cannot be immediately fired and that the owner or possessor of the firearm does not possess or have control over the parts necessary to make the firearm operable." (emphasis added).
[13] A "facial" challenge means a claim that the law is "invalid in toto โ and therefore incapable of any valid application." Steffel v. Thompson, 415 U.S. 452, 474, 94 S.Ct. 1209, 1223, 39 L.Ed.2d 505 (1974).
[14] This court is aware that Supreme Court jurisprudence has described the doctrine of vagueness and the standards used to evaluate it in varying terms. In Hoffman Estates, for example, the Supreme Court upheld a facial challenge to a law which regulated businesses that sold any items that were "designed or marketed for use with illegal cannabis or drugs." 455 U.S. at 491-92, 102 S.Ct. at 1189-90. Just one year later, in Kolender v. Lawson, the Supreme Court struck down a facial challenge to a California statute which required individuals to provide "credible and reliable" identification information when stopped by a peace officer in a Terry-type detention. 461 U.S. 352, 355, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983). The differing standards that seemed to apply in these two cases, decided roughly 1 year apart, can be reconciled by the type of conduct and penalty which each of the challenged statutes prohibited. In Hoffman Estates, the statute was akin to economic (as opposed to constitutional) regulations, and only quasi-criminal, thus scrutiny was less exacting. 455 U.S. at 494-95, 102 S.Ct. at 1191. In Kolender, the statute at issue was criminal in nature, and it provided police officers unfettered discretion to stop individuals. Thus, the law implicated First Amendment and freedom of movement concerns, and consequently it was scrutinized more closely. 461 U.S. at 358 n. 8, 103 S.Ct. at 1859 n. 8. See also Chapman v. United States, 500 U.S. 453, 467, 111 S.Ct. 1919, 1929, 114 L.Ed.2d 524 (1991) ("[V]agueness claim must be evaluated as the statute is applied to the facts of [the] case" when "First Amendment freedoms are not infringed by the statute.").
[15] Under the statute, "Assault firearm" includes the following firearms:
Algimec AGMI type
Any shotgun with a revolving cylinder such as the "Street Sweeper" or "Striker 12"
Armalite AR-180 type
Australian Automatic Arms SAR
Avtomat Kalashnikov type semi-automatic firearms
Beretta AR-70 and BM59 semi-automatic firearms
Bushmaster Assault Rifle
Calico M-900 Assault carbine and M-900
CETME G3
Chartered Industries of Singapore SR-88 type
Colt AR-15 and CAR-15 series
Daewoo K-1, K-2, Max 1 and Max 2, AR 100 types
Demro TAC-1 carbine type
Encom MP-9 and MP-45 carbine types
FAMAS MAS223 types
FN-FAL, FN-LAR, or FN-FNC type semi-automatic firearms
Franchi SPAS 12 and LAW 12 shotguns
G3SA type
Galil type
Heckler and Koch HK91, HK93, HK94, MP5, PSG-1
Intratec TEC 9 and 22 semi-automatic firearms
M1 carbine type
M14S type
MAC 10, MAC 11, MAC 11-9mm carbine type firearms
PJK M-68 carbine type
Plainfield Machine Company Carbine
Ruger K-Mini-14/5F and Mini-14/5RF
SIG AMT, SIG 550SP, SIG 551SP, SIG PE-57 types
SKS with detachable magazine type
Spectre Auto carbine type
Springfield Armory BM59 and SAR-48 type
Sterling MK-6, MK-7 and SAR types
Steyr A.U.G. semi-automatic firearms
USAS 12 semi-automatic type shotgun
Uzi type semi-automatic firearms
Valmet M62, M71S, M76, or M78 type semi-automatic firearms
Weaver Arm Nighthawk
N.J.S.A. 2C:39-1w(1).
[16] Closely related to these allegations of confusion are plaintiffs' objections to the terms `type' and `series' as used in the specific listings. See n. 13 supra (listing as a prohibited weapon, for example, the `ArmaLite AR-180 type'). Plaintiffs' expert claims that the word `type' is properly applied to only Chinese and/or North Korean firearms, and that Western and Russian firearms are never marked or known as a `type.' (Plaintiffs' Exh. 1, Johnson Aff., ถถ 59-60). The plaintiffs conclude that because the words `type' and `series' are not marked on weapons and because weapons are not `known' as such in the industry, these words render the definitions unconstitutionally vague.
[17] Plaintiffs also point out similar confusion surrounding 12 other prohibited weapons classifications. (See Plaintiffs' Exhs., Johnson Aff., Miller Aff., Viden Aff., Doe III Aff., Doe VIII Aff.)
[18] Plaintiffs' expert does not know if the listings for the Australian Automatic Arms SAR, Demro TAC-1 carbine type, G3SA, or PJK M-68 carbine type, actually refer to any existing firearms.
[19] It is also noteworthy that defendants have brought forth some evidence that the use of the word `type' is not without precedent. An advertisement for an A2 Semi-auto Rifle Kit describes the unassembled kit as an `A2 AR-15 type,' which undermines plaintiffs' professed confusion concerning the use of this phrase. (Defendants Exh. R, Flahive Aff., 7/24/98). The word `type' is also utilized to delineate the Treasury Secretary's power to authorize the importation of weapons particularly suitable for sporting purposes. (See e.g., Defendants Exh. F, Treasury Study, p. 6). See also Fresno Rifle and Pistol Club, Inc. v. Van de Kamp, 746 F.Supp. 1415, 1427 Appendix A (E.D.Cal.1990) (upholding California's assault weapons law which included a listing of specific weapons, such as `Avtomat Kalashnikovs (AK) series).
[20] For example, in his affidavit, plaintiff John Doe III states the following:
I own a Remington Model 11-87 12 gauge shotgun stamped `2 พ or 3" Magnum' which holds 5 or 6 of such shotgun shells, but which could hold more than 6 rounds of shorter, non-standard shotgun shells. I own no such shorter shells.
(Plaintiffs' Exh. 9, John Doe III Aff., ถ 4).
[21] For the same reason, plaintiffs' challenge to the prohibition on rifles with fixed magazine capacities over 15 rounds, and the prohibition on large capacity magazines is also unavailing. Plaintiffs' claims, for instance, that John Doe I and II "have no way of knowing whether their magazines will hold and function with more than 15 rounds of shorter ammunition[,]" (Compl. ถ 74), and that the statute "[a]s applied to tubular magazines which may be loaded with different amounts of rounds of ammunition depending on cartridge length" is thus vague, is of no consequence in light of the standard applied to this facial vagueness challenge.
[22] This Attorney General opinion followed at least one New Jersey state court case which declared unconstitutional, in a criminal prosecution, N.J.S.A. 2C:39-5f & 2C:39-1w(2) (dealing with the prohibition of weapons `substantially identical' to the specifically listed weapons). See Plaintiffs' Exh. 21, State v. Robert D. Merrill, Criminal Ind. No. 95-02-260-1 (Law.Div. February 2, 1996).
[23] Significantly, although certainly not determinative of this issue, declaratory judgment actions are permitted in New Jersey. See N.J.S.A. 2C:16-50 to 2A:16-62. To this court's knowledge, however, such a challenge is not presently pending.
[24] The related complaint based on a violation of free speech is discussed infra.
[25] In pertinent part, N.J.S.A. ง 2C:58-12b requires:
b. The owner of an assault firearm purchased on or before May 1, 1990 which is on the list of assault firearms determined by the Attorney General to be legitimate for target-shooting purposes shall have one year from the effective date of P.L.1990, c. 32 (C. 2C:58-12 et al.) to register that firearm. In order to register an assault firearm, the owner shall:
...
(4) Submit valid proof that the person is a member of a rifle or pistol club in existence prior to the effective date of P.L.1990, c. 32 (C. 2C:58-12 et al.). Membership in a rifle or pistol club shall not be considered valid unless the person joined the club no later than 210 days after the effective date of P.L.1990, c. 32 (C. 2C:58-12 et al.) and unless the rifle or pistol club files its charter with the Superintendent no later than 180 days following the effective date of P.L.1990, c. 32 (C. 2C:58-12 et al.). The rifle or pistol club charter shall contain the name and address of the club's headquarters and the name of the club's officers.
[26] N.J.S.A. ง 2C:39-3j provides:
j. Any person who knowingly has in his possession a large capacity ammunition magazine is guilty of a crime of the fourth degree unless the person has registered an assault firearm pursuant to section 11 of P.L.1990, c. 32 (C. 2C:58-12) and the magazine is maintained and used in connection with participation in competitive shooting matches sanctioned by the Director of Civilian Marksmanship of the United States Department of the Army.
[27] Richard Miller, Chairman of the Coalition of New Jersey Sportsmen, Inc., explained why some individuals did not and will not join gun clubs:
some disagreed with the beliefs or principles of a club, including on political issues, conservation issues, or otherwise; some could not afford the membership fees; some did not qualify because they were not acquainted with and thus could not be endorsed by existing members; some did not choose to join a club because they did not wish to be associated with the other members of a specific club; some clubs were filled to capacity and did not have any open membership; and some Coalition members did not reside within a convenient distance of a club.
(Plaintiffs' Exh. 2, Miller Aff., ถ 10).
[28] Interestingly, this case could be removed from the ambit of commercial speech juris-prudence due to the fact that the Act generally bans the listed weapons from New Jersey. In a sense then, plaintiffs wish to commercially express themselves on what could be an illegal transaction. And, of course, communications relating to an unlawful activity are afforded no First Amendment protections. See Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976) ("[T]here is no claim that the transactions proposed in the forbidden advertisements are themselves illegal in any way."); Nordyke v. Santa Clara County, 110 F.3d 707, 710 (9th Cir.1997) (Offer to pay `hit man' one million dollars accorded no First Amendment protection). Nonetheless, this reasoning appears unduly circular and designed only to avoid reaching the harder analytical questions.
[29] Plaintiffs' reliance on SBC Communications, Inc. v. Federal Communications Comm'n, 981 F.Supp. 996, 1001 (N.D.Tex. 1997), which invalidated a law aimed at certain Bell Companies, is misplaced. Better guidance is sought and found in Fresno Rifle and Pistol Club, Inc. v. Van De Kamp, 965 F.2d 723, 727-28 (9th Cir.1992), which rejected virtually the identical bill of attainder challenge asserted here against a California firearms ban. See also Springfield Armory, Inc. v. City of Columbus, 805 F.Supp. 489, 493-96 (S.D.Ohio 1992), rev'd on other grounds, 29 F.3d 250 (6th Cir.1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567954/ | 44 F.Supp.2d 700 (1999)
UNITED STATES of America,
v.
Frank DeSUMMA.
No. CRIM. 98-562-02.
United States District Court, E.D. Pennsylvania.
March 26, 1999.
*701 *702 David Fritchey, Asst. U.S. Atty., Philadelphia, PA, for Plaintiff.
Louis Busico, Newton, PA, for Defendant.
ORDER AND MEMORANDUM
DuBOIS, District Judge.
ORDER
AND NOW, to wit, this 26th day of March, 1999, upon consideration of defendant Frank DeSumma's Motion to Suppress Statements and All Physical Evidence (Document No. 64, filed January 29, 1999), and the related submissions of the parties, following a Hearing and Oral Argument on February 19, 1999, IT IS ORDERED, for the reasons set forth in the accompanying Memorandum, that defendant Frank DeSumma's Motion to Suppress Statements and All Physical Evidence is GRANTED IN PART and DENIED IN PART, as follows:
1. That part of the Motion to Suppress which seeks to suppress the statement of Frank DeSumma with respect to the presence of a weapon is GRANTED;
2. That part of the Motion to Suppress which seeks to suppress the weapon seized from the vehicle of defendant, Frank DeSumma, as a result of his statement is DENIED.
MEMORANDUM
I. FACTS AND PROCEDURAL HISTORY[1]
On September 29, 1998, four Special Agents of the Federal Bureau of Investigation ("FBI") arrested defendant Frank DeSumma pursuant to a complaint and warrant.[2] On October 28, 1998, a Federal grand jury returned a nine-count Indictment against DeSumma and two co-defendants, Peter C. D'Amelio and George Delia, for extortionate debt collection and weapons violations. On November 5, 1998, defendants pled not guilty to all counts of the Indictment.[3] On November 16, 1998, the Court denied defendant DeSumma's Motion for Pre-trial Release.
On January 29, 1999, DeSumma filed a Motion to Suppress Statements and All Physical Evidence; the government responded on February 17, 1999. On February 19, 1999, the Court held a hearing and oral argument on the motion. The government called one witness, Special Agent S.J. Giarrizzo of the FBI. The following facts surrounding defendant's arrest were established.
On September 29, 1998, Special Agent Giarrizzo was part of a four-person team of FBI agents charged with executing an arrest warrant for the defendant. Special Agent Giarrizzo stated that to his knowledge neither he nor the other members of the arrest team had any paperwork with them other than the arrest warrant. The team of agents went to Club Ricochet, a "gentleman's club" on Oxford Valley Road in Lower Bucks County. While an agent entered the club to find the defendant the rest of the team waited outside in the club's parking lot.
After the agent used a "ruse" to get the defendant out of the club and into the parking lot, at least two of the agents who waited in the parking lot identified themselves as federal officers. Special Agent Giarrizzo told defendant that he was under arrest. At this point, the defendant was "just a few paces, maybe ten or fifteen feet" from his car, and he was surrounded *703 by the arrest team. N.T. at 48. Although the arrest was "instantaneous" with the defendant's emergence from the club, id. at 55, in a few seconds' time he reached his car, at which time he was stopped by Special Agent Giarrizzo. Defendant attempted to place his hands on the hood of his vehicle, but he was told that that was not necessary.[4] He was then handcuffed and subjected to a pat-down search by Special Agent Giarrizzo. As the agent was conducting the pat-down search, he asked the defendant whether he had any weapons. Defendant responded that he had a weapon inside of his car, indicated that his car was locked with a key-number lock system, and provided the key number to unlock the car. While searching the vehicle the agents found the gun. At no point in this sequence did the agents advise the defendant of his Miranda rights. Special Agent Giarrizzo stated that they searched the vehicle only because of defendant's response to his question about weapons. N.T. at 60.
In the suppression motion, defendant argues that his statement to Special Agent Giarrizzo that there was a weapon in his car was illegally obtained because he had not been advised of his rights as required by Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966). It is defendant's position that the weapon seized from his vehicle was obtained as a direct result of this violation, and thus must be suppressed under Wong Sun v. United States, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963).
The government argues that this case fits within the "public safety exception" to Miranda established in New York v. Quarles, 467 U.S. 649, 104 S.Ct. 2626, 81 L.Ed.2d 550 (1984). In the alternative, the government argues that the search of the car was valid under the "automobile exception" to the search warrant requirement established in Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925).[5] The Court will address the admissibility of the statement and the weapon in turn.
II. DISCUSSION
A. The Statement
Where a defendant seeks to suppress a post-arrest statement, the government bears the burden of establishing by a preponderance of the evidence that the statement was not the product of custodial interrogation conducted in the absence of Miranda warnings. Colorado v. Connelly, 479 U.S. 157, 107 S.Ct. 515, 93 L.Ed.2d 473 (1986). In the absence of Miranda warnings, the government has the burden of establishing that the interrogation fits within a recognized exception to the Miranda rule. See id.
1. Miranda
In Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the Supreme Court examined a defendant's Fifth Amendment right to be free from compelled self-incrimination in the context of custodial interrogation; the Court has repeatedly held that certain procedural safeguards were necessary to "dissipate the compulsion inherent in custodial interrogation and, in so doing, guard against abridgement of [a] suspect's Fifth Amendment rights." Moran v. Burbine, 475 U.S. 412, 425, 106 S.Ct. 1135, 89 L.Ed.2d 410 (1986); see Miranda, 384 U.S. at 468, 86 S.Ct. 1602. These safeguards include certain rights that an accused must be informed of, and must waive, before interrogation can commence:
He must be warned prior to any questioning that he has the right to remain silent, that anything he says can be used *704 against him in a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires. Opportunity to exercise these rights must be afforded to him throughout the interrogation.
Miranda, 384 U.S. at 479, 86 S.Ct. 1602. Only if there is a knowing, voluntary, and intelligent waiver of the rights expressed in the warnings can police question a suspect without counsel being present and introduce at trial any statements made during the interrogation. See id.
2. Public Safety Exception to Miranda
In New York v. Quarles, 467 U.S. 649, 104 S.Ct. 2626, 81 L.Ed.2d 550 (1984), the Court fashioned an important exception to the Miranda requirements. In that case, a young woman told two police officers that she had just been raped, that her assailant had just entered a nearby store, and that he was carrying a gun. Upon entering the store the officers quickly spotted the defendant. After a short chase, the defendant was caught and searched. Because he was wearing an empty shoulder holster, and mindful of the victim's warning, the arresting officer asked him where the gun was located before reading him the Miranda warnings. See id. at 651-52, 104 S.Ct. 2626. The defendant nodded in the direction of some empty cartons and stated, "the gun is over there." In concluding that the statement and the gun should not be suppressed, the Court held that "concern for public safety must be paramount to adherence to the literal language of the prophylactic rules enunciated in Miranda." Quarles, 467 U.S. at 653, 104 S.Ct. 2626.
The public safety exception applies only where there is "an objectively reasonable need to protect the police or the public from any immediate danger associated with [a] weapon." Id. at 659 n. 8, 104 S.Ct. 2626. Thus, absent circumstances suggesting such danger, the need for the exception is not apparent, and the suspicion that the questioner is on a fishing expedition outweighs the belief that public safety motivated the pre-Miranda questioning.
What is objectively reasonable, of course, depends upon the circumstances of the arrest. In United States v. Mobley, 40 F.3d 688 (4th Cir.1994), the arresting officers asked the defendant whether he had a weapon when he was naked, handcuffed, and removed from his house before questioning. In refusing to apply the public safety exception, the Fourth Circuit stressed the "exceptive nature" of the Quarles rule, stating that as such it must be construed narrowly. Mobley, 40 F.3d at 693. There was nothing that separated the arrest from "an ordinary and routine arrest scenario"; thus the court in Mobley held that it was bound to follow Miranda, not its exception. Id.
The government cites cases which support the proposition that the test for applying the public safety exception is objective reasonableness. In United States v. DeSantis, 870 F.2d 536 (9th Cir.1989), the Ninth Circuit held that whether the arresting officers believed the defendant might have had a weapon is not dispositive. Rather, other circumstances in DeSantis suggested danger: (1) before the arresting officers asked the defendant whether he had a weapon, the defendant was not secured in handcuffs, and (2) the defendant asked if could go to another room in the house so that he could change clothes before being taken to court. In United States v. Brady, 819 F.2d 884 (9th Cir. 1987), the arresting officer had reason to be concerned because he was confronted with a potential kidnap victim and saw an individual carrying a knife near the scene. Thus, under the circumstances, it was objectively reasonable to believe that the officer might be in danger.
The facts in the instant case are quite different. As noted, defendant was *705 alone when arrested, with agents surrounding him. There is no evidence that the agents knew he was carrying a weapon, or had access to one. Nor is there any evidence that the arresting agents were aware of the defendant's previous use of a firearm in this case.[6]
The Court finds that this was "an ordinary and routine arrest scenario," and thus concludes that the arresting agents had an insufficient factual basis from which they might reasonably conclude that the defendant presented a danger to themselves or the public.[7]Mobley, 40 F.3d at 693. The arresting agents should have given defendant Miranda warnings. They did not, and the statement must be suppressed.
B. The Gun
The Court must next determine whether the gun found in defendant's car must be suppressed because of the Miranda violation. The standard for suppression of physical evidence derived from Miranda violations has not been settled definitively by the Supreme Court or the Third Circuit.
1. Elstad
In Oregon v. Elstad, 470 U.S. 298, 105 S.Ct. 1285, 84 L.Ed.2d 222 (1985), the Supreme Court refused to suppress a confession validly obtained after proper Miranda warnings purely because it came after a prior confession elicited during an unwarned, custodial interrogation. The Supreme Court recognized that the "fruit of the poisonous tree" doctrine enunciated in Wong Sun v. United States, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963) forbids the use of evidence obtained as a result of a constitutional violation, but held that because Miranda is a prophylactic rule, a Miranda violation does not necessarily preclude the use of all evidence flowing therefrom. Elstad, 470 U.S. at 306-09, 105 S.Ct. 1285.
Derivative evidence is suppressed only where the Fifth Amendment itself is violated, which, according to the Elstad Court, occurs where the statement itself is not voluntary. A showing of actual coercion in obtaining the statement will meet this standard. Id. at 305, 105 S.Ct. 1285. See also United States v. Johnson, 816 F.2d 918, 922-23 (3d Cir.1987)(stating that absent constitutionally impermissible coercion in eliciting an initial confession, adequate Miranda warnings before a subsequent voluntary confession validates that confession).
Although neither the Supreme Court nor this Circuit has extended Elstad to apply to physical evidence seized as a consequence of a Miranda violation, the Third Circuit has noted that in Elstad, the Supreme *706 Court specifically rejected the proposition that the "fruit of the poisonous tree" doctrine extends to violations of Miranda. Johnson, 816 F.2d at 922-23. In addition, every circuit that has considered the issue has construed Elstad to apply equally to all forms of derivative evidence. See, e.g., United States v. Elie, 111 F.3d 1135, 1142 (4th Cir.1997)("derivative evidence obtained as a result of an unwarned statement that was voluntary under the Fifth Amendment is never `fruit of the poisonous tree.'") (citations omitted); United States v. Mendez, 27 F.3d 126, 130 (5th Cir.1994)("[t]he derivative evidence rule operates only when an actual constitutional violation occurs, as where a suspect confesses in response to coercion."); United States v. Sangineto-Miranda, 859 F.2d 1501, 1515 (6th Cir.1988)("where police simply fail to administer Miranda warnings, the admissibility of nontestimonial physical evidence derived from the uncounseled statements should turn on whether the statements were voluntary within the meaning of the Fifth Amendment"); United States v. Gonzalez-Sandoval, 894 F.2d 1043, 1048 (9th Cir.1990)(finding that "tainted fruits" doctrine does not apply to physical evidence obtained through Miranda violation); see also United States v. Coley, 974 F.Supp. 41 (D.D.C.1997)(finding that absent proof of unconstitutional conduct, there is no requirement that fruit of Miranda violation be excluded); Wayne R. LaFave & Jerald H. Israel, Criminal Procedure § 9.5(b), at 201 (Supp.1991)(noting that "Elstad only rejected application of the fruits doctrine as applied to a subsequent confession," but that "there is much in the Court's opinion that suggests that the fruits doctrine should also be inapplicable to physical evidence acquired through a Miranda-violative confession"). But see United States v. Byram, 145 F.3d 405, 409 (1st Cir.1998) (applying fruits doctrine to second statement where Miranda violation is not merely technical, there is a "substantial nexus" between the violation and the original statement, and second statement not preceded by Miranda warnings).
The Fourth, Fifth, Sixth, and Ninth Circuits have held that the physical evidence seized as a result of a Miranda violation is to be suppressed only upon a showing that the original statement was not voluntary. This Court concurs, and concludes that physical evidence obtained because of a voluntary statement obtained in violation of Miranda need not be suppressed because of the Miranda violation. If a statement that reveals the existence or location of physical evidence is voluntary and not itself the product of a constitutional violation, the physical evidence will be admissible unless excluded for some other reason.
2. Voluntariness of the Statement
In the context of the Fifth Amendment, "coercive police activity is a necessary predicate to the finding that a [statement] is not `voluntary'...." Colorado v. Connelly, 479 U.S. 157, 167, 107 S.Ct. 515, 93 L.Ed.2d 473 (1986); Defendant in this case revealed the existence and location of the gun with a single statement made in response to a single question. He volunteered the key number for the agents to unlock the car and retrieve the gun. At that time he had been in custody only for a few minutes, at most. The record contains no evidence of coercive police activity or compulsion of any kind. Thus, the Court concludes that defendant's statement was voluntary, and the gun will not be suppressed as tainted fruit.
3. The Automobile Exception
Having determined that the gun should not be suppressed as a fruit of the poisonous tree, the Court must determine whether the search of the car was valid. The Fourth Amendment protects against unreasonable searches. U.S. Const. amend. IV. A search is reasonable when supported by probable cause. United States v. Verdugo-Urquidez, 494 U.S. 259, 297-98, 110 S.Ct. 1056, 108 L.Ed.2d 222 (1990). Probable *707 cause exists when, at the moment of the search, the facts and circumstances within the officers' knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that an area contains evidence of a crime. See Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 13 L.Ed.2d 142 (1964)(discussing probable cause in context of arrest).
Although defendant's admission that there was a weapon in his vehicle will be suppressed because of the Miranda violation, it provided probable cause for the search of the car, where the weapon was subsequently found. Because the agents had probable cause to search the vehicle, there was no need for a warrant. Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925); Karnes v. Skrutski, 62 F.3d 485, 498 (3d Cir.1995)(noting that "the automobile exception to the warrant requirement allows warrantless searches of any part of a vehicle that may conceal evidence where there is probable cause to believe that the vehicle contains evidence of a crime.")(internal citations omitted). Thus, the search was valid, and the gun may be offered in evidence in the government's case-in-chief.
III. CONCLUSION
For the foregoing reasons, the Court will grant defendant's Motion to Suppress to the extent that it seeks to exclude his response to Special Agent Giarrizzo's pre-Miranda questions, and deny the motion with respect to the weapon.
NOTES
[1] For a more thorough discussion of the procedural history of this case, see United States v. D'Amelio, No. 98-562-01, 1998 WL 800345 (E.D.Pa. Nov. 16, 1998).
[2] Also arrested on that date at different locations were DeSumma's co-defendants, Peter C. D'Amelio and George Delia.
[3] D'Amelio is charged in Counts 1, 2, 5, and 6. DeSumma is charged in Counts 1-8. Delia is charged in Counts 1, 4, 5, and 9.
[4] Special Agent Giarrizzo stated that he was uncertain whether DeSumma ever touched his car. N.T. at 56.
[5] The government also submits that the vehicle search was permissible as a search incident to arrest. Because the Court holds that the gun should not suppressed, the Court need not address this argument.
[6] The government states that the agents knew that the defendant was armed because the arrest warrant detailed both his criminal history and a recent shooting incident. However, no such evidence was presented at the suppression hearing. Special Agent Giarizzo, the government's sole witness, made no reference to the contents of the arrest warrant, the supporting affidavit, or the defendant's admission that he was a convicted felon. Unverified representations of counsel in legal memoranda are not evidence and thus are accorded no weight in the Court's findings of fact. See Cisternas-Estay v. I.N.S., 531 F.2d 155, 157 n. 1 (3d Cir.1976)("[U]ncontroverted statements of counsel should not be considered part of the record."); Prince v. Sun Shipbuilding & Dry Dock Corp., 86 F.R.D. 106, 107 (E.D.Pa.1980)(representations of counsel in a brief are not part of the record). Thus, the Court will not infer that the arresting officers knew the information contained in the affidavit.
[7] The government argues that because the arrest warrant was, in part, for firearms violations, the arrest team had reason to be concerned for the presence of weapons. However, assuming arguendo, the arresting agents were aware of the contents of the arrest warrant, applying the exception solely because the defendant was wanted for a weapons violation would be tantamount to establishing a per se rule that the public safety exception applies to every firearms arrest. The Court is unwilling to create such a rule in light of the narrow construction which must be given to the Quarles exception. See Mobley, 40 F.3d at 693. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567971/ | 44 F.Supp.2d 593 (1999)
Brenda HICKS, Plaintiff,
v.
IBM, et al., Defendants.
No. 98 Civ. 5228 (CM).
United States District Court, S.D. New York.
April 16, 1999.
*594 Sheri M. Hatton, Sussman, Bergstein & Wotorson, Goshen, NY, for Brenda Hicks, plaintiff.
Jay E. Gerber, Davis Weber & Edwards, P.C., New York City, for IBM, defendant.
John Houston Pope, Davis Weber & Edwards, New York City, for defendants.
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT RICKER'S MOTION TO DISMISS PLAINTIFF'S CLAIM FOR RELIEF UNDER SECTION 296(6) OF THE NEW YORK STATE EXECUTIVE LAW AND OTHERWISE DENYING THE INDIVIDUAL DEFENDANTS' MOTION TO DISMISS
McMAHON, District Judge.
Plaintiff Brenda Hicks, who is half Native American and half African American, brought this employment discrimination claim against her current employer IBM, and against four employees, for violation of 42 U.S.C. § 1981 and New York's Executive Law §§ 296 and 297. The complaint alleges that the four individual Defendants implemented racially discriminatory job assignments, failed to provide commensurate training, and permitted the existence of a racially oppressive work environment. The individual Defendants have filed this motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, on the grounds that neither 42 U.S.C. § 1981 nor the relevant sections of the Executive Law give rise to a claim against an individual as opposed to a contracting party. Defendant IBM has not joined in the motion. For the reasons that follow, the motion is denied.
Background
The complaint alleges as follows: since 1983, Plaintiff has been an employee of IBM, assigned to the MET laboratory located in East Fishkill, New York. (Cmplt.¶ 9.) During her years at IBM Fishkill, she has received positive reviews and, in 1993, was promoted from Production Operator to Senior Lab Technician. (Complt.¶¶ 10, 37.)
In January of 1996, Plaintiff alleges that she began experiencing racial and national origin discrimination. (Cmplt.¶ 11.) Plaintiff contends that Defendant Marty Ricker. ("Ricker"), a laboratory engineer and Plaintiff's assigned mentor, made inappropriate remarks regarding Plaintiff's *595 race and gender and on one occasion pulled her hair. (Cmplt. ¶¶ 12-16.) Plaintiff alleges that Ricker made comments about Plaintiff's race such as "send them to school, clean them up and they still belong on the cotton field" and "I'm tired of black people taking taxes." (Cmplt. ¶ 12.) Plaintiff also asserts that Ricker, in the presence of Plaintiff, made inappropriate remarks about Blacks on welfare, and that Ricker asked her if her son owned a "boom box," a question that Plaintiff alleges demonstrates his racial stereotyping. (Cmplt. ¶¶ 14, 16.) Plaintiff asserts that these remarks incited racial comments from other employees, thereby creating a hostile work environment. (Cmplt. ¶ 42.) In late 1996, Plaintiff's entire department was required to attend diversity training (Cmplt. ¶ 18), but Plaintiff alleges that the employees' inappropriate remarks continued after the training. (Cmplt. ¶ 19, 21.) Plaintiff also alleges that Ricker failed to mentor her because of her race and national origin. (Cmplt. ¶ 45.)
Each time a racially offensive incident occurred, Plaintiff notified her lab manager, Defendant George Walker ("Walker"). (Cmplt. ¶¶ 17, 22.) Plaintiff alleges that both Ricker and Walker failed to assign her diverse work assignments in comparison to her Caucasian co-employees. (Cmplt. ¶ 45.) Further, Plaintiff asserts that Walker failed to take adequate steps to alleviate the harassment. (Cmplt. ¶ 28.)
In April of 1998, Plaintiff reported her complaints to Defendant J.J. Sinnott ("Sinnott"), Vice President of Human Resources. (Cmplt. ¶ 29.) Sinnott assigned the matter to Defendant Dr. Katherine Frase ("Frase"), another Vice President of Human Resources. (Cmplt. ¶ 30.) Plaintiff alleges that Frase failed to make any meaningful investigation and recommendation for corrective action. (Cmplt. ¶ 31.) Sinnott established a procedure for Plaintiff to meet with Walker on a weekly basis to report the work that Plaintiff was assigned and whether it had been completed. (Cmplt. ¶ 34.) Plaintiff contends that this procedure resulted in micro-management of her work and that Walker threatened her continued employment with IBM. (Cmplt. ¶¶ 34, 35.)
Plaintiff subsequently brought this action alleging that IBM and the individual Defendants, Ricker, Walker, Sinnott, and Frase have violated 42 U.S.C. § 1981 and New York Executive Law §§ 296 and 297.
Discussion
On a motion to dismiss pursuant to FED. R.CIV.P. 12(b)(6), this court must accept as true the factual allegations in the complaint and draw all reasonable inferences in favor of the plaintiff. See Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir.1994). The court should grant a motion to dismiss only if, after viewing plaintiff's allegations in a favorable light, it appears beyond doubt that Plaintiff can prove no set of facts in support of her claim. See Valmonte v. Bane, 18 F.3d 992, 998 (2d Cir. 1994).
Individual Liability under § 1981
42 U.S.C. § 1981 states:
(a) All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefits of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
(b) For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship.
(c) The rights protected by this section are protected by impairment by nongovernmental discrimination and impairment under color of state law.
*596 Section 1981 was passed under the Civil Rights Act of 1866 to implement the 13th Amendment and to prohibit all discrimination based on race. See Jett v. Dallas Independent School District, 491 U.S. 701, 713-714, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989). As construed by the courts for many years, § 1981 provided protection only to the process of making the employment contract, and therefore did not give rise to claims of racial or ethnic discrimination that occurred during the contractual relationship. See Patterson v. McLean Credit Union, 491 U.S. 164, 176, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989). However, the Civil Rights Act of 1991 broadened § 1981 to include performance of the contract as part of the phrase "make and enforce contracts." See 42 U.S.C. § 1981(b). Thus, acts of discrimination that occur at any time during the contractual relationship can also give rise to liability under § 1981.
Defendants assert that, by keeping the language "make and enforce contracts," Congress intended that § 1981 apply only to employers, and that individual employees of a corporation, who are not parties to the underlying employment contract, cannot be held liable under § 1981. As both parties concede, the issue of whether § 1981 provides for individual liability has not been clearly resolved and there is no controlling authority in the Second Circuit. Defendants contend, however, that individual liability under § 1981 would be inconsistent with the Court of Appeals' decision in Tomka v. Seiler Corp., 66 F.3d 1295 (2d Cir.1995).
In Tomka, the court concluded that Title VII of the Civil Rights Act of 1964 did not contemplate imposing liability on individuals employed by an "employer." After analyzing the legislative history of Title VII, the court rationalized that finding individual liability would lead to results that Congress never intended. See id at 1314. There is no mention, for example, of agency liability in the floor debates, implying that Congress did not contemplate it under Title VII. See id. Further, the court found that Congress could not have meant to create a situation where the plaintiff could settle with the employer and leave the defendant employees to bear the burden of the judgment. See id. at 1315.
The Defendants argue that this rationale applies equally to the amendments to § 1981. Defendants assert that Congress could not have intended to expose individuals to liability by adding "performance" under § 1981 when they could not be held liable under Title VII. In effect, Defendants argue that § 1981 is co-extensive with Title VII in the area of employment contracts.
However, in reaching its conclusion that Title VII did not contemplate individual liability, the court in Tomka took pains to distinguish § 1981 from Title VII. Title VII, for example, established limitations on damages according to employer size exempting employers with less than fifteen employees. See Tomka, 66 F.3d at 1315. Thus, the court reasoned that if Congress had intended to encompass individual liability under Title VII, it would have included individuals in the calibrations and discontinued the exemption. See id. There are no corresponding limitations on damages under a § 1981 claim. See id. at 1316. Further, the court recognized that Title VII and § 1981 give rise to distinct causes of action. See id. The Tomka majority also acknowledged the dissent's note that employer-entities and their agents can face unlimited liability under 42 U.S.C. § 1981. See Tomka, 66 F.3d at 1316.
The Second Circuit concluded that the "significant differences in the statutory enforcement mechanism, coverage, and remedial provisions of § 1981, as distinguished from Title VII, reveal that the breadth of one statute provides no support for divining the intent of Congress in limiting the coverage of the other." Id. at 1317. Thus, the court's analysis of the distinction between Title VII and § 1981 and its affirmation of the "breadth" of the *597 latter, strongly suggest that individuals can be held liable under § 1981.[1] Several district courts in the Circuit have so held. See Ayton v. Lenox Hill Hospital, No. 93 Civ.6601, 1997 WL 10000 *8 (S.D.N.Y. Jan.10, 1997); Northup v. Connecticut Commision on Human Rights & Opportunities, No. Civ. 3:97-211, 1998 WL 118145 *3 (D.Conn. Feb.2, 1998); Amin v. Quad/Graphics, Inc., 929 F.Supp. 73, 78 (N.D.N.Y.1996).
Defendants argue that those cases that have permitted individual liability have not considered the anomaly of recognizing individual liability for § 1981 claims and not for Title VII claims. Defendants assert that allowing individual liability under § 1981 is opening a Pandora's box of litigation among co-workers that Congress could not have intended. It appears to this Court, however, that Congress itself opened that Pandora's box when it amended § 1981 in a way that encompassed every aspect of the employment relationship, despite the existence of another perfectly effective remedy (Title VII) to redress racial and ethnic discrimination in the employment context. In effect, Congress removed certain limitations it had written into Title VII for race and ethnicity cases, without amending that statute. As is often the case, litigants and the courts must live with the consequences.
However, individual liability under § 1981 is not without limits. In each of the cases that have allowed individual liability, the individuals have been supervisors who were personally involved in the discriminatory activity. See Ayton v. Lenox Hill Hospital, 1997 WL 10000 at *8; Northup v. Connecticut Commission on Human Rights, 1998 WL 118145 at *3; Amin v. Quad/Graphics, Inc., 929 F.Supp. at 78. See also Richard v. Bell Atlantic Corp., 946 F.Supp. 54, 74 (D.C.1996) (holding that officers, directors and employees of corporation may be held personally liable when they intentionally infringe on § 1981 rights); Leige v. Capitol Chevrolet, Inc., 895 F.Supp. 289, 293 (M.D.Ala.1995) (holding individuals with capacity to hire and fire or make recommendations to those decisions are subject to liability). That limitation gives meaning to the statutory "make and enforce" language; those who can be held liable are those who have the authority to act on behalf of an employer in making and enforcing the employer's contracts. To the same effect is the Fifth Circuit's decision in Bellows v. Amoco Oil Co., 118 F.3d 268, 274 (5th Cir.1997). In Bellows, the court narrowed the holding of Faraca v. Clements, 506 F.2d 956, 959 (5th Cir.1975), where the Director of the Georgia Retardation Center was subject to liability under § 1981 when he decided not to hire the plaintiff because plaintiff was married to an African American woman. The court in Bellows stated that the director was personally liable because he and the employer, the State of Georgia, were essentially one and the same. See Bellows, 118 F.3d at 274. The director was acting on behalf of the state; his hiring decision was indistinguishable from that of the employer. See id. Thus, individuals should be held liable under § 1981 only when they are essentially one and the same with the employer; that is when they have the capacity to make and enforce the contract between the employer and the employee.
Plaintiff alleges that Defendants Ricker and Walker exercised supervisory authority over Plaintiff (Complt.¶ 41), and *598 that Defendants Sinnott and Frase are Principal Agents of the employer, IBM. (Complt.¶¶ 3,4.) The question of whether the individual Defendants have the capacity to make and enforce contracts, thereby subjecting them to potential liability under § 1981, survives Defendants' motion to dismiss.
Intent to Discriminate
Defendants also argue for dismissal because Plaintiff fails to allege sufficient facts to establish the required discriminatory intent under § 1981. Defendants assert that Plaintiff makes only broad, conclusory statements of racial discriminatory intent.
To establish a claim under § 1981, a Plaintiff must allege sufficient facts to support the following elements: "(1) the plaintiff is a member of a racial minority; (2) an intent to discriminate on the basis of race by the defendant; and (3) the discrimination concerned one or more of the activities enumerated in the statute (i.e. make and enforce contracts)." Mian v. Donaldson, Lufkin & Jenrette Securities Corp., 7 F.3d 1085, 1087 (2d Cir.1993). When discriminatory intent is in question, courts are cautious of summary adjudication. See Schwapp v. Town of Avon, 118 F.3d 106, 110 (2d Cir.1997). However, conclusory statements of discriminatory intent are not enough to survive a motion to dismiss. See Yusuf v. Vassar College, 35 F.3d 709, 713 (2d Cir.1994). Further, a complaint that identifies other possible motives, combined with a lack of specific factual support of racial animus, contradicts a claim of racial discrimination. See id. at 714.
Defendant Ricker argues that Plaintiff's allegations regarding his comments and actions, albeit insensitive, lack any racial hostility. Defendant Ricker also asserts that Plaintiff's allegations that he treated her differently because she was a woman undermine her § 1981 claim.[2]
Defendant is correct that Plaintiff's allegation that "Defendant Ricker pulled her hair and commented that he did not know that it was real" (Complt.¶ 13) and that gender-orientated comments such as "because you are a woman, you cannot do this" (Complt.¶ 12), do not establish the necessary racial discrimination. However, "the real question is whether the complaint alleges facts sufficient to raise an inference of racial motivation." Williams v. Greendolf, Inc., 735 F.Supp. 137, 139 (S.D.N.Y. 1990). In the cases that Defendant Ricker relies on, no facts were pleaded to support an inference of racial discrimination. See Yusuf, 35 F.3d at 714 (plaintiff offered no reason to suspect that disciplinary panel's action had anything to do with race other than his assertion that panel members were white and he was Bengali); De Jesus-Keolamphu v. Village of Pelham Manor, 999 F.Supp. 556, 565 (S.D.N.Y. 1998) (plaintiff alleged no facts that any actions taken were motivated by racial animus). Here, Plaintiff does allege that Ricker made racially motivated comments. Plaintiff alleges that Ricker commented about blacks on welfare in Plaintiff's presence (Complt.¶ 14), and that Ricker made the comments "send them to school, clean them up and they still belong in the cotton field" and "I'm tired of black people taking taxes." (Complt.¶ 12.) These allegations are sufficient to give rise to an inference of discriminatory intent. The motion to dismiss the § 1981 claim against Defendant Ricker is denied.
Defendants Walker, Sinnott and Frase contend that Plaintiff alleges only that they were indifferent to her plight, not that they were purposefully discriminatory because of her race. These Defendants rely on Karibian v. Columbia University, 930 F.Supp. 134 (S.D.N.Y.1996), to suggest that such indifference does not establish *599 the required purposeful intent. In Karibian, the court held that an employer cannot be held liable, under Title VII and the Human Rights Law, for failure to take investigative or remedial measures in response to a discrimination complaint when it is determined that no discrimination has occurred. See id. at 148.
However, Defendants are not the employer and this is not a Title VII claim. In Amin v. Quad Graphics, 929 F.Supp. 73, 78 (N.D.N.Y.1996), the court held that individual supervisors could be held liable under § 1981 if they were personally involved in the discriminatory activity. See id. at 78. The court held that the "element of personal involvement may be satisfied by proof that a supervisor had knowledge of alleged acts of discrimination and failed to remedy or prevent them." Id. Because the plaintiff in Amin offered evidence that the defendant supervisors had knowledge of discrimination and failed to act, a question of fact existed and the motion for summary judgment was dismissed. See id. at 79.
Similarly, Plaintiff alleges that Defendants Walker, Sinnott and Frase were aware of the alleged hostile work environment and failed to take adequate steps to remedy the situation. (Complt.¶¶ 28, 31.) The motion to dismiss the § 1981 claim against these Defendants is denied.
Individual Liability under New York Executive Law § 296
Discrimination claims brought under New York's Human Rights Law may be made pursuant to N.Y.EXEC.LAW § 296(1) or N.Y.EXEC.LAW § 296(6). See Bascomb v. Smith Barney, Inc., No. 96Civ.8747, 1999 WL 20853 *5 (S.D.N.Y. Jan.15, 1999). Section 296(1)(a) provides that "it shall be unlawful discriminatory practice for any employer ... to discriminate against such individual in compensation or in terms, conditions or privileges of employment." The New York Court of Appeals has held that "a corporate employee is not subject to individual liability as an employer under the Human Rights Law if he is not shown to have an ownership interest or any power to do more than carry out personnel decisions made by others." Patrowich v. Chemical Bank, 63 N.Y.2d 541, 542, 483 N.Y.S.2d 659, 660, 473 N.E.2d 11, 12 (1984).
However, the Second Circuit has also imposed individual liability under its interpretation of N.Y.EXEC.LAW § 296(6), which states that "it shall be unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under this article, or attempt to do so." N.Y.EXEC.LAW § 296(6). In Tomka v. Seiler Corp., 66 F.3d 1295, 1317 (2d Cir.1995), the court distinguished Patrowich, and held that individuals may be liable, under § 296(6), even without an ownership interest or the authority to hire and fire, if they actually participated in the discrimination.[3]See Tomka, 66 F.3d at 1317. Thus, the court denied a motion to dismiss when the plaintiff alleged that each defendant participated in the discrimination and created a hostile work environment. See id.
Defendants assert that Plaintiff fails to allege that any of them are employers, as defined by Patrowich, to establish a claim of individual liability under § 296(1). Defendants contend that the only allegation Plaintiff makes to support such a claim that Defendants have the authority to terminate her is presented in her *600 brief, rather than the complaint, and cannot be used to defeat the motion to dismiss. See Benedict v. Amaducci, No. 92 Civ.5239, 1995 WL 702444 *3 (S.D.N.Y. Nov.28, 1995). However, Plaintiff alleges in her Complaint that Defendants Ricker and Walker are her supervisors and that Defendants Sinnott and Frase are Principal Agents of IBM. These facts, accepted as true, are sufficient to support a claim that they have the authority to terminate her.
Defendants also contend that, to be liable under § 296(6) as aiders and abettors, they must aid and abet the employer's independent acts of discrimination. Because the individual Defendants' conduct forms the basis of IBM's liability, Defendants argue that they cannot be subject to aiding and abetting liability. "It is the employer's participation in the discriminatory practice that serves as the predicate for the imposition of liability on others for aiding and abetting." Murphy v. ERA United Realty, 251 A.D.2d 469, 674 N.Y.S.2d 415, 417 (2d Dept. 1998). See also Bascomb v. Smith Barney, No.96Civ.8747, 1999 WL 20853 *5 (S.D.N.Y. Jan.15, 1999) (noting that claim may be directed at persons who aid and abet an employer's violation of the statute). But see McIlwain v. Korbean Int'l Investment Corp., 896 F.Supp. 1373, 1383 (S.D.N.Y.1995) (holding that an individual who is employee of corporation can aid, abet, incite a primary violation committed by another employee or the business itself) (emphasis added).
At this stage, it is too early to dismiss Plaintiff's aiding and abetting claim against Defendants Walker, Sinnott and Frase. In DeWitt v. Lieberman, No. 97 Civ. 4651, 1999 WL 13236 *12 (S.D.N.Y. Jan.13, 1999) the court held that the plaintiff could not prevail against a co-employee under § 296(6) until she established employer liability and granted the individual defendant's motion for summary judgment. See id. The court held that under New York law, an "employer cannot be held liable for an employee's discriminatory act unless the employer became party to it by encouraging, condoning, or approving it." Id. Because the plaintiff offered no evidence that the employer encouraged, condoned or approved the individual defendant's actions, the claim against the individual defendant was dismissed. See id.
Here, Plaintiff alleges that Defendants Walker, Sinnott and Frase, all supervisory personnel, failed to take adequate actions to correct the discrimination, and viewing these allegations in a favorable light, thereby encouraged, condoned or approved Defendant Ricker's conduct. It is axiomatic that a corporation can only act through its employees; therefore, a large corporate employer like IBM can only "encourage, condone, or approve" discrimination by the acts of supervisors like Sinnott and Frase and (arguably) Walker. Thus, it is possible that these individual Defendants may be liable under § 296(6) for aiding the employer's violation in light of Tomka, 66 F.3d at 1317.[4] The motion to dismiss the claim against them is denied.
Ricker stands in a different place. He is alleged to have committed, and incited other unnamed employees to commit, the very discriminatory acts that are at issue here. I therefore dismiss the § 296(6) claim against him, on the thoery that the primary actor cannot be an aider and abettor of his own actions.
*601 Conclusion
The individual Defendants' motion to dismiss Plaintiff's claims under 42 U.S.C. § 1981 and N.Y.EXEC.LAW § 296 is denied, except that Defendant Ricker's motion to dismiss Plaintiff's claim under § 296(6) is granted.
This constitutes the decision and order of the Court.
NOTES
[1] Jett v. Dallas Independent School District, 491 U.S. 701, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989), also suggests that individuals can be held liable under § 1981. In Jett, the Petitioner brought a § 1981 discrimination action against the school district and against the school principal in his official and personal capacities. See id. at 707, 109 S.Ct. 2702. At the trial level, the jury awarded damages against the Principal. See id. The District Court set aside the punitive damages award against the principal as unsupported by the evidence, and the Principal subsequently reached a settlement with Petitioner. See id. at 708, 109 S.Ct. 2702. The issue of whether the principal could be held individually liable under § 1981 was never specifically addressed.
[2] § 1981 does not prohibit gender discrimination. See Anderson v. Conboy, 156 F.3d 167, 170 (2d Cir.1998) (citing Runyon v. McCray, 427 U.S. 160, 167, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976)).
[3] The holding of Tomka is a subject of controversy among the New York courts. Some courts have adopted the holding. See Steadman v. Sinclair, 223 A.D.2d 392, 636 N.Y.S.2d 325 (1st Dept 1996); Peck v. Sony Music Corp., 221 A.D.2d 157, 632 N.Y.S.2d 963 (1st Dept 1995). Other courts have regarded the Tomka holding as contrary to the statutory term "employer" in § 296(1) and the authority of Patrowich in defining the term. See Trovato v. Air Express Int'l, 238 A.D.2d 333, 655 N.Y.S.2d 656 (2d Dept1997); Foley v. Mobil Chemical Co., 170 Misc.2d 1, 647 N.Y.S.2d 374 (S.C.1996). The New York Court of Appeals has yet to address the issue with a definitive ruling.
[4] Defendants also argue that Plaintiff fails to mention in her complaint that the Defendants should be held liable pursuant to § 296(6), under aiding and abetting. However, the failure of a complaint to cite a statute (or in this case a subsection of the statute) in no way affects the merits of the claim. See Albert v. Carovano, 851 F.2d 561, 571 n. 3 (2d Cir. 1988). Further, as long as facts are alleged that are sufficient to sustain a cause of action under § 296(6), it does not matter that plaintiff did not use words such as aid, abet, or incite, in the complaint. See McIlwain v. Korbean Int'l Investment Corp., 896 F.Supp. 1373, 1382 (S.D.N.Y.1995). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567976/ | 44 F.Supp.2d 743 (1999)
UNITED STATES of America, Plaintiff,
v.
Donte HAMMOND, Defendant.
No. CR. AMD-99-073.
United States District Court, D. Maryland.
March 25, 1999.
MEMORANDUM AND ORDER
BREDAR, United States Magistrate Judge.
This matter is before the Court on the government's motion to detain the defendant without bail pending trial, pursuant to 18 U.S.C. § 3142. Pursuant to a grand jury indictment returned in this District, the defendant is alleged to have possessed a firearm after sustaining a conviction for a felony offense, in violation of 18 U.S.C. § 922(g) and 924. The government contends, *744 under 18 U.S.C. § 3142(f)(1)(D) and (f)(2)(A), that the defendant is both a flight risk and that he poses a danger to the community, and that there are no conditions of release that can be fashioned that will adequately mitigate these concerns. 18 U.S.C. § 3142(e). The government agrees that it bears the burden of proof in this proceeding, and that no presumptions arise in its favor on the detention issue. Presently under consideration by the Court is the announcement by the government that it will proceed solely by proffer as it attempts to meet its burden despite the Court's request that it present live testimony in support of its motion.
It is the Court and not the government that determines whether proceeding by proffer is acceptable in a given detention hearing. While in the majority of detention matters heard by this Court proffers in lieu of live testimony are appropriate, this is not such a case.
I.
The pretrial services agency of this Court has investigated the defendant's background and uncovered certain key information. Mr. Hammond is 22 and a lifelong resident of Baltimore. There is no record of him ever having been employed. He claims to live with his girlfriend, but she contests that claim. Mr. Hammond has a criminal history. In April 1994, he was sentenced to concurrent terms of seven years in prison (six years suspended) on separate drug distribution counts. In March 1996, he was sentenced to fifteen years in prison (eleven years and six months suspended), again on a drug distribution charge. He was arrested by Baltimore City police in January 1999 and this case springs from that arrest.
Mr. Hammond came before this Court for a detention hearing on March 17, 1999. At that hearing, the government, although given the opportunity, presented no evidence in support of its motion to detain. Instead, it directed the Court's attention to the grand jury indictment and to the Pretrial Services report. In addition, the Assistant U.S. Attorney representing the government "proffered" what she believed would be revealed if the government elected to present evidence in the proceeding.
According to the proffer, two Baltimore City police officers, if present, would testify that on January 16, 1999, they approached Mr. Hammond in the 2700 block of Spelman Avenue in Baltimore's Southern Police District with the intention of arresting him. The officers considered Mr. Hammond to be "loitering." The officers would testify further that Mr. Hammond ran away and, with them in pursuit, he removed a handgun from his waistband area and dropped it to the ground before being apprehended.
Counsel representing Mr. Hammond at the detention hearing suggested to the Court that a case of this naturea so-called "dropsy" case in which there is no independent corroboration and in which the dropped weapon is the sole basis for the case before the Courtis one in which the government should proceed with live evidence rather than by proffer because of the inherent unreliability of the factual predicate and the necessity of testing such facts in the crucible of cross-examination. The defendant's lawyer recognized the dark shadow which the charge, if substantiated, cast across the likelihood of his client's pretrial release from the standpoint of dangerousness to the community and suggested that this consideration, in fact, amplified the need for testimony as opposed to proffer.
At the conclusion of the hearing on March 17, the Court advised the parties that it was troubled by the information presented to it. The Court noted the defendant's criminal history and the seriousness of the charge now leveled against him. The Court also noted, however, its obligation under 18 U.S.C. § 3142(g)(2) to consider "the weight of the evidence against the person." In this matter the evidence of guilt goes not just to the ultimate *745 chance of conviction but is also the key evidence on the dangerousness issue. Noting questions about the "weight of the evidence," the Court invited the government to present the live testimony of the police officer or officers who allegedly witnessed the offense giving rise to the charge, so that the Court could assess and reach conclusions about the credibility of the uncorroborated eyewitness testimony proffered by the U.S. Attorney and thereby reach a more informed conclusion as to the "weight of the evidence." Upon the government's representation that it would accept this invitation and present the live testimony of the officer(s) if given the opportunity, the Court did not then order the defendant released upon failure of the government's proof, but instead continued the detention hearing until March 18, 1999, at which time the government would be permitted to reopen their case.
At the hearing on March 18, the government changed course and declined to present live testimony of police officers. Instead, the government presented a photocopy of a police officer's statement in support of a charging document apparently filed in state Court in relation to the incident that later gave rise to the pending federal charge. When the Court inquired as to the government's intention with respect to the presentation of live testimony, government counsel provided the troubling explanation that supervisory staff in the United States Attorney's Office had decided that the presentation of such evidence was unnecessary because the information supplied to the Court, with particular reference to the additional written statement of the police officer, was in their view sufficient to compel detention in the case.
II.
The Bail Reform Act, 18 U.S.C. § 3141 et seq., does not expressly authorize the government to proceed by proffer at detention hearings. Such authority is granted to defendants. 18 U.S.C. § 3142(f). Nonetheless, a number of Federal Circuits notably, not the Fourthhave held that evidence proffers of the sort presented by the government in this case may sometimes be adequate for a detention order. See, United States v. Acevedo-Ramos, 755 F.2d 203, 208 (1st Cir.1985); United States v. Martir, 782 F.2d 1141, 1145 (2d Cir.1986); United States v. Delker, 757 F.2d 1390, 1397 (3d Cir.1985); United States v. Fortna, 769 F.2d 243, 250 (5th Cir.1985); United States v. Portes, 786 F.2d 758, 767 (7th Cir.1985); United States v. Winsor, 785 F.2d 755, 756 (9th Cir.1986); United States v. Gaviria, 828 F.2d 667, 669 (11th Cir.1987). Indeed, this Court routinely enters orders of detention on government proffers at detention hearings, sometimes over the objection of defendants. Most of the abovecited authorities recognize that the procedural requirements for detention hearings under 18 U.S.C. § 3142 reflect those in the District of Columbia statute upon which it was modeled and which were found to meet constitutional due process standards in United States v. Edwards, 430 A.2d 1321 (D.C.App.1981) (en banc), cert. denied, 455 U.S. 1022, 102 S.Ct. 1721, 72 L.Ed.2d 141 (1982). Edwards, in turn, contains the following language:
The legislative history of the statute confirms Congress' intent that the information upon which the judicial officer makes his finding need not be sworn testimony, and that the hearing is not designed to afford defendants a discovery device. Thus in providing that the finding of substantial probability is to be based on information presented "by proffer or otherwise," the House Report anticipates
that, as is the present practice under the Bail Reform Act, ... the use of sworn testimony will be the exception and not the rule.... (B)ail hearings under the Bail Reform Act, which frequently result in detention of the accused, proceed primarily by way of proffers. They are not formal trials *746 requiring strict adherence to technical rules of evidence. If the Court is dissatisfied with the nature of the proffer, it can always, within its discretion, insist on direct testimony. But the discretion should be left to the Court without imposing on it the burden of limiting admissibility to that it would permit a jury to hear. (H.R.Rep. No. 91-907, 91st Cong., 2d Sess. 182, 184 (1970) (emphasis added).)
Accordingly, hearsay evidence may be presented, although the Court may require direct testimony if dissatisfied with a proffer.
Id., at 1334 (emphasis added).
In short, the case law supporting detention upon government proffers in no way requires a judicial officer to accept or accredit proffered evidence, nor does that case law assume that proffers in lieu of live testimony are appropriate in every case. The case law certainly does not limit, and in fact supports, the discretion of the reviewing judicial officer to require the presentation of evidence. Of necessity, the propriety of a proffer as a basis for detention must be assessed on a case-by-case basis. When the government is able to proffer evidence that reflects ample and substantial corroboration for its contention that a defendant has committed an offense and is dangerous or a flight risk, efficiency and the need to conserve scarce judicial resources justify accepting that proffer in lieu of live testimony; and such proffers that are reflective of weighty and broad evidence of guilt, when considered with other information such as criminal history and lack of ties to the community, can be entirely proper bases for orders of detention. On the other hand, when the evidence proffered is the uncorroborated statement(s) of one or two police officers who allegedly observed a single act committed by the defendant, and when there is no other evidence proffered in support of the eyewitness testimony, the Court should consider the proffer with great care and accord it limited weight. Before entering any order of detention in such a case, the judicial officer should require the government to present live testimony able to withstand confrontation, long- and well-recognized as the "greatest legal engine ever invented for the discovery of truth." California v. Green, 399 U.S. 149, 158, 90 S.Ct. 1930, 26 L.Ed.2d 489 (1970)(quoting 5 J. Wigmore, Evidence § 1367 (3d ed.1940)).
III.
In this case, the government has elected to proceed by proffer, after being given the opportunity to supplement the record with live testimony when their initial presentation fell short in the Court's view. The proffered evidence is weak because it is uncorroborated.[1] The weight it deserves is solely a function of the credibility one ascribes to the officers(s)/witness(es), and it is impossible for the Court to make that credibility determination without the officer(s) personally present and subject to cross-examination. The Court has concluded, in the exercise of its discretion, that its responsibility under the *747 Bail Reform Act to consider the weight of the evidence and to put the government to its burden on dangerousness can only be met in this case by hearing testimony from one or both of the arresting officers. Therefore, the detention hearing in this case shall continue on Friday, March 26, at 4:00 p.m. At that time the government is directed to produce one or both of the arresting officers and to then present their testimony as to the facts surrounding the arrest of the defendant. The officer(s) will then be subject to cross-examination by the defendant's attorney, in the normal fashion. Oral argument on the government's motion is no longer deemed necessary by the Court, and the hearing scheduled for March 25 at 10:00 a.m. is vacated. So ORDERED.
NOTES
[1] The government argues vigorously that the defendant's demand that the Court hear more than a proffer is based upon an inherent and inappropriate suspicion of police testimony. The government further suggests that it will be required to present more than a proffer only if the Court indulges a "pre-existing antipolice sentiment." Government's Brief at 11. The government misunderstands its own duty as well as the role of the Court. As noted, the problem with the evidence is not its source but rather its lack of corroboration. The government has no presumption in its favor in this case and must carry its burden. The Court must see that it does so or order the defendant released. The government is quite right in its contention that it would be improper to suspect the testimony of a witness because he is a police officer. It would be similarly improper for the Court to accept unquestioningly the testimony of a witness because he is a police officer. In this case, the government goes too far when it impliedly suggests that the Court must accept unquestioningly a proffer of uncorroborated police testimony. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2567981/ | 44 F.Supp.2d 92 (1999)
Gerard S. REDER, Plaintiff,
v.
The TRAVELERS PLAN ADMINISTRATORS OF CONNECTICUT, INC., Defendant.
No. Civ.A. 96-30180-MAP.
United States District Court, D. Massachusetts.
March 31, 1999.
*93 *94 Thomas Curley Campoli & Campoli, Pittsfield, MA, Judith C. Knight, Camploli & Curley, Pittsfield, MA, for Gerard S. Reder, plaintiff.
Elizabeth Graham, Edward P. O'Leary, Tonomey A. Coleman, Fitzhugh & Associates, Boston, MA, for Travelers Plan Administrators of Connecticut, Inc., defendant.
MEMORANDUM REGARDING REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
PONSOR, District Judge.
I. INTRODUCTION
Gerard S. Reder ("plaintiff" or "Reder"), owner of Berkshire Armored Car ("BAC") and Berkshire Armored Car of Florida ("BAC Florida") has sued The Travelers Plan Administrators of Connecticut, Inc. ("TPA"), asserting claims for negligence (Count I), gross negligence (Count II), indemnification (Count III), and violation of the Employee Retirement Security Act, 29 U.S.C. § 1001 et seq. ("ERISA") (Count IV). Plaintiff claims he was injured when a jury awarded damages against him in a Florida lawsuit by a BAC Florida employee. This lawsuit asserted that Reder, in his individual capacity, committed a breach of contract by failing to provide the employee and his wife health insurance. Reder claims that he failed to provide the insurance as a result of misinformation *95 provided by TPA to an agent of BAC making an inquiry about a group health plan sponsored and administered by BAC.
Defendant moved for summary judgment on each of plaintiff's claims. That motion was referred to Magistrate Judge Kenneth P. Neiman for a Report and Recommendation. The Magistrate Judge issued his Report and Recommendation on March 12, 1999, recommending that TPA's motion be granted as to all of plaintiff's claims. Plaintiff has now filed an objection to the Report and Recommendation as to Counts I through III. Plaintiff does not object to the recommendation to dismiss the ERISA claim in Count IV.
The court will adopt the Report and Recommendation in its entirety and will grant TPA's motion for summary judgment as to all counts asserted by plaintiff. Because the Report and Recommendation addresses virtually all of the issues presented in this case, an extended discussion is unnecessary. However, plaintiff has raised one narrow issue in his objection to the recommendation to dismiss plaintiff's negligence claims (Counts I and II) that merits brief discussion.
II. FACTS
The pertinent facts of record are set forth in detail in the Report and Recommendation at pages 95-96. They are essentially undisputed and, therefore, will only be summarized here.
At all relevant times, plaintiff was President and owner of BAC and BAC Florida. BAC was the sponsor and administrator of an employee health insurance plan covered under ERISA. BAC's vice president, Debra Gable ("Gable"), was the appointed fiduciary of the plan. Defendant TPA served as the third-party administrator of the Plan; among other things, it provided advice to BAC regarding eligibility requirements of the Plan.
In August of 1993, Gable contacted Deborah Betts ("Betts"), the TPA agent responsible for answering eligibility questions, and inquired whether Richard Carney ("Carney"), an employee of BAC Florida, was eligible to enroll in the BAC health plan. Betts informed Gable that Carney was ineligible to enroll in the plan. This information later proved to be incorrect.
As a result of not having been enrolled in a health plan, Carney and his wife became responsible for medical expenses incurred by his wife. Carney and his wife sued both BAC Florida and plaintiff individually in Florida state court and were awarded $76,672.53. The Carneys' Florida action against Reder was based on his breach of an oral contract in which he personally promised that the Carneys would receive health insurance. The Carneys' claim against BAC Florida was for breach of an employment contract in which Reder, acting in his capacity as President of BAC Florida, bound the company to provide group health insurance coverage for the Carneys.
III. DISCUSSION
Magistrate Judge Neiman concluded that plaintiff's negligence claims (Counts I and II) were not viable because, as a matter of law, TPA did not owe Reder any duty in his individual capacity. Plaintiff objects to the Report and Recommendation, asserting that those claims survive summary judgment scrutiny under the principles set forth in Nycal Corporation v. KPMG Peat Marwick LLP, 426 Mass. 491, 688 N.E.2d 1368 (1998) and Restatement (Second) of Torts § 552 (1972). Essentially, plaintiff claims that TPA's duty to BAC flowed to him, in his individual capacity, as sole owner and corporate officer of that entity. Plaintiff objects to the technical distinction he believes the Magistrate Judge drew between plaintiff, the owner or corporate officer of BAC, and plaintiff, the individual. Plaintiff's argument is addressed below.
In Nycal, the Supreme Judicial Court grappled with the difficult issue of the scope of an accountant's liability in providing *96 information for guidance to others in the commercial setting. In that case, Nycal Corporation ("Nycal") sued the accounting firm Peat Marwick for injuries sustained by Nycal as a result of its reliance on an auditors' report prepared by Peat Marwick. See id. at 492, 688 N.E.2d 1368. The accounting firm had been retained by Gulf Resources & Chemical Corporation ("Gulf") to prepare the audit for inclusion in Gulf's annual report. See id. When it prepared the audit, Peat Marwick was aware of at least one company that had given initial indications that it was planning a hostile takeover of Gulf. See id. The accounting firm was not, however, specifically aware of any interest on the part of Nycal in acquiring Gulf's stock. See id. at 493, 688 N.E.2d 1368.
Following the preparation of the auditors' report and its inclusion in Gulf's annual report, Gulf and Nycal entered into discussions regarding a possible stock purchase of Gulf by Nycal. See id. In connection with such discussions Gulf provided Nycal with a copy of its annual report. In reliance on the auditors' report prepared by Peat Marwick contained therein, Nycal purchased thirty-five percent of Gulf's outstanding shares of stock for $16,000,000 in cash and $18,000,000 in Nycal's stock. The acquisition gave Nycal operating control of Gulf. See id. Shortly after the purchase, Gulf went bankrupt, rendering Nycal's investment worthless. See id. at 492, 688 N.E.2d 1368.
Nycal sued the accounting firm, asserting negligence and alleging that the report materially misrepresented the financial condition of Gulf. See id. The trial court granted Peat Marwick's motion for summary judgment and, thereafter, the Supreme Judicial Court granted the parties' application for direct appellate review. See id.
The focus of the Supreme Judicial Court's inquiry was the appropriate standard of liability applicable to an accounting firm with respect to information disseminated in its report. See id. at 493, 688 N.E.2d 1368. Nycal urged the court to adopt a broad standard of liability, based on foreseeability and traditional notions of tort liability. See id. at 493, 688 N.E.2d 1368. The court rejected this standard, concluding that, among other things, client-controlled dissemination of such information would expose accountants to "liability in an indeterminate amount for an indeterminate time to an indeterminate class." Id. The court also rejected the defendant's proposed near-privity test as too strict. See id. at 494-95, 688 N.E.2d 1368. Under that test, an accountant would face liability to non-contractual third parties only if he were aware that the information "was to be used for a particular purpose, in the furtherance of which a known party (or parties) was intended to rely, and if there was some conduct on the part of the accountant creating a link to that party." Id. at 494, 688 N.E.2d 1368.
Instead, the court in Nycal adopted a standard of liability that rests on a middle ground between the broad foreseeability test and the strict near-privity test. See id. at 496-99, 688 N.E.2d 1368. That standard, which plaintiff asserts is applicable in this case, is set forth in Restatement (Second) of Torts § 552 (1977). It provides, in pertinent part, as follows:
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
That liability is limited to:
loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence *97 or knows that the recipient so intends or in a substantially similar transaction.
The comment to section 552 of the Restatement makes clear that
[i]t is enough that the maker of the representation intends it to reach and influence either a particular person or persons, known to him, or a group or class of persons, distinct from the much larger class who might reasonably be expected sooner or later to have access to the information and foreseeably to take some action in reliance upon it... It is sufficient, in other words, insofar as the plaintiff's identity is concerned, that the maker supplies the information for repetition to a certain group or class of persons and that the plaintiff proves to be one of them, even though the maker never had heard of him by name when the information was given.
Based on such principles, the court in Nycal held that Peat Marwick's liability to noncontractual third parties was limited to those individuals "who can demonstrate `actual knowledge on the part of accountants of the limited though unnamed group of potential [third parties] that will rely upon the [report], as well as actual knowledge of the particular financial transaction that such information is designed to influence.'" Id. at 498, 688 N.E.2d 1368. Accordingly, the court upheld the dismissal of Nycal's claim because "the facts failed to show that the defendant knew (or intended) that the plaintiff, or any limited group of which the plaintiff was a member, would rely on the audit report in connection with an investment with Gulf." Id. at 499, 688 N.E.2d 1368.
In this case, Reder's damages arise out of his failure to honor an oral contract made in his individual capacity to provide health insurance to Carney, an employee of BAC Florida. As in Nycal, there is simply no factual evidence in the record that would indicate that TPA or its agent knew or intended that Reder, or any limited group of which he was a member, would rely on the TPA advice in failing to honor his oral contract.
Contrary to plaintiff's suggestion in his objection to the Report and Recommendation, it is inconsequential that plaintiff was the owner of BAC, the company to which TPA was responsible for providing eligibility advice. This is true even if, as plaintiff contends, TPA had a duty to BAC that, in turn, flowed to plaintiff in his capacity as owner or corporate officer of that entity. As noted above, plaintiff's damages did not arise out of his relationship with BAC, but, instead, resulted from a broken promise to an employee of his Florida company made in his individual capacity.[1]
IV. CONCLUSION
For the reasons set forth in this opinion, TPA's motion summary judgement as to all of plaintiff's claims will be ALLOWED.
A separate order will issue.
NEIMAN, United States Magistrate Judge.
REPORT AND RECOMMENDATION REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (Docket No. 36)
Gerard Reder ("Plaintiff"), owner of Berkshire Armored Car ("BAC") and Berkshire Armored Car Florida ("BAC Florida"), filed a complaint in Berkshire Superior Court on August 16, 1996, against The Travelers Plan Administrators of Connecticut, Inc. ("TPA"). Plaintiff's complaint sought indemnification for an amount paid by him in satisfaction of a judgment rendered against him and BAC Florida, jointly and severally, for $97,500, in a case brought in Florida District Court. That case was brought by Plaintiff's former *98 employee, Richard Carney ("Carney"), who sued not only Plaintiff, BAC, BAC Florida, but TPA as well, for payment of medical costs which he alleged were due him pursuant to BAC's health insurance plan enacted pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et. seq. ("ERISA"). BAC and TPA were voluntarily dismissed from the Florida District Court case prior to trial.
As originally filed, Plaintiff's complaint made claims of negligence (Count I), gross negligence (Count II) and indemnification (Count III) against TPA. Defendant removed the complaint to this court on September 20, 1996, alleging that ERISA preempts these common law causes of action. There is also diversity between the parties. Plaintiff subsequently amended his complaint on October 30, 1996, to add an ERISA count (Count IV).
Before the court is Defendant's motion for summary judgment on all counts. Defendant alleges that it is entitled to a judgment as a matter of law because ERISA preempts all of Plaintiff's state law claims. Should the court find that ERISA does not preempt Plaintiff's claims, Defendant asserts that Plaintiff lacks standing to assert ERISA based rights. Defendant also alleges that it may not be held responsible for money damages under the statute and that Plaintiff suffered no injury as a result of TPA's actions.
Defendant's motion has been referred to the court for a report and recommendation pursuant to Rule 3 of the Rules of the United States Magistrates of the United States District Court for the District of Massachusetts. See 28 U.S.C. § 636(b)(1)(B). For the following reasons, the court will recommend that Defendant's motion be allowed.
I. SUMMARY JUDGMENT STANDARD
In accordance with Fed.R.Civ.P. 56(c), summary judgment will be granted if "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Magee v. United States, 121 F.3d 1, 3 (1st Cir. 1997). Once the moving party has demonstrated that no genuine issue of material fact exists, the burden is on the opposing party to contradict that demonstration by coming "forward with specific provable facts which establish that there is a triable issue." Aponte Matos v. Toledo Davila, 135 F.3d 182, 186 (1st Cir.1998). A genuine issue is one which a reasonable fact finder could resolve in favor of the nonmoving party. Id.
Not every genuine factual conflict, however, necessitates a trial. "It is only when a disputed fact has the potential to change the outcome of the suit under the governing law if found favorably to the non-movant that the materiality hurdle is cleared." Parrilla-Burgos v. Hernandez-Rivera, 108 F.3d 445, 448 (1st Cir.1997) (internal quotations omitted). The facts are to be viewed in a light most favorable to the non-movant. Dykes v. DePuy, Inc., 140 F.3d 31, 36 (1st Cir.1998). Summary judgment may be granted when there is no dispute as to any material fact and only questions of law remain. Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir.1997).
II. FACTUAL BACKGROUND
A. The Benefit Plan and Excess Insurance Coverage
At all relevant times, Plaintiff was President and owner of BAC and BAC Florida. BAC was the plan sponsor and administrator and Debra Gable ("Gable"), BAC Vice President, was the appointed fiduciary of the Berkshire Armored Car, Inc. Health Benefit Plan ("Plan"). Pursuant to a Claims Administration Agreement ("Agreement"), TPA served as third-party claim administrator of the Plan and accordingly was to "process, adjust and settle claims ... for benefits under the Plan in accordance with the terms and conditions of the Plan." TPA served in this *99 capacity from February 1, 1992, until January 31, 1994.
The Agreement identified the roles, duties, responsibilities and liabilities of all parties to the various Plan contracts. BAC had absolute authority with respect to control, management, investment, disposition and utilization of Plan assets. Thus, BAC had sole authority and responsibility for the design of the Plan, decisions regarding individual eligibility, and payment of Plan benefits. Pursuant to this authority, BAC created specific requirements for employee and dependent eligibility under the Plan, including that no employee dependent's coverage would be effective prior to coverage of that employee.
The Agreement expressly provided that TPA was an administrative agent of BAC and not a fiduciary. Thus, TPA exercised no discretion, control or authority over assets. TPA provided advice to BAC regarding whether individuals met the Plan's eligibility requirements. One particular individual at TPA, Deborah Betts ("Betts"), was charged with answering eligibility questions with regard to BAC's plan.
The Plan was self-funded by BAC up to a prescribed limit. Excess insurance coverage beyond the limit was provided by Travelers Insurance Company ("Travelers") at a predetermined exposure level amount per Plan participant. The policy, therefore, was called a "stop-loss" policy. For example, under the stop-loss provision for policy year February 1, 1993, through January 31, 1994, BAC was required to pay the first $50,000 worth of medical costs for each covered individual and Travelers provided coverage for each individual whose claims exceeded this stop-loss threshold. Still, Travelers would not provide coverage for individuals who failed to meet eligibility requirements of the Summary Plan Description ("SPD").
In addition to the stop-loss trigger for excess individual coverage, there was also an aggregate trigger in Travelers' policy. Pursuant to this provision, Travelers was required to pay claims in excess of $185,320.05 in total claims per year. For payment under either trigger, the claims must have been paid within the policy year in question.
B. Facts Relevant to Plaintiff's Claim
In July of 1993, Gable, as BAC's Plan administrator, faxed a plan enrollment form to TPA for Carney and his dependent wife. At the time, Gable assumed that Carney was a BAC employee. On August 30, 1993, however, Gable became aware that Carney was an employee of BAC Florida, not BAC. Gable mentioned this to Plaintiff, BAC's owner. Plaintiff indicated to Gable that he did not believe Carney could be enrolled in the Plan as it was a Massachusetts plan and Carney was not a BAC employee. Gable then claims to have inquired of TPA on August 20, 1993, as to whether Carney could be enrolled in the Plan and was told that he could not.
Although Betts was solely responsible at TPA for answering eligibility-related questions regarding BAC's plan, she did not recall receiving any such question regarding Carney. As a result, Betts never consulted with her supervisor, as was her practice. Betts also testified that it was her standard practice to advise employers with eligibility questions that ineligible employees may be included in a plan with a separate agreement. The separate agreement, according to Betts, may have stop-loss ramifications.
According to Gable, she had inquired of someone at TPA who told her that her supervisor said unequivocally that Carney could not be included in the BAC plan. Given that information, Gable instructed TPA not to pay any claims for Carney or his wife. TPA denied all subsequent claims by Carney.
Carney then brought suit in Florida District Court against BAC, Plaintiff, TPA and BAC Florida for medical expenses incurred by his wife and for attorney's fees. Prior to trial, an order of dismissal *100 with prejudice entered as to TPA and BAC. At trial, the Carneys were awarded a $76,672.53 judgment against Plaintiff and BAC Florida for past and future medical expenses. However, the judgment was paid by cashier's check drawn on BAC's account. The present litigation then ensued.
III. DISCUSSION
A.
Various enumerated parties most particularly, a participant, beneficiary, or fiduciary in certain limited circumstances inapplicable here may maintain civil enforcement actions under ERISA to recover benefits due under an ERISA health plan. 29 U.S.C. §§ 1002(7),(8). Although there is a split in the circuits as to whether an unremunerated party might have independent statutory standing to sue under ERISA, see Hermann Hosp. v. MEBA & Med. Benefits Plan, 845 F.2d 1286, 1287-88 (5th Cir.1988), it appears that in this circuit the list of parties to which a jurisdictional grant has been explicitly given is exclusive. See Kwatcher v. Mass. Serv. Emp. Pension Fund, 879 F.2d 957, 964 (1st Cir.1989). This court has so held. I.V. Servs. of America, Inc. v. Inn Development Management, Inc., 7 F.Supp.2d 79, 83 (D.Mass.1998).
Given that exclusivity, TPA argues that it is entitled to a judgment as a matter of law on Count IV, the ERISA count, as Plaintiff lacks standing to pursue a claim under ERISA. An employer is not generally considered a participant or beneficiary under the plan. 29 U.S.C. § 1132(a)(1)(B). Even an employer adjudged responsible for payment of benefits, is not an enumerated party for the purposes of 29 U.S.C. § 1002.
Plaintiff does not contend that he is an enumerated party under the statute. In fact, he essentially conceded at oral argument that he likely lacks standing to pursue his ERISA based claim, whether as an employer or in his individual capacity. In addition, Plaintiff does not contend that Carney is an enumerated party, which might give rise to standing on Plaintiff's part under an assignment of rights theory. Compare I.V. Services, 7 F.Supp.2d at 83 (health care provider may obtain derivative standing as an assignee of health care benefits from a plan participant). Accordingly, the court will recommend that summary judgment be allowed on Count IV of Plaintiff's complaint.
B.
Defendant also moves for summary judgment on Plaintiff's remaining counts, alleging that ERISA preempts all the common law claims at issue. Defendant asserts that Plaintiff's lack of standing will not effect the preemption analysis regarding these claims. The court agrees. The inquiries, while interrelated, are different. Mullins v. Blue Cross and Blue Shield of Virginia, Inc., 859 F.Supp. 206, 207 n. 4 (W.D.Va.1994). See Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1278 (6th Cir.1991). But see Weaver v. Employers Underwriters, Inc., 13 F.3d 172, 177 (5th Cir.1994)(citing cases which required standing before preemption could apply).
1.
ERISA governs plans which provide employees with "medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability [or] death" whether benefits are provided "through the purchase of insurance or otherwise." 29 U.S.C. § 1002(1). Congress crafted ERISA with a broad preemption clause. Specifically, 29 U.S.C. § 1144(a) provides that ERISA "shall supersede any and all state laws insofar as they relate to any employee benefit plan covered by the statute." ERISA broadly defines state law as inclusive of "all laws, decisions, rules, regulations or other state actions having the effect of law." 29 U.S.C. § 1144(c)(1).
*101 The explicit preemptive intent of ERISA was acknowledged by the Supreme Court in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). As the court explained, Congress intended to protect plan participants and beneficiaries through preemption by providing for uniformity amongst plans. Congress also intended that preemption minimize administrative and financial burdens on participating plans by alleviating the need to comply with potentially conflicting state laws. Id. at 98-99, 103 S.Ct. 2890.
The Supreme Court later explained that state law "relates to" and thus preempts an ERISA plan "if it has a connection with or reference to such a plan." Thus, certain claims may be preempted even when the claimant is not seeking benefits under an ERISA plan so long as the claim is "premised on the existence of an ERISA-covered pension plan." District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 130, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992) (internal quotations marks and citations omitted). The Court has specifically held that state common law breach of contract and tort claims that "relate to" an ERISA-covered plan are preempted. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). See Turner v. Fallon Community Health Plan, Inc., 127 F.3d 196, 199 (1st Cir. 1997); Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790, 794 (1st Cir.1995); Toomey v. Jones, 855 F.Supp. 19, 27 (D.Mass. 1994). When viewed in this framework, TPA claims, Plaintiff's common law claims must fail.
In contrast, Plaintiff suggests that the reach of the preemption doctrine with regard to ERISA has been limited by New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). That is true. Notwithstanding ERISA's broad preemptive language and intent, the Supreme Court explained, it "never assumed lightly that Congress has derogated state regulation, but instead addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law." Id. at 654, 115 S.Ct. 1671 (citing Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981)). Thus, even in ERISA cases, "where federal law is said to bar state action in fields of traditional state regulation," the Court explains it has consistently "worked on the `assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'" Travelers, 514 U.S. at 654, 115 S.Ct. 1671. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)). Thus, not every "connection" or "reference" to a plan results in preemption. Travelers, 514 U.S. at 656, 115 S.Ct. 1671. At bottom, ERISA preemption applies when a state law mandates employee benefit strictures or their administration, binds employers or plan administrators to particular choices or precludes uniform administrative practice, or provides alternate enforcement mechanisms for employees to obtain ERISA plan benefits. Id. at 658, 115 S.Ct. 1671.
2.
The court believes that common law claims of general applicability, such as the ones at issue here, may in fact impose even fewer burdens on ERISA plans than the state statutes found by the Court to be unrelated to the ERISA plans at issue. See California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997); De Buono v. NYSAILA Med. and Clinical Servs. Fund, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997). Statutes of "general applicability impose some burdens on the administration of ERISA plans but nevertheless do not `relate to' them within the meaning of *102 [ERISA]." DeBuono, 520 U.S. at 814, 117 S.Ct. at 1752. In this regard, common law claims of negligence, gross negligence and reimbursement, grounded in advice given by a plan administrator to an employer, cannot always be said to relate to benefit strictures or their administration. "The key to distinguishing between what ERISA preempts and what it does not lies ... in recognizing that the statute comprehensively regulates certain relationships: for instance, the relationship between plan and plan member, between plan and employer, between employer and employee (to the extent an employee benefit plan is involved) and between a plan and trustee." Gen. Amer. Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521-22 (9th Cir.1993). Preemption will not apply to traditional common law causes of action that do not "implicate the relations among the traditional ERISA plan entities." Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1469 (4th Cir.1996).
Plaintiff asserts that his claim that TPA failed to use due care when giving advise about BAC's obligations under the plan is grounded in "garden variety" negligence and therefore avoids ERISA's broad preemptive sweep. As framed by Plaintiff, the issue is whether TPA failed to use the due care and diligence of a reasonable professional administrator when offering a response to an inquiry posed by BAC's Plan fiduciary. In pursuing the issue, Plaintiff relies predominantly on Delaney, where the "gravamen of the claim [was] that the defendants, in their capacity as insurance professionals, negligently failed to obtain a replacement insurance plan" for the named plan beneficiary. Because common law may impose a duty of care on all types of professionals, the court concluded, a state law malpractice claim brought against the defendant insurance professionals was independent of ERISA in every way. Id. at 1471-72. The common law was found by the court to impose a duty of care of due diligence on all professionals regardless of whether the underlying subject is an ERISA plan. Id. at 1471. See also Arizona State Carpenters Pension Trust Fund v. Citibank (Arizona), 125 F.3d 715, 723-24 (9th Cir.1997).
If Plaintiff was suing in his capacity as an employer, his argument might have more force. Arguably, TPA could be said to owe a duty to BAC, if not BAC Florida, to act in a professional manner, as Delaney opines. Although the First Circuit has not yet spoken on this discrete issue, Plaintiff's negligence claim, and for that matter his gross negligence claim, might survive Defendant's preemption challenge particularly given the growing trend in the circuits following Travelers to retrench from total preemption of ERISA-related claims.
Plaintiff, however, makes no pretense about trying to pursue this case as an employer. Indeed, Plaintiff makes clear that he is maintaining this suit against Defendant in his individual capacity, if for no other reason than to distance himself from invoking an ERISA plan and thereby risking preemption. Thus, Plaintiff has constantly asserted that the Plan, and the relationship between plan entities, need not be scrutinized to make a determination in this case.
Despite its explication of preemption, the court finds it unnecessary to determine the scope of ERISA preemption here. As Defendant asserts, even if ERISA does not preempt Plaintiff's claim, the economic loss doctrine bars his recovery. The traditional rule is that "when a defendant interferes with a contract or economic opportunity due to negligence and causes no harm to either the person or property of the plaintiff, the plaintiff may not recover for a purely economic losses." Garweth Corp. v. Boston Edison, 415 Mass. 303, 613 N.E.2d 92, 94 (1993).
Granted, Plaintiff asserts that an inquiry under section 522 of the Restatement (Second) of Torts (1977) is more closely analogous and should apply. Liability under section 522 is specifically predicated *103 on negligent misrepresentations made in the commercial context where a professional is employed to provide guidance for others. As the Restatement explains,
One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Restatement (Second) Torts § 522 (cited in Nycal Corp. v. KPMG Peat Marwick LLP, 426 Mass. 491, 688 N.E.2d 1368, 1371-72 (1998)). However, a key element in a section 522 analysis is that, in order for a party to owe a duty, it has to possess actual knowledge of a third party, and the third party's reliance on the information at issue, at the time the alleged misrepresentation is made. See Nycal, 688 N.E.2d at 1372. It is here where Plaintiff falters. Even under the most generous of standards, Plaintiff fails to establish what duty was owed to him individually.
There can be no negligence unless a duty is owed and whether a duty is owed is a question of law. Yakubowicz v. Paramount Pictures Corp., 404 Mass. 624, 536 N.E.2d 1067, 1070 (1989). Moreover, the duty must be established at the time of the alleged misrepresentation. Id. It is not measured at some later date. The relevant inquiry here, therefore, is whether TPA, when making representations to Gable, BAC's fiduciary, was aware at that moment that Plaintiff, a third party, would rely on those representations, not as an employer, but in his individual capacity. Plaintiff's claim that it was he who later paid the award rendered against both him and BAC Florida is of no moment. Although a factual dispute may exist about who actually paid the award, it is not relevant for purposes here.
At bottom, Plaintiff presents insufficient evidence as a matter of law to conclude the TPA owed him a duty in his individual capacity. The undisputed record demonstrates that Gable, acting as BAC's agent, contacted someone at TPA and stated that she "put an employee on the plan and now I know that they don't work for Berkshire of Massachusetts. They work for a different company. Berkshire Armored Car Services of Florida, Inc." Gable then inquired, "Can that person be on the plan." (PI. Facts (Docket No. 40) Exh. A.) Gable also claims that she was erroneously told, "No, the person cannot be on the plan because they don't work for Berkshire Armored Car Service of Massachusetts," and, in turn, communicated this information to Plaintiff.
Nothing in this exchange, assuming its accuracy for purposes here, indicates that the TPA employee could have reasonably anticipated that Plaintiff, in his individual capacity, would rely on the representation with respect to Carney's eligibility at the time it was made to Gable. Nor, does it appear to the court that, at the time, Plaintiff was in fact relying on that representation in his individual capacity. Only after Plaintiff was adjudged liable in the Florida action did he formulate the rationale that it was he rather than Gable, or Gable as an agent of BAC who relied on TPA's misrepresentation. The court will therefore recommend that summary judgment be allowed on the negligence claims, Counts I and II, at least as they are grounded in a purely common law negligence theory.
3.
TPA also moves for summary judgment on Plaintiff's indemnification claim. That claim is largely based on the express terms of the Agreement between TPA and BAC under which BAC
(and its directors, officers, shareholders and employees) [shall be held] harmless from any and all claims, lawsuits, settlements, judgments, costs, penalties, taxes and expenses, including attorney's fees, resulting from or in connection with this *104 Agreement where it is determined in a final judgment by a court of competent jurisdiction that the liability therefor was the direct consequence of gross negligence ... on the part of TPA.
(PI. Exhibit D at 7.)
In essence, Plaintiff seeks reimbursement for the payment he individually made on the judgment rendered against him and BAC Florida for breaching a promise to Carney. Plaintiff alleges that he was only adjudged liable due to TPA's gross negligence in rendering him advice. Plaintiff claims that he is entitled to indemnification under the Agreement as he is a director, officer, shareholder and employee of BAC.
As is obvious, the Agreement under which Plaintiff seeks indemnification is one which governs the relationship between TPA and BAC, not TPA and BAC Florida against whom judgment was rendered. It strains credulity to believe that the Agreement between BAC and TPA was meant to indemnify Plaintiff, who happens to be an officer of BAC, for a claim unrelated to BAC and rendered solely against him and BAC Florida. It seems odd, as well, that Plaintiff, who argues so vigorously that it was he alone who paid the judgment, seeks shelter in a corporate agreement on behalf of BAC. Even assuming that it was BAC's account from which the money was drawn, the plain language of the Agreement is explicit that indemnification is to occur only "in connection with [the] Agreement." To afford parties outside the Agreement the protection of the hold harmless clause runs counter to its clear meaning.
The court will therefore recommend that summary judgment be allowed on Count III as it relates to contractual indemnification. To the extent that Plaintiff claims that he is entitled to indemnification under common law, the court has already determined that the underlying claims of negligence must fail. Therefore, the common law indemnification claim falls of its own weight.
IV. CONCLUSION
For the foregoing reasons, the court will recommend that summary judgment be allowed on Counts I-IV.[2]
March 12, 1999.
NOTES
[1] Because the court has found that plaintiff's negligence and indemnification claims lack substantive merit, it is unnecessary to address the alternative argument that they are preempted by ERISA.
[2] The parties are advised that under the provisions of Rule 3(b) of the Rules for United States Magistrates in the United States District Court for the District of Massachusetts, any party who objects to these findings and recommendations must file a written objection with the Clerk of this Court within ten (10) days of the party's receipt of this Report and Recommendation. The written objection must specifically identify the portion of the proposed findings or recommendations to which objection is made and the basis for such objection. The parties are further advised that failure to comply with this rule shall preclude further appellate review by the Court of Appeals of the District Court order entered pursuant to this Report and Recommendation. See Keating v. Secretary of Health & Human Services, 848 F.2d 271, 275 (1st Cir.1988); United States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir.1986); Scott v.. Schweiker, 702 F.2d 13, 14 (1st Cir.1983); United States v. Vega, 678 F.2d 376, 378-379 (1st Cir.1982); Park Motor Mart v. Ford Motor Co., 616 F.2d 603, 604 (1st Cir.1980). See also Thomas v. Arn, 474 U.S. 140, 154-55, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). A party may respond to another party's objections within ten (10) days after being served with a copy thereof. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568303/ | 58 F.Supp.2d 157 (1999)
Tracy HOWARD, Petitioner,
v.
Peter J. LACY, Respondent.
No. 98 CIV. 6531(JES).
United States District Court, S.D. New York.
July 2, 1999.
Order Supplementing Report and Recommendation June 30, 1999.
*158 Tracy Howard, Malone, NY, Pro se.
Kevin Scott Koplin, Asst. District Attorney, Bronx County, Bronx, NY, for Peter J. Lacy.
ORDER
SPRIZZO, District Judge.
The above-captioned action having come before this Court, and Magistrate Judge Peck having filed a Report and Recommendation dated May 7, 1999, recommending that the petitioner's petition be denied, and the Court having extended petitioner's time in which to file objections to the Report and Recommendation, and the petitioner having filed an objection dated June 11, 1999, and the Court having considered all matters raised, it is
ORDERED that the Court adopts Magistrate Judge Peck's Report and Recommendation, and it is further
*159 ORDERED that the instant petition shall be and hereby is dismissed, and it is further
ORDERED that as petitioner has not made a substantial showing of the denial of a constitutional right, see 28 U.S.C. § 2253, no certificate of appealability shall issue, and it is further
ORDERED that the Clerk of Court shall dismiss the above-captioned action.
REPORT AND RECOMMENDATION
PECK, United States Magistrate Judge.
To the Honorable John E. Sprizzo, United States District Judge.
Petitioner Tracy Howard seeks a writ of habeas corpus, pursuant to 28 U.S.C. § 2254, from his conviction of five counts of first degree robbery. (Pet. ¶ 1; Howard Br. at 2.)[1]See People v. Howard, 235 A.D.2d 232, 232, 653 N.Y.S.2d 102, 103 (1st Dep't), appeal denied, 89 N.Y.2d 1036, 659 N.Y.S.2d 867, 681 N.E.2d 1314 (1997). Howard's petition alleges that (1) the state unconstitutionally consolidated the two indictments under which he was convicted (Pet.¶ 12(A)); (2) he was denied his constitutional right to a speedy trial (Pet. ¶ 12(B)); and (3) suggestive pretrial identifications deprived him of due process (Pet. ¶ 12(C)).
For the reasons set forth below, I recommend that Howard's petition be denied. Howard's identification and unconstitutional consolidation of indictments claims are unexhausted, not amenable to further state court review, and therefore procedurally barred from habeas review; Howard's constitutional speedy trial claim is ripe for habeas review but is meritless under the four-part balancing test set down by the Supreme Court for use in analyzing speedy trial claims.
FACTS
On April 17, 1990, a Bronx Grand Jury indicted Howard (Indictment No. 3259-90) for acting in concert to commit five counts each of first and second degree robbery (and related lesser offenses), in connection with two robberies at a grocery store at 822 Morris Avenue on January 15, 1990, and March 4, 1990. (Koplin Aff. ¶ 4 & Ex. 2: State 1st Dep't Br. at 3; Koplin Aff. Ex. 1: Howard 1st Dep't Br. at 4, 11, 25; Howard Br. at 6.)
On July 31, 1990, a Bronx Grand Jury filed a second indictment (No. 5932-90) accusing Howard of acting in concert to commit three counts each of robbery first and second degree robbery in connection with a robbery of the Melisa Grocery at 614 Morris Avenue on March 17, 1990. (Koplin Aff. ¶ 5 & Ex. 2: State 1st Dep't Br. at 3; Koplin Aff. Ex. 1: Howard 1st Dep't Br. at 4, 11, 25; Howard Br. at 6.)
The State moved to consolidate indictments 5932-90 and 3259-90 pursuant to N.Y. CPL § 200.20(2)(c) "on the grounds that both indictments alleged incidents of armed robberies that are `the same or similar in law.'" (Koplin Aff. Ex. 1: Howard 1st Dep't Br. at 25; see also Koplin Aff. ¶ 6 & Ex. 1 at 11, 13; Howard Br. at 6.) On December 19, 1990, the Supreme Court granted the consolidation, with leave for Howard to renew his objection at a later date. (Koplin Aff. ¶ 6 & Ex. 2: State 1st Dep't Br. at 13; Koplin Aff. Ex. 1: Howard 1st Dep't Br. at 12, 25; Howard Br. at 7.)
On June 28, 1991, Howard's attorney renewed his objection on the ground that consolidation would be "overly prejudicial" to Howard:
I think that there's three matters that we have to take up, ... and the third matter is the matter of the consolidation of the two indictments.
*160 If Your Honor will recall, back I don't have a date on it. The District Attorney's Office made a motion to consolidate the two indictments before Your Honor, Your Honor granted that motion but gave me leave to reargue your order granting a consolidation after the Wade Hearings were concluded.
Now, the basis of my argument to prevent a consolidation of the two indictments was, number one, that it would be overly prejudicial for Mr. Howard to go to trial on three separate robberies rather than the two robberies that involved the same witness and that is on Indictment 3259 of 1990.
We now have a situation where he would be going to trial on three separate robberies, on three separate dates, two of those would involve the same store and the same alleged witness, but the third one was on a different date involving different witnesses.
So, in addition to the prejudicial effect that I think it would have, we also have a situation here where the identification testimony, I believe, on Indictment 3259 of 1990 is much stronger than the identification testimony on Indictment Number 59[3]2 of 1990.... [T]herefore, if a jury felt that Mr. Howard was involved in the robberies charged in 3259, they might also convict him for the robbery in 59[3]2; although the evidence of identification in that matter was much weaker.
(6/28/91 Wade Tr. at 30-33.) The trial court denied Howard's objection, thus reaffirming the consolidation. (Id. at 46.)
On September 26, 1991, Howard's scheduled trial date, Howard's counsel filed a motion to dismiss pursuant to N.Y. CPL § 30.30 and the Sixth and Fourteenth Amendments, alleging denial of the right to a speedy trial. (See 10/24/91 Duffy Op. at 1.) The trial court denied the motion, holding:
As to that branch of defendant's motion for dismissal of these charges based upon the Sixth Amendment to the United States Constitution, it is denied. No facts have been set forth to support the assertion that defendant's constitutional right to a speedy trial has been denied in this matter. (See People v. Taranovich, 37 N.Y.2d 442, 373 N.Y.S.2d 79, 335 N.E.2d 303).
The Court accordingly now turns to the second branch of defendant's motion based upon statutory "speedy trial" considerations under CPL § 30.30....
From these calculations, the Court determines that the defendant has shown, by his papers, that the People are chargeable with no more than 156 days. As this is well within the 183 day statutory period, the defendant has failed, in his papers, to show the People have exceeded their time.
(10/24/91 Duffy Op. at 3.)
Howard's trial began in November 1991 (Tr. at 1-2, 18, 19), and on December 10, 1991, the jury convicted Howard on the two consolidated indictments of five counts of first degree robbery, finding him not guilty of two additional first degree robbery counts. (Tr. at 615-21.) On January 27, 1992, Howard was sentenced to five concurrent terms of seven to twenty-one years, to run consecutively to a two to six year sentence he had previously received in New York County for another robbery. (1/27/92 Sentence Tr. at 9; Koplin Aff. ¶ 7; Howard Br. at 9.) See also People v. Howard, 235 A.D.2d 232, 232, 653 N.Y.S.2d 102, 102-03 (1st Dep't 1997).[2]
*161 Howard's Direct Appeal
In March 1996, Howard appealed his January 27, 1992 Bronx conviction on the grounds that: (1) the trial court erred in consolidating the two indictments; (2) the trial court erred in denying his motion to dismiss on speedy trial grounds pursuant to CPL § 30.20 and CPL § 30.30 and his constitutional rights; and (3) the conviction on indictment 5932-90 should be reversed since the complainant's trial identifications were tainted by unduly suggestive pretrial identification procedures. (Koplin Aff. ¶ 8 & Ex.1: Howard 1st Dep't Br. at 24-61; see also Pet. ¶ 9(D); Howard Br. at 9-10.)
On January 9, 1997, the First Department affirmed Howard's conviction, holding:
Defendant was not deprived of his statutory or constitutional right to a speedy trial. At most, only 165 days are chargeable to the People pursuant to CPL 30.30, even if the period preceding November 7, 1990 is included in the calculations. Contrary to defendant's contention, the People's November 28, 1990 declaration of readiness was not rendered "illusory" by their filing of a consolidation motion a few days later. Moreover, once they answered ready, they were not required to declare continuously their readiness after the motion to consolidate was granted. Defendant's remaining procedural and substantive arguments concerning the CPL 30.30 motion are without merit. Nor did the almost 18-month delay between arraignment and trial deprive defendant of his constitutional right to a speedy trial.
The court properly granted the motion to consolidate the two Bronx indictments involving three separate robberies of bodegas close in time and proximity to each other, where the identification evidence in the cases were strong, and the cases were not complex.
The photo array and line-up were not unduly suggestive, where, in each instance, our review of the photographs reveals that the fillers shared similar features with defendant and there was no "substantial likelihood that defendant would be singled out for identification."
People v. Howard, 235 A.D.2d 232, 232, 653 N.Y.S.2d 102, 103 (1st Dep't 1997) (citations omitted & emphasis added).
On March 11, 1997, Howard's counsel sought leave to appeal to the New York Court of Appeals, stating only that "there is a question of law in the above-captioned case as stated in Points I, II and III of appellant's [1st Dep't] brief which ought to be reviewed by the Court of Appeals." (Koplin Aff. Ex. 4: 3/11/97 Howard Applic. for Leave to Appeal at 1.) On April 16,-1997, Howard's counsel supplemented his leave application with a three and a half page single spaced letter that "focuses particularly upon the second point presented in the [1st Dep't] brief which pertains to appellant's claims that his state and constitutional rights to speedy trial were violated." (Dkt. No. 10: Howard 4/16/97 Supp. Leave Applic. at 1[3]; 4/26/98 Howard Br. at 10)
On April 29, 1997, the New York Court of Appeals denied leave to appeal. People v. Howard, 89 N.Y.2d 1036, 659 N.Y.S.2d 867, 681 N.E.2d 1314 (1997) (table).
Howard's Present Federal Habeas Corpus Petition
Howard's present federal habeas petition raises three Sixth and Fourteenth Amendment claims: (1) denial of his right *162 to a fair trial by the consolidation of the two indictments (Pet. ¶ 12(A)); (2) denial of his right to a speedy trial (Pet. ¶ 12(B)); and (3) denial of due process by the complainant's tainted identification (Pet. ¶ 12(C)).
ANALYSIS
I. PETITIONER'S CLAIMS NOT CLEARLY ARTICULATED IN HIS APPLICATIONS FOR LEAVE TO APPEAL TO THE NEW YORK COURT OF APPEALS (I.E., HIS CONSOLIDATION AND IDENTIFICATION CLAIMS) ARE NOT EXHAUSTED AND ARE PROCEDURALLY BARRED FOR HABEAS CORPUS REVIEW
Section 2254 codifies the exhaustion requirement, providing that "[a]n application for a writ of habeas corpus on behalf of a person in custody pursuant to the judgment of a State court shall not be granted unless it appears that (A) the applicant has exhausted the remedies available in the courts of the State...." 28 U.S.C. § 2254(b)(1)(A). See, e.g., Rose v. Lundy, 455 U.S. 509, 515-16, 102 S.Ct. 1198, 1201, 71 L.Ed.2d 379 (1982) ("The exhaustion doctrine existed long before its codification by Congress in 1948... in 28 U.S.C. § 2254"); Picard v. Connor, 404 U.S. 270, 275, 92 S.Ct. 509, 512, 30 L.Ed.2d 438, (1971); Bossett v. Walker, 41 F.3d 825, 828 (2d Cir.1994), cert. denied, 514 U.S. 1054, 115 S.Ct. 1436, 131 L.Ed.2d 316 (1995); Pesina v. Johnson, 913 F.2d 53, 54 (2d Cir.1990); Daye v. Attorney General, 696 F.2d 186, 190-94 (2d Cir.1982) (en banc); Jordan v. Lefevre, 22 F.Supp.2d 259, 261, 266 (S.D.N.Y.1998) (Mukasey, D.J. & Peck, M.J.). As the Supreme Court has made clear, "[t]he exhaustion doctrine is principally designed to protect the state courts' role in the enforcement of federal law and prevent disruption of state judicial proceedings." Rose v. Lundy, 455 U.S. at 518, 102 S.Ct. at 1203; accord, e.g., Jordan v. Lefevre, 22 F.Supp.2d at 266.
The Second Circuit has held that "[e]xhaustion of available state remedies requires presentation of the claim to the highest state court from which a decision can be had." Daye v. Attorney General, 696 F.2d at 191 n. 3; accord, e.g., Bossett v. Walker, 41 F.3d at 828 ("To fulfill the exhaustion requirement, a petitioner must have presented the substance of his federal claims `to the highest court of the pertinent state.'"); Grey v. Hoke, 933 F.2d 117, 119 (2d Cir.1991) ("a petitioner must present his federal constitutional claims to the highest court of the state before a federal court may consider the merits of the petition"); Pesina v. Johnson, 913 F.2d at 54 ("We have held that the exhaustion requirement mandates that federal claims be presented to the highest court of the pertinent state before a federal court may consider the petition," citing Daye); Jordan v. Lefevre, 22 F.Supp.2d at 266-67; Bass v. Scully, No. CV-92-0349, 1995 WL 347040 at *2 (E.D.N.Y. May 25, 1995); Brooks v. Kelly, No. 88-CV-0631E, 1993 WL 350188 at *3 (W.D.N.Y. Sept. 10, 1993); Thebner v. Miller, 788 F.Supp. 714, 717 (E.D.N.Y. 1992).
Howard's supplemental leave application, dated April 16, 1997, spent three and a half single-spaced pages detailing his speedy trial argument. (See Dkt. No. 10: Howard 4/6/97 Supp. Leave Applic. at 1-4.) That claim, therefore, is exhausted and ripe for federal habeas review.
Howard's other two claims consolidation of the two indictments and suggestive identifications however, are not exhausted. In his initial letter seeking leave to appeal to the New York Court of Appeals, Howard only stated that: "there is a question of law in the above-captioned case as stated in Points I, II and III of appellant's [1st Dep't] brief...." (Koplin Aff. Ex. 4: Howard Leave Applic. at 1.) This statement, merely referring to points in his First Department brief, is insufficient to satisfy the exhaustion/presentation requirement. In Grey v. Hoke, 933 F.2d 117 (2d Cir.1991), the petitioner argued one *163 claim in his leave to appeal letter to the New York Court of Appeals, and also attached his Appellate Division briefs, which had raised that issue plus two others. Id. at 20. The Second Circuit held that the claims only referred to in his attached briefs were not exhausted:
Petitioner argues that by attaching his Appellate Division brief to his letter application to the Court of Appeals, he presented that court with an opportunity to rule on his sentencing and prosecutorial misconduct claims. He concedes, however, that his letter application requested that the Court of Appeals review only the search and seizure claim. The letter made no mention of the sentencing and prosecutorial misconduct claims. Under these circumstances, we disagree with petitioner's assertion that the Court of Appeals was presented with his sentencing and prosecutorial misconduct claims.
The fair import of petitioner's submission to the Court of Appeals, consisting of his brief to the Appellate Division that raised three claims and a letter to the Court of Appeals arguing only one of them, was that the other two had been abandoned. The only possible indication that the other two claims were being pressed was the inclusion of a lengthy brief originally submitted to another court. This did not fairly apprise the court of the two claims. We decline to presume that the New York Court of Appeals has "a duty to look for a needle in a paper haystack." For a federal court to hold that a state court had the opportunity to rule on a constitutional claim as to which no ruling was requested, and then to rule on the merits of the claim itself, would undermine the very considerations of comity that the rules of exhaustion were designed to protect.
Grey v. Hoke, 933 F.2d at 120 (citations omitted).[4]
The district court decisions within the Circuit have extended Grey's rule to situations, like Howard's where the application for leave to appeal to the New York Court of Appeals refers to the Appellate Division briefs. For example, in Brooks v. Kelly, No. 88-CV-0631E, 1993 WL 350188 (W.D.N.Y. Sept. 10, 1993), petitioner's application for leave to appeal stated that "`other significant issues are also presented which are thoroughly articulated in'" petitioner's Appellate Division briefs, which were attached. Id. at *2. The District Court held that the claim was not exhausted:
For a federal claim to be considered exhausted, it must have been presented *164 to the highest state court. A petitioner is not deemed to have presented a claim to the New York State Court of Appeals simply by attaching an Appellate Division brief without further elaboration of the claim in the petition for leave to appeal. [Citing Grey v. Hoke.] Further, a petitioner has not fulfilled the exhaustion requirement by having made in the application for leave to appeal general reference to claims in the attached appellate brief meriting review.
Brooks v. Kelly, 1993 WL 350188 at *3 (citations omitted & emphasis added).
Similarly, in Thebner v. Miller, 788 F.Supp. 714 (E.D.N.Y.1992), the petitioner raised one claim in detail in his application for leave to appeal to the New York Court of Appeals, and included the additional sentence that "`[n]umerous other issues are raised in defendant-appellant's brief all of which deserve review by this court.'" Id. at 717. The District Court held that petitioner's "inclusion in his application to the Court of Appeals of a single sentence which refers, in a general way, to the various claims raised in his sixty-seven page brief to the Appellate Division, is insufficient to fairly apprise the Court of Appeals of the factual and legal issues in those claims." Id. at 717 (citing Grey); see also Jordan v. Lefevre, 22 F.Supp.2d at 261, 268; Benitez v. Senkowski, 97 Civ. 7819(DLC), 1998 WL 668079 at *8 n. 7 (S.D.N.Y. Sept. 17, 1998) (Cote, D.J. & Peck, M.J.); Ojeda v. Artuz, 96 Civ. 5900, 1997 WL 283398 at *3 (S.D.N.Y. May 29, 1997); Morrison v. McClellan, 903 F.Supp. 428, 430 (E.D.N.Y.1995); Marrero v. Keane, 93 Civ. 3573 (PLK), 1995 WL 66660 at *1 (S.D.N.Y. Feb. 16, 1995) (reference to "Points I and II" of Appellate Division brief not sufficient under Grey; "Presentation requires more than a `general reference' to the issues presented in an attached brief.") (citing Grey v. Hoke, Brooks v. Kelly and Thebner v. Miller); Matias v. Hoke, 703 F.Supp. 324, 325 (S.D.N.Y.1989) (Sprizzo, D.J.)[5]
Thus, under Grey and its progeny, Howard's reference in his leave to appeal application *165 to his Appellate Division briefs is not sufficient, and all of his claims except his speedy trial claim are not exhausted.
Howard, however, would be procedurally barred from raising these claims now in the New York Court of Appeals. As the Second Circuit explained in Grey v. Hoke:
Here, New York procedural rules plainly bar petitioner from attempting to raise [the claims he raised before the Appellate Division but not in his application for leave to appeal] before the New York Court of Appeals. Petitioner cannot again seek leave to appeal these claims in the Court of Appeals because he has already made the one request for leave to appeal to which he is entitled. See N.Y. Court Rules § 500.10(a). Collateral review of these claims is also barred because the issues were previously determined on the merits on direct appeal. See N.Y.Crim. Proc. Law § 440.10(2)(a); see also N.Y.Crim. Proc. Law § 440.10(2)(c) (barring review if a claim could have been raised on direct review)....
We agree with the state, however, that petitioner's forfeiture in state court of [the claims not adequately raised before the N.Y. Court of Appeals] bars him from litigating the merits of those claims in federal habeas proceedings, absent a showing of cause for the procedural default and prejudice resulting therefrom. Murray v. Carrier, 477 U.S. 478, 492, 106 S.Ct. 2639, 2647, 91 L.Ed.2d 397 (1986); Wainwright v. Sykes, 433 U.S. 72, 87-91, 97 S.Ct. 2497, 2506-2509, 53 L.Ed.2d 594 (1977). Petitioner makes no showing of cause or of prejudice. The [claims not raised before the Court of Appeals] must therefore be dismissed without reaching the merits.
Grey v. Hoke, 933 F.2d at 120-21; accord, e.g., Jordan v. Lefevre, 22 F.Supp.2d at 262, 269; Bass v. Scully, 1995 WL 347040 at *3; Marrero v. Keane, 1995 WL 66660 at *2; Brooks v. Kelly, 1993 WL 350188 at *3; Thebner v. Miller, 788 F.Supp. at 717-18; see also, e.g., Bossett v. Walker, 41 F.3d at 828-29. As modified and clarified by more recent Supreme Court case law, to avoid a procedural default, a habeas petitioner must ""`demonstrate cause for the default and actual prejudice as a result of the alleged violation of federal law, or demonstrate that failure to consider the claims will result in a fundamental miscarriage of justice,'"" i.e., a showing of "actual innocence." Gibriano v. Attorney General, 965 F.Supp. 489, 493 n. 5 (S.D.N.Y. 1997) (Sprizzo, D.J. & Peck, M.J.) (quoting Ellman v. Davis, 42 F.3d 144, 147 (2d Cir.1994) (quoting Coleman v. Thompson, 501 U.S. 722, 750, 111 S.Ct. 2546, 2564, 115 L.Ed.2d 640 (1991)), cert. denied, 515 U.S. 1118, 115 S.Ct. 2269, 132 L.Ed.2d 275 (1995)); see also, e.g., Lebron v. Mann, 40 F.3d 561, 564 (2d Cir.1994); Jordan v. Lefevre, 22 F.Supp.2d at 269.
Here, Howard has not alleged cause and prejudice nor has he made a showing of actual innocence. Thus, his consolidation and identification habeas claims should be dismissed as procedurally defaulted.
II. HOWARD'S SPEEDY TRIAL CLAIM LACKS MERIT
It is black letter law that a defendant is guaranteed a speedy trial by the Sixth and Fourteenth Amendments to the Constitution. E.g., Barker v. Wingo, 407 U.S. 514, 515, 92 S.Ct. 2182, 2184, 33 L.Ed.2d 101 (1972). As the Supreme Court recognized, however:
The right to a speedy trial is generically different from any of the other rights enshrined in the Constitution for the protection of the accused. In addition to the general concern that all accused persons be treated according to decent and fair procedures, there is a societal interest in providing a speedy trial which exists separate from, and at times in opposition to, the interests of the accused....
A second difference between the right to speedy trial and the accused's other *166 constitutional rights is that deprivation of the right may work to the accused's advantage. Delay is not an uncommon defense tactic. As the time between the commission of the crime and trial lengthens, witnesses may become unavailable or their memories may fade. If the witnesses support the prosecution, its case will be weakened, sometimes seriously so. And it is the prosecution which carries the burden of proof. Thus, unlike the right to counsel or the right to be free from compelled self-incrimination, deprivation of the right to speedy trial does not per se prejudice the accused's ability to defend himself.
Finally, and perhaps most importantly, the right to speedy trial is a more vague concept than other procedural rights. It is, for example, impossible to determine with precision when the right has been denied. We cannot definitely say how long is too long in a system where justice is supposed to be swift but deliberate. As a consequence, there is no fixed point in the criminal process when the State can put the defendant to the choice of either exercising or waiving the right to a speedy trial.
Barker v. Wingo, 407 U.S. at 519-21, 92 S.Ct. at 2186-87. The Supreme Court recognized that some states had adopted bright line procedural rules, but the Court could not adopt a similar rule since that "would require this Court to engage in legislative or rulemaking activity." Id. at 523, 92 S.Ct. at 2188.
The Supreme Court therefore adopted a "balancing test." Id. at 529-30, 92 S.Ct. at 2191-92. The Supreme Court in Barker identified four factors which guide a court's determination of whether a defendant was denied his right to a speedy trial: "[1] Length of delay, [2] the reason for the delay, [3] the defendant's assertion of his right, and [4] prejudice to the defendant." Id. at 530, 92 S.Ct. at 2192; accord, e.g., id. at 530-33, 92 S.Ct. at 2192-93; United States v. Jones, 129 F.3d 718, 724 (2d Cir.1997), cert. denied, ___ U.S. ___, 118 S.Ct. 2075, 141 L.Ed.2d 150 (1998); United States v. Lainez-Leiva, 129 F.3d 89, 91-92 (2d Cir.1997); Rayborn v. Scully, 858 F.2d 84, 89 (2d Cir.1988), cert. denied, 488 U.S. 1032, 109 S.Ct. 842, 102 L.Ed.2d 974 (1989); Flowers v. Warden, 853 F.2d 131, 132 (2d Cir.), cert. denied, 488 U.S. 995, 109 S.Ct. 563, 102 L.Ed.2d 588 (1988); McKenzie v. Herbert, 969 F.Supp. 1, 3 (E.D.N.Y.1997); Dunavin v. Leonardo, No. 95-CV-296 RSP/GJD, 1997 WL 151771 at *3, *14 (N.D.N.Y. March 31, 1997) (Pooler, D.J.); Imoh v. Reish, No. 92 CV. 4404 (SJ), 1995 WL 428705 at *2 (E.D.N.Y. July 12, 1995); Amable v. Scully, 91 Civ. 4694, 1993 WL 300036 at *3 (S.D.N.Y. Aug. 4, 1993); Cao v. Mann, 89 Civ. 5312, 1990 WL 89363 at *3 (S.D.N.Y. June 18, 1990); Hart v. Leonardo, 88 Civ. 5761, 1990 WL 89364 at *2 (S.D.N.Y. June 15, 1990).
The Supreme Court in Barker added:
We regard none of the four factors identified above as either a necessary or sufficient condition to the finding of a deprivation of the right of speedy trial. Rather, they are related factors and must be considered together with such other circumstances as may be relevant. In sum, these factors have no talismanic qualities; courts must still engage in a difficult and sensitive balancing process.
Barker v. Wingo, 407 U.S. at 533, 92 S.Ct. at 2193; accord, e.g., United States v. Lainez Leiva, 129 F.3d at 92; Rayborn v. Scully, 858 F.2d at 89; Flowers v. Warden, 853 F.2d at 132-33; Dunavin v. Leonardo, 1997 WL 151771 at *14; Cao v. Mann, 1990 WL 89363 at *3.
A. Length of Delay
The Supreme Court in Barker v. Wingo noted that "[t]he length of the delay is to some extent a triggering mechanism. Until there is some delay which is presumptively prejudicial, there is no necessity for inquiry into the other factors that go into the balance." Barker v. Wingo, 407 U.S. 514, 530, 92 S.Ct. 2182, 2192, 33 L.Ed.2d 101 (1972); accord, e.g., Rayborn *167 v. Scully, 858 F.2d 84, 89 (2d Cir. 1988); McKenzie v. Herbert, 969 F.Supp. 1, 2 (E.D.N.Y.1997); Velez v. People, 941 F.Supp. 300, 318 (E.D.N.Y.1996); United States v. Teyibo, 877 F.Supp. 846, 858 (S.D.N.Y.1995) ("To determine whether a defendant's Sixth Amendment right to a speedy trial has been violated, the court must engage in a two-step inquiry. First, the court must determine whether the interval between the indictment and trial is `presumptively prejudicial.' Second, the court must employ [the Barker v. Wingo] balancing test....") (citations omitted).
In the instant case, the period between Howard's arrest on April 11, 1990 and the start of trial in November 1991, was approximately nineteen months. (E.g., 10/24/91 Duffy Op. at 1.) The Supreme Court and the Second Circuit have found that no constitutional speedy trial violation existed in cases in which the period between arrest and trial was even longer. See, e.g., Barker v. Wingo, 407 U.S. at 533-34, 92 S.Ct. at 2193-94 (over 5 years); United States v. Vasquez, 918 F.2d 329, 338 (2d Cir.1990) ("The length of the delay here" 26 months "was less extensive than that tolerated in other cases."); Rayborn v. Scully, 858 F.2d 84, 89 (2d Cir. 1988) (over 7 years); United States v. McGrath, 622 F.2d 36, 41 (2d Cir.1980) (24 months); United States v. Lane, 561 F.2d 1075, 1078 (2d Cir.1977) ("The delay here was quite lengthy approximately 58 months or just under five years but nevertheless was shorter than that in other cases in which no Sixth Amendment violation has been found."); United States v. Infanti, 474 F.2d 522, 527 (2d Cir.1973) ("the length of time from arrest to indictment was 21 months and from arrest to trial 28 months, neither extraordinary."); United States v. Teyibo, 877 F.Supp. at 858-59 ("an eighteen-month delay is considerably shorter than the delays in other cases in which courts have found no Sixth Amendment violation."); Holmes v. Bartlett, 810 F.Supp. 550, 562 (S.D.N.Y.1993) ("In this case, the length of delay, eighteen months, was considerably shorter than the delays in other cases where courts found no Sixth Amendment violation.").
Thus, the length of delay factor alone does not offer support for Howard's speedy trial claim.
B. Reasons For The Delay
In analyzing this second factor, the Supreme Court in Barker cautioned that:
[D]ifferent weights should be assigned to different reasons. A deliberate attempt to delay the trial in order to hamper the defense should be weighted heavily against the government. A more neutral reason such as negligence or overcrowded courts should be weighted less heavily but nevertheless should be considered since the ultimate responsibility for such circumstances must rest with the government rather than with the defendant. Finally, a valid reason, such as a missing witness, should serve to justify appropriate delay.
Barker v. Wingo, 407 U.S. 514, 531, 92 S.Ct. 2182, 2192, 33 L.Ed.2d 101 (1972); see also, e.g., Flowers v. Warden, 853 F.2d 131, 134 (2d Cir.1988); United States v. McGrath, 622 F.2d 36, 41 (2d Cir.1980); United States v. Lane, 561 F.2d 1075, 1078-79 (2d Cir.1977); United States v. Infanti, 474 F.2d 522, 527-28 (2d Cir. 1973).
In his pretrial speedy trial motions, Howard claimed that a delay of 238 days should be charged to the State. (10/24/91 Duffy Op. at 2; Johnston 9/23/91 Aff. on Speedy Trial Motion, at 5-6.) The trial court, however, concluded that a delay of only 156 days was attributable to the State, while the remainder of the delay was excludable or attributable to Howard. (10/24/91 Duffy Op. at 4-8.) For example, the adjournment between January 9 and January 30, 1991 was found to have been requested by Howard's attorney (id. at 4); between August 19 and September 3, 1991, Howard's attorney was on vacation (Johnston 9/23/91 Aff. on Speedy Trial Motion, at 5); and on September 26, 1991, time *168 was tolled by the filing of Howard's speedy trial motion. (10/24/91 Duffy Op. at 8.) On appeal, the First Department held that "At most, only 165 days are chargeable to the People pursuant to CPL 30.30, even if the period preceding November 7, 1990 is included in the calculations." People v. Howard, 235 A.D.2d 232, 232, 653 N.Y.S.2d 102, 103 (1st Dep't 1997).[6]
Whether the delay attributable to the State was 165 days, the 238 days claimed by Howard below, or even the entire nineteen month period, since nothing in the record indicates a deliberate attempt by the State to delay the trial in order to hamper Howard's defense, this factor does not weigh in Howard's favor. See, e.g., Flowers v. Warden, 853 F.2d 131, 133-34 (2d Cir.1988) (no Sixth Amendment violation because 17-month delay was "due solely to `institutional dysfunction,'" i.e., court docket congestion); United States v. McGrath, 622 F.2d at 41 (no speedy trial violation because, inter alia, "[t]here is no evidence of bad faith or deliberate delays here"); United States v. Lane, 561 F.2d at 1079 (no speedy trial violation because, inter alia, "[w]hile the record here contains some rather long unexplained delays, there is no indication that these are attributable either to deliberate procrastination or even negligent inaction on the part of the Government."); Amable v. Scully, 91 Civ. 4694 (MGC), 1993 WL 300036 at *3 (S.D.N.Y. Aug. 4, 1993) (petitioner's "conclusory allegation" that "delay was due to the State's attempt to secure an `unfair advantage' ... is not supported by any evidence of bad faith on the part of the State"); Burress v. Henderson, 814 F.Supp. 313, 322 (W.D.N.Y.1993) ("the record does not reflect any deliberate attempts by either side to delay the trial in order to aid or hamper the defense"); Holmes v. Bartlett, 810 F.Supp. 550, 562 (S.D.N.Y.1993) ("although the cause of delay is uncertain, nothing in the record suggests that the State of New York intended to delay the trial in this case or that the prosecutor obtained any strategic advantage from the delay"); Velez v. People, 941 F.Supp. 300, 318 (E.D.N.Y.1996).
C. Howard's Assertion of His Right
As to the third factor, "the defendant's responsibility to assert his right" to a speedy trial, the Supreme Court has stated that:
Whether and how a defendant asserts his right is closely related to the other factors we have mentioned. The strength of his efforts will be affected by the length of the delay, to some extent by the reason for the delay, and most particularly by the personal prejudice, which is not always readily identifiable, that he experiences. The more serious the deprivation, the more likely a defendant is to complain. The defendant's assertion of his speedy trial right, then, is entitled to strong evidentiary weight in determining whether the defendant is being deprived of the right. We emphasize that failure to assert the right will make it difficult for a defendant to prove that he was denied a speedy trial.
Barker v. Wingo, 407 U.S. 514, 531-32, 92 S.Ct. 2182, 2192-93, 33 L.Ed.2d 101 (1972).
Howard asserted his speedy trial right in his motion to dismiss the indictments on statutory and constitutional speedy trial grounds. (Koplin Aff. Ex. 1: Howard 1st Dep't Br. at 47, 51). However, Howard did not assert the claim until September 26, 1991, the seventeenth-month of the nineteen-month delay. (Id.) Raising the claim on the eve of trial cuts against the petitioner. See, e.g., United States v. Vasquez, 918 F.2d 329, 338 (2d Cir.1990) (third factor "weighs heavily" against petitioners where they "waited roughly 22 months before advancing their speedy trial claim, *169 and this hardly renders plausible their contention that an expeditious resolution of their cases was a matter of pressing constitutional importance for them"); United States v. McGrath, 622 F.2d 36, 41 (2d Cir.1980) ("third factor weighs against [petitioners who] waited until immediately before trial to file their motion to dismiss on speedy trial grounds"); United States v. Lane, 561 F.2d 1075 (2d Cir.1977) (petitioner's eve of trial speedy trial motion is "indicative of an interest in having the indictment dismissed, rather than of an interest in expediting the proceedings"); Amable v. Scully, 91 Civ. 4694 (MGC), 1993 WL 300036 at *3 (S.D.N.Y. Aug. 4, 1993) ("late assertion of his claim weighs against a finding that petitioner's right to a speedy trial was violated"); Burress v. Henderson, 814 F.Supp. 313, 322 (W.D.N.Y.1993) (delay in assertion of right until commencement of trial not "the type of `aggressive' assertion of speedy trial rights necessary to warrant the relief sought"); Dudley v. Dalsheim, 526 F.Supp. 88, 93 (S.D.N.Y.1981) (20-month delay in asserting right until "last minute pre-trial motion ... mitigates against a finding that a defendant was denied a speedy trial"), aff'd mem., 686 F.2d 110 (2d Cir.1982).
D. Prejudice
As to the fourth factor, prejudice, the Supreme Court explained that:
A fourth factor is prejudice to the defendant. Prejudice, of course, should be assessed in the light of the interests of defendants which the speedy trial right was designed to protect. This Court has identified three such interests: (i) to prevent oppressive pretrial incarceration; (ii) to minimize anxiety and concern of the accused; and (iii) to limit the possibility that the defense will be impaired. Of these, the most serious is the last, because the inability of a defendant adequately to prepare his case skews the fairness of the entire system. If witnesses die or disappear during a delay, the prejudice is obvious. There is also prejudice if defense witnesses are unable to recall accurately events of the distant past. Loss of memory, however, is not always reflected in the record because what has been forgotten can rarely be shown.
Barker v. Wingo, 407 U.S. 514, 532, 92 S.Ct. 2182, 2193, 33 L.Ed.2d 101 (1972) (fn. omitted). The Second Circuit has explained that "[a]lthough `a showing of prejudice is not a prerequisite to finding a sixth amendment violation, courts generally have been reluctant to find a [constitutional] speedy trial violation in the absence of genuine prejudice.'" United States v. Jones, 129 F.3d 718, 724 (2d Cir.1997) (quoting Rayborn v. Scully, 858 F.2d 84, 94 (2d Cir.1988)); Dunavin v. Leonardo, No. 95-CV-296 RSP/GJD, 1997 WL 151771 at *15 (N.D.N.Y. March 31, 1997) (Pooler, D.J.) ("In the absence of a showing of prejudice, courts generally will not find a speedy trial violation unless all of the remaining Barker factors weigh heavily in favor of the [petitioner]."); United States ex rel. Eccleston v. Henderson, 534 F.Supp. 813, 816 (E.D.N.Y.) (prejudice is "most significant" Barker factor), aff'd, 697 F.2d 289 (2d Cir.), cert. denied, 459 U.S. 871, 103 S.Ct. 157, 74 L.Ed.2d 131 (1982).
Howard alleges he suffered prejudice from the delay because: (1) he had to "endure 18 months of pretrial incarceration," and (2) "[h]ad Bronx County not taken 18 months to proceed to trial Howard could have determined that the concurrent sentence offered in New York County with his disposition in the Bronx county was not lawful.... Had Howard known that it would have taken 18 months to go to trial and that he would be getting consecutive time Howard would have elected to accept the People's offer of 4-12 years as [the] plea agreement." (Howard Br. at 18)
Although the length of pretrial incarceration is relevant to the assessment of "prejudice" under Barker, 407 U.S. at 532, 92 S.Ct. at 2193, eighteen months of *170 pretrial incarceration (especially where much of the delay is not attributable to the State) is not sufficiently serious prejudice to cause a constitutional violation here in light of the other facts in the balance. See, e.g., United States v. Vasquez, 918 F.2d 329 (2d Cir.1990) (26 months "incarceration in the pretrial period was a hardship and must be included in the assessment of `prejudice.' But, the circumstances here do not approach the prejudice suffered by defendants in cases where we have found a speedy trial violation."') (quoting Flowers v. Warden, 853 F.2d 131, 133-34 (2d Cir.1988)); United States v. McGrath, 622 F.2d 36, 41 (2d Cir.1980) (despite 24-month delay from indictment to trial, "[a]bsent specific assertions" of "specific and substantiated prejudice arising from the delay," no constitutional violation); McKenzie v. Herbert, 969 F.Supp. 1, 3 (E.D.N.Y.1997) (no prejudice from 15-month incarceration despite petitioner's contention that "he was unable to assist in the preparation of his defense due to his pre-trial incarceration"); Amable v. Scully, 97 Civ. 4694, 1993 WL 300036 at *3 (S.D.N.Y. Aug. 4, 1993) ("Although petitioner was incarcerated during the nineteen month pre-trial period, this hardship is not sufficient prejudice to establish a violation of his constitutional right to a speedy trial when it is considered in the context of the other Barker factors."); Burress v. Henderson, 814 F.Supp. 313, 322 (W.D.N.Y.1993) (no prejudice from 19 month delay before trial; "While the interest in preventing oppressive pretrial incarceration is one of the important interests enumerated in Barker as protected by the Sixth Amendment right to a speedy trial, ... prejudice is usually measured in terms of how the delay has affected the ability of the defendant to prepare his defense.").
Howard's second claim that the delay affected his ability to evaluate the legality of the New York County plea agreement and sentence is without merit. In his petition, Howard fails to address how or why the length of the pretrial incarceration hindered his ability to assess the "legality" of the separate sentence offered or imposed in New York County (a conviction and sentence not the subject of the habeas petition) or how the delay affected his plea negotiations, or his plea analysis, in the Bronx or New York County cases. See, e.g., United States v. Lainez-Leiva, 129 F.3d 89, 92 (2d Cir.1997) (denies defendant's claim of prejudice because of possible loss of concurrent sentence, because he "had no right to a concurrent sentence" and trial court "was authorized to impose either a concurrent or consecutive sentence."); United States v. Cyphers, 556 F.2d 630, 636 (2d Cir.) (no constitutional speedy-trial violation from almost three year delay even though defendant's incarceration while awaiting trial in New York prevented a timely consideration of his parole in Ohio and prevented him from receiving a federal sentence partly concurrent with his Ohio sentence), cert. denied, 431 U.S. 972, 97 S.Ct. 2937, 53 L.Ed.2d 1070 (1977).
The prejudice Howard suffered here does not approach the prejudice alleged by defendants in other cases where the Second Circuit nevertheless found no speedy trial violation. See, e.g., United States v. McQuillan, 525 F.2d 813, 818 (2d Cir.1975) (no speedy-trial violation even though defendant lost his job, and alleged that some of his witnesses became unavailable for trial); United States v. Lasker, 481 F.2d 229, 237 (2d Cir.1973) (prejudice was "insubstantial" where defendant alleged "general claims of prejudice, such as damage to reputation ... and dulling of witnesses' memories," and two character witnesses for defendant died), cert. denied, 415 U.S. 975, 94 S.Ct. 1560, 39 L.Ed.2d 871 (1974); United States v. Infanti, 474 F.2d 522, 528 (2d Cir.1973) (no speedy trial violation from 28-month delay even though defendant alleged that two witnesses critical to his case had died, prosecution witnesses had memory lapses, and records allegedly critical to defendant's case had been destroyed); United States v. Schwartz, 464 *171 F.2d 499, 505 (2d Cir.) (no speedy-trial violation even though defendant claimed destruction of records, impairment of witnesses' memory, and unavailability of a government official who could testify that defendant's transaction was legal), cert. denied, 409 U.S. 1009, 93 S.Ct. 443, 34 L.Ed.2d 302 (1972). Howard has failed to allege sufficient prejudice.
E. Balancing All Four Barker Factors
Having considered the four Barker factors in this case and all of the relevant circumstances, the Court finds that there was no Constitutional speedy trial violation in this case.
CONCLUSION
For the reasons set forth above, the Court should deny Howard's petition for a writ of habeas corpus.
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable John E. Sprizzo, 40 Foley Square, Room 2201, and to the chambers of the undersigned, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Sprizzo. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir.1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir.1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825, 121 L.Ed.2d 696 (1992); Small v. Secretary of Health & Human Servs., 892 F.2d 15, 16 (2d Cir. 1989); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir.1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72,
May 7, 1999.
SUPPLEMENTAL REPORT AND RECOMMENDATION
In response to my May 7, 1999 Report and Recommendation, petitioner Tracy Howard, by letter dated June 11, 1999, asked the Court to dismiss his petition without prejudice so he could exhaust his unexhausted claims. By letter dated June 21, 1999, the State opposed, and by letter dated June 28, 1999, petitioner Howard renewed his request that his petition be dismissed without prejudice so he can "renew [it] when all state exhaustion has been completed."
Petitioner Howard's request would be appropriate if he would be able to raise the unexhausted claims in State court. However, as explained at pages 12-13 of my May 7, 1999 Report and Recommendation, New York procedural rules bar Howard from raising these issues before the New York Court of Appeals. Thus, his unexhausted claims would be procedurally barred in State court. Accordingly, it would be a waste of judicial resources both in the State courts and if Howard were to bring the issues back to Federal court to dismiss his petition without prejudice.[1]
*172 CONCLUSION
For the reasons set forth above and in my original Report and Recommendation, the Court should deny Howard's habeas petition, and should not dismiss his petition without prejudice.
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable John E. Sprizzo, 40 Centre Street, Room 2201, and to my chambers, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Sprizzo. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir.1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825, 121 L.Ed.2d 696 (1992); Small v. Secretary of Health & Human Servs., 892 F.2d 15, 16 (2d Cir.1989); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir.1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir.1983); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).
NOTES
[1] Howard's habeas petition was filed in the Northern District of New York, which transferred it to this Court.
[2] Howard pled guilty and was convicted in New York County of attempted robbery in the first degree and was sentenced to two to six years imprisonment on December 12, 1991. People v. Howard, 235 A.D.2d at 232, 653 N.Y.S.2d at 102-03. The New York County conviction resulted from a robbery Howard committed with an accomplice "on or about October 14, 1989, at 156th Street and Amsterdam Avenue" in New York. (Howard Br. in 98 Civ. 6372 at 3.) The Court notes that Howard's separate habeas petition in 98 Civ. 6372 about his New York County conviction was dismissed by the Court, with Howard's consent, on April 2, 1999, to allow Howard to exhaust state remedies. (See Dkt. Nos. 9-10 in 98 Civ. 6372.)
[3] ADA Koplin had stated that he was unable to find a copy of this supplemental letter in the DA or Court of Appeals' files. (Dkt. No. 9: Koplin 4/7/99 Aff. ¶¶ 4-6.) Howard, however, submitted a copy of the April 16, 1997 letter (Dkt. No. 10), and the Court has no reason to believe that the letter is not genuine. Accordingly, the Court will consider below the effect of the supplemental letter.
[4] Accord, e.g., Cardenas v. Superintendent, Malone Correctional Facility, No. CV-94-5093 (CPS), 1996 WL 497138 at *3-4 (E.D.N.Y. Aug. 26, 1996) (excessive sentence claim procedurally barred where raised before 2d Dep't but not in application for leave to appeal); DeLeon v. Hanslmaier, No. CV-94-5512 (CPS), 1996 WL 31232 at *3 (E.D.N.Y. Jan. 19, 1996) ("The fact that petitioner attached his brief submitted to the Appellate Division [with his application for leave to appeal to the Court of Appeals] is not enough to satisfy the exhaustion requirement."), aff'd mem., 104 F.3d 355 (2d Cir.1996); Figueroa v. Kelly, 95 Civ. 0216, 1995 WL 702327 at *2 (S.D.N.Y. Nov. 29, 1995) ("If a petitioner limits the issues to be reviewed in a letter application to the New York Court of Appeals, the other claims presented in his or her Appellate Division brief are not deemed exhausted under the Lundy requirement.... [but] should be deemed procedurally forfeited for purposes of federal habeas review where the petitioner is now procedurally barred from presenting those claims to the state court."); McGann v. Kelly, 891 F.Supp. 128, 134 (S.D.N.Y.1995) ("By failing to raise his ineffective assistance of counsel claim in his leave application, petitioner did not fairly apprise the [N.Y.] Court of Appeals of the factual and legal premises underlying his claim."); Bass v. Scully, 1995 WL 347040 at *3; Lynes v. Mitchell, 894 F.Supp. 119, 123 (S.D.N.Y.1995), aff'd mem., 104 F.3d 355 (2d Cir.1996); Morales v. Keane, No. CV-94-2379 (RR), 1995 WL 235222 at *13 n. 9 (E.D.N.Y. April 13, 1995); Smith v. Keane, No. CV-94-0514, 1995 WL 87330 at *2 (E.D.N.Y. Feb. 10, 1995); Esquilin v. Walker, No. CV-91-4608, 1992 WL 151903 at *2 (E.D.N.Y. June 16, 1992), aff'd mem., 990 F.2d 624 (2d Cir.1993); Cornielle v. Riley, No. CV-92-1018, 1992 WL 142009 at *2 (E.D.N.Y. June 16, 1992).
[5] There is a contrary line of cases from the Eastern District of New York. See Spence v. Superintendent, Great Meadow Correctional Facility, 987 F.Supp. 151, 161 (E.D.N.Y.1997) (distinguishes Grey as case where leave to appeal letter "reflect[ed] an abandonment of" the legal claims not directly raised in that letter); Manning v. Artuz, No. 94-CV-3325 (SJ), 1996 WL 294359 at *3-4 (E.D.N.Y. May 29, 1996) (distinguishes Grey because the "fair import" of letter application's reference to Appellate Division briefs was "that Petitioner was requesting the New York Court of Appeals to review the same claims that were advanced in the Appellate Division."); Meatley v. Artuz, 886 F.Supp. 1009, 1013-14 (E.D.N.Y.1995) (where no specific claim raised in letter to N.Y. Court of Appeals and Appellate Division briefs were attached to the letter, claims raised in bold headings in those briefs deemed exhausted); Melendez v. Scully, No. CV-91-2497 (RR), 1993 WL 41769 at *4 (E.D.N.Y. Feb. 10, 1993) (distinguishes Grey as case of abandonment of claim while Melendez's counsel's leave to appeal letter argued one issue and also stated that he relied on the attached Appellate Division briefs as to other issues).
The Court is not persuaded by these cases. Grey's result should not change merely because the Appellate Division briefs are not only attached to the application for leave to appeal to the New York Court of Appeals but are referred to in that application. To preserve an issue for federal habeas review, the petitioner must present it in the application for leave to appeal to the New York Court of Appeals. Discussion of why appeal should be granted on one issue, and then a passing reference to other issues in enclosed briefs, does not fairly apprise the New York Court of Appeals of the claims to be reviewed. To hold otherwise would require the Court of Appeals to read through lengthy briefs in search of issues deserving of review. In other words, such a holding would create "a duty to look for a needle in a paper haystack." The Court therefore believes the line of cases cited in text above better reflect the Second Circuit's Grey decision. Accord, Jordan v. Lefevre, 22 F.Supp.2d at 268 & n. 4. As Judge Mukasey stated in adopting my Report and Recommendation in Jordan v. Lefevre, the Eastern District "cases subvert Grey, and also rely on a case that antedates and was implicitly overruled by Grey....Grey controls on the issue of whether grounds for appeal were properly presented in the Court of Appeals." Jordan v. Lefevre, 22 F.Supp.2d at 262.
[6] Because the First Department did not explain how it reached its 165-day determination, this Court is not able to determine if the First Department's 165-day figure is a typographical error meant to uphold the trial court's 156-day calculation, or if the First Department attributed nine more days of delay to the State.
[1] The Court also notes that even if the petition were dismissed without prejudice, any subsequent federal habeas petition likely would be time barred by the AEDPA's one-year statute of limitations. Thus, a without prejudice dismissal in practical effect likely would be a with prejudice dismissal as far as federal habeas review is concerned. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568010/ | 44 F.Supp.2d 915 (1999)
Iline THOMAS, Plaintiff,
v.
William HENDERSON, Postmaster General of the United States, Defendant.
No. 98-71533.
United States District Court, E.D. Michigan, Southern Division.
April 27, 1999.
*916 George B. Washington, Detroit, MI, for plaintiff.
Geneva Halliday, Detroit, MI, for defendant.
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
ROSEN, District Judge.
I. INTRODUCTION
This sexual harassment case is presently before the Court on a Motion for Summary Judgment filed by Defendant, William Henderson, Postmaster General of the United States, on January 29, 1999. Plaintiff, Iline Thomas, filed the instant action on April 8, 1998, alleging that her supervisor at the Royal Oak District of the United States Post Office, Robert Young, subjected her to both hostile work environment and quid pro quo sexual harassment in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. In the instant motion, Defendant argues that Plaintiff has failed to state a prima facie case of sexual harassment under either a hostile work environment or quid pro quo theory.
The Court held a hearing on Plaintiff's Motion on April 22, 1999. Having heard the oral arguments of counsel, and having reviewed the briefs and supporting documents submitted by the parties, the Court is now ready to rule on Defendant's motion. This Opinion and Order sets forth the Court's ruling.
II. FACTUAL BACKGROUND[1]
On September 30, 1996, the Postal Service retained Plaintiff as a three month temporary casual clerk on the 3:30 p.m. to *917 2:00 a.m. "afternoon shift" at the Central Forwarding Section ("CFS") of the Royal Oak Division.[2] Jeff Nail, a supervisor in the Royal Oak Division, originally hired Plaintiff and served as her supervisor until November 17, 1996, when Mr. Young transferred into CFS as the supervisor for the afternoon shift.[3] Although Mr. Young rehired Plaintiff for an additional three month term effective January 1, 1997, he terminated her on March 17, 1997 for "irregular attendance." [Def. Exhibit 1]. While Plaintiff acknowledges that her attendance record deteriorated beginning in January 1997, she claims that her absences constituted an attempt to avoid Mr. Young's harassment. [Brief in Opposition, p. 9 n. 7]. Between September 30, 1996 and April 1, 1997, twenty-nine employees worked on Mr. Young's shift, all of whom were women. [Pl. Exhibit E, Interrogatory 6].
Plaintiff alleges that within two weeks of Mr. Young assuming his supervisory responsibilities, he began a pattern of harassment by making comments about her job performance, perfume, and personal life, which led her to request and obtain a transfer to the 8:30 p.m. to 5:00 a.m. evening shift in December:
Q. What had occurred at this time that made you want to get away from him?
A. Well, Bob was always just complaining that I was messing up the mail, and the incident of my perfume smells good and asking me different questions about [my husband], do me and Andre argue, are we mad at each other, you know, why my other kids' last names is different from mine. It was just, you know, things like that.[4]
[Thomas Dep., p. 38]. Plaintiff returned to the afternoon shift two weeks later when the Postal Service canceled the evening shift.
After returning to the afternoon shift, Plaintiff alleges that in January 1997, Mr. Young started playing "cat-and-mouse" with her time card. More specifically, Plaintiff contends that on days when Mr. Nail or another temporary supervisor, Dorothy Harris, were not present, Mr. Young would remove her time card from the proper location before she arrived at work, and then call her over to his desk after giving the other permanent and casual employees their assignments. He would then hold the time card out in front of her and force her to grab for it.[5] Plaintiff *918 alleges that Mr. Young played cat-and-mouse with her time card "several times," including on one occasion when Plaintiff states that he inappropriately stroked her hand while she grabbed for the card.[6] [Thomas Dep., pp. 179-180].
Plaintiff also contends that on three occasions Mr. Young briefly touched her leg and inner thigh in a sexually suggestive manner during conversations at his desk, which was located on the work room floor but partially obstructed from the view of other employees by machinery and other items. Mr. Young does not recall touching Plaintiff's leg, but states that it "does not sound totally out of character that I would touch someone to get their attention." [Young Dep., p. 80]. For the sake of thoroughness, the Court will detail Plaintiff's descriptions of these three incidents.
According to Plaintiff, the first incident occurred in early January 1997, when Mr. Young allegedly touched Plaintiff's leg while commenting on her perfume:
A. ... After sending everybody to do their assignments, he told me to sit at his desk. I'm sitting here. He brings his chair over, slides in front of me and he stoops down.
Q. Is he sitting in the chair?
A. He's sitting in the chair. It's like a rolling chair and he stoops down in front of me and he tells me my perfume smells good, with his hand on my leg.
Q. What were you wearing at that time?
A. The clothing?
Q. Yes.
A. Pants. I don't remember the color or nothing. It was like a pants and T-shirt. He put his hands on my leg and told me my perfume smelled good. I shifted up in my seat. I went back like this, and that's when he slid back around his table. I didn't know what to do. I was just sitting here. I'm not prejudiced or nothing like that, it was just the touch of his just made me sick. I'm just sitting there and he was like smiling and told me to go on and do my assignment. I went to do my assignment, but before I sat down, I went to the bathroom and I started to cry.
The second incident allegedly occurred in late January, when Plaintiff claims that Mr. Young startled her by coming up behind her and whispering in her ear, "Take your break at five-thirty." [Thomas Dep., p. 89]. After the break, he called her over to his desk where the following purportedly occurred:
Q. I want to focus on the day that Mr. Young came up and whispered in your ear about what time to take *919 your break and you said you jumped. What happened after that?
A. After that, he started walking away smiling, like it was funny. Then, lunch time came and he gave everybody their assignments except for me. He would tell me to sit at his desk and then again, he proceeded to touch me and said that I couldn't wear this perfume anymore. First, he said I had an attitude, my attitude was bad, and I didn't say anything. Then, he said the perfume I had wore, the last time I had wore it I couldn't wear it anymore, because it was hazardous to him.
Q. Did he tell you anything else about why you couldn't wear the perfume?
A. He said it made him cough and sneeze, I guess the perfume was in his throat or something and he couldn't speak.
Q. Did he tell you that other employees had complained about it?
A. Yes. He said he had a lot of complaints that others were saying my perfume was real strong. I said, "You mean to tell me if I get up and walk to the end of the hall, you can smell my perfume?" And he was like "Yeah." I sniffed it myself and I was like, "I don't think so," because my perfume was not that strong. I said, "You mean if I get up and walk down to the end of the hall, can you smell my perfume?" And he was like, "Yeah, don't wear it anymore." When he said that, he had his hand on my inner thigh again and I proceeded to move, and that's when he said I had a bad attitude and I needed to work on it.
[Thomas Dep., pp. 90-92].
The third and final incident allegedly took place in late February, when Plaintiff claims that Mr. Young again called her over to his desk:
Q. What happened on that occasion?
A. He was just running it down. He was like, "When you come in here, your attitude is lousy, you have lousy excuses." And I started looking up at the ceiling, because I didn't want to hear what he had to say. So he rolled his chair around and he went to stoop down and put his hand on my thigh again, and I moved, I jumped back.
Q. When you say he stooped down, how far down did he stoop? You have to tell it, so the court reporter can write it down.
A. Like his face was like on the level of my chest. Then, he said like what I'm saying right now, "I don't like your attitude." And I said, "I don't like your attitude."
Q. This is where he was sitting talking to you, when you were looking at the ceiling?
A. Yes. I was sitting up like this and he had his hand like on my thigh. I was looking at the ceiling, like that. He said, "I don't like your attitude." I said, I don't like your attitude. And we just went back and forth.
Q. Did you tell him to remove his hand from your thigh?
A. I was too scared. I was too scared to say anything. I mean it's the way the look that he gave, it just spooked me. I just didn't say anything. I didn't want to lose my job because I needed it.
Q. But you didn't hesitate to say to him, "I don't like your attitude."
A. That wasn't going to get me fired, by me saying, "I don't like your attitude." I figured if I said "I don't want you touching me," or something like that, he may say okay, well, leave, go home, and I couldn't afford to lose my job. I *920 know it sounds crazy and weird but that's the way it happened.
[Thomas Dep., pp. 122-124].[7]
During each of the three touching incidents described above, Plaintiff acknowledges that Mr. Young was looking at her face and talking to her about "work-related things," and that she would stare at the ceiling or wall to avoid eye-contact.[8] [Thomas Dep., p. 184-185]. She further states that on each occasion, his hand was on top of her leg with fingers going down toward her inner thigh, and that the contact lasted just a matter of seconds:
Q. The last time you testified that on three occasions, when you were sitting in the chair at the end of Mr. Young's desk, he pulled his chair around in front of you. You said that he was talking to you and on three occasions that he placed his hand on your thigh; is that correct?
A. Yes.
Q. That happened three times; is that right?
A. Yes.
Q. Last time, you were sort of demonstrating on your own thigh but I could not see on the other sides of the table. I want you to show me on yourself, if you would, exactly what he did. Was it the same all three times?
A. Yes. I can't do it on myself.
Q. Just try to show me. What did he do? I realize you said you were wearing slacks and now you have on a skirt, but do the best you can.
A. He pulled his chair around and he placed his hand on my thigh here.
Q. Kind of on the top of your leg?
A. Right.
Q. You are placing your hand, to me, on the top of your leg.
MR. WASHINGTON: The top and inside.
BY MS. HALLIDAY:
Q. On top and a little bit down into the thigh area of your leg; is that correct?
A. Right.
Q. How many seconds did he keep his hand there?
A. I can't remember. It wasn't
Q. Let me ask you this. You previously said that he put his hand on your leg and you jerked; is that correct?
A. I sat up like this.
Q. Did you do that quickly?
A. Yeah.
Q. So like the minute he touched you, the second he touched you, you jerked up; is that correct?
A. Yes.
Q. Did you also testify before that at that point he removed his hand?
A. Yes.
Q. We're talking just a matter of seconds; is that correct?
A. Yes
*921 Q. Was it the same situation on all three occasions?
A. Yes.
Q. By that, I mean he placed his hands on your leg with his fingertips going down to toward your thigh?
A. No. Not that far down.
Q. Just more on top?
A. Yes.
Q. He placed his hands on the top of your leg?
MR. WASHINGTON: I don't think that was the gesture she made. It was extending into the middle of the inner thigh, as she just demonstrated it.
MS. HALLIDAY: She just told me that wasn't it.
A. You had your hand like going down.
BY MS. HALLIDAY:
Q. It wasn't down toward your crotch?
A. It wasn't down toward the middle part. It was like here.
Q. He touched the top of your leg with your fingertips just by the sides of them, going down toward your inside thigh?
A. Yes.
Q. You immediately jerked?
A. Yes.
Q. And he immediately withdrew his hand; is that correct?
A. Yes.
[Thomas Dep. Vol II, pp. 19-22].
On March 7, 1997, Plaintiff contacted Sherry Saites at the Equal Employment Opportunity ("EEO") office of the Royal Oak District to complain about Mr. Young. Although Plaintiff claims that she told Ms. Saites that Mr. Young was "touching me in places I didn't like," [Thomas Dep., p. 128], Ms. Saites does not recall any discussion of inappropriate touching during this initial phone conversation.[9] [Saites Dep., p. 51]. Following standard procedures, Ms. Saites mailed out a packet of EEO complaint forms to Plaintiff that same day.[10]
On March 17, 1997, Plaintiff alleges that she "snuck" over to speak with temporary supervisor Dorothy Harris to complain about Mr. Young. She further alleges that Mr. Young saw her speaking with Ms. Harris, which led him to fire her later that same night by trying to get her to sign termination papers without reading them. [Thomas Dep., pp. 135-137].
Q. He was looking under your desk?
A. No. He dropped a piece of tissue by the cage and told me to come to his desk.
Q. What was the significance of him dropping the tissue by the cage?
A. I guess, so he could whisper so, nobody could hear him telling me to come to his desk.
* * * * * *
*922 Q. What happened then?
A. I was at his desk and he was like, "Do you remember what we discussed a couple of weeks ago?" I said, "We discussed a lot of things a couple of weeks ago." He was like, "I don't see any improvement. I want you to sign this paper." I was like, "I am not signing nothing I can't read." He was like, "If you don't sign it, I will send it over and tell them you refuse to sign it." I said, "I'm not signing nothing I can't read." I was like, "Do Jeff know what's going on?" He just gave me a crazy look like no, and I was like, "I'm not signing anything until I speak to Jeff." Then, he was just like, "Punch out and go home." So I was like okay. I punched out and I went home.
Q. Did he tell you what was the nature of the paper?
A. He never told me what was on the paper.
Q. Did he tell you he was terminating your casual employment?
A. They didn't tell me anything? [sic] He just told me to sign this paper. He had his hand over it. He had it covered and he told me to sign it and I wasn't going to sign anything I couldn't read.
Q. Did anybody else witness this?
A. They didn't see it, but after he told me to punch out and go home, I went and grabbed my coat and book bag and I went over to Antoinette [Harriday] and I told her.
[Thomas Dep., pp. 136-137]. Mr. Young then proceeded to submit an Employee Evaluation and/or Probationary Report recommending Plaintiff's dismissal for irregular attendance. The report includes a notation from Mr. Young, dated 3/17/97 at 11:47 p.m., providing "Employee refused to sign." [Def. Exhibit 1].
On April 15, 1997, Plaintiff met with an EAP counselor, Viviane Gracey, telling her that Mr. Young "touched me, he used to rub my legs, my things, and my hands."[11] [Pl. Exhibit G, Counselor Report]. Plaintiff then scheduled an EEO interview with Ms. Saites for April 25, 1999, during which she alleged that Mr. Young had called her to his desk and inappropriately touched her. Ms. Saites responded by conducting interviews of other women employees in Central Forwarding. Although Ms. Redd refused to speak with Ms. Saites, she has submitted a sworn affidavit alleging that on one occasion Mr. Young shined a work light on her breasts. [Pl. Exhibit H]. Three other employees, Karen Hulley, Kim Sanders, and Dora Carden, told Ms. Saites that Mr. Young has made inappropriate sexual comments.[12] [Pl. Exhibit B, notes attached to Saites Dep.].
Plaintiff then proceeded to file an EEO Complaint of Discrimination, dated June 20, 1997, alleging sex discrimination and providing:[13]
My supervisor, Robert Young, engaged in sexual harassment of me including unwanted touching, unwanted comments, and discriminatory and retaliatory job assignments. Finally, on March 14, he terminated me because I would not go along with what he wanted.
*923 [Complaint Exhibit 1]. The Postal Service reassigned Mr. Young to another work area pending the outcome of the investigation. At the end of the investigation, no cause was found for disciplining Mr. Young.[14]
III. ANALYSIS
A. Standards Applicable to Motions for Summary Judgment
Summary judgment is proper "`if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Fed. R.Civ.P. 56(c).
Three 1986 Supreme Court cases Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ushered in a "new era" in the standards of review for a summary judgment motion. These cases, in the aggregate, lowered the movant's burden on a summary judgment motion.[15] According to the Celotex Court,
In our view, 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.
Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
After reviewing the above trilogy, the Sixth Circuit established a series of principles to be applied to motions for summary judgment. They are summarized as follows:
* Cases involving state of mind issues are not necessarily inappropriate for summary judgment.
* The movant must meet the initial burden of showing "the absence of a genuine issue of material fact" as to an essential element of the non-movant's case. This burden may be met by pointing out to the court that the respondent, having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case.
* The respondent cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must "present affirmative evidence in order to defeat a properly supported motion for summary judgment."
* The trial court no longer has the duty to search the entire record to establish that it is bereft of a genuine issue of material fact.
* The trial court has more discretion than in the "old era" in evaluating the respondent's evidence. The respondent must "do more than simply show that there is some metaphysical doubt as to the material facts." Further, "[w]here the record taken as a whole could not lead a rational trier of fact to find" for the respondent, the motion should be granted. The trial court has at least some discretion to determine whether the respondent's claim is plausible.
Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir.1989). See also, Nernberg v. Pearce, 35 F.3d 247, 249 (6th Cir.1994). The Court will apply the foregoing standards in deciding Defendant's *924 Motion for Summary Judgment in this case.
B. Plaintiff's Sexual Harassment Claims
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating "against any individual with respect to [her] compensation, terms, conditions, or privileges of employment, because of such individual's ... sex...." 42 U.S.C. § 2000e-2(a)(1). As noted by the Sixth Circuit, courts recognize two forms of workplace sexual harassment which constitute discrimination based on sex: (1) "quid pro quo" harassment, in which a supervisor requests sexual favors in exchange for job benefits; and (2) "hostile work environment" harassment, in which a pervasive atmosphere of sexual harassment creates an objectively hostile work environment. Blankenship v. Parke Care Centers, Inc., 123 F.3d 868, 872 (6th Cir.1997). In the present case, Plaintiff alleges that Defendant is liable for both forms of sexual harassment by her supervisor Robert Young.
1. Hostile Work Environment Harassment
In order to state a prima facie case of hostile work environment sexual harassment, an employee must demonstrate that:
(1) the employee is a member of a protected class; (2) the employee was subject to unwelcomed sexual harassment; (3) the harassment complained of was based on sex; (4) the charged sexual harassment had the effect of unreasonably interfering with the plaintiff's work performance and creating an intimidating, hostile, or offensive work environment; and (5) the existence of respondent superior liability.
Barnes v. Montgomery County Board of Education, 1997 WL 253279, *2 (6th Cir.(Ky.)) (unpublished decision) (quoting Fleenor v. Hewitt Soap Company, 81 F.3d 48, 49 (6th Cir.), cert. denied, 519 U.S. 863, 117 S.Ct. 170, 136 L.Ed.2d 112 (1996)).
In a series of decisions, the Supreme Court has clarified that hostile work environment sexual harassment only becomes actionable if the alleged conduct is "sufficiently severe or pervasive to alter the condition of [the victim's] employment and create an abusive working environment." Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 67, 106 S.Ct. 2399, 2405, 91 L.Ed.2d 49 (1986) (internal quotation marks and citation omitted). The Meritor standard was reaffirmed and expounded on in Harris v. Forklift Systems, Inc., 510 U.S. 17, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993), which instructed that the question of whether conduct is sufficiently severe or pervasive must be judged by both an objective and an subjective standard:
Conduct that is not severe or pervasive enough to create an objectively hostile or abusive work environment an environment that a reasonable person would find hostile or abusive is beyond Title VII's purview. Likewise, if the victim does not subjectively perceive the environment to be abusive, the conduct has not actually altered the conditions of the victim's employment, and there is no Title VII violation.
510 U.S. at 21-22, 114 S.Ct. at 370.
No "mathematically precise test" exists for judging whether an environment is objectively hostile or abusive and, thus, the determination requires an examination of all the circumstances, including "the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance." Id., at 22-23, 114 S.Ct. at 371. As summarized by Justice Scalia in the Supreme Court's recent unanimous decision in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75, 118 S.Ct. 998, 140 L.Ed.2d 201 (1998):
The prohibition of harassment on the basis of sex requires neither asexuality nor androgyny in the workplace; it forbids *925 only behavior so objectively offensive as to alter the "conditions" of the victim's employment.... We have always regarded that requirement as crucial, and as sufficient to ensure that courts and juries do not mistake ordinary socializing in the workplace such as male-on-male horseplay or intersexual flirtation for discriminatory `conditions of employment.'
* * * * * *
The real social impact of workplace behavior often depends on a constellation of surrounding circumstances, expectations, and relationships which are not fully captured by a simple recitation of the words used or the physical acts performed. Common sense, and an appropriate sensitivity to social context, will enable courts and juries to distinguish between simple teasing or roughhousing ... and conduct which a reasonable person in the plaintiff's position would find severely hostile or abusive.
118 S.Ct. at 1003.
Returning to the present case, the Court initially notes that, standing alone, Plaintiff's allegations that Mr. Young caressed her hand while playing cat-and-mouse with her time card, and that he asked intrusive questions about her perfume, family and personal problems fall outside the purview of Title VII. This chicanery and commentary amount to, at most, nothing more than the horeseplay and offensive utterances which, while distasteful, do not rise to the level of actionable sexual harassment.
That said, the Court must view Mr. Young's conduct in light of all the circumstances, and the allegation that Mr. Young also touched Plaintiff's leg and inner thigh on three different occasions presents a far more difficult question. Applying the Harris standard, Defendant asserts that under any objective assessment, Mr. Young's conduct did not create a sufficiently severe and sustained hostile work environment to support a harassment claim. More specifically, Defendant argues that even assuming the veracity of Plaintiff's allegations, it is not unreasonable or sexual in nature for a male supervisor to briefly touch the leg of a female employee to get her attention, if the employee insists on looking away at the ceiling during a conversation about work-related issues.
Q. Can you think of any reason you would have ever touched her on her legs?
A. Well, I indicated a lot of times when I talked to her, her body language was like she would be turning away and looking away and I would be trying to speak with her and I may have tapped her on the knee to get her attention.
* * * * * *
Q. Do you remember lightly tapping her on the knee?
A. No, not specifically, but it sounds like something certainly that I would do to get her attention.
[Young Dep., pp. 77-78].
If defendant had only touched Plaintiff on one occasion, or perhaps even just tapped her on the knee, the Court might agree. In actuality, however, Plaintiff alleges that Mr. Young touched her leg and inner thigh on three different occasions within approximately a two month period, even though each time she shifted up in her chair to avoid the contact. Moreover, rather than orally instructing Plaintiff to pay attention, or touching her on a less suggestive area of her body such as the shoulder or arm, Mr. Young allegedly placed his hand on top of Plaintiff's leg with his fingers going down toward her inner thigh, an action which contains obvious potential sexual connotations. Finally, Plaintiff expressly alleges that the decline in her attendance record coincided directly with Mr. Young's harassment. In sum, Plaintiff's allegations, if true, involve frequent, severe, and sexually suggestive conduct in the workplace that negatively impacted on her job performance.
*926 Accordingly, the Court finds the record sufficient to raise a question of fact as to whether Mr. Young's conduct created an objectively hostile work environment. Plaintiff alleges that on three occasions within approximately two months, Mr. Young touched her leg and inner thigh, albeit briefly, in a sexually suggestive manner. In light of Plaintiff's other allegations, including her claim that Mr. Young inappropriately stroked her hand on one occasion, a reasonable person in Plaintiff's position could find such conduct severely hostile or abusive.
2. Quid Pro Quo Harassment
In order to state a prima facie case of quid pro quo sexual harassment, an employee must demonstrate:
(1) that the employee was a member of a protected class; (2) that the employee was subjected to unwelcome sexual harassment in the form of sexual advances or requests for sexual favors; (3) that the harassment complained of was based on sex; (4) that the employee's submission to the unwelcome advances was an express or implied condition for receiving job benefits or that the employee's refusal to submit to a supervisor's sexual demands resulted in a tangible job detriment; and (5) the existence of respondeat superior liability.
Kauffman v. Allied Signal, Inc., Autolite Div., 970 F.2d 178, 186 (6th Cir.1992) (quoting Highlander v. KFC Nat. Management Co., 805 F.2d 644, 648 (6th Cir.1986)); See also, Richmond-Hopes v. City of Cleveland, 1998 WL 808222, *4 (6th Cir. 1998) (unpublished opinion).
On its face, Plaintiffs quid pro quo claim seems fatally flawed in that Plaintiff does not allege that Mr. Young ever requested sexual favors in return for job benefits. Indeed, Plaintiff acknowledges that Mr. Young never asked her on a date or out to lunch, never came over to her house, never overtly suggested that he wanted a sexual relationship with her, and never told her that her job or assignments were contingent on letting him touch her. [Young Dep. Vol II, pp. 23-26]. Plaintiff argues, however, that the Court should imply a quid pro quo claim from the conduct by Mr. Young that supports her hostile work environment claim, coupled with her termination. More specifically, Plaintiff contends that Mr. Young's efforts to touch her leg and inner thigh constituted implied requests for sexual favors, and that Mr. Young fired her because she spurned these sexual overtures.
To accept Plaintiff's argument, however, would mean that anytime a prima facie hostile work environment claim was accompanied by an adverse employment action, a plaintiff would automatically state a prima facie case of quid pro quo sexual harassment. Sixth Circuit case law does not support such a result and, contrary to Plaintiff's assertions, the Court does not read Oncale, supra, to obviate the distinction between hostile work environment and quid pro quo sexual harassment.
In the Court's view, a quid pro quo claim requires some evidence that, from an objective perspective, the alleged conduct carried with it an express or implied request for sexual favors in return for some action affecting the plaintiff's terms or conditions of employment. Without such stated or implied conditions of reciprocity, the offensive conduct is simply that: action which is harassing and offensive, but not a quid pro quo request. The Court reasonably reads Plaintiff's Complaint and Deposition to allege that Mr. Young engaged in a pattern of sexually harassing conduct which directly affected her work performance and eventually led to her discharge for irregular attendance. While such allegations do support a hostile work environment claim, they do not support a claim for quid pro quo sexual harassment as a matter of law.
IV. CONCLUSION
For all of the aforementioned reasons:
*927 IT IS HEREBY ORDERED that Defendant's Motion for Summary Judgment is DENIED with respect to Plaintiff's hostile work environment claim, and GRANTED with respect to Plaintiff's quid pro quo claim.
NOTES
[1] For the purposes of the instant motion for summary judgment, the Court derives the factual background almost exclusively from Plaintiff's lengthy deposition testimony. Plaintiff also provided defense counsel with copies of self-written notes, allegedly documenting incidents involving Mr. Young. In addition, Plaintiff recorded certain conversations with Mr. Young, transcripts of which are attached to Defendant's motion as Exhibit 6.
[2] Defendant submitted employment records indicating that the Postal Service previously retained Plaintiff as a temporary Christmas casual on December 3, 1994 for a period not to exceed 21 days. She was terminated on December 16, 1994 for irregular attendance. [Def. Exhibit 1]. In addition, the records reveal that Red Roof Inn hired Plaintiff for a housekeeping position on March 4, 1996, and terminated her on April 22, 1996 for poor attendance. [Def. Exhibit 3]. In direct conflict with these employment records, Plaintiff's application for employment with the Postal Service, dated September 13, 1996, indicates her employment with Red Roof Inn as March 4, 1996 to present. [Def. Exhibit 2].
[3] Following a week of training, Mr. Young began supervising Plaintiff's shift on November 24, 1996. Mr. Nail, who supervised the day shift, would usually remain on the premises until "about four or five o'clock," and Plaintiff testified that she considered both Mr. Nail and Mr. Young her supervisors. [Thomas Dep., pp. 35-36].
[4] Although Plaintiff claims that she requested a transfer to "get away from him," she acknowledges that she never told anyone her alleged reason for wanting a transfer. [Thomas Dep., pp. 38, 40]. She further claims that a co-worker, Ruby Harris, overheard Mr. Young ask about her children's last names and chastised him for asking such a personal question. [Thomas, Dep., p. 44]. The record, however, contains no evidence corroborating this allegation.
[5] At her deposition, Plaintiff described the first cat-and-mouse incident as follows:
Q. The first time this happened, the time card is in his hands, what happened next?
A. I went over to his desk. After he gave the casuals and the regulars their assignments, we went over to his desk and he sat down and he took the time card and he did like this with it.
Q. Held it out to you?
A. Held it out to me. When I went to grab it, he snatched it back.
Q. Then, what happened?
A. Then, I just looked at the ceiling, like this.
Q. Kind of disgusted?
A. Yes.
Q. Then, what happened?
A. He did it again and held the time card out. When I went to grab the time card, he snatched it back and I grabbed it, and he was standing there and he was smiling and I walked away.
Q. Did anything else happen at that time?
A. No.
[Thomas Dep., pp. 47-48]. Plaintiff claims that in discussing this incident with co-workers a few days later, Wanda Thurman told her that "I think he likes you," to which she allegedly replied, "I don't like him, he's ugly." [Thomas Dep., pp. 50-51]. Plaintiff further testified that another co-worker, Antoinette Harriday, said that "Bob was always staring at her [Antoinette], making her feel uncomfortable." [Thomas Dep., pp. 51-52]. Once again, however, the record contains no evidence corroborating the aforementioned statements by co-workers.
[6] Mr. Young concedes that he may have played cat-and-mouse with Plaintiff's time-card, but denies ever reaching out and grabbing or attempting to hold her hand. [Young Dep., p. 74].
[7] Plaintiff testified that she told her godmother Mary Johnson about the second and third incidents, but the record contains no corroborating evidence. [Thomas Dep., p. 92-93, 124].
[8] Plaintiff's exact deposition testimony was as follows:
Q. He was looking you in the face but he was like stooped over toward you?
A. Yes, with his hand on my inner thigh.
Q. Talking to you about work-related things; is that correct?
A. Yes.
Q. Was that the same on all three occasions?
A. Yes.
Q. You said, I think, that you never said anything to him directly?
A. Yes.
Q. But you used to look at the ceiling, is that correct?
A. Either the ceiling or the wall.
Q. Was it obvious to him that you were looking away?
A. Yes, because he was like I had a bad attitude, he didn't like my attitude.
[Thomas Dep., pp. 184-185].
[9] Ms. Saites testified as follows:
Q. There's really no reference, one way or the other here, that I can see as to whether there was touching or not. Do you recall any conversation about whether there was any kind of touching going on?
A. If there was, that would have been a red flag. That would have been written down, either highlighted or in bold or something.
Q. So as far as you remember, she didn't say there was any touching during the course of this conversation?
A. No. At the very most, she said he took her time card and his hand may have grazed hers when she took the time card, which isn't really a red flag.
Q. Right. I understand. And you don't remember whether you asked her specifically about any kind of touching?
A. I wouldn't unless I was led to believe that there was something more there to pull out.
Q. Okay. So there was, as far as you can recall, no discussion, one way or the other, as to whether there was touching in this first phone call?
A. No.
[Saites Dep., pp. 51-52].
[10] The complaint forms were returned to the EEO office on April 17, 1997 as unclaimed. The forms were remailed the same day and claimed by Plaintiff on April 19, 1997.
[11] Plaintiff's counsel directs the Court to Ms. Gracey's report, where she indicated that "Psychiatric evaluation is a must." Counsel fails to note, however, that the report also details problems Plaintiff was having with her husband, and indicates that Plaintiff's fears of Mr. Young following her may be "linked to client's paranoia." [Pl. Exhibit G].
[12] In a Rule 56(f) affidavit submitted to the Court, Plaintiff's counsel states that he could not obtain affidavits from Ms. Hulley, Ms. Sanders, and Ms. Carden corroborating their allegations, but that he believes they would testify consistent with their statements to Ms. Saites. [Pl. Exhibit J].
[13] Although Plaintiff checked the box for sex discrimination on the EEO complaint form, she did not check the box for retaliation.
[14] Plaintiff states that she has made two attempts at suicide and was hospitalized in August 1997. She is also currently in treatment and on medication at New Center Community Mental Health. [Brief in Opposition, p. 11].
[15] "Taken together the three cases signal to the lower courts that summary judgment can be relied upon more so than in the past to weed out frivolous lawsuits and avoid wasteful trials." 10A Charles A. Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice & Procedure, § 2727, at 33 (1993 Supp.). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2568062/ | 44 F.Supp.2d 653 (1999)
HAMILTON BANK, N.A., Plaintiff,
v.
KOOKMIN BANK, et ano., Defendants.
No. 98 CIV. 2162(LAK).
United States District Court, S.D. New York.
April 28, 1999.
*654 *655 Kevin C. Logue, William C. Rand, Paul, Hastings, Janofsky & Walker LLP, New York City, for Plaintiff.
Elliot Silverman, McDermott, Will & Emery, New York City, for Defendants.
MEMORANDUM OPINION (Second Corrected)
KAPLAN, District Judge.
Kookmin Bank ("Kookmin"), which is organized in the Republic of Korea ("Korea"),[1] presented a draft for payment under a letter of credit (the "L/C") issued by Hamilton Bank, N.A. ("Hamilton"), a national bank with its principal office in Florida.[2] Hamilton refused to pay because a required document was missing. Hamilton, however, failed to notify Kookmin by telecommunication of the reason for its refusal as required by the Uniform Customs and Practice for Documentary Credits (1993 Revision), ICC Pub. No. 500 (the "UCP"), which governed the L/C. Hamilton brought this action for a declaratory judgment and for damages for libel by a letter Kookmin sent to the Office of the Comptroller of the Currency ("OCC"). Kookmin has counterclaimed to recover the $1.5 million allegedly due on the L/C and now seeks summary judgment.
Facts
The Letter of Credit
The material facts are not in dispute. On June 11, 1996, Hamilton issued a letter of credit in the amount of $1,500,000 on behalf of Sky Industries Corporation ("Sky") for the benefit of Sung-Jin Trading Co. ("Sung-Jin") in connection with a proposed transaction in which Sky would purchase leather sport shoes from Sung-Jin.[3] By the original terms of the L/C, payment would be made on a draft upon presentation of (1) a bill of lading, (2) a commercial invoice, (3) a packing list, and (4) a "copy of authaenticated [sic] telex from issuing bank to advising bank, indicating quantity to be shipped, destination, and nominating transporting company" (the "Authenticated Telex").[4] The purpose of the Authenticated Telex was to protect Hamilton. No draft would be honored until Sky first deposited and pledged funds backing the total amount of the L/C.[5]
The L/C was amended three times,[6] the only relevant amendment being the third which stated in pertinent part "on additional conditions add: No further Amendments of this L/C will be issued by applicant. Any other condition should be in accordance with `Option Contract' signed by applicant and beneficiary dated May 31, 1996. All other terms remain unchanged."[7]*656 The L/C and each of its amendments stated it was governed by the UCP.[8]
Sung-Jin Trading's Negotiation of the L/C
J.G. Kim, the president of Sung-Jin, attempted to negotiate a draft drawn on the unamended L/C to Kookmin's Pusan branch in June 1996. Taek Su Jun, a Kookmin manager, refused to negotiate the draft because the Authenticated Telex was not included among the documents presented.[9] According to Jun, Kim told him that "it [was] in the process of being taken care of."[10]
On July 12, Kim allegedly attempted to negotiate a draft drawn on the amended L/C at Pusan Bank.[11] That same day, Pusan Bank sent a message to Hamilton through SWIFT[12] seeking approval to negotiate the draft without the Authenticated Telex.[13] On July 17, Hamilton responded via SWIFT notifying Pusan Bank that it was not permitted to do so.[14]
On July 13, prior to obtaining a response from Pusan Bank, Kim attempted once again to negotiate his draft to Kookmin.[15] This time, in response to Jun's request for the Authenticated Telex, Kim presented to Kookmin two documents: one entitled "special instructions," purportedly from Sky Industries to Sung-Jin, dated July 2, 1996,[16] and the other a copy of an option contract dated May 31, 1996 between Sung-Jin and Sky Industries[17] which contained a reference to the special instructions.[18]
Although the option contract presented to Kookmin referred to the Authenticated Telex requirement,[19] according to Jun, Kim explained that the combination of the option contract and the special instructions obviated the need for it.[20] Kookmin did not verify this with Hamilton.[21] Nor did it inquire of Dong Nam Bank, Hamilton's advising bank in Korea, whether the Authenticated Telex had been received or into the significance of the special instructions.[22] Evidently assuming that the L/C requirements had been satisfied, Kookmin negotiated the draft and remitted $1.5 million to Sung-Jin.[23]
Kookmin's Presentation of the Documents to Hamilton
Kookmin sent to Hamilton the documents it obtained from Kim along with a request for payment of $1.5 million. Hamilton received the documents on July 22, 1996[24] and returned them to Kookmin via courier on July 24 with an accompanying *657 letter stating that they were being returned because presentment was "not in compliance with the terms and conditions of the credit."[25] On August 2, Kookmin again presented the documents to Hamilton.[26] Four days later, Hamilton again returned the documents to Kookmin[27] and sent a message through SWIFT the same day stating that Hamilton was returning them because Kookmin had not presented the Authenticated Telex as required by the L/C.[28]
Kookmin's Letter to the OCC
Over the course of the next year, Kookmin and Hamilton exchanged correspondence regarding the L/C with no amicable resolution. On October 14, 1997, Kookmin sent a letter by facsimile to the Office of the Comptroller of the Currency ("OCC") in both Florida and Georgia.[29] Kookmin there stated that it believed that Hamilton issued the L/C with the intent not to honor it; that it had evidence that similar L/C's had been issued previously; that it believed that Hamilton had committed fraud; and that Kookmin was preparing a lawsuit in Korea. Kookmin asked, moreover, for certain factual information about Hamilton.[30] In response to this letter, the OCC requested information from Kookmin regarding its evidence of the alleged fraud.[31] Kookmin provided details pertaining to Hamilton's failure to make payment on the L/C and of its issuance of at least one other letter of credit with an authenticated telex requirement.[32] The OCC sent Hamilton a copy of Kookmin's initial letter and inquired about the allegations it contained.[33]
Procedural History and Claims Asserted
Kookmin brought an action in Korea on or about December 5, 1997 to recover damages for Hamilton's refusal to honor the L/C. Hamilton subsequently brought this action seeking an injunction barring prosecution of Kookmin's Korean action, a declaratory judgment and damages for libel against Kookmin. It also sued Sky Industries, claiming that Sky must indemnify it if Hamilton is found liable to Kookmin. Kookmin counterclaimed against Hamilton for Hamilton's dishonoring the L/C. This Court denied Hamilton's motion to enjoin the Korea suit,[34] which since has been decided in Kookmin's favor. Kookmin moves now for summary judgment dismissing the complaint. It argues that (1) Hamilton's failure to follow precisely the procedures of the UCP precludes Hamilton from relying on the lack of the Authenticated Telex to justify dishonoring Kookmin's draft drawn on the L/C; (2) Hamilton is estopped from claiming that Kookmin failed to obtain the Authenticated Telex because Hamilton itself was responsible for its issuance;[35] and (3) Hamilton has no claim for libel.
Discussion
Choice of Law
A threshold issue concerns the law that governs resolution of this dispute. *658 It is well settled that when subject matter jurisdiction is based on diversity, federal courts look to the choice of law rules of the forum state.[36] Under New York conflicts principles, the law of the issuing bank's locus governs with respect to liability for the nonpayment of a draft under a letter of credit,[37] and claims for libel generally are governed by the law of the plaintiff's domicile.[38] As Hamilton is based in Florida, both claims are governed by Florida law.
UCP Article 14
It is undisputed that Kookmin never presented an Authenticated Telex and that the conditions to payment on the L/C therefore were not satisfied fully. Kookmin nevertheless claims that Hamilton is precluded under the UCP[39] from relying on this deficiency because it did not (a) notify Kookmin via telecommunication of the specific reason for its refusal to pay; and (b) state all discrepancies in respect of which the bank refused the documents.
UCP Article 14, "Discrepant Documents and Notice,"[40] provides that an issuing bank may refuse documents presented to it for the purpose of drawing on a letter of credit if it "determines that the documents appear on their face not to be in compliance with the terms and conditions of the Credit."[41] If the issuing bank does so, "it must give notice to that effect by telecommunication ... no later than the close of the seventh banking day following the day of receipt of the documents."[42] Moreover, "[s]uch notice must state all discrepancies in respect of which the bank refuses the documents ..."[43] Failure to act in accordance with these provisions "preclude[s the issuing bank] from claiming that the documents are not in compliance with the terms and conditions of the Credit."[44] This preclusion, furthermore, is strict. Under Florida law, "a bank will be estopped from subsequent reliance on a ground for dishonor if it did not specify that ground in its initial dishonor."[45] The provisions of Article 14 thus "have been interpreted to incorporate a penalty against an issuing bank that does not assert the noncompliance of documents in a timely fashion."[46]
It is undisputed that Hamilton did not communicate its rejection via telecommunications. It replied via DHL courier.[47]*659 Nor did Hamilton's initial rejection of Kookmin's tender state specific reasons for its action, asserting only that the documents were "not in compliance with the terms and conditions of the Credit."[48] This was not sufficiently specific for purposes of Article 14(d), which requires, inter alia, that the issuing bank "must state all discrepancies" for rejecting the documents.[49]
Hamilton argues that it fulfilled the requirements of Article 14 despite these lapses. It contends first that Kookmin had notice of its rejection of the discrepant documents when Hamilton rejected Pusan Bank's attempted presentation. Even assuming, without deciding, that notice of a previous rejection is enough to meet Article 14's required statement of reasons for rejection, this claim is unsupported. First, Hamilton did not send notice to Pusan Bank of its rejection until July 17 four days after Kim negotiated his draft to Kookmin. Second, there is no allegation that Kookmin actually was aware of that rejection or that there was any privity between the two banks giving rise to constructive notice.[50]
Hamilton next asserts that its second rejection on August 6 via SWIFT fulfilled the Article 14 requirements. But it is mistaken. Not only was this rejection beyond the seven day limit prescribed by Article 14, but the Eleventh Circuit has held that "a bank will be estopped from subsequent reliance on a ground for dishonor if it did not specify that ground in its initial dishonor."[51] In consequence, Hamilton did not meet the requirements of Article 14.
Hamilton rejoins that the strict preclusion of Article 14 nonetheless is inapplicable because (a) the transaction was tainted by fraud; (b) Kookmin knowingly presented insufficient documents; and (c) the ICC Uniform Rules for Collections, and not the UCP, apply.
Effect of the Alleged Fraud
Hamilton argues first that the special instructions and option contract were forgeries[52] and, accordingly, that it is not precluded from claiming that the documents were not in compliance with the L/C.[53] This argument, however, is misdirected.
*660 According to the cases Hamilton cites, Article 14(e)'s rule of strict preclusion does not apply where fraud on the issuing bank prevents it from giving sufficient notice of dishonor. The principle prevents the issuing bank from being whipsawed sanctioned for not uncovering latent defects in documents presented while trying to comply with the prompt notification requirements of Article 14(d).[54] This rationale, however, does not advance plaintiff's case because the alleged fraud concerning the special instructions and the option contract had nothing to do with Hamilton's failure to give timely and sufficient notice of the reason for its refusal to honor Kookmin's draft. That is, Hamilton does not allege that it was gulled into believing that the instructions and option were genuine, only to discover later they were not. To the contrary, the relevant defect in the documents presented was patent, and Hamilton was acutely aware of it. The authenticity of the allegedly fraudulent documents had no bearing on Hamilton's actions. In consequence, the alleged fraud to which Hamilton refers is immaterial.
Also unavailing is Hamilton's claim that its dishonor of Kookmin's draft was justified because the transaction was fraudulent. Fraud "authorizes dishonor only where `a drawdown would amount to an outright fraudulent practice by the beneficiary.'"[55] The fraud must infect the underlying contract.[56] Here, the fraud alleged has nothing to do with the contract there is no allegation that the items shipped were so completely and obviously defective as to render worthless any claim of performance.[57] Rather, the alleged fraud went to the authenticity of certain of the documents presented by Sung-Jin. The Circuit, however, has noted specifically that presentation of fraudulent documents under the letter of credit does not amount to fraud in the transaction and thus does not authorize dishonor.[58] Accordingly, Hamilton's claim of fraud has no bearing on the application of Article 14.
Alleged Presentation of Discrepant Documents
Hamilton claims next that Kookmin is not entitled to the benefits of the UCP preclusion rule because it knowingly presenting discrepant documents under the L/C.[59] It contends that UCP Article 13(a) which states that "[b]anks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit" imposed an obligation on Kookmin to present only documents that appeared on their face to be in compliance with the L/C. By failing to do so, Hamilton alleges, Kookmin did not negotiate properly Sung-Jin's draft and therefore is not protected by Article 14.
Hamilton relies on the decision of a divided Fifth Circuit panel, Philadelphia Gear Corp. v. Central Bank,[60] and Brenntag Int'l Chemicals Inc. v. Norddeutsche Landesbank GZ for this proposition.[61] In Brenntag, Judge Sweet held that documents *661 "negotiated ... [which] were false on their face ... are not valid for presentment ... for collection on the [letter of credit]."[62] Similarly, Philadelphia Gear held that the issuing bank's notice of rejection was not deficient notwithstanding its lack of specificity because the negotiating bank was aware of the defects in the draft drawn on the letter of credit.[63] Important to the court's decision was its finding that "[i]t would be a strange rule indeed under which a party could tender drafts containing defects of which it knew and yet attain recovery on the ground that it was not advised of them."[64]
While Philadelphia Gear and Brenntag support Hamilton, they are neither the only view of the issue nor controlling here. The dissent in Philadelphia Gear, for example, concluded that the conduct of the negotiating bank was immaterial. It focused instead exclusively on the procedure of the issuing bank's rejection of the documents presented under the letter of credit, asserting that "[n]owhere is the issuing bank excused from its obligations by the state of mind of the beneficiary."[65] This was the focus also in Bank of Cochin, Ltd. v. Manufacturers Hanover Trust Co.,[66] where the Second Circuit held that an issuing bank's failure to notify the negotiating bank of the specific discrepancies in the documents and to do so within the time limits prescribed by the UCP "precludes [the issuing bank] from asserting [the negotiating bank's] noncompliance with the terms of the letter of credit."[67]
As the foregoing shows, there is case law on both sides of the issue. But the Florida District Court of Appeals squarely rejected Philadelphia Gear in Banco do Brasil v. City National Bank of Miami,[68] stating that "Bank of Cochin and the Philadelphia Gear dissent represent the better reasoned and more widely accepted view."[69] This Court of course is obliged to apply the law of Florida in this diversity case. Absent compelling indications that the Florida Supreme Court would decide the issue differently and there are none it is bound to follow Banco do Brasil.[70]
Even if the Florida courts had not taken this position, this Court notes that Philadelphia Gear and Brenntag are distinguishable from this case. Here, the notice was not merely insufficiently specific, it was untimely as well a circumstance absent in those cases. There is nothing in Philadelphia Gear or Brenntag that suggests that an untimely response would be overlooked in these circumstances. To the contrary, the majority in Philadelphia Gear noted that "[b]ecause it is undisputed that Philadelphia received timely notice of nonpayment ... our inquiry must focus upon the sufficiency of [the issuing bank's] notice,"[71] thus implying that the result might well have changed had the notice been untimely.
Moreover, the position Hamilton advocates is untenable. Under the plain language of the UCP, Article 14 applies when *662 the documents "appear on their face not to be in compliance."[72] Thus the UCP contemplate, even expect, the tender of documents which are noncompliant on their face. Refusal of the documents is the only sanction. There is no exception to the preclusive rule of Article 14. Nor is one warranted. While the fraud exception affords an issuing bank necessary protection against latent defects, the same cannot be said where the defects are patent.[73]
Finally, the approach advanced by Hamilton would undermine the simplicity and certainty that are the hallmarks of the letter of credit.[74] Letters of credit enhance the fluidity of commerce a goal furthered by Article 14. To inquire into the subjective element of whether the negotiating bank knew it was presenting discrepant documents each time an issuing bank fails to adhere to the Article 14 requirements would contravene the very purpose of this very exacting system. Judge Goldberg, dissenting in Philadelphia Gear, summed up this point as follows:
"An inherent advantage of letters of credit is that questions regarding dishonorment are easily answered a court or potential litigant need merely look to the choreography and see if the dancers took the proper steps. This usually poses an objective question, with the answer obvious from the face of the documents and the terms of the letter of credit. The rule [Hamilton wants this Court] to apply ... injects into the otherwise mechanical and simple inquiry that most subjective issue of the knowledge of the beneficiary."[75]
In the last analysis the question regarding the interplay of UCP Articles 13 and 14 is who should bear the risk of loss the bank attempting to present discrepant documents or the issuing bank which fails to adhere to the prescribed notification requirements. In Bank of Cochin, our Circuit reasoned that
"[i]n this era of near instantaneous international communications, we can find no rationale to justify [the issuer's] delay in informing [the beneficiary] of the specific defects.... Had this information been imparted in a timely fashion, some part or all of the funds might have been recovered.... [The issuer] was at all times in the best position to learn of the fraudulent nature of [the] activities."[76]
Similarly, Hamilton here was in the best position to know that it had not waived the Authenticated Telex requirement[77] and it could have minimized the risk of loss at the least cost. It should have done so.
Alleged Applicability of the ICC Uniform Rules of Collection
Hamilton argues next that Kookmin presented the documents on a collection basis and that the ICC Uniform Rules of Collection therefore apply instead of the UCP. Hamilton relies on Alaska Textile Co. v. *663 Chase Manhattan Bank, N.A.[78] for this contention, but overstates its applicability.
In Alaska Textile, the collecting bank[79] presented documents for payment notwithstanding its knowledge that they were not in compliance with the letter of credit. On the form collection letter, the collecting bank typed "Documents are presented on an approval basis."[80] The Second Circuit reasoned that this phrase was analogous to the phrase "on a collection basis" which could, "[d]epending on the circumstances ... indicate that the documents are being sent on a basis independent of the letter of credit, i.e., for simple collection under the Uniform Rules for Collections."[81] This was so because "[s]uch phrases are themselves ambiguous, and their meaning must be obtained from the context.... [If, however,] the correspondence shows that the presentation is being made under the credit" the UCP rules will apply.[82] Ultimately the court, despite the known discrepancies in the documents and the accompanying "approval basis" request, found that the submission was made under the letter of credit.
Here, no such phrase implicating the Rules of Collection was used. Nor is there any other basis for supposing that Kookmin acted for collection.[83] Accordingly, the UCP and not the Rules of Collection apply.[84] There is therefore no reason to entertain whether Hamilton's response was proper under the latter criteria.
For the reasons discussed above, Hamilton's efforts to get out from under Article 14 are unsuccessful. In consequence, Hamilton is precluded from relying on Kookmin's failure to present an Authenticated Telex in dishonoring the L/C.
Failure to Mitigate
Hamilton argues that Kookmin failed to mitigate its damages and is therefore not entitled to the full amount of the L/C even if it prevails on liability. Hamilton, however, is unable to demonstrate the existence of any duty to mitigate in these circumstances.
Although there might be a choice of law issue here, neither party contends that Korean law applies, and the end result would be the same under either New York or Florida law. Pursuant to New York law, actual damages under a letter of credit need not be proved.[85] And while Florida law reduces the award on a dishonored letter of credit by the amount for which any goods are resold, it imposes no duty to resell the goods. The reasoning of the Fifth Circuit is instructive:
"The measure of damages used in ordinary contract cases is inapplicable because a letter of credit simply is not an ordinary contract. The letter of credit is a unique device developed to meet specific needs of the marketplace. If the letter of credit is to retain its utility as a commercial instrument, the rights and duties of the issuer, the beneficiary, and the procurer must remain clear. *664 Parties to commercial transactions must be able to rely on the fact that as soon as the conditions contained in a particular letter are satisfied, payment is due."[86]
Although Hamilton cites Hyosung America, Inc. v. Sumagh Textile Co. Ltd.,[87] and Wichita Eagle and Beacon Publishing Co. v. Pacific National Bank of San Francisco,[88] for its proposition, those cases are not helpful to it. Wichita Eagle merely stated the general rule of mitigation applicable to contracts for the sale of goods. It did not address whether a duty to mitigate arises in the letter of credit context.[89]Hyosung involved an action for fraud and mitigation of tort damages, not wrongful dishonor of a letter of credit.[90]
In light of Hamilton's failure to establish either that there was any duty to mitigate damages on a dishonored letter of credit, or that Kookmin actually resold any of the goods, Hamilton's mitigation of damages defense is baseless.
Alleged Libel
The final issue this Court must address is whether Kookmin's letter to the OCC was libelous. Kookmin claims: (1) the letter merely stated an opinion, (2) it was truthful, (3) Hamilton failed to follow the requirements of the Florida pre-suit notice statute, and (4) the statements were privileged.
While a statement of pure opinion will not support an action for libel, such is not the case for a statement of mixed opinion and fact.[91] The Florida District Court of Appeals distinguished pure opinion from mixed opinion as follows:
"Pure opinion is based upon facts that the communicator sets forth in a publication, or that are otherwise known or available to the reader or the listener as a member of the public. Mixed opinion is based upon facts regarding a person or his conduct that are neither stated in the publication nor assumed to exist by a party exposed to the communication. Rather the communicator implies that a concealed or undisclosed set of defamatory facts would confirm his opinion."[92]
Kookmin's statement in its letter "[w]e have evidence that Hamilton ... has issued similar documents with same results"[93] referenced undisclosed facts that were not known or available to, or assumed to exist by, the OCC. The statement also was arguably defamatory. The reference to "similar documents" was to letters of credit on which Hamilton allegedly had no intention of honoring. In consequence, the statement was one of mixed opinion which is actionable for fraud.
Kookmin's claim that its statements were true fares no better. Its contention that Hamilton issued the L/C with the intent to dishonor it is highly dubious. Kookmin reaches this conclusion from the fact that "Hamilton agreed with Sky from the outset that any letters of credit issued ... would be `inoperative' and that Hamilton would never issue the telexes necessary *665 to make them operative."[94] This is at best a parochial reading of the L/C application and Hamilton's internal memoranda concerning its issuance. At the very least, there is a question of fact whether Hamilton had no intention of honoring the L/C.
Kookmin claims next that Hamilton's libel claim must be dismissed because it failed to follow the procedures prescribed by the Florida pre-suit notice statute[95] prior to filing this action. The plain text of the statute indicates that it is limited to media defendants, and the Florida courts agree.[96] The one case supporting the application of this statute to non-media defendants, Laney v. Knight-Ridder Newspapers, Inc.,[97] has not been followed by the Florida state courts.[98] This Court therefore follows the reasoning of the Florida courts and holds that Hamilton had no obligation to follow the requirements of the pre-suit notice statute.
Finally, Kookmin asserts that its letter to the OCC was privileged. To be qualifiedly privileged, the statement must have been made (1) in good faith, (2) by one who had a duty or interest in the subject matter, (3) to someone who had a corresponding duty or interest, (4) on a proper occasion, and (5) in a proper manner.[99] Application of the privilege is a question of law, so long as "there is no dispute as to the circumstances surrounding the publication."[100] There is no dispute here surrounding the circumstances of publication. Kookmin published its statement to one entity, the OCC,[101] expressing its concern that it had been defrauded by Hamilton. Thus, whether privilege exists is for the Court to decide.
The Court holds that the single publication by Kookmin was qualifiedly privileged and the privilege was not abused in this particular instance. Kookmin's statements were made in good faith in response to Hamilton's failure to make payment on Kookmin's draft presented under the L/C. Its publication was limited in scope, and the information was not disclosed to persons other than the OCC. Furthermore, this was a statement to "a political authority regarding matters of public concern," a recognized legal ground for privilege.[102]
Hamilton asserts, notwithstanding, that the statement was made with express malice which obviates the privilege.[103] So long as there is sufficient evidence of the presence of express malice, a jury question is created.[104] Express malice, however, is "a very high standard for a plaintiff to meet."[105] It exists "[w]here a person speaks upon a privileged occasion, but the speaker is motivated more by a desire to harm the person defamed than by a purpose to protect the person or social interest giving rise to the privilege."[106] But there simply is no evidence of its presence here.
*666 Construing the statement in the light most favorable to Hamilton, Kookmin (a) had no basis for its accusation of fraud, and (b) did not perform any reasonable investigation prior to sending the letter.[107] That notwithstanding, Kookmin attempted to work out a favorable resolution to the matter with Hamilton for over a year, Kookmin made its statements only to one entity the chief regulating body of the banking industry, and most of its statements including the accusation of fraud were couched as opinion.
In these circumstances, the letter and other evidence of record cannot support an inference that Kookmin wrote it to "gratify its malevolence" or simply to harm Hamilton.[108] In addition, the words in Kookmin's letter clearly "were not so extreme as to demonstrate express malice."[109] In consequence, a jury could not reasonably find that Kookmin's statement was made with express malice. At most, the evidence would allow a finding of recklessness, but that is insufficient to support express malice.
Conclusion
For the foregoing reasons, defendant's motion for summary judgment dismissing the complaint as against Kookmin and for summary judgment on its counterclaim is granted. The action is dismissed as to Kookmin. Kookmin shall have judgment against Hamilton for $1.5 million plus interest thereon at the rate of 9 percent from July 22, 1996 to the date of judgment.[110]
SO ORDERED.
NOTES
[1] Pre-Trial Order Stipulated Facts ("PTO") ¶ 2.
[2] Id. ¶ 1.
[3] Id. ¶ 7.
[4] Id. ¶ 11.
[5] See Silverman Decl. Ex. 8.
[6] The amendments occurred on June 14, 19 and 27. PTO ¶ 12.
[7] Id. ¶ 13.
[8] Rand Decl. Exs. 1-4.
[9] Id. Ex. 5 (Jun Dep.) at 54.
[10] Id. at 55, 66.
[11] Def. Mem. 4.
[12] SWIFT is a secured means of communication among financial institutions used primarily to confirm financial transactions. SWIFT stands for Society for Worldwide Interbank Financial Telecommunications.
[13] Rand Aff. Ex. 12.
[14] Id. Ex. 14.
[15] PTO ¶ 14.
[16] See Rand Decl. Ex. 17. The special instructions document appears to have been signed by Moises Cikurel, on behalf of Sky Industries and notarized by Rodolfo Garcia who ostensibly is a New York notary.
[17] See Id. Ex. 15. The option contract appears to have been signed by Kim and Moises Cikurel.
[18] PTO ¶ 16.
[19] See Rand Decl. Ex. 15 ¶ 4.
[20] Jun Dep. 68-70.
[21] Id. at 92.
[22] Id. at 50, 56, 69, 92.
[23] Silverman Decl. Ex. 18 (in Korean); Jun Dep. 131-33 (apparently translating Ex. 18).
[24] PTO ¶ 23.
[25] Id. ¶ 24.
[26] Id. ¶ 26.
[27] Id. ¶ 27.
[28] Id. ¶ 28.
[29] Id. ¶ 31.
[30] See Rand Decl. Ex. 25.
[31] PTO ¶ 32.
[32] Id. ¶ 33.
[33] See Silverman Decl. Ex. 29.
[34] Hamilton Bank, N.A. v. Kookmin Bank, 999 F.Supp. 586 (S.D.N.Y.1998).
[35] Kookmin's argument, in essence, is that the beneficiary of a condition precedent cannot take advantage of the failure of the condition when the failure is due to the beneficiary's actions. But reliance on this line of reasoning is misplaced. Hamilton had no obligation to issue the Authenticated Telex, as does the beneficiary to effect a condition precedent. Moreover, the failure was not due to Hamilton's actions. The telex was to be issued only after Sky so requested and deposited funds with Hamilton to cover a draft drawn on the L/C. Because this claim is meritless, it warrants no further discussion.
[36] See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir. 1999).
[37] N.Y. UNIF. COM. C. § 4-102(2) (McKinney 1991).
[38] See Lee v. Bankers Trust Co., 166 F.3d 540, 545 (2d Cir.1999) (citing Reeves v. American Broad. Co., 719 F.2d 602, 605 (2d Cir.1983) ("the state of the plaintiff's domicile will usually have the most significant relationship to the case")).
[39] As an initial matter, the UCP apply here. The L/C states on its face that it is governed by the 1993 revision. Under Florida law, the UCP control if the terms of a letter of credit incorporate them. See, e.g., Banco do Brasil v. City Nat'l Bank, 609 So.2d 689, 690 (Fla. App.1992), review denied, 617 So.2d 318 (Fla. 1993). Moreover, aside from one of Hamilton's alternative arguments discussed below, the parties agree that they apply.
[40] See Def. Mem. Ex. 1.
[41] UCP Art. 14(c), (d)(i).
[42] Id.
[43] Id. Art. 14(d)(ii).
[44] Id. Art. 14(e).
[45] Kerr-McGee Chemical Corp. v. FDIC, 872 F.2d 971, 973 (11 Cir.1989) (Powell, J., sitting by designation); see also Banco General Runinahui, S.A. v. Citibank Int'l, 97 F.3d 480, 486 n. 13 (11th Cir.1996); 3 JAMES J. WHITE & ROBERT S. SUMMERS, UNIFORM COMMERCIAL CODE § 26-9 at 167 (1995).
[46] Bank of Cochin, Ltd. v. Manufacturers Hanover Trust Co., 808 F.2d 209 (2d Cir.1986) (discussing UCP-290) (citing H. HARFIELD, BANK CREDITS & ACCEPTANCES 232 (5th ed.1974)); accord, Marino Industries Corp. v. Chase Manhattan Bank, N.A., 686 F.2d 112. 118 (2d Cir.1982).
[47] Silverman Decl. Ex. 23.
[48] Id. Ex. 22.
[49] In fact, Article 14(d) would be rendered superfluous if Hamilton's notice of rejection were sufficient. This subsection specifies the procedures that must be followed once a determination has been made under Article 14(b) that "the documents appear on their face not to be in compliance with the terms and conditions of the Credit...." That is to say, in order even to reach the procedures of Article 14(d), a determination already has been made pursuant to Article 14(b) that the documents are not in compliance with the terms of the L/C. Thus, Article 14(d) must require something more than a mere recapitulation of what already has been determined under Article 14(b). How much more is not a matter the Court needs to decide here.
[50] Hamilton does not even allege that Sung-Jin's presentation to Kookmin was on the same basis as its previous presentation to Pusan Bank.
[51] Kerr-McGee, 872 F.2d at 973.
[52] While the Court recognizes that there is evidence in the record supporting this claim, it is unnecessary to decide this in order to dispose of this matter.
[53] See, e.g., Brenntag Int'l Chemicals Inc. v. Norddeutsche Landesbank GZ, 9 F.Supp.2d 331, 343 (S.D.N.Y.1998) (applying UCC law to the UPC). While there is no explicit fraud defense in the UCP, analogous UCC provisions may be utilized, so long as those provisions are "consistent with the UCP." Alaska Textile Co., Inc. v. Chase Manhattan Bank, N.A., 982 F.2d 813, 822 (2d Cir.1992) (citing Bank of Cochin Ltd. v. Manufacturers Hanover Trust Co., 612 F.Supp. 1533, 1542-1543 (S.D.N.Y.1985), aff'd, 808 F.2d 209 (2d Cir. 1986)). Under Florida law, an issuing bank may refuse to honor documents which are fraudulent. See FLA. STAT. ANN. § 675.114(2) (1998).
Assuming, arguendo, that Kookmin's presentment was tainted with fraud, Hamilton still faces the preclusive effect of not responding by telecommunications within seven banking days.
[54] See, e.g., Boston Hides & Furs, Ltd. v. Sumitomo Bank, Ltd., 870 F.Supp. 1153, 1162-63 (D.Mass. 1994). See also E & H Partners v. Broadway Nat'l Bank, No. 96 Civ. 7098(RLC), 1998 WL 734356, *10 (S.D.N.Y. Oct.20, 1998) ("Fraud is a well-established exception to the rule that an issuing bank must pay when a beneficiary submits documents that conform on their face to the terms and conditions of the letter of credit.")
[55] 3Com Corp. v. Banco do Brasil, S.A., 171 F.3d 739, 746 (2d Cir.1999) (quoting Recon/Optical, Inc. v. Government of Israel, 816 F.2d 854, 858 (2d Cir.1987)).
[56] See 3Com Corp., at 746.
[57] Id. at 747.
[58] See Rockwell Int'l Systems, Inc. v. Citibank, N.A., 719 F.2d 583, 588-89 (2d Cir.1983).
[59] Pl. Mem. 18.
[60] 717 F.2d 230 (5th Cir.1983).
[61] 9 F.Supp.2d 331 (S.D.N.Y.1998).
[62] Id. at 344.
[63] 717 F.2d 230 at 236.
[64] Id. at 238.
[65] Id. at 242.
[66] 808 F.2d 209 (2d Cir.1986).
[67] Id. at 210. The UCP have been amended about once every ten years. UCP-290 Art. 8(e), which was the current version in Bank of Cochin, is the same in all material respects to UCP-500 Art. 14(d). The significant difference is that while 8(e) states that the issuing bank must notify the negotiating bank of any discrepancies "without delay," Art. 14(d) gives the precise deadline of seven days. That difference is not material here.
[68] 609 So.2d 689 (Fla.App.1992), review denied, 617 So.2d 318 (Fla.1993).
[69] Id. at 691.
[70] See, e.g., West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940).
[71] 717 F.2d at 236.
[72] UCP Art. 14(b).
[73] In fact, the record indicates that Hamilton was aware fully of the discrepancies, as it contemplated waiving them. See Silverman Aff. Ex. 21 (Telex from Sky Industries indicating that it would not accept the L/C with discrepant documents).
[74] See Philadelphia Gear, 717 F.2d at 241 (Goldberg, J., dissenting); see also Alaska Textile Co., 982 F.2d at 817.
[75] Philadelphia Gear, 717 F.2d at 241.
[76] Bank of Cochin, 808 F.2d at 213.
[77] Hamilton contends that Bank of Cochin is not applicable because the court did not address a bank's knowing presentation of discrepant documents. This argument is misplaced. The court's silence on the issue does not warrant the conclusion that it did not consider it. There is the equally likely conclusion that the court thought it irrelevant. The court made it quite clear that timeliness was the principal issue; that upon the "failure timely to notify the confirming bank of discrepancies in the documents ... the issuing bank is precluded from asserting a claim of noncompliance." 808 F.2d at 212. The beneficiary's knowledge is immaterial to the issuing bank's duties.
[78] 982 F.2d 813.
[79] A collecting bank is one acting as an agent of the beneficiary for the purposes of presenting the documents under the letter of credit and receiving payment on the draft. See id. at 817 n. 2.
[80] See id. at 817 (emphasis supplied).
[81] Id. at 818.
[82] Id. (internal quotations omitted).
[83] See Silverman Decl. Ex. 19 (Kookmin submission to Hamilton); Id. Ex. 22 (Hamilton response to Kookmin's submission).
[84] Alaska Textile, 982 F.2d at 818; Glencore, Ltd. v. Chase Manhattan Bank, 1998 WL 101734, at *7 (S.D.N.Y.1998).
[85] See Hellenic Republic v. Standard Chartered Bank, 244 A.D.2d 240, 664 N.Y.S.2d 434, 434 (1st Dept.1997), lv. to app. denied, 91 N.Y.2d 811, 671 N.Y.S.2d 715, 694 N.E.2d 884 (1998) ("[A] letter of credit is an instrument that must be considered separate and apart from the underlying contract.... [T]he trial court properly precluded defendant from introducing evidence as to plaintiff's actual damages.").
[86] East Girard Savings Ass'n v. Citizens Nat'l Bank and Trust Co. of Baytown, 593 F.2d 598, 603-04 (5th Cir.1979). See also Bank of North Carolina v. Rock Island Bank, 630 F.2d 1243, 1254 (7th Cir.1980) (nothing "indicates that a beneficiary of a letter of credit must mitigate its damages by trying to recover from someone other than the issuer, and such a rule would reduce the value and discourage the use of letters of credit.")
[87] 25 F.Supp.2d 376 (S.D.N.Y.1998), aff'd in relevant part, 137 F.3d 75 (2d Cir.1998).
[88] 343 F.Supp. 332 (N.D.Cal.1971), rev'd on other grounds, 493 F.2d 1285 (9th Cir.1974).
[89] Id. at 341 (finding no duty to mitigate).
[90] Hyosung America, 25 F.Supp.2d at 387.
[91] See Morse v. Ripken, 707 So.2d 921, 922 (Fla.App.1998).
[92] Id. (citing Hay v. Independent Newspapers, Inc., 450 So.2d 293, 295 (Fla.App.1984)).
[93] Silverman Decl. Ex. 28.
[94] Def. Mem. 25.
[95] FLA. STAT. ANN. § 770.01 (West 1997).
[96] See Gifford v. Bruckner, 565 So.2d 887 (Fla.App.1990); Davies v. Bossert, 449 So.2d 418 (Fla.App.1984).
[97] 532 F.Supp. 910 (S.D.Fla.1982).
[98] See Davies, 449 So.2d 418; Tobkin v. Jarboe, 695 So.2d 1257 (Fla.App.1997); Bridges v. Williamson, 449 So.2d 400 (Fla.App.1984).
[99] American Ideal Mgmt., Inc. v. Dale Village, Inc., 567 So.2d 497, 499 (Fla.App.1990).
[100] Shaw v. R.J. Reynolds Tobacco Co., 818 F.Supp. 1539, 1542 (M.D.Fla.1993), aff'd, 15 F.3d 1097 (11th Cir.1994); see also Nodar v. Galbreath, 462 So.2d 803, 810 (Fla.1984).
[101] See Silverman Decl. Ex. 28. Kookmin sent the letter to the OCC's offices in both Florida and Georgia.
[102] Nodar, 462 So.2d at 809.
[103] Id. at 806.
[104] Shaw, 818 F.Supp. at 1542.
[105] Id.
[106] Nodar, 462 So.2d at 811-12.
[107] See Pl. Mem. 31. The letter was written by S. SangHee Yi, a member of Kookmin's inhouse counsel's office. Rand Decl. Ex. 6 ("Yi Dep.") 169. Yi had recently graduated from law school and, at the time, had two months of work experience since passing the bar examination. Yi Dep. at 7-9.
[108] Nodar, 462 So.2d at 811.
[109] Id. at 812.
[110] See N.Y. CPLR §§ 5001, 5004. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8569589/ | *248TEXTO COMPLETO DE LA SENTENCIA
El Sr. Ángel Ubarri Aponte (Sr. Ubarri o el apelante) nos solicita la revocación de la sentencia emitida por el Tribunal de Primera Instancia, Sala Superior de San Juan (TPI), el 10 de junio de 2003 y notificada el 19 de junio del mismo año. En la misma, el TPI declaró No Ha Lugar la demanda del epígrafe e impuso al Sr. Ubarri el pago de costas.
Analizados cuidadosamente el expediente, así como el derecho aplicable, resolvemos confirmar la sentencia apelada.
I
Los hechos que dan lugar al caso de autos, según fueron determinados por el TPI, son los siguientes:
El 24 de abril de 1992, en la Carr. Núm. 1 de Caguas hacia San Juan, ocurrió un accidente automovilístico entre un vehículo marca Mercury Grand Marquis, conducido por su dueño, el Sr. Ubarri, y el vehículo modelo Malibu de 1978, propiedad del Sr. Ángel L. Urbina Santos (Sr. Urbina Santos), el cual iba conducido por su hijo Ángel I. Urbina Fontánez (Sr. Urbina Fontánez). Apéndice del Apelante, págs. 3-4. Por motivo de este accidente y de los daños causados al apelante, las partes firmaron un acuerdo de transacción en el cual el Sr. Urbina Santos se obligó a pagar al apelante una compensación ascendente a cinco mil dólares ($5,000.00) por todos los daños causados, incluyendo físicos, mentales y daños al vehículo.
Posteriormente, la compañía aseguradora del apelante, Pan American Insurance Company (PAICO), presentó una acción civil contra los señores Urbina Santos y Urbina Fontánez (los apelados) reclamándoles el pago de los daños ocasionados al vehículo del Sr. Ubarri. En dicho caso, el Tribunal de Primera Instancia, Sala de Caguas, dictó sentencia declarando nulo el acuerdo de transacción aludido. Por tanto, condenó al Sr. Urbina Santos y a su esposa a pagar los daños ocasionados al vehículo del apelante, los cuales estimó en seis mil cuatrocientos veinte dólares con sesenta centavos ($6,420.60). Además, el Tribunal ordenó al apelante a restituirle al Sr. Urbina Santos los cinco mil dólares ($5,000.00) pagados al primero en consideración al acuerdo transaccional declarado nulo.
Así las cosas, el 20 de marzo de 1997, el Sr. Ubarri presentó la demanda del epígrafe contra los apelados y sus respectivas esposas y sociedades legales de gananciales. Apéndice del Apelante, págs. 17-20. Entre otras, alegó en el segundo párrafo de su demanda que “[a]l llegar a una intersección del kilómetro 25.4 y estando detenido para efectuar un viraje a la izquierda, el vehículo que conducía, el demandante fue impactado por la parte trasera por un vehículo Chevrolet 1978, [...] conducido por el Sr. Angel L. Urbina Fontánez". Apéndice del Apelante, pág. 17. Asimismo, acotó en el cuarto párrafo que “[l]a causa de acción próxima y única del referido accidente fue la negligencia del codemandado Urbina Fontánez al conducir su vehículo a velocidad excesiva y no guardar la distancia debida”. Apéndice del Apelante, págs. 17-18. A tenor con lo alegado, solicitó que el tribunal condenara a los demandados a pagar al demandante solidaria y mancomunadamente la suma de cinco mil dólares ($5,000.00) por concepto de daños, así como mil dólares ($1,000.00) por concepto de costas, gastos y honorarios de abogado.
El 16 de enero de 1998, el Sr. Urbina Santos presentó su contestación a la demanda. Apéndice del Apelante, págs. 22-23. En particular, aceptó lo alegado por el apelante en el segundo párrafo de su demanda. Sin embargo, negó en su totalidad los hechos expuestos en el cuarto párrafo.
Tras varios trámites procesales, las partes presentaron el Informe Sobre Conferencia Preliminar Entre Abogados. El TPI les ordenó someter memorandos de Derecho, luego de lo cual, las partes dieron su anuencia a que éste dictara sentencia con la prueba estipulada y sin necesidad de entrar a la vista en su fondo. Apéndice del Apelante, pág. 2.
*249En consideración a la prueba presentada por las partes, el 10 de junio de 2003, el TPI emitió sentencia en la cual desestimó la demanda. En esencia, concluyó que el Sr. Ubarri falló en probar uno de los elementos de su causa de acción, es decir, la negligencia. Apéndice del Apelante, pág.14. Señaló que la mera alegación del demandante respecto a la negligencia del Sr. Urbina Fontánez, sin otra prueba, no era evidencia suficiente para colocar al Tribunal en posición de determinar la alegada negligencia.
Inconforme con dicho dictamen, el apelante acude ante nos y plantea lo siguiente:
"ERRÓ EL TRIBUNAL DE PRIMERA INSTANCIA AL DECLARAR NO HA LUGAR Y DESESTIMAR SUMARIAMENTE LA DEMANDA INTERPUESTA POR UBARRI.
EN LA ALTERNATIVA, ERRÓ EL TRIBUNAL AL NO SEÑALAR VISTA EVIDENCIARIA PARA DILUCIDAR LA DUDA QUE TENÍA RESPECTO AL ELEMENTO DE CAUSA PRÓXIMA; LO QUE DEBIÓ HABER HECHO PARA TENER ANTE SI TODA LA PRUEBA PREVIO A LA RESOLUCIÓN DEL CASO. ”
En resumen, argumenta que estaba detenido en la avenida para hacer un viraje a la izquierda cuando su vehículo fue impactado, hecho admitido por el Sr. Urbina Santos. Añade que el TPI obvió realizar la inferencia permisible y razonable de negligencia a tenor con las doctrinas de Colisión Trasera y Res Ipsa Loquitur. En la alternativa, arguye que si el TPI entendía que no tenía toda la prueba para poder resolver la controversia en sus méritos, debió haber diferido la resolución del caso hasta tanto se dilucidara en vista evidenciaría lo relativo a la causa próxima del accidente.
El 22 de agosto de 2003, notificado el 5 de septiembre de 2003, concedimos a los apelados treinta (30) días para que presentaran su alegato. No obstante, ya para el 2 de septiembre de 2003, los apelados habían presentado un escrito en oposición a la apelación del Sr. Ubarri. En el mismo, adujeron que el apelante había aceptado las reglas y estipulaciones que iban a regir la controversia; por tanto, se vinculó a las mismas. Intimaron además que, al apelante solicitar una vista evidenciaría, pretende subvertir y/o alterar las estipulaciones de las partes. Oposición a la Apelación, págs. 5-6. Sostienen que de su contestación a la demanda y de las estipulaciones suscritas entre las partes surge con claridad que éstos no aceptaron negligencia alguna respecto al accidente, por lo que le correspondía al apelante probar este hecho. Señalaron que el hecho de la ocurrencia de una colisión trasera en un accidente automovilístico no es automáticamente sinónimo de negligencia, ni tampoco opera una presunción concluyente.
II
En nuestro sistema jurídico, la responsabilidad civil derivada de acciones u omisiones culposas o negligentes se rige por el Artículo 1802 del Código Civil de Puerto Rico. 31 L.P.R.A. § 5141. Éste enuncia, en forma general, una norma genérica que nos prohíbe causar daño a otro mediante conducta, sea ésta activa o pasiva. Rivera Pérez v. Cruz Corchado, 119 D.P.R. 8 (1987). El mismo dispone:
“El que por acción u omisión causa daño a otro, interviniendo culpa o negligencia, está obligado a reparar el daño causado. La imprudencia concurrente del perjudicado no exime de responsabilidad, pero conlleva la reducción de la indemnización. ”
Una acción presentada al amparo del referido artículo presupone la concurrencia de tres elementos, a saber: (1) la existencia de un daño real; (2) culpa o negligencia; y (3) relación causal entre el daño causado y la conducta culposa o negligente. Pons Anca v. Engebretson, 2003 J.T.S. 151; 160 D.P.R._(2003); Mun. de San Juan v. Bosque Real, S.E., 2003 J.T.S. 33; 158 D.P.R._(2003); Cintrón Adorno v. Gómez, 147 D.P.R. 576 (1999); Montalvo v. Cruz, 144 D.P.R. 748 (1998); Toro Aponte v. E.L.A., 142 D.P.R. 464 (1997); Soc. Gananciales v. G. Padín Co., Inc., 117 D.P.R. 94 (1986).
249
*250Para fines de este artículo, se ha definido el vocablo “daño” como “todo aquel menoscabo material o moral que sufre una persona, ya en sus bienes vitales naturales, ya en su propiedad o en su patrimonio, causado en contravención a una norma jurídica y por el cual ha de responder otra”. Santini Rivera et al. v. Serv. Air, Inc. et al., 137 D.P.R. 1, 7 (1994). Asimismo, nuestro más alto foro ha dicho que la culpa o negligencia es la falta del debido cuidado que consiste en no anticipar y prever las consecuencias racionales de un acto u omisión, que una persona prudente y razonable hubiera previsto en las mismas circunstancias. Valle Izquierdo v. E.L.A., 2002 J.T.S. 70; 157 D.P.R._(2002); Montalvo v. Cruz, supra. Este deber de anticipar y prever los daños no se extiende a todo peligro imaginable, sino a aquél que puede ser anticipado por una persona prudente. Tomos Arroyo v. D.I.P., 140 D.P.R. 265 (1996). Respecto a la relación causal, rige en nuestra jurisdicción la doctrina de causa adecuada. A base de la misma, no se considerará causa toda condición sin la cual no se hubiera producido el resultado, sino la que de ordinario lo produce según la experiencia general. Toro Aponte v. E.L.A., supra; Parrilla Báez v. Airport Catering Services, 133 D.P.R. 263 (1993); As eg. Lloyd's London v. Cía. Des. Comercial, 126 D.P.R. 251 (1990).
Resulta, pues, indispensable probar cada uno de los anteriores elementos, sin los cuales no se configura causa de acción alguna que pueda ser reconocida bajo la doctrina de la responsabilidad civil extracontractual. Valle Izquierdo v. E.L.A., supra. Por tanto, salvo aquellas circunstancias en las que es de aplicación la doctrina de responsabilidad absoluta, el demandante tiene que probar la negligencia, no basta con alegarla.
Como es sabido, la obligación de presentar evidencia primeramente recae sobre la parte que sostiene la afirmativa en la cuestión en controversia. Regla 10(B) de las de Evidencia, 32 L.P.R.A. Ap. IV, R. 10(B); Reece Corp. v. Ariela, 122 D.P.R. 270 (1988); Asoc. Auténtica Empleados v. Municipio de Bayamón, 111 D.P.R. 527 (1981); P.R. Telephone Co. v. Tribunal Superior, 103 D.P.R. 200 (1975). Es por ello que el peso de la prueba para establecer la negligencia del demandado lo tiene la parte demandante. Colón González v. K-Mart, 2001 J.T.S. 98, 154 D.P.R._(2001). En tomo a este tema, el Tribunal Supremo ha expresado:
“En materia de responsabilidad civil extracontractual, el hecho productor del daño nunca se presume. Así, pues, la mera ocurrencia de un accidente, sin más, no puede constituir prueba concluyente demostrativa de conducta lesiva antijurídica de la parte demandada, elemento indispensable para engendrar responsabilidad. Por tanto, quien alegadamente sufre un daño por la negligencia de otro tiene ‘la obligación de poner al tribunal en condiciones de poder hacer una determinación clara y específica sobre negligencia mediante la presentación de prueba a esos efectos’. (Énfasis nuestro y citas omitidas). Id., pág. 1484.
Sencillamente, la negligencia no se presume y quien la imputa debe probarla.” Vaquería Garrochales, Inc. v. A.P.P.R., 106 D.P.R. 799 (1978); Morales Mejias v. M.Pack. & Ware. Co., 86 D.P.R. 3, 5 (1962); Carrión v. Díaz, 62 D.P.R. 289 (1943).
De otra parte, se ha establecido que la pmeba de negligencia civil es de menos grado y rigor que la exigida para derrotar la presunción de inocencia en un caso criminal. Viuda de Morales v. De Jesús Toro, 107 D.P.R. 826 (1978). Es decir, el demandante no tiene que probar la negligencia más allá de duda razonable. Empero, las circunstancias reveladas por la pmeba deben ser lo suficientemente fuertes de manera que el tribunal pueda, tomando en consideración las probabilidades existentes en el caso, excluir inferencias favorables al demandado. Viuda de Delgado v. Boston Ins. Co., 99 D.P.R. 714 (1971).
La negligencia no necesariamente se tiene que probar mediante pmeba directa, pudiéndose probar mediante pmeba circunstancial. Colón González v. K-Mart, supra; Bacó v. Almacén, 2000 J.T.S. 122, 151 D.P.R._(2000); Regla 10(H) de las de Evidencia, 32 L.P.R.A. Ap. IV, R. 10(H); véase, además, Herminio Brau del Toro, Los Daños y Perjuicios Extracontractuales en Puerto Rico, Vol. I, 2da edición, Publicaciones JTS, Inc., 1986, págs. 394-395. En cuanto a la pmeba indirecta o circunstancial, se ha dicho que su característica fundamental es que la evidencia ofrecida, aun cuando fuera creída por el juzgador, no es por sí suficiente para *251probar un hecho en controversia, sino que se requiere un proceso de inferencias en conjunción con otra evidencia ya admitida o por admitirse, o un razonamiento basado en la experiencia y las inferencias que hace una persona razonable. Bacó v. Almacén, supra, citando a E. L. Chiesa, Tratado de Derecho Probatorio, T H, Publicaciones JTS, Inc., pág. 1239. Ahora bien, al considerar este tipo de evidencia, el juzgador debe conocer la distinción entre aquella que es una mera conjetura y la que es una inferencia razonable. Id.
Resulta pertinente recalcar que en nuestra jurisdicción las inferencias permisibles, a diferencia de las presunciones, no están reguladas por el ordenamiento. E. L. Chiesa, Op. Cit.; pág. 1241. “Es inferencia la deducción que de los hechos probados hace en su discernimiento el juez o jurado, sin que al efecto medie mandato expreso de la ley”. Brau del Toro, Op. Cit., pág. 394. A tal efecto, la prueba circunstancial conlleva la presentación de evidencia sobre un hecho, del cual la existencia de otro pueda razonablemente inferirse. Es por tanto, que “fijas inferencias en un caso de negligencia tienen que cubrir todos los elementos del concepto de negligencia, esto es, (1) la existencia de un deber de cuidado reconocido por ley, y (2) el quebrantamiento de este deber por parte del actor”, de manera que el juzgador pueda razonablemente concluir que existe la misma. Id.
Asimismo, debemos señalar que en Rosado v. Ponce Railway & Light Co., 18 D.P.R. 609 (1912), se introdujo en nuestra jurisdicción la llamada doctrina Res Ipsa Loquitur. Esta crea una inferencia permisible de negligencia, y autoriza al juzgador de los hechos a concluir la existencia de la misma en determinadas circunstancias. Marrero v. Albay Insurance, 124 D.P.R. 827 (1989). Esta teoría tuvo lugar en nuestro ordenamiento jurídico hasta que fue desterrada por el más alto foro en Bacó v. Almacén, supra. A tenor con ello, resultaría errónea cualquier aplicación posterior de esta doctrina y de la jurisprudencia basada en la misma.
Por último, la Regla 10.3 de Procedimiento Civil, 32 L.P.R.A. Ap. Ill, R. 10.3, establece que cualquiera de las partes, luego de que se hayan presentado todas las alegaciones, puede solicitar que se dicte sentencia por las mismas. La regla presupone la formulación de una moción particular aparte que sirva para informar y poner en guardia al contrario, evitando así confusiones. Cía. de Desarrollo Comer. v. American Fruits, 104 D.P.R. 90 (1975) Sin embargo, ésta no procede cuando de las alegaciones surge una controversia sustancial de hechos. Id.; Rivera v. Otero de Jové, 99 D.P.R. 189 (1970).
A los fines de atender esta moción, todos los hechos bien alegados en la demanda y las inferencias que puedan hacerse de las mismas se estiman admitidos por la parte demandada cuando ésta solicita la sentencia por las alegaciones. Id., pág. 195. No obstante, esas admisiones sólo se admiten para propósitos de la moción, y no son finales y conclusivas en tal forma que constituyan una renuncia a cualquier controversia material que deba determinarse por la prueba en el juicio. Montañez v. Hosp. Metropolitano, 2002 J.T.S. 80, 157 D.P.R._ (2002). Es decir, denegada esta moción por estimarse hechos en conflicto, las partes no quedan obligadas por los hechos que asumieron como ciertos a los fines exclusivos de la moción y tienen derecho en la vista plenaria a desfilar toda su prueba. Cuevas Segarra, Tratado de Derecho Procesal Civil, Ed. Luiggi Abraham, San Juan, Publicaciones J.T.S., Tomo I, 2000, pág. 279.
Precisa señalar que el estándar aplicable al adjudicar una moción para que se dicte sentencia por las alegaciones es idéntico al que se utiliza ante una moción de desestimación basada en que la demanda deja de exponer una reclamación que justifique la concesión de un remedio. Montañez v. Hosp. Metropolitano, supra. En adición, cuando es el demandado quien solicita la sentencia por las alegaciones, los hechos y alegaciones de la demanda se considerarán como ciertos, mas aquéllos en la contestación a la demanda se estimarán ciertos sólo en lo que no estén en conflicto con la demanda. Id.
III
A la luz de la normativa anterior, procede que discutamos los errores apuntados por el apelante. El Sr. Ubarri señala que el TPI no debió haber desestimado su demanda, pues éste pudo haber hecho una inferencia *252permisible de negligencia a la luz de la doctrina de Res Ipsa Loquitur y de Colisión Trasera. Además, aduce que el TPI debió conceder una vista evidenciaría si tenía duda sobre la causa próxima de los daños. No le asiste la razón.
Según surge del expediente, el Sr. Ubarri adujo en la alegación número dos de su demanda que al llegar a una intersección en la Carr. Núm. 1, en dirección de Río Piedras a Caguas, y estando detenido para efectuar un viraje a la izquierda, “el vehículo que conducía el demandante fue impactado por la parte trasera por un vehículo Chevrolet 1978, tablilla 16x531 conducido por el Sr. Ángel L. Urbina Fontánez”. Igualmente, en la alegación número cuatro argüyó que “[l]a causa de acción próxima y única del referido accidente fue la negligencia del codemandado Urbina Fontánez al conducir su vehículo a velocidad excesiva y no guardar la distancia debida”.
En su contestación, el Sr. Urbina Santos admitió los hechos expuestos en la alegación número dos. No obstante, negó en su totalidad la alegación número cuatro, entre otras. Siendo así, la negligencia del Sr. Urbina Fontánez respecto al accidente quedó en controversia. Así lo reconoció el propio Sr. Ubarri en el Segundo Informe Enmendado Sobre Conferencia Preliminar Entre Abogados, en el cual estableció como controversia de la parte demandante-reconvenida la negligencia y responsabilidad pecuniaria del demandado. Ante este cuadro, le correspondía al apelante probar la negligencia del Sr. Urbina Fontánez.
A base de la prueba estipulada, las partes dieron su anuencia para que el TPI dictara sentencia sin necesidad de celebrar una vista en su fondo. Al así proceder, las partes sometieron su caso a la consideración del juzgador sin necesidad de presentar más evidencia.
Conforme a lo anterior, el TPI concluyó que el apelante meramente alegó la negligencia del Sr. Urbina Fontánez al conducir el vehículo de motor y no puso a dicho foro en condiciones para poder determinar que, en efecto, este último había sido negligente. Concurrimos con dicha conclusión.
La negligencia, como uno de los elementos indispensables de su causa de acción, tenía que ser probada por el Sr. Ubarri, ya sea mediante evidencia directa o circunstancial. Sin embargo, no se desprende que el apelante haya presentado alguna prueba con relación a dicho elemento. Aun mas, el Sr. Ubam alego que el Sr. Urbina Fontánez conducía negligentemente el vehículo, a exceso de velocidad y que no guardó la distancia debida, hechos que no están sustentados por evidencia alguna. Por tanto, el TPI no podía dar por ciertos estos hechos que no fueron probados.
El apelante, además, aduce que el TPI debió realizar una inferencia razonable sobre la negligencia del Sr. Urbina Fontánez, amparándose en que el vehículo del primero estaba detenido y fue impactado por su parte trasera. Dicha alegación, aun siendo cierta, no es suficiente para probar la negligencia del Sr. Urbina Fontánez. El apelante no presentó evidencia sobre otros hechos que, en conjunción al primero, permitieran al juzgador inferir razonablemente la negligencia del Sr. Urbina Fontánez. Realizar dicha inferencia a base de una mera alegación trastoca el fundamental principio de que el demandante tiene que probar cada uno de los elementos de su causa de acción, pues no basta con alegarlos. Además, el TPI estaba impedido de presumir la negligencia del Sr. Urbina Fontánez, pues no se trata de un caso de responsabilidad absoluta. En suma, el apelante pretendió que el TPI hiciera una inferencia sobre negligencia sin poner a dicho foro en posición para poder realizarla.
Asimismo, como hemos anticipado, la doctrina de Res Ipsa Loquitur quedó eliminada en nuestra jurisdicción. A tenor con ello, el TPI no podía inferir la negligencia del Sr. Urbina Fontánez a base de tal doctrina. A igual conclusión debemos llegar con respecto a la aplicación de la doctrina llamada Colisión Trasera (Rear-end Collision), la cual se aplica en la jurisdicción norteamericana y tiene un efecto procesal análogo al de Res Ipsa Loquitur en cuanto crea una inferencia de negligencia contra un conductor cuando su automóvil impacta a otro por la parte trasera. Por tanto, no podemos aplicar tal doctrina en contravención a *253la jurisprudencia que eliminó Res Ipsa Loquitur y cualquier otra teoría ajena a nuestro sistema de derecho.
Por último, debemos señalar que el caso de autos no se trató de una clásica moción para que se dicte sentencia por las alegaciones, al amparo de la Regla 10.3 de Procedimiento Civil, supra. A diferencia de ésta, aquí las partes, voluntariamente, sometieron su caso y renunciaron a una vista evidenciaría. Estas partes, incluyendo el Sr. Ubarri, dieron por sometido su caso con la prueba estipulada, de manera que el TPI dictara sentencia sin necesidad de celebrar una vista en su fondo. Ninguna de las partes se opuso al procedimiento aludido, por lo que dicho acuerdo los obligó. Como se sabe, una vez hecha y aprobada por el Tribunal, una estipulación obliga a quienes la hacen y a las partes por ellos legalmente representadas. P.R. Glass Corp. v. Tribunal Superior, 103 D.P.R. 223 (1975). Además, las partes renunciaron a la vista en su fondo estando facultados para así hacerlo. Esto es así, toda vez que todo derecho, incluso el de rango constitucional, es renunciable. Autoridad de Energía Eléctrica v. U.T.I.E.R., 2001 J.T.S. 40, 153 D.P.R._(2001).
Ciertamente, la intención que tuvieron las partes al dar su anuencia para la disposición del caso sin necesidad de celebrar una vista en su fondo, no es materia que le corresponda evaluar a este foro. Tampoco nos corresponde evaluar cuán sabia fue dicha decisión. Ahora bien, si las partes optaron por este procedimiento tienen que afrontar las consecuencias del mismo. El apelante no puede pretender subsanar los efectos perjudiciales de su decisión solicitando que el TPI celebre una vista a la que él mismo renunció. Tuvo su oportunidad de probar su caso y la aprovechó como entendió que le resultaría más conveniente. El hecho de que haya perdido en esa oportunidad, no significa que tenga otra para lograr lo que no pudo lograr en la primera, pues los casos judiciales tienen que tener su fin. Resolver lo contrario convertiría a todo procedimiento judicial en un ejercicio académico en el cual las partes ponen a prueba sus teorías y su evidencia y, posteriormente, la parte perdidosa solicita la revancha, esta vez presentando una mejor teoría y una mejor evidencia.
En suma, el TPI no tenía duda con respecto a la causa próxima del daño que ameritara una vista evidenciaría, como aduce el apelante. Simplemente, no se le presentó evidencia respecto a la alegada negligencia del Sr. Urbina Fontánez. Por tanto, en ausencia de prueba sobre uno de los elementos esenciales de la causa de acción, procedía la desestimación de la demanda.
!V
Por los fundamentos expuestos, se confirma la sentencia emitida por el Tribunal de Primera Instancia, Sala Superior de San Juan, el 10 de junio de 2003 y notificada el 19 de junio de 2003
Lo acordó y manda el Tribunal y lo certifica la Secretaria General.
Aida Ileana Oquendo Graulau
Secretaria General
ESCOLIOS 2004 DTA 106
1. Véase, por ejemplo, Aponte v. Sears Roebuck de P.R., Inc., 144 D.P.R. 830 (1998).
2. Párrafo núm. 2 de la demanda, Apéndice del Apelante, pág. 17.
3. Párrafo núm. 4 de la demanda, Apéndice del Apelante, págs. 17-18.
4. Contestación a la Demanda, Apéndice del Apelante, pág. 22.
5. Apéndice del Apelante, pág. 33.
*2546. Según se desprende del Segundo Informe Enmendado Sobre Conferencia Preliminar Entre Abogados, la única prueba anunciada por el apelante que versaría sobre la negligencia del Sr. Urbina Fontánez era el propio testimonio del primero. Apéndice del Apelante, pág. 35. Sin embargo, no entendemos cómo el Sr. Ubarri podría testificar sobre la alegada velocidad excesiva y conducción negligente del Sr. Urbina Fontánez cuando se supone que el apelante estuviera detenido, observando el tráfico vehicular en dirección opuesta a la que transitaba el Sr. Urbina Fontánez, sin tener oportunidad de observar el vehículo de este último y el posterior impacto a su vehículo. Si éste no hubiera sido el caso, ¿podía haber tomado el apelante alguna medida para evitar el impacto o minimizar los daños?
7. Por esta razón, no entraremos a evaluar la posible aplicación de Res Ipsa Loquitur a los hechos particulares de este caso.
8. Véase, Nieves López v. Rexach Bonet, 124 D.P.R. 427, pág. 438, nota 3.-
9. En Bacó v. Almacén, supra, nuestro más alto foro determinó que la doctrina de Res Ipsa Loquitur no iba a ser aplicada en materia de daños por ser ésta una doctrina importada de la jurisdicción norteamericana que no añade nada al derecho» probatorio existente en Puerto Rico. Concluyó, a la pág. 1527: “queda claro que nuestro ordenamiento jurídico en materia de daños no precisa recurrir o hacer referencia a tal doctrina [Res Ipsa Loquitur]. Tampoco hace falta importar otras teorías ajenas a nuestro derecho probatorio, en vista de que el alegado vacío que se pretende conjurar no existe . (Enfasis nuestro.)
10. Surge de la sentencia apelada lo siguiente: “Luego de varios incidentes procesales, y una vez presentado por las partes el Informe Enmendado Sobre Conferencia Preliminar Entre Abogados, el Tribunal ordenó a las partes someter los correspondientes Memorandos de Derecho. Así, y con la anuencia de las partes, se dictaría sentencia con la prueba previamente estipulada y sin necesidad de entrar a la vista en su fondo”. Apéndice del Apelante, pág. 2.
11. Como es sabido, por regla general y en ausencia de circunstancias que justifiquen lo contrario, todo litigante que escoge libremente a un abogado para que lo represente en un litigio no puede evitar las consecuencias de los actos y omisiones de tal agente y debe considerarse que ha tenido aviso de todos los hechos y actos que le han sido notificados a su abogado. Srio. del Trabajo v. J. C. Penney Co. Inc., 119 D.P.R. 660 (1987); Maldonado v. Srio. de Rec. Naturales, 113 D. P.R. 494 (1982); Barletta v. Tribunal Superior, 99 D.P.R. 379 (1970); Díaz v. Tribunal Superior, 93 D.P.R. 79 (1966). O sea, como regla general, los errores del abogado son imputables a la parte y la atan. Véase además Cuevas Segarra, Op. Cit, T. II, págs. 790-791.
12. Una parte no tiene derecho a que su caso adquiera vida eterna en los tribunales, manteniendo a la otra en un estado de incertidumbre. Dávila Mundo v. Hospital San Miguel, Inc., 117 D.P.R. 807 (1986). | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2569011/ | 78 F.Supp.2d 226 (1999)
BASKIN-ROBBINS INCORPORATED, A Delaware Corporation, Baskin-Robbins USA, Co., A California Corporation, Plaintiffs,
v.
S & N PRINJA, INC., A New York Corporation, Neelam Prinja and Yogesh Prinja, Defendants.
No. 98 CIV.2974 (CM)(MDF).
United States District Court, S.D. New York.
December 20, 1999.
*227 Stephen Horn, Steven A. Browne, Robert L. Zisk, Schmeltzer, Aptaker & Shepard, P.C., Washington, DC, Ronald D. Degen, O'Rourke & Degen, PLLC, New York City, for Plaintiffs.
Indra Pal, Brooklyn, NY, for Defendants.
MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT ON ITS BREACH OF CONTRACT CLAIM AND DEFENDANTS' THIRD AND FOURTH COUNTERCLAIMS, DENYING SUMMARY JUDGMENT AS TO PLAINTIFFS' SECOND COUNTERCLAIM, GRANTING SUMMARY JUDGMENT TO PLAINTIFFS ON THEIR FIRST COUNTERCLAIM, AND GRANTING IN PART PLAINTIFFS' MOTION TO STRIKE
McMAHON, District Judge.
Plaintiffs Baskin-Robbins Inc. and Baskin-Robbins USA ("Baskin-Robbins") have brought claims against Defendants S & N Prinja, Inc. and Neelam and Yogesh Prinja for (1) failure to make payments for royalties and advertising fees, inventory, supplies, and accrued interest pursuant to the parties' Franchise Agreement ("the Agreement"), and (2) violation of the Lanham Act, 15 U.S.C. § 1114 et seq., for continued use by Defendants of the Baskin-Robbins trademark, trade name, and trade dress after termination of the Agreement. Baskin-Robbins also requests a hearing as to its entitlement to attorney's fees under the Agreement, or an opportunity to submit affidavits on that issue.
Defendants asserted counterclaims for (1) recovery of a $1,000 "Grand Opening Fee" paid to Baskin-Robbins by Defendants under the Franchise Agreement, (2) damages for alleged failure of Baskin-Robbins to deliver ice cream to Defendants on two occasions, (3) lost capital and revenue caused by Baskin-Robbins's refusal to allow Defendants to relocate, and (4) failure of Baskin-Robbins to inform Defendants of a Territorial Agreement allegedly entered into by Dunkin' Donuts, a Baskin-Robbins affiliate, with a third party.
*228 Baskin-Robbins has moved for summary judgment in its favor on its first claim and against Defendants on their counterclaims. It has also moved to strike certain portions of Defendants' Attorney Affirmation and the Affidavit of Neelam Prinja in Opposition to Baskin-Robbins's Motion for Summary Judgment. For the reasons that follow, Baskin-Robbins's Motion for Summary Judgment is granted with respect to its breach of contract claim and Defendants' third and fourth counterclaims, and denied with respect to Defendants' second counterclaim. Summary Judgment is also granted to Defendants on their first counterclaim. Baskin-Robbins's Motion to Strike is granted as to all statements at issue except for a portion of paragraph 3 of the Prinja Affidavit. Finally, Baskin-Robbins's claim for attorney's fees under the Agreement is deferred until after trial.
Background
Defendant S & N Prinja ("S & N"), a corporate franchisee, entered into a Franchise Agreement with Baskin-Robbins in May 1994, which authorized S & N to operate a Baskin-Robbins ice cream store at Pacesetter Plaza Shopping Center in Pomona, New York. Defendants Neelam and Yogesh Prinja ("the Prinjas"), the principals of S & N, executed a personal guaranty providing that the Prinjas would guarantee jointly and severally all of S & N's obligations under the Franchise Agreement and that both of them were personally bound by the Agreement's terms. The Agreement further provided that it was to expire on September 23, 1998.
Under the terms of the Agreement, Defendants agreed to the following: pay Baskin-Robbins a monthly royalty fee of .5 percent of the store's gross sales per month; make monthly contributions of 1.5 percent of the store's gross sales per month to a Baskin-Robbins fund to cover advertising costs; pay for all products purchased from Baskin-Robbins; report gross sales to Baskin-Robbins each month; and pay interest of 18 percent on late payments. Moreover, the Agreement stated that failure to pay any fees, invoices, or other charges due under the Agreement for more than five days would constitute default, which authorized Baskin-Robbins to terminate the franchise upon 30 days notice.
Finally, the Agreement granted Baskin-Robbins attorney's fees in specified legal actions against the franchisee. The relevant provisions (1) require the franchisee "to pay all collection charges, including reasonable attorney's fees," (2) require the franchisee to pay attorney's fees in connection with actions to enforce various covenants in the Agreement, (3) require the franchisee to pay Baskin-Robbins "all damages, costs and expenses, including reasonable attorney's fees, incurred by [it] subsequent to the termination or expiration of [the] Agreement in obtaining injunctive relief for the enforcement of any provisions of [] Section 17 [of the Agreement governing the obligation of the franchisee to cease use of Baskin-Robbins trademarks and pay all monies owed upon termination of the Agreement]," and (4) entitle the prevailing party "to recover from the other(s) all of the legal expenses of the prevailing party, including reasonable attorney's fees" in actions concerning the construction or validity of the Agreement.
On April 22, 1998, Baskin-Robbins sent Defendants a Notice of Default for failure to pay monies then due under the Agreement and demanded compliance with the Agreement's terms before May 22, 1998. Specifically, Baskin-Robbins alleges that Defendants were delinquent on royalties and advertising fees owed for the months of June 1996 to March 1998, totaling approximately $9,000. Between April 22 and May 22, according to Baskin-Robbins account records, Defendants made four payments amounting to roughly $4,050, but these were treated by Baskin-Robbins as pre-payments for ice cream, and Defendants have not disputed this designation. Defendants made no further payments to *229 Baskin-Robbins after May 22, and the Agreement was terminated on that date. Baskin-Robbins claims that Defendants continued to do business using its name and trademarks even after the Agreement was terminated until September 1998, in violation of the Lanham Act. Baskin-Robbins has not moved for summary judgment on that claim.
Baskin-Robbins's original Complaint, which was served on Defendants on April 29, 1998, sought an injunction ordering Defendants to cure alleged violations of Baskin-Robbins's health, sanitation, and safety standards, and Baskin-Robbins immediately thereafter moved for a preliminary injunction for the same purpose. However, Baskin-Robbins deemed the alleged violations to have been cured sometime after that point, and withdrew its motion at a hearing before Magistrate Judge Mark Fox on June 15, 1998, but reserved its right to pursue its claim for legal fees. On July 17, 1998, Baskin-Robbins served an Amended Complaint including claims for breach of contract and violation of the Lanham Act arising out of the facts described above, as well as a demand for attorney's fees.
On September 15, 1998, Defendants served an Answer containing three counterclaims for (1) reimbursement of a $1,000 "Grand Opening Fee" paid to Baskin-Robbins under the terms of the Agreement, which provided that the $1,000 was to be used for the advertising and promotion of the opening of the franchisee's store, but in fact was never used for such purpose; (2) roughly $25,000 in damages caused by Baskin-Robbins's failure to deliver prepaid ice-cream on two occasions in June 1997 and December 1997; (3) the refusal of Baskin-Robbins to allow the Prinjas to relocate their store due to Defendants' default under the Franchise Agreement, resulting in damages to Defendants of $250,000 in lost capital and $150,000 in lost net revenues. On February 3, 1999, Defendants filed a Supplemental Counterclaim for damages of $71,692.85 for Baskin-Robbins's alleged failure to disclose to Defendants a sale by Baskin-Robbins's parent company, Allied Domecq, of its franchise rights in Baskin-Robbins to an unidentified third party.
Baskin-Robbins's Breach of Contract Claim
Baskin-Robbins argues that it is entitled to summary judgment on its claim for the payments due from S & N under the Franchise Agreement in the amount of $11,233.95, broken down as follows: $7,632.87 for royalties and advertising fees from May 1997 to September 1998; $674.16 for ice cream furnished on September 7, 1998; $499.58 for supplies furnished on March 27 and May 21, 1998; and $2,427.34 in accrued interest from June 1997 to April 1999.
In support of its motion, Baskin-Robbins has submitted the Affidavit of David Barber, a Collection Coordinator for Allied Domecq, which details the nature and amount of the unpaid charges, and four computer printouts from Baskin-Robbins's accounting records: an Accounts Receivable Status Report dated July 27, 1999, indicating total arrears of $11,233.95; Cash Receipts from September 1992 to September 1998; a list of Closed Obligations from October 1991 to September 1998; and a list of Open Obligations from June 1997 to October 1998. (Certification of David Barber, attached as Exhibit 3 to Certifications and Exhibits of Plaintiffs Baskin-Robbins and Baskin-Robbins USA, Co. Submitted in Support of Motion for Summary Judgment.) Defendants have made no showing whatsoever that the disputed payments were made. Instead, they merely state in their brief that they "do not accept the computer printouts of the Plaintiffs," and that the July 1999 Accounts Receivable statement "is disputed" by them because it was not available during discovery. They offer no evidence, however, to cast doubt upon the accuracy of Baskin-Robbins's records. Significantly, none of those records has been submitted in isolation each is corroborated *230 by the Barber Affidavit, which identifies them from personal knowledge based on Barber's collection duties at Baskin-Robbins. Defendants do state in their Response to Plaintiffs' Local Rule 56.1 Statement that they did in fact make payments from May 1997 through September 1998, but, obviously, an allegation in a Rule 56.1 statement unaccompanied by supporting evidence is not adequate to withstand summary judgment. In view of Defendants' failure to make even a minimally sufficient showing to dispute the accuracy of Baskin-Robbins's records, or to make any showing at all that the fees and royalties were paid, summary judgment is granted on Baskin-Robbins breach of contract claim.
Defendants' Counterclaims
(1) Grand Opening Fee
Defendants have counterclaimed for the $1,000 that they paid to Baskin-Robbins as a Grand Opening Fee under the terms of the Agreement, which provided that the fee "shall be applied by area franchisor towards the advertising and promotion of the opening of the retail unit." (Baskin-Robbins Franchise Agreement ¶ 12.4, attached as Exhibit 1A to Baskin-Robbins Certifications.) It is undisputed that no advertising or promotion of the Prinjas' store was undertaken by Baskin-Robbins, and Baskin-Robbins acknowledged Defendants' entitlement to return of the $1,000 in a letter to the Prinjas dated June 25, 1998 from Sally Dutra of Baskin-Robbins's Marketing Department, which stated: "According to our records, you have a balance of $1,000.00 left in your Grand Opening account as of June 19, 1998 ... In order to receive reimbursement, attach copies or original invoices with proof of payment to the enclosed [standard reimbursement] form ... Your reimbursement will be processed directly." (Def.Exh. 2.)
Baskin-Robbins makes two arguments in support of its motion as to this claim. First, it asserts that Defendants' claim is time-barred under the Agreement, which provides that any and all claims or actions arising out of the agreement or the relationship between franchisor and franchisee brought by one party against the other must be commenced "within one year from the discovery of the facts giving rise to any such claim or action, or such claim or action shall be barred ...." (Baskin-Robbins Exh. 1A.) Baskin-Robbins argues that because the original Complaint was filed on April 28, 1998, and Defendants' Answer is dated September 9, 1998 both of which are more than one year after Defendants began seeking reimbursement in 1994 their counterclaim is untimely. I note, however, that not until termination of the Agreement on May 22, 1998 did it become certain that Baskin-Robbins would not carry out any promotion or advertising in connection with the Grand Opening of Defendants' store (the Agreement provided no time limitation within which such advertising or promotion was to be carried out). Defendants' "claim" thus arose on that date, and hence, cannot be dismissed as untimely under the Agreement.
Second, Baskin-Robbins points out that Defendants failed to complete a standard Grand Opening Funds Reimbursement Form for the return of the $1,000 a fact undisputed by Defendants. Baskin-Robbins asserts that submission of the completed form was both a company procedure and a "condition precedent" to reimbursement, such that Defendants' neglect to do so precludes them from entitlement to the funds. By this argument, however, Baskin-Robbins is attempting to merge what appears to be an internal procedural requirement into its obligation to return monies provided in consideration for performance it never rendered. The Agreement unambiguously provides that the $1,000 was to be applied by Baskin-Robbins for advertising and promotion, and it has been established that Baskin-Robbins never performed this obligation. While Baskin-Robbins repeatedly asserts *231 in its affidavits that completion of its reimbursement form was a "condition precedent" to Defendants' recovery of the Grand Opening Fee, the Agreement contains no provision specifying procedures for reimbursement of this or any other funds provided to Baskin-Robbins by the franchisee. Neither has Baskin-Robbins identified any provision of the Agreement that incorporates the company's procedures for reimbursement as a condition precedent to the return of funds not used by Baskin-Robbins as required by its contract with Defendants. Thus, Baskin-Robbins may not rely on an alleged company practice, not provided for under the Agreement, to escape its obligation to repay Defendants as a result of its failure to render performance of the very acts for which Defendants paid the Grand Opening Fee.
There is, finally, another basis for finding against Baskin-Robbins on this claim in the elementary principle of contracts law that a pre-existing debt, or "account stated," may serve as consideration for a promise to pay the debt. See County Trust Co. of New York v. Mara, 242 A.D. 206, 210, 273 N.Y.S. 597, 603 (1st Dept. 1934); Calamari and Perillo, Contracts § 5-3 (3d ed.1987). The June 25 letter from Ms. Dutra, which states that Defendants reimbursement "will be processed directly" upon return of the reimbursement form, amounts to such a promise. Thus, even if Defendants' claim had been untimely under the Agreement, the June 25 letter would constitute a new enforceable promise to repay Defendants for their $1,000 payment.
Although Defendants have not moved for summary judgment, because there exists no issue of fact as to Defendants' entitlement to reimbursement of the Grand Opening Fee, summary judgment on this claim is appropriate. Accordingly, I award Defendants a setoff of $1,000 against Baskin-Robbins's damages for Defendants' breach of the Franchise Agreement. See 20 Am.Jur.2d, Counterclaim, Recoupment, and Setoff § 37 (1995).
(2) Undelivered Ice Cream
Defendants allege that Baskin-Robbins failed to deliver ice cream to their store on two occasions, which they claim in their Answer to Plaintiffs' Interrogatories consisted of two days in June 1997 and six days in December 1997. The only evidence in the record that delivery of ice cream was not made are two letters from Neelam Prinja dated December 1, 1997 (attached as Exhibit F to Certifications of Baskin-Robbins in Support of Motion for Summary Judgment) and February 10, 1998 (attached as Exhibit 1 to Defendants' Attorney Affirmation in Opposition to Motion for Summary Judgment) to Baskin-Robbins corporate headquarters in California. The December 1 letter makes reference to Baskin-Robbins's failure to deliver ice cream "during the summer," but makes no mention of the alleged failure to deliver in December.[1] The February 10 letter, which is addressed to a Kimberly Bartoli at Baskin-Robbins, makes reference to a telephone conversation with Ms. Bartoli that morning "regarding non-delivery of Ice Cream due to non-payment of previous dues." Baskin-Robbins claims in its brief that any missed deliveries resulted from *232 "Defendants' own failure to pay for ice cream in a timely manner" (Pl. Br. at 17), but has provided no evidence to substantiate that assertion. The letters from Neelam Prinja therefore raise an issue of fact as to whether the delivery due in June 1997 was made. On the other hand, there is no evidence from which to infer that Baskin-Robbins failed to make the December 1997 delivery.
Baskin-Robbins further argues, however, that Defendants have failed to make a sufficient showing with respect to damages. A plaintiff seeking damages for breach of contract has the burden of proof to establish the measure of damage sustained from the breach. See 36 N.Y.Jur.2d, Damages § 192 (1984). Defendants have made no allegation or showing of lost profits. The only mention in the record of damages on this claim which was submitted not by Defendants but by Baskin-Robbins is Defendants' Answer to Interrogatories from Baskin-Robbins (attached as Exhibit 4H to Certifications and Exhibits of Baskin-Robbins). In that response, Defendants calculated their damages, which they denominate "per diem expenditure loss," at $4,147.70, an amount which Defendants arrived at by (1) dividing the cost of capital improvements for the franchise term by the number of days in their lease (1576 days), and multiplying that figure by eight, the total number of days that Defendants were allegedly forced to close their store; (2) adding the "additional per diem losses" that Defendants claim to have sustained in an amount of 50% of the cost of capital improvements over 60 days; and (3) adding the annual cost of overhead in 1997 divided by 365 days. This methodology is problematic for two reasons. First, Defendants have given no indication that their capital expenditures could have been avoided had Baskin-Robbins delivered ice cream as provided under the Agreement, or any other explanation as to how such routine expenses might be classified as damages. Second, as Baskin-Robbins correctly points out, Defendants could not logically have incurred any overhead costs for days on which it claims to have been closed, so that such costs cannot be a basis for their damages calculation. But apart from these computational flaws, Defendants have not come forward with any evidence of such damages, as opposed to the unsupported assertions contained in the above calculation.
Defendants further claim damages of $22,000 in "lost goodwill" as a result of the alleged closures, but again, have provided no substantiation whatsoever for that figure. A plaintiff in a breach of contract action "must produce facts and figures from which the trier of the facts may make an estimate, and the mere statement that he estimates his expenses at a specified figure, without more, is incompetent." 36 N.Y.Jur.2d, Damages § 192. Defendants may, however, still be entitled to nominal damages, which satisfy the damages element of a breach of contract claim under New York law. See Kronos v. AVX Corp., 81 N.Y.2d 90, 95, 595 N.Y.S.2d 931, 612 N.E.2d 289 (1993) (citing 5 Corbin, Contracts § 1001, at 29). I therefore deny summary judgment on their second counterclaim.
(3) Denial of Permission to Relocate
In their third counterclaim, Defendants allege that on or about March 11, 1998, Baskin-Robbins denied them permission to relocate their store, resulting in damages of $250,000 in lost capital and $150,000 in lost net revenue. Defendants have adduced no evidence from which I could infer the existence of a legal duty to allow them to relocate. They ostensibly attached to their Answer to Baskin-Robbins's Interrogatories a copy of an unidentified Baskin-Robbins policy presumably stating (it is unclear from Baskin-Robbins's description) that franchisees may relocate. Neither party has produced this document to the Court on this motion, however. But even if such a policy had been included in the record presented to *233 me, the Franchise Agreement contains an integration clause providing that it is the complete embodiment of the parties' agreement. (Franchise Agreement ¶ 24.1, attached as Exh. 1A to Certifications and Exhibits of Baskin-Robbins). The Agreement makes no reference to any such corporate policy; therefore, as a matter of law, it is not part of the Agreement. In the absence of a showing by Defendants of a duty contractual or otherwise on the part of Baskin-Robbins to assent to their relocation, this claim is dismissed as well.
(4) Failure to Disclose the Dunkin' Donuts Territorial Agreement
The precise nature of this claim is difficult to decipher from Defendants' Supplemental Counterclaim, but it appears from the Affidavit of Neelam Prinja that this claim stems from a territorial agreement entered into by Dunkin' Donuts which like Baskin-Robbins is owned by Allied Domecq with an individual named Ara Ounanian (attached as Exhibit 10 to Defendants' Attorney Affirmation). Defendants allege that they would have made "different business decisions" had they been aware of the territorial agreement, and that Baskin-Robbins's failure to disclose the existence of that agreement by its sister corporation caused them damages in the amount of $71,692.85.
Even accepting Defendants' allegations as true, they have submitted no evidence of any duty owed them by Baskin-Robbins to disclose the existence of such agreements, nor of the damages they allegedly suffered. Accordingly, Baskin-Robbins's motion is granted on this claim.
I also note that Defendants have alluded in their brief to what they portray as an objective on the part of Baskin-Robbins to coerce small franchisees out of business, seemingly to suggest that Baskin-Robbins's legal action against them is merely a vehicle for achieving that end. Consistent with most of their allegations, these assertions are wholly unsupported by evidence.
For the foregoing reasons, Baskin-Robbins's motion for summary judgment is granted on its breach of contract claim and against Defendants on their third and fourth counterclaims, and denied on Defendants second counterclaim. Finally, summary judgment is granted for Defendants on their first counterclaim.
Baskin-Robbins's Motion to Strike
Baskin-Robbins has also moved to strike certain statements in Defendants' Attorney Affirmation and in the Affidavit of Neelam Prinja. All of those statements either repeat allegations in the complaint or make additional allegations based upon information and belief. The Motion to Strike is essentially moot, as none of the statements, if admissible, would be dispositive of Baskin-Robbins's summary judgment motion. The specific statements at issue in the Attorney Affirmation are:
. . . . .
2. That the crux of the Defendants' counterclaims is that Baskin-Robbins prohibited the Defendants from making sound business decisions in reference to the Baskin-Robbins franchise that they held when the business took a downturn due to the location of the store and the adjacent construction.
3. That Defendants attempted to increase business by adding products such as the Dunkin Donuts line, Exhibit 1, by supplying Baskin-Robbins products off site outlets, Exhibit 1, and finally, selling the franchise to an owner of another Baskin-Robbins franchise at New City, New York. Exhibit 2.
4. That each proposal to increase and improve the business or to protect the Defendants' investment was prohibited by Baskin-Robbins.
5. That the Baskin-Robbins Plaintiffs commenced this action as part of a pattern and practice of closing down Baskin-Robbins stores and opening so-called combo stores selling Baskin-Robbins and Dunkin Donuts products.
*234 6. That upon information and belief, the Baskin-Robbins Defendants were purchased by Allied Domecq, a European based company, which owns Dunkin Donuts and which owned Dunkin Donuts before acquiring Baskin Robbins.
. . . . .
The relevant statements in the Prinja Affidavit are:
. . . . .
3. That upon information and belief, the Plaintiffs had a practice whereby an additional $1,000 was paid by prospective franchisees to encourage a grand opening promotion, but in fact, the Plaintiffs simply used this as a mechanism to collect an additional fee which was not refunded to me and, to my knowledge, not to other franchisees. Exhibit 8, at 22 and Exhibit 9.
. . . . .
6. That the policy of Allied Domecq is to advertise for prospective franchisees of combo or multi-disciplinary stores.
7. That upon information and belief, at the time that the Defendants entered into a franchise agreement with the Plaintiffs, Baskin-Robbins was not wholly owned by Allied Domecq.
. . . . .
12. That upon information and belief, the so-called violations enumerated at the February, 1998 inspection of the Defendants' Baskin-Robbins store were prepared prior to the inspection.
Baskin-Robbins correctly points out that statements in an affidavit in opposition to summary judgment must be based upon the personal knowledge of the affiant in order to satisfy Fed.R.Civ.P. 56(e). With the exception of the statement in paragraph 3 in the Prinja Affidavit referring to Baskin-Robbins's failure to refund the Grand Opening Fee, none of the above averments meets that standard. Accordingly, Baskin-Robbins's motion to strike is granted, with the exception of the portion of paragraph 3 of the Prinja Affidavit stating "an additional fee which was not refunded to me and, to my knowledge, not to other franchisees."
Baskin-Robbins Claim for Attorney's Fees
Finally, Baskin-Robbins seeks attorney's fees as provided under various sections of the Franchise Agreement. I will defer consideration of this claim until after trial.
NOTES
[1] Paragraph Five of the February 10 letter reads as follows:
There were so many instances that even though we had prepaid for our ice cream, we did not get out [sic] delivery and we had to close the store for days together in the peak season resulting in financial loss, estimated between $15,000$20,000 during the summer. The moneys we had wired or mailed were either posted to wrong store [sic] or kept in suspense. When we call [sic] the accounting/collections department for reconciliation of accounts, we do not get an explanation of our accounts, but instead we received notice of default and termination. Our shipment was stopped abruptly without notice even though the corporation had received the money we wired well in advance. This resulted in the closure of the store for 2 weeks and we had to bear the losses. We had to struggle to have our shipments resumed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/110551/ | 453 U.S. 182 (1981)
CALIFORNIA MEDICAL ASSOCIATION ET AL.
v.
FEDERAL ELECTION COMMISSION ET AL.
No. 79-1952.
Supreme Court of United States.
Argued January 19, 1981.
Decided June 26, 1981.
APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
*184 Rick C. Zimmerman argued the cause for appellants. With him on the briefs was David E. Willett.
Charles N. Steele argued the cause for appellees. With him on the brief was Kathleen Imig Perkins.[*]
Louis R. Cohen, A. Stephen Hut, Jr., Roger M. Witten, Kenneth J. Guido, Jr., and Ellen G. Block filed a brief for Common Cause as amicus curiae urging affirmance.
JUSTICE MARSHALL delivered the opinion of the Court with respect to Parts I, II, and IV, and delivered an opinion with respect to Part III, in which JUSTICE BRENNAN, JUSTICE WHITE, and JUSTICE STEVENS joined.
In this case we consider whether provisions of the Federal Election Campaign Act of 1971, 86 Stat. 11, as amended, 2 U. S. C. § 431 et seq. (1976 ed. and Supp. III), limiting the amount an unincorporated association may contribute to a multicandidate political committee violate the First Amendment or the equal protection component of the Fifth Amendment. Concluding that these contribution limits are constitutional, *185 we affirm the judgment of the Court of Appeals for the Ninth Circuit.
I
The California Medical Association (CMA) is a not-for-profit unincorporated association of approximately 25,000 doctors residing in California. In 1976, CMA formed the California Medical Political Action Committee (CALPAC). CALPAC is registered as a political committee with the Federal Election Commission, and is subject to the provisions of the Federal Election Campaign Act relating to multicandidate political committees.[1] One such provision, 2 U. S. C. § 441a (a) (1) (C), prohibits individuals and unincorporated associations such as CMA from contributing more than $5,000 per calendar year to any multicandidate political committee such as CALPAC.[2] A related provision of the Act, 2 U. S. C. § 441a (f), makes it unlawful for political committees such as CALPAC knowingly to accept contributions exceeding this limit.[3]
*186 In October 1978, the Federal Election Commission found "reason to believe" that CMA had violated the Act by making annual contributions to CALPAC in excess of $5,000, and that CALPAC had unlawfully accepted such contributions. When informal conciliation efforts failed, the Commission in April 1979 authorized its staff to institute a civil enforcement action against CMA and CALPAC to secure compliance with the contribution limitations of the Act. In early May 1979, after receiving formal notification of the Commission's impending enforcement action, CMA and CALPAC, together with two individual members of these organizations, filed this declaratory judgment action in the United States District Court for the Northern District of California challenging the constitutionality of the statutory contribution limitations upon which the Commission's enforcement action was to be based. Several weeks later, the Commission filed its enforcement action in the same District Court. In this second suit, CMA and CALPAC pleaded as affirmative defenses the same constitutional claims raised in their declaratory judgment action.
On May 17, 1979, pursuant to the special expedited review provisions of the Act set forth in 2 U. S. C. § 437h (1976 ed. and Supp. III),[4] the District Court certified the constitutional questions raised in appellants' declaratory judgment action to the Court of Appeals for the Ninth Circuit. In the meantime, pretrial discovery and preparation in the Commission's enforcement action continued in the District Court. In May 1980, a divided Court of Appeals, sitting en banc, rejected appellants' constitutional claims and upheld the $5,000 limit on annual contributions by unincorporated associations to multicandidate political committees. 641 F. 2d 619. Appellants sought review of that determination in this Court, again pursuant to the special jurisdictional provisions of 2 U. S. C. *187 § 437h (1976 ed. and Supp. III). The Commission subsequently moved to dismiss the appeal, and we postponed a ruling on our jurisdiction over this case pending a hearing on the merits. 449 U. S. 817 (1980).[5]
II
Because the Commission vigorously contends that this Court does not have jurisdiction over this appeal, we first consider the complex judicial review provisions of the Federal Election Campaign Act.[6] The Act provides two routes by which questions involving its constitutionality may reach this Court. First, such questions may arise in the course of an enforcement proceeding brought by the Commission under 2 U. S. C. § 437g (1976 ed. and Supp. III). Such actions are filed by the Commission in the federal district courts, where they are to be accorded expedited treatment. §§ 437g (a) *188 (6) (A) and (10) (1976 ed., Supp. III). The judgments of the district courts in such cases are appealable to the courts of appeals, with final review in this Court available upon certiorari or certification. § 437g (a) (9).
However, because Congress was concerned that its extensive amendments to the Act in 1974 might raise important constitutional questions requiring quick resolution,[7] it provided an alternative method for obtaining expedited review of constitutional challenges to the Act. This procedure, outlined in 2 U. S. C. § 437h (1976 ed. and Supp. III), provides in part:
"The Commission, the national committee of any political party, or any individual eligible to vote in any election for the office of President may institute such actions in the appropriate district court of the United States, including actions for declaratory judgment, as may be appropriate to construe the constitutionality of any provision of this Act. The district court immediately shall certify all questions of constitutionality of this Act to the United States court of appeals for the circuit involved, which shall hear the matter sitting en banc." § 437h (a).
*189 The statute further provides that decisions of the courts of appeals on such certified questions may be reviewed in this Court on direct appeal, § 437h (b), and it directs both the courts of appeals and this Court to expedite the disposition of such cases, § 437h (c).
Although Congress thus established two avenues for judicial review of constitutional questions arising under the Act, it failed to provide any mechanism for coordinating cases in which the same constitutional issues are raised by the same parties in both a § 437h declaratory judgment action and a § 437g enforcement proceeding. The Commission contends that this legislative oversight has allowed litigants, like appellants here, to disrupt and delay enforcement proceedings brought by the Commission under § 437g by instituting separate § 437h declaratory judgment actions in which the constitutional defenses to enforcement are asserted as affirmative claims. The Commission further argues that § 437h declaratory judgment actions may seriously undermine the functioning of the federal courts because of the special treatment that these courts are required to accord such cases. To alleviate these potential problems, the Commission urges this Court to construe the overlapping judicial review provisions of the Act narrowly so as to preclude the use of § 437h actions to litigate constitutional challenges to the Act that have been or might be raised as defenses to ongoing or contemplated Commission enforcement proceedings.[8] Under this proposed reading of § 437g and § 437h, the District Court in *190 this case should have declined to certify appellants' constitutional claims to the Court of Appeals in light of the Commission's pending enforcement action against CMA and CALPAC. On this basis, we are urged by the Commission to dismiss the appeal in this case for want of jurisdiction.
Although we agree with the Commission that the judicial review provisions of the Act are scarcely a blueprint for efficient litigation, we decline to construe § 437h in the manner suggested by the Commission.[9] There is no suggestion in the language or legislative history of § 437h indicating that Congress intended to limit the use of this provision to situations in which no § 437g enforcement proceedings are contemplated or underway.[10] Section 437h expressly requires a district court to "immediately . . . certify all questions of the constitutionality of this Act" to the court of appeals. (Emphasis supplied.) We do not believe that Congress would have used such all-encompassing language had it intended to restrict § 437h in the manner proposed by the Commission.[11] Indeed, the cramped construction of the *191 statute proposed by the Commission would directly undermine the very purpose of Congress in enacting § 437h. It is undisputed that this provision was included in the 1974 Amendments to the Act to provide a mechanism for the rapid resolution of constitutional challenges to the Act. These questions may arise regardless of whether a Commission enforcement proceeding is contemplated. Yet under the Commission's approach, even the most fundamental and meritorious constitutional challenge to the Act could not be reviewed pursuant to § 437h, but instead could be considered only pursuant to the more limited procedure set forth in § 437g,[12] if this question also happened to be raised in a Commission enforcement action. If Congress had intended to remove a whole category of constitutional challenges from the purview of § 437h, thereby significantly limiting the usefulness of that provision, it surely would have made such a limitation explicit.
In addition, the language of § 437g itself undercuts the Commission's contention that § 437h actions must be held in abeyance if the same parties are or may be involved in § 437g enforcement actions brought by the Commission. The statute expressly provides that § 437g enforcement actions *192 filed by the Commission in the district court are to be "put ahead of all other actions (other than other actions brought under this subsection or under section 437h of this title)." § 437g (a) (10) (emphasis added). If Congress had intended to coordinate § 437g and § 437h in the manner now proposed by the Commission, it is inconceivable that it would have chosen the above language. Instead, the wording of the statute plainly implies that actions brought under both sections may proceed in the district court at the same time. See Bread Political Action Committee v. Federal Election Comm'n, 591 F. 2d 29, 33 (CA7 1979), appeal pending, No. 80-1481. In sum, although Congress might have been wiser to orchestrate § 437g and § 437h in the manner proposed by the Commission, the statutory language and history belie any such intention.[13] We therefore conclude that we have jurisdiction over the appeal.[14]
*193 Appellants' First Amendment claim is based largely on this Court's decision in Buckley v. Valeo, 424 U. S. 1 (1976) (per *194 curiam). That case involved a broad challenge to the constitutionality of the 1974 Amendments to the Federal Election Campaign Act. We held, inter alia, that the limitations placed by the Act on campaign expenditures violated the First Amendment in that they directly restrained the rights of citizens, candidates, and associations to engage in protected political speech. Id., at 39-59. Nonetheless, we upheld the various ceilings the Act placed on the contributions individuals and multicandidate political committees could make to candidates and their political committees, and the maximum aggregate amount any individual could contribute in any calendar year.[15] We reasoned that such contribution *195 restrictions did not directly infringe on the ability of contributors to express their own political views, and that such limitations served the important governmental interests in preventing the corruption or appearance of corruption of the political process that might result if such contributions were not restrained. Id., at 23-38.
Although the $5,000 annual limit imposed by § 441a (a) (1) (C) on the amount that individuals and unincorporated associations may contribute to political committees is, strictly speaking, a contribution limitation, appellants seek to bring their challenge to this provision within the reasoning of Buckley. First, they contend that § 441a (a) (1) (C) is akin to an unconstitutional expenditure limitation because it restricts the ability of CMA to engage in political speech through a political committee, CALPAC. Appellants further contend that even if the challenged provision is viewed as a contribution limitation, it is qualitatively different from the contribution restrictions we upheld in Buckley. Specifically, appellants assert that because the contributions here flow to a political committee, rather than to a candidate, the danger of actual or apparent corruption of the political process recognized by this Court in Buckley as a sufficient justification for contribution restrictions is not present in this case.
While these contentions have some surface appeal, they are in the end unpersuasive. The type of expenditures that this Court in Buckley considered constitutionally protected were those made independently by a candidate, individual, or group in order to engage directly in political speech. Id., at 44-48. Nothing in § 441a (a) (1) (C) limits the amount CMA or any of its members may independently expend in order to advocate political views; rather, the statute restrains only the amount that CMA may contribute to CALPAC. Appellants nonetheless insist that CMA's contributions to CALPAC should receive the same constitutional protection as independent expenditures because, according to appellants, *196 this is the manner in which CMA has chosen to engage in political speech.
We would naturally be hesitant to conclude that CMA's determination to fund CALPAC rather than to engage directly in political advocacy is entirely unprotected by the First Amendment.[16] Nonetheless, the "speech by proxy" that CMA seeks to achieve through its contributions to CALPAC is not the sort of political advocacy that this Court in Buckley found entitled to full First Amendment protection. CALPAC, as a multicandidate political committee, receives contributions from more than 50 persons during a calendar year. 2 U. S. C. § 441a (a) (4). Thus, appellants' claim that CALPAC is merely the mouthpiece of CMA is untenable. CALPAC instead is a separate legal entity that receives funds from multiple sources and that engages in independent political advocacy. Of course, CMA would probably not contribute to CALPAC unless it agreed with the views espoused by CALPAC, but this sympathy of interests alone does not convert CALPAC's speech into that of CMA.
*197 Our decision in Buckley precludes any argument to the contrary. In that case, the limitations on the amount individuals could contribute to candidates and campaign organizations were challenged on the ground that they limited the ability of the contributor to express his political views, albeit through the speech of another. The Court, in dismissing the claim, noted:
"While contributions may result in political expression if spent by a candidate or an association to present views to the voters, the transformation of contributions into political debate involves speech by someone other than the contributor." 424 U. S., at 21 (emphasis added).
This analysis controls the instant case. If the First Amendment rights of a contributor are not infringed by limitations on the amount he may contribute to a campaign organization which advocates the views and candidacy of a particular candidate, the rights of a contributor are similarly not impaired by limits on the amount he may give to a multicandidate political committee, such as CALPAC, which advocates the views and candidacies of a number of candidates.[17]
We also disagree with appellants' claim that the contribution restriction challenged here does not further the governmental interest in preventing the actual or apparent corruption of the political process. Congress enacted § 441a (a) (1) (C) in part to prevent circumvention of the very limitations *198 on contributions that this Court upheld in Buckley.[18] Under the Act, individuals and unincorporated associations such as CMA may not contribute more than $1,000 to any single candidate in any calendar year. 2 U. S. C. § 441a (a) (1) (A). Moreover, individuals may not make more than $25,000 in aggregate annual political contributions. 2 U. S. C. § 441a (a) (3). If appellants' positionthat Congress cannot prohibit individuals and unincorporated associations from making unlimited contributions to multicandidate political committeesis accepted, then both these contribution limitations could be easily evaded. Since multicandidate political committees may contribute up to $5,000 per year to any candidate, 2 U. S. C. § 441a (a) (2) (A), an individual or association seeking to evade the $1,000 limit on contributions to candidates could do so by channelling funds through a multicandidate political committee. Similarly, individuals could evade the $25,000 limit on aggregate annual contributions to candidates if they were allowed to give unlimited sums to multicandidate political committees, since such committees are not limited in the aggregate amount they may contribute in any year.[19] These concerns prompted *199 Congress to enact § 441a (a) (1) (C), and it is clear that this provision is an appropriate means by which Congress could seek to protect the integrity of the contribution restrictions upheld by this Court in Buckley.[20]
*200 IV
Appellants also challenge the restrictions on contributions to political committees on the ground that they violate the equal protection component of the Fifth Amendment. Under the statute, corporations and labor unions may pay for the establishment, administration, and solicitation expenses of a "separate segregated fund to be utilized for political purposes." 2 U. S. C. § 441b (b) (2) (C). Contributions by these groups to such funds are not limited by the statute. 2 U. S. C. § 431 (8) (B) (vi) (1976 ed., Supp. III). Appellants assert that a corporation's or a union's contribution to its segregated political fund is directly analogous to an unincorporated association's contributions to a multicandidate political committee. Thus, they conclude that because contributions are unlimited in the former situation, they cannot be limited in the latter without violating equal protection.
We have already concluded that § 441a (a) (1) (C) does not offend the First Amendment. In order to conclude that it nonetheless violates the equal protection component of the Fifth Amendment, we would have to find that because of this provision the Act burdens the First Amendment rights of persons subject to § 441a (a) (1) (C) to a greater extent than it burdens the same rights of corporations and unions, and that such differential treatment is not justified. We need not consider this second questionwhether the discrimination alleged by appellants is justifiedbecause we find no such discrimination. Appellants' claim of unfair treatment ignores the plain fact that the statute as a whole imposes far fewer restrictions on individuals and unincorporated associations than it does on corporations and unions. Persons subject to the restrictions of § 441a (a) (1) (C) may make unlimited expenditures on political speech; corporations *201 and unions, however, may make only the limited contributions authorized by § 441b (b) (2). Furthermore, individuals and unincorporated associations may contribute to candidates, to candidates' committees, to national party committees, and to all other political committees while corporations and unions are absolutely barred from making any such contributions. In addition, multicandidate political committees are generally unrestricted in the manner and scope of their solicitations; the segregated funds that unions and corporations may establish pursuant to § 441b (b) (2) (C) are carefully limited in this regard. §§ 441b (b) (3), 441b (b) (4). The differing restrictions placed on individuals and unincorporated associations, on the one hand, and on unions and corporations, on the other, reflect a judgment by Congress that these entities have differing structures and purposes, and that they therefore may require different forms of regulation in order to protect the integrity of the electoral process. Appellants do not challenge any of the restrictions on the corporate and union political activity, yet these restrictions entirely undermine appellants' claim that because of § 441a (a) (1) (C), the Act discriminates against individuals and unincorporated associations in the exercise of their First Amendment rights. Cf. Buckley, 424 U. S., at 95-99.
Accordingly, we conclude that the $5,000 limitation on the amount that persons may contribute to multicandidate political committees violates neither the First nor the Fifth Amendment. The judgment of the Court of Appeals is therefore affirmed.
So ordered.
JUSTICE BLACKMUN, concurring in part and concurring in the judgment.
I join Parts I, II, and IV of JUSTICE MARSHALL'S opinion which, to that extent, becomes an opinion for the Court.
I write separately, however, to note my view of appellants' First Amendment claims. Part III of the opinion appears to *202 rest on the premise that the First Amendment test to be applied to contribution limitations is different from the test applicable to expenditure limitations. I do not agree with that proposition. Although I dissented in part in Buckley v. Valeo, 424 U. S. 1. 290 (1976), I am willing to accept as binding the Court's judgment in that case that the contribution limitations challenged there were constitutional. Id., at 23-38. But it does not follow that I must concur in the plurality conclusion today, ante, at 196, that political contributions are not entitled to full First Amendment protection. It is true that there is language in Buckley that might suggest that conclusion, see, e. g., 424 U. S., at 20-23, and it was to such language that I referred when I suggested in my dissent that the Court had failed to make a principled constitutional distinction between expenditure and contribution limitations. Id., at 290. At the same time, however, Buckley states that "contribution and expenditure limitations both implicate fundamental First Amendment interests," id., at 23, and that "governmental `action which may have the effect of curtailing the freedom to associate is subject to the closest scrutiny,'" id., at 25, quoting NAACP v. Alabama, 357 U. S. 449, 460-461 (1958). Thus, contribution limitations can be upheld only "if the State demonstrates a sufficiently important interest and employs means closely drawn to avoid unnecessary abridgment of associational freedoms." 424 U. S., at 25. See Note, The Unconstitutionality of Limitations on Contributions to Political Committees in the 1976 Federal Election Campaign Act Amendments, 86 Yale L. J. 953, 961-962 (1977).
Unlike the plurality, I would apply this "rigorous standard of review," 424 U. S., at 29, to the instant case, rather than relying on what I believe to be a mistaken view that contributions are "not the sort of political advocacy . . . entitled to full First Amendment protection." Ante, at 196. Appellees claim that 2 U. S. C. § 441a (a) (1) (C) is justified by the governmental *203 interest in preventing apparent or actual political corruption. That this interest is important cannot be doubted. It is a closer question, however, whether the statute is narrowly drawn to advance that interest. Nonetheless, I conclude that contributions to multicandidate political committees may be limited to $5,000 per year as a means of preventing evasion of the limitations on contributions to a candidate or his authorized campaign committee upheld in Buckley. The statute challenged here is thus analogous to the $25,000 limitation on total contributions in a given year that Buckley held to be constitutional. 424 U. S., at 38.
I stress, however, that this analysis suggests that a different result would follow if § 441a (a) (1) (C) were applied to contributions to a political committee established for the purpose of making independent expenditures, rather than contributions to candidates. By definition, a multicandidate political committee like CALPAC makes contributions to five or more candidates for federal office. § 441a (a) (4). Multicandidate political committees are therefore essentially conduits for contributions to candidates, and as such they pose a perceived threat of actual or potential corruption. In contrast, contributions to a committee that makes only independent expenditures pose no such threat. The Court repeatedly has recognized that "[e]ffective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association . . . ." NAACP v. Alabama, 357 U. S., at 460. By pooling their resources, adherents of an association amplify their own voices, see Buckley v. Valeo, 424 U. S., at 22; the association "is but the medium through which its individual members seek to make more effective the expression of their own views." NAACP v. Alabama, 357 U. S., at 459. Accordingly, I believe that contributions to political committees can be limited only if those contributions implicate the governmental interest in preventing actual or potential corruption, and if the limitation is no broader than necessary to achieve that interest. Because this narrow test *204 is satisfied here, I concur in the result reached in Part III of JUSTICE MARSHALL'S opinion.
JUSTICE STEWART, with whom THE CHIEF JUSTICE, JUSTICE POWELL, and JUSTICE REHNQUIST join, dissenting.
In § 313 of the Federal Election Campaign Act of 1971, 2 U. S. C. § 437g (1976 ed., Supp. III), Congress created an elaborate system for the enforcement of the Act. That system may be summarized as follows:
If the Commission becomes aware of a possible violation of the Act, it must notify the person responsible for the violation (who is referred to in the Act as the respondent). 2 U. S. C. § 437g (a) (2) (1976 ed., Supp. III). After investigating the possible violation, the Commission must notify the respondent of any recommendation made by the Commission's General Counsel that the Commission decide whether there is probable cause to believe that the respondent has violated, or is about to violate, the Act. If the Commission determines that there is probable cause, it must attempt, for at least 30 but not more than 90 days, "to correct or prevent such violation by informal methods of conference, conciliation, and persuasion . . . ." § 437g (a) (4) (A) (i). (If the probable-cause determination is made within 45 days before an election, the Commission need seek conciliation for only 15 days. § 437g (a) (4) (A) (ii).) If conciliation fails, the Commission may institute a civil action for relief in an appropriate United States district court. § 437g (a) (6) (A) (1976 ed. and Supp. III). Any judgment of that court may be appealed to the appropriate court of appeals, and the judgment of the court of appeals is subject to review by this Court upon certiorari or certification. § 437g (a) (9). Section 437g (a) (10) provides that "[a]ny action brought under this subsection shall be advanced on the docket of the court in which filed, and put ahead of all other actions (other than other actions brought under this subsection or under section 437h of this title)."
*205 A number of Members of Congress believed that the Act raised significant constitutional issues, and Congress concluded that such issues ought to be expeditiously resolved. Consequently, Congress authorized "such actions in the appropriate district court of the United States, including actions for declaratory judgment, as may be appropriate to construe the constitutionality of any provision of this Act." 2 U. S. C. § 437h (a) (1976 ed., Supp. III). To assure quick and authoritative resolution of these constitutional issues, Congress established two extraordinary procedures. First, "[t]he district court immediately shall certify all questions of constitutionality of this Act to the United States court of appeals for the circuit involved, which shall hear the matter sitting en banc." Ibid. Second, "any decision on a matter certified under subsection (a) of this section shall be reviewable by appeal directly to the Supreme Court of the United States." § 437h (b). These procedures are to be accomplished with special promptness: "It shall be the duty of the court of appeals and of the Supreme Court of the United States to advance on the docket and to expedite to the greatest possible extent the disposition of any matter certified under subsection (a) of this section." § 437h (c).
The Court today holds that a person who has received formal notification of an impending § 437g enforcement proceeding may nevertheless bring an action under § 437h raising precisely the same constitutional issues presented in the § 437g proceeding. This holding interferes, I think, with the proper enforcement of the Act and with the sound functioning of the federal courts in ways that Congress cannot have intended.
Although neither the language of the Act nor its legislative history directly addresses the issue resolved by the Court's holding, the structure of the Act itself expresses Congress' intent that § 437h is not to be available as a means of thwarting a § 437g enforcement proceeding. The Act provides for two separate kinds of proceedings with two separate purposes. *206 The first proceeding serves to prevent violations of the Act. The second makes possible prompt challenges to the constitutionality of the Act, more or less in the abstract.
Because the proceedings serve different purposes, Congress instituted separate sets of procedures tailored to the purposes of each proceeding. Thus Representative Haysthe chairman of the House Committee responsible for the billstated during debate: "The delicately balanced scheme of procedures and remedies set out in the act is intended to be the exclusive means for vindicating the rights and declaring the duties stated therein." 120 Cong. Rec. 35134 (1974). In particular, in § 437g Congress balanced in extensive detail the public's interest in an expeditious resolution of any § 437g question against the respondent's interest in fair procedures. Congress accordingly (1) specified the periods of time in which § 437g proceedings must be accomplished, (2) directed that § 437g cases need only be heard by ordinarily constituted panels in the courts of appeals, and (3) limited access to this Court to those cases certified to the Court and those cases which the Court chooses to review.
Under the Court's holding today, Congress' assessment of each of the cautiously limited rights contained in § 437g can easily be upset, to the detriment of the strong interest in a prompt resolution of a § 437g proceeding. First, Congress' requirement of a timely resolution of an enforcement proceeding can be disrupted by a respondent's decision to engraft a § 437h proceeding onto a § 437g action. If, in response to such a graft, the § 437g action is stayed pending the outcome of the § 437h proceeding, delay will obviously result. If the § 437g action is not stayed, delay may often be caused by the necessity of redoing work in light of the decision reached by the § 437h courts. Nor will the fact that an appeal has already been had on the abstract constitutional principle make up for some of that lost time, since an appeal on the question of whether the constitutional principle was correctly applied will still be available under § 437g.
*207 Second, by invoking § 437h, a § 437g respondent will be able to arrogate to himself the extraordinaryperhaps uniqueright to an immediate hearing by a court of appeals sitting en banc. (Under Rule 35 of the Federal Rules of Appellate Procedure, a case is ordinarily heard en banc only after a three-judge panel has heard it and after a majority of the circuit judges in active service have decided that consideration by the full court is necessary to assure the uniformity of the circuit's decisions or that the proceeding involves a question of exceptional importance.) Third, by invoking § 437h, the § 437g respondent can similarly arrogate to himself the unusual right of direct appeal to this Court.
Not only will Congress' careful balancing of interests thus be undone by today's holding, but what Representative Hays referred to as the Act's "comprehensive system of civil enforcement," 120 Cong. Rec. 35134 (1974), is likely to be impaired by the strain placed on the Federal Election Commission by the necessity of carrying on two lines of litigation where the Act envisions but one. I see no indication that by adopting § 437hwhich its author, Senator Buckley, said "merely provides for the expeditious review of the constitutional questions I have raised," 120 Cong. Rec. 10562 (1974) Congress intended either to expand the rights of § 437g respondents or to contract the Government's ability to stop violations of the Act promptly.[*]
*208 In addition, I think the Court errs in construing with such liberality the jurisdictional scope of an Act that places uncommonly heavy burdens on the federal court system. Litigants who can invoke both § 437g and § 437h can impose on the courts piecemeal adjudication, with all its dangers and disadvantages: Section 437h litigation will often occur without the firm basis in a specific controversy and without the fully developed record which should characterize all litigation and which will generally characterize § 437g proceedings. And § 437h litigation is all too likely to decide questions of constitutional law which might have been avoided by a decision on a narrower ground in a § 437g proceeding.
I cannot believe that Congress intended to require every federal court of appeals to hear en banc every constitutional issue arising in a § 437g proceeding. En banc hearings drain large amounts of judicial time, and since they require the summoning together in the larger federal appellate courts of some two dozen circuit judges, they are cumbersome as well. As the Court of Appeals said in the instant case, "if mandatory en banc hearings were multiplied, the effect on the calendars of this court as to such matters and as to all other business might be severe and disruptive." 641 F. 2d 619, 632. I would hold that, where a respondent has been formally notified of a § 437g enforcement proceeding, the respondent may not use the issues raised in that enforcement proceeding as a basis for an action under § 437h. I would also hold that the individual members of the respondent associations in the instant case fall within the same bar, given the identity of the interests of the associations and their *209 members. Consequently, I would hold that the District Court should not have certified this case to the Court of Appeals, and that the Court of Appeals was without jurisdiction to decide it.
Accordingly, I would dismiss this appeal for want of jurisdiction.
NOTES
[*] Bruce J. Ennis, Jr., filed a brief for the American Civil Liberties Union as amicus curiae urging reversal.
[1] Under the Act, a political committee is defined to include "any committee. . . which receives contributions aggregating in excess of $1,000 during a calendar year or which makes expenditures aggregating in excess of $1,000 during a calendar year." 2 U. S. C. § 431 (4) (1976 ed., Supp. III). A "multicandidate political committee" is defined as a "political committee which has been registered under section 433 of this title for a period of not less than 6 months, which has received contributions from more than 50 persons, and . . . has made contributions to 5 or more candidates for Federal Office." 2 U. S. C. § 441a (a) (4).
[2] Section 441a (a) (1) (C) provides in pertinent part that "[n]o person shall make contributions . . . to any other political committee in any calendar year which, in the aggregate, exceed $5,000." The Act defines the term "person" to include "an individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons." 2 U. S. C. § 431 (11) (1976 ed., Supp. III). Corporations and labor organizations, however, are prohibited by 2 U. S. C. § 441b (a) from making any contributions to political committees other than the special segregated funds authorized by § 441b (b) (2) (C), and hence these entities are not governed by § 441a (a) (1) (C).
[3] This section provides that "[n]o . . . political committee shall knowingly accept any contribution or make any expenditure in violation of the provisions of this section."
[4] See infra, at 188-189.
[5] In the meantime, the District Court has entered judgment in favor of the Commission in its enforcement action against CMA and CALPAC. Federal Election Comm'n v. California Medical Assn., 502 F. Supp. 196 (1980).
[6] Initially, we reject the Commission's suggestion that appellants may lack standing to raise the claims involved here. The grant of standing under § 437h, which this Court has held to be limited only by the constraints of Art. III of the Constitution, Buckley v. Valeo, 424 U. S. 1, 11 (1976) (per curiam), authorizes actions to be brought by the Commission, the national committee of a political party, and individuals eligible to vote in federal elections. The individual appellants in this case fall within this last category, and, as members and officers of CMA and CALPAC, have a sufficiently concrete stake in this controversy to establish standing to raise the constitutional claims at issue here. Accordingly, we do not address the question whether parties not enumerated in § 437h's grant of standing, such as CMA and CALPAC, may nonetheless raise constitutional claims pursuant to that section. Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U. S. 252, 264, n. 9 (1977). Compare Martin Tractor Co. v. Federal Election Comm'n, 460 F. Supp. 1017 (DC 1978), aff'd, 200 U. S. App. D. C. 322, 627 F. 2d 375, cert. denied sub nom. National Chamber Alliance for Politics v. Federal Election Comm'n, 449 U. S. 954 (1980), with Bread Political Action Committee v. Federal Election Comm'n, 591 F. 2d 29 (CA7 1979), appeal pending, No. 80-1481.
[7] Senator Buckley introduced the amendment incorporating § 437h into the Act, and noted:
"It merely provides for expeditious review of the constitutional questions I have raised. I am sure we will all agree that if, in fact, there is a serious question as to the constitutionality of this legislation, it is in the interest of everyone to have the question determined by the Supreme Court at the earliest possible time." 120 Cong. Rec. 10562 (1974).
The sole explanation of this provision in the House was by Representative Frenzel, who stated:
"I believe within this conference report there are at least 100 items questionable from a constitutional standpoint. . . .
"I do call . . . attention . . . to the fact that any individual under this bill has a direct method to raise these questions and to have those considered as quickly as possible by the Supreme Court." Id., at 35140.
[8] Although the Commission now contends that § 437h actions may not be maintained simultaneously with § 437g proceedings raising the same constitutional claims, it has in the past argued that the two review provisions are independent of each other and that § 437h actions could be brought by defendants in a § 437g proceeding to adjudicate any constitutional claims arising during the course of such proceedings. Federal Election Comm'n v. Lance, 635 F. 2d 1132, 1137, n. 3 (CA5 1981); Federal Election Comm'n v. Central Long Island Tax Reform Immediately Committee, 616 F. 2d 45, 48-49 (CA2 1980).
[9] Even if the Commission's proposed construction of the statute were accepted, it remains unclear whether we would be required to dismiss this appeal. The only defendants in the Commission's § 437g enforcement proceeding are CMA and CALPAC. However, the plaintiffs in the § 437h action include, along with CALPAC and CMA, two individual doctors. These individuals have standing to bring this action, see n. 6, supra, and the Commission apparently does not contend that such parties, who are not involved in a pending or ongoing enforcement proceeding, are barred from invoking the § 437h procedure.
[10] The legislative history of the 1974 Amendments is silent on the interaction of the two provisions. However, the brief discussion in Congress of § 437h indicates that it was intended to cover all serious constitutional challenges to the Act. See n. 7, supra.
[11] The Commission suggests that the language of § 437h, authorizing eligible plaintiffs to "institute such actions . . . , including actions for declaratory judgments, as may be appropriate to construe the constitutionality of any provision of the Act," confers on the district court discretion to dismiss as "inappropriate" § 437h suits raising constitutional claims that are also presented in § 437g proceedings. We do not agree that the word "appropriate" embodies the broad substantive limitation proposed by the Commission. As the reference to declaratory judgment actions in the preceding clause makes clear, the concept of an "appropriate" action refers only to the form in which the litigation is cast. Thus, for example, a suit for damages would not be an "appropriate" action for testing the facial validity of the Act. In any event, whatever ambiguity surrounds the meaning of the word "appropriate" in § 437h is dispelled by the section's command that the district court "immediately. . . certify all questions of constitutionality" to the court of appeals. (Emphasis added.)
[12] The judgments of the courts of appeals in § 437g cases are reviewable in this Court only upon certification or writ of certiorari. § 437g (a) (9). In contrast, the judgments of the courts of appeals in § 437h proceedings may be directly appealed to this Court. § 437h (b).
[13] In reaching a contrary conclusion, the dissent today engages in a most unusual method of statutory interpretation. Although § 437h expressly requires a district court to "immediately . . . certify all questions of the constitutionality" of the Act to the court of appeals and although the legislative history of that provision clearly indicates Congress' intent to have constitutional challenges to the Act resolved through the § 437h procedure, the dissent blithely concludes that "neither the language of the Act nor its legislative history directly addresses the issue" before the Court today. Post, at 205. Having so neatly swept aside the relevant statutory language and history, the dissent proceeds to rewrite the statute in a manner it perceives as necessary to insure the "proper enforcement of the Act and . . . the sound functioning of the federal courts . . . ." Ibid. Under this reconstruction, § 437h may not be invoked by a party who has been "formally notified of a § 437g proceeding"; indeed, that provision may not even be used by those with an "identity of . . . interests" with a party who has been so notified. Post, at 208. While the concepts of "formal notification" and "identity of interests" which the dissent seeks to engraft on § 437h might well benefit the Commission in its effort to enforce the Act and might relieve the courts of appeals of the burden of some § 437h actions, the task before us is not to improve the statute but to construe it. We have already acknowledged that the statute, as we interpret it today, is subject to the criticisms raised by the dissent. Supra, at 190. The remedy, however, lies with Congress.
Moreover, in its effort to justify rewriting § 437h, the dissent exaggerates the burden § 437h actions have placed on the federal courts. To date, there have been only a handful of cases certified to the Courts of Appeals under this procedure. Anderson v. Federal Election Comm'n, 634 F. 2d 3 (CA1 1980); Federal Election Comm'n v. Central Long Island Tax Reform Immediately Committee, 616 F. 2d 45 (CA2 1980); Republican National Committee v. Federal Election Comm'n, 616 F. 2d 1 (CA2 1979), summarily aff'd, 445 U. S. 955 (1980); Federal Election Comm'n v. Lance, 635 F. 2d 1132 (CA5 1981); Bread Political Action Committee v. Federal Election Comm'n, 591 F. 2d 29 (CA7 1979), appeal pending, No. 80-1481; Buckley v. Valeo, 171 U. S. App. D. C. 172, 519 F. 2d 821 (1975), aff'd in part and rev'd in part, 424 U. S. 1 (1976); Clark v. Valeo, 182 U. S. App. D. C. 21, 559 F. 2d 642 (1972), summarily aff'd sub nom. Clark v. Kimmitt, 431 U. S. 950 (1977); Martin Tractor Co. v. Federal Election Comm'n, 200 U. S. App. D. C. 322, 627 F. 2d 375, cert. denied sub nom. National Chamber Alliance for Politics v. Federal Election Comm'n, 449 U. S. 954 (1980). Moreover, the Federal Election Campaign Act is not an unlimited fountain of constitutional questions, and it is thus reasonable to assume that resort to § 437h will decrease in the future. Under these circumstances, we do not believe that § 437h poses any significant threat to the effective functioning of the federal courts.
[14] While we thus decline to adopt the Commission's view, we believe that its concerns about the potential abuse of § 437h are in large part answered by the other restrictions on the use of that section. The unusual procedures embodied in this section are, at the very least, circumscribed by the constitutional limitations on the jurisdiction of the federal courts. Buckley v. Valeo, 424 U. S., at 11. A party seeking to invoke § 437h must have standing to raise the constitutional claim. Ibid. Furthermore, § 437h cannot properly be used to compel federal courts to decide constitutional challenges in cases where the resolution of unsettled questions of statutory interpretation may remove the need for constitutional adjudication. Federal Election Comm'n v. Central Long Island Tax Reform Immediately Committee, supra, at 51-53. See Nixon v. Administrator of General Services, 433 U. S. 425, 438 (1977); Thorpe v. Housing Authority, 393 U. S. 268, 283-284 (1969); Crowell v. Benson, 285 U. S. 22, 62 (1932). Moreover, we do not construe § 437h to require certification of constitutional claims that are frivolous, see, e. g., Gifford v. Congress, 452 F. Supp. 802 (ED Cal. 1978); cf. California Water Service Co. v. City of Redding, 304 U. S. 252, 254-255 (1938) (per curiam), or that involve purely hypothetical applications of the statute. See, e. g., Clark v. Valeo, supra; Martin Tractor Co. v. Federal Election Comm'n, supra; 627 F. 2d at 384-386, 388-390. Finally, as a practical matter, immediate adjudication of constitutional claims through a § 437h proceeding would be improper in cases where the resolution of such questions required a fully developed factual record. See, e. g., Anderson v. Federal Election Comm'n, supra; Martin Tractor Co. v. Federal Election Comm'n, supra, at 325, 627 F. 2d, at 378; Mott v. Federal Election Comm'n, 494 F. Supp. 131, 135 (DC 1980). These restrictions, in our view, enable a district court to prevent the abuses of § 437h envisioned by the Commission.
None of these considerations, however, pertain to this case. At least the individual appellants have standing to bring this challenge. See n. 6, supra. Additionally, appellants here expressly challenge the statute on its face, and there is no suggestion that the statute is susceptible to an interpretation that would remove the need for resolving the constitutional questions raised by appellants. Finally, as evidenced by the divided en banc court below, the issues here are neither insubstantial nor settled. We therefore conclude that this case is properly before us pursuant to § 437h.
[15] Specifically, this Court upheld the $1,000 limit on the amount a person could contribute to a candidate or his authorized political committees, 2 U. S. C. § 441a (a) (1) (A), the $5,000 limit on the contributions by a multicandidate political committee to a candidate or his authorized political committee, 2 U. S. C. § 441a (a) (2) (A), and the overall $25,000 annual ceiling on individual contributions, 2 U. S. C. § 441a (a) (3).
[16] In Buckley, this Court concluded that the act of contribution involved some limited element of protected speech.
"A contribution serves as a general expression of support for a candidate and his views, but does not communicate the underlying basis for the support. The quantity of communication by the contributor does not increase perceptibly with the size of his contribution, since the expression rests solely on the undifferentiated, symbolic act of contributing. At most, the size of the contribution provides a very rough index of the intensity of the contributor's support for the candidate. A limitation on the amount of money a person may give to a candidate or campaign organization thus involves little direct restraint on his political communication, for it permits the symbolic expression of support evidenced by a contribution but does not in any way infringe the contributor's freedom to discuss candidates and issues." 424 U. S., at 21 (footnote omitted).
Under this analysis, CMA's contributions to CALPAC symbolize CMA's general approval of CALPAC's role in the political process. However, this attenuated form of speech does not resemble the direct political advocacy to which this Court in Buckley accorded substantial constitutional protection.
[17] Amicus American Civil Liberties Union suggests that § 441a (a) (1) (C) would violate the First Amendment if construed to limit the amount individuals could jointly expend to express their political views. We need not consider this hypothetical application of the Act. The case before us involves the constitutionality of § 441a (a) (1) (C) as it applies to contributions to multicandidate political committees. Under the statute, these committees are distinct legal entities that annually receive contributions from over 50 persons and make contributions to 5 or more candidates for federal office. 2 U. S. C. § 441a (a) (4). Contributions to such committees are therefore distinguishable from expenditures made jointly by groups of individuals in order to express common political views.
[18] The Conference Report on the provision in the 1976 amendments to the Act that became § 441a (a) (1) (C) specifically notes:
"The conferees' decision to impose more precisely defined limitations on the amount an individual may contribute to a political committee, other than a candidate's committees, and to impose new limits on the amount a person or multicandidate committee may contribute to a political committee, other than candidates' committees, is predicated on the following considerations: first, these limits restrict the opportunity to circumvent the $1,000 and $5,000 limits on contributions to a candidate; second, these limits serve to assure that candidates' reports reveal the root source of the contributions the candidate has received; and third, these limitations minimize the adverse impact on the statutory scheme caused by political committees that appear to be separate entities pursuing their own ends, but are actually a means for advancing a candidate's campaign." H. R. Conf. Rep. No. 94-1057, pp. 57-58 (1976).
[19] Appellants suggest that their First Amendment concerns would be satisfied if this Court declared § 441a (a) (1) (C) unconstitutional to the extent that it restricts CMA's right to contribute administrative support to CALPAC. The Act defines "contribution" broadly to include "any gift, subscription, loan, advance, or deposit of money or anything of value . . . or . . . the payment by any person of compensation for the personal services of another person which are rendered to a political committee without charge for any purpose." 2 U. S. C. §§ 431 (8) (A) (i), (ii) (1976 ed., Supp. III).
Thus, contributions for administrative support clearly fall within the sorts of donations limited by § 441a (a) (1) (C). Appellants contend, however, that because these contributions are earmarked for administrative support, they lack any potential for corrupting the political process. We disagree. If unlimited contributions for administrative support are permissible, individuals and groups like CMA could completely dominate the operations and contribution policies of independent political committees such as CALPAC. Moreover, if an individual or association was permitted to fund the entire operation of a political committee, all moneys solicited by that committee could be converted into contributions, the use of which might well be dictated by the committee's main supporter. In this manner, political committees would be able to influence the electoral process to an extent disproportionate to their public support and far greater than the individual or group that finances the committee's operations would be able to do acting alone. In so doing, they could corrupt the political process in a manner that Congress, through its contribution restrictions, has sought to prohibit. We therefore conclude that § 441a (a) (1) (C) applies equally to all forms of contributions specified in § 431 (8) (A), and assess appellants' constitutional claims from that perspective.
[20] We also reject appellants' contention that even if § 441a (a) (1) (C) is a valid means by which Congress could seek to prevent circumvention of the other contribution limitations embodied in the Act, it is superfluous and therefore constitutionally defective because other antifraud provisions in the Act adequately serve this end. See, e. g., 2 U. S. C. §§ 441a (a) (7), 441a (a) (8). Because we conclude that the challenged limitation does not restrict the ability of individuals to engage in protected political advocacy, Congress was not required to select the least restrictive means of protecting the integrity of its legislative scheme. Instead, Congress could reasonably have concluded § 441a (a) (1) (C) was a useful supplement to the other antifraud provisions of the Act. Cf. Buckley v. Valeo, 424 U. S., at 27-28 (rejecting contention that effective bribery and disclosure statutes eliminated need for contribution limitations).
[*] The Court's opinion suggests that any approach other than its own would "remove a whole category of constitutional challenges from the purview of § 437h, thereby significantly limiting the usefulness of that provision." Ante, at 191. However, that "whole category" consists only of those few challenges raised by § 437g respondents who did not raise the challenge before the § 437g proceeding began. Any such challenge, of course, will not go unresolved, but will be promptly handled according to the method Congress provided under § 437g for Federal Election Campaign Act issues raised after proceedings have begun.
The Court's opinion also suggests that the fact that § 437g proceedings are to be put ahead of all other actions except "other actions brought under this subsection or under section 437h" somehow supports its holding. There is no evidence that this provision of the statute contemplates more than that a court might have a wholly separate § 437h case on its docket at the time that a § 437g action is filed, and there is no evidence that Congress intended "other actions brought . . . under section 437h" to include a § 437h action which is in practical effect the same case as the § 437g action. | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/1584269/ | 717 F. Supp. 1053 (1989)
Larry K. NICK, Damon Andrews & Co., Ltd., Energy Assets Associates 85-1, Energy Assets Associates 85-2, Energy Assets Associates 86-2, Westville Associates, L.P., Randi Gardens Associates, 3920 Market Street Associates, York Village Associates, Eagle Run Associates, Columbia Gardens Limited Partnership, Bowling Arms Associates, MCS Associates Limited Partnership, York Associates, Pennwold Associates, Ajax Energy Partners, Ajax Petroleum Terminals, Inc., Ajax Energy, Inc., Best Petroleum, Inc., Ajax Hudson Petroleum, Inc., Ajax Hackensack Petroleum, Ajax Albany Terminal, Inc., Ajax Island Petroleum, Inc., Ajax Hudson Terminal, Inc., and Ajax Energy Trucking Co., Ltd., Plaintiffs,
v.
Robert ABRAMS, Attorney General of the State of New York, John Wappett, Ernest J. Peck and other Employees in the Attorney General's Office Whose Names are not known to Plaintiff at this time, Defendants.
No. 89 Civ. 4844 (RWS).
United States District Court, S.D. New York.
July 26, 1989.
Snow, Becker, Krauss, P.C., New York City, for plaintiffs; Ronald J. Katter, Leslie Trager, of counsel.
Robert Abrams, Atty. Gen. State of N.Y., New York City, for defendants; Edward D. Saslaw, John P.M. Wappett, Asst. Attys. Gen., of counsel.
OPINION
SWEET, District Judge.
Plaintiffs Larry K. Nick ("Nick") and various partnerships and corporations for which Nick serves as general partner or president (collectively, the "Plaintiffs") have applied for a preliminary injunction directing defendant Robert Abrams, the Attorney General of the State of New York ("Abrams"), and defendants John Wappett ("Wappett"), Ernest J. Peck ("Peck"), and other employees of the Attorney General's office (collectively, the "Defendants") to return materials the Defendants seized pursuant to a search warrant during a criminal investigation. For the reasons set forth below, the application for a preliminary injunction is denied at this time.
*1054 The Parties
Nick, a New York resident, is a certified public accountant who does business at 880 Third Avenue, Fourteenth Floor, New York, New York. Nick serves as general partner or president of numerous partnerships and corporations named as plaintiffs in this action. Those entities also maintain offices at 880 Third Avenue, Fourteenth Floor, New York, New York.
Abrams is the Attorney General for New York State. Wappett is an Assistant Attorney General assigned to the Criminal Prosecutions Bureau, and Peck is an employee in the Attorney General's office. The complaint also identifies as defendants various unnamed employees of the Attorney General's office.
The Facts
On September 1, 1988, New York State's Commissioner of Taxation and Finance (the "Commissioner") asked the Attorney General's office to investigate alleged criminal activity concerning the collection and payment of New York State taxes. As part of this investigation, Wappett drafted several search warrant applications that he submitted to the Honorable Lawrence E. Kahn, Justice of the New York State Supreme Court, County of Albany ("Justice Kahn"), on June 19, 1989.
On June 21, 1989, Justice Kahn signed eight search warrants, including one for 225 West Thirty-Fourth Street, Suite 1107, New York, New York (the "Thirty-Fourth Street Search Warrant"). On June 23, 1989, Wappett learned that the Thirty-Fourth Street Search Warrant's subjects recently had moved to 880 Third Avenue, Third Floor, New York, New York. On June 26, 1989, Wappett applied in writing for Justice Kahn to amend this warrant, which he did (the "Latsinik Search Warrant").
The Latsinik Search Warrant reads in pertinent part:
YOU ARE HEREBY DIRECTED TO SEARCH: The premises known as 880 Third Avenue, Third Floor, City of New York, County of New York, State of New York, the offices of Alexander Latsinik, Alex L. Fuel Co., Inc., Hudson Petroleum, Inc., and any other business entity involving Alexander Latsinik, including any rooms, closets, file cabinets, safes, desks or other areas of said offices.
Latsinik was a founding limited partner in Ajax Energy Partners, which Nick served as general partner.
On June 27, 1989, several investigators for the Attorney General's office, including Peck, arrived at 880 Third Avenue to execute the Latsinik Search Warrant (the "June 27 Search"). Upon learning that the businesses at issue had moved from the third floor to the fourteenth floor, Wappett telephoned Justice Kahn to amend the Latsinik Search Warrant. Justice Kahn approved the amendment at 7:05 a.m. on June 27, 1989.
While the investigators were on the fourteenth floor, Nick identified four cartons of materials that Latsinik was storing there, and the investigators seized those documents. Although the Latsinik Search Warrant did not cover Nick, the investigators allegedly searched Nick's files, making notes and photocopying various documents. When they left, the investigators took the Latsinik documents, their notes, and their photocopies.
On June 28, 1989, Wappett obtained from Justice Kahn another search warrant for 880 Third Avenue, Fourteenth Floor, New York, New York (the "Nick Search Warrant"). That warrant provided in pertinent part:
YOU ARE HEREBY DIRECTED TO SEARCH: The premises known as 880 Third Avenue, Fourteenth Floor, City of New York, County of New York, State of New York, the offices of Philip Silverglate, Larry K. Nick, Xavier Monaco, Ajax Energy, Inc., and any other business entity involving the above-named individuals and any subsidiary of the above-named businesses including, but not limited to: Ajax Heating Oil, Inc., Best Petroleum, Inc., Ajax Hudson Petroleum, Inc., Ajax Hackensack Petroleum, Petro-Chemical Trading, Ltd., Ajax Albany Terminal, Ajax Island Petroleum, Ajax Hudson Terminal, Inc., and Ajax Energy *1055 Trucking Co., Ltd., including any rooms, closets, file cabinets, safes, desks or other areas of said offices.
According to Wappett, he based the application for the Nick Search Warrant upon a cursory review of documents obtained from the locations subject to the seven other search warrants obtained with the Thirty-Fourth Street Search Warrant and upon information Nick's controller, Frank Caputi ("Caputi"), allegedly volunteered to Peck during the June 27 Search. Nick contends that the Attorney General's office obtained the additional names on the Nick Search Warrant from information that was "undoubtedly learned during the[] illegal search two days earlier [the June 27 Search]." Nick Aff. ¶ 4.
On June 29, 1989, investigators from the Attorney General's office executed the Nick Search Warrant (the "June 29 Search"), seizing numerous documents, as well as computers, software, and floppy and hard disks.
Nick contends that the June 29 Search was more extensive than the Nick Search Warrant permitted. For example, Nick alleges that the investigators seized a file concerning a refinancing of property owned by Westville Associates ("Westville"), although that file contained no reference to any of the entities listed in the Nick Search Warrant. According to Nick, he cannot complete the Westville refinancing until the Attorney General's office returns this file.
Nick also asserts that the Attorney General's office seized the files of other entities not listed in the Nick Search Warrant, including Energy Assets Associates, 1515 Hillside Associates, Randi Gardens Associates, Damon Andrews & Co. Ltd., 3920 Market Street Associates, York Village Associates, Eagle Run Associates, Columbia Gardens Limited Partnership, Bowling Arms Associates, M.C.S. Associates Limited Partnership, York Associates, and Pennwold Associates. Nick is the general partner for each of these entities.
On July 13, 1989, Wappett submitted the returns and inventories regarding the Nick Search Warrant to Justice Kahn, who sealed them under New York law.
According to Wappett, the Attorney General's office is in the process of reviewing the seized materials so it can release any documents not pertinent to its investigation.
Nick and several other of the Plaintiffs are parties in two unrelated actions now pending in federal court, Fisher v. Horizon Equities, 89 Civ. 1546 (S.D.N.Y.) (KMW), and Richter v. Nick, 89 Civ. 9089 (S.D. N.Y.) (MBC). According to Nick, he requires documents currently held by the Attorney General's office to respond to discovery requests in Fisher and to prepare an answer in Richter.
Prior Proceedings
On July 14, 1989, the Plaintiffs sued under 42 U.S.C. § 1983. The complaint alleges that the Defendants violated the Fourth Amendment because they seized materials beyond the Nick Search Warrant's scope and because the Nick Search Warrant was "overly broad, unsubstantiated and obtained on the basis of a prior illegal search and seizure." Complaint ¶ 27.
Also on July 14, 1989, the Plaintiffs moved by Order to Show Cause for a preliminary injunction directing the Defendants to return the materials seized pursuant to the Nick Search Warrant.
Standard for a Preliminary Injunction
To obtain a preliminary injunction, an applicant must make a "showing of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of the hardships tipping decidedly toward the party requesting the preliminary relief." Consolidated Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 256 (2d Cir.1989) (quoting Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979)), petition for cert. filed, June 19, 1989.
Younger Abstention
In Younger v. Harris, the Supreme Court ruled that a federal court should abstain from interfering with a pending *1056 state criminal prosecution, absent exceptional circumstances creating a threat of irreparable injury "`both great and immediate.'" 401 U.S. 37, 43-44, 91 S. Ct. 746, 750, 27 L. Ed. 2d 669 (1971). The Supreme Court founded this policy of restraint upon principles of equity, comity, and federalism. See Kugler v. Helfant, 421 U.S. 117, 123, 95 S. Ct. 1524, 1530, 44 L. Ed. 2d 15 (1975).
According to the Second Circuit, courts applying Younger abstention "`must determine (1) whether there is an ongoing state proceeding; (2) whether an important state interest is involved; and (3) whether the federal plaintiff has an adequate opportunity for judicial review of his constitutional claims during or after the proceeding.'" University Club v. City of New York, 842 F.2d 37, 40 (2d Cir.1988) (quoting Christ the King Regional High School v. Culvert, 815 F.2d 219, 224 (2d Cir.), cert. denied, 484 U.S. 830, 108 S. Ct. 102, 98 L. Ed. 2d 63 (1987)). Applying each of these elements, abstention is appropriate here, and a preliminary injunction will not issue.
1. Ongoing State Proceeding
This case requires an inquiry into whether a "pending state proceeding" exists when a state attorney general executes a search warrant authorized by a judge during a criminal investigation prior to arrest or indictment. For the reasons set forth below, these circumstances constitute a pending state proceeding for Younger abstention purposes.
First, the challenged search warrant meets New York's definition of a "criminal proceeding." New York law defines a "criminal proceeding" as "any proceeding which (a) constitutes a part of a criminal action or (b) occurs in a criminal court and is related to a prospective, pending or completed criminal action, ... or involves a criminal investigation." N.Y.Crim. Proc.Law § 1.20(18) (McKinney 1981). A criminal action "commences with the filing of an accusatory instrument against a defendant in a criminal court...." Id. at § 1.20(16). Because no indictment has been issued, section 1.20(18)(a) does not apply. However, the search warrant challenged here falls within section 1.20(18)(b). It "occur[red] in a criminal court" Justice Kahn of the New State Supreme Court issued the search warrant and it "involve[d] a criminal investigation."
Second, other courts have invoked Younger abstention to reject challenges to prosecutors' actions during criminal investigations. For example, in Kaylor v. Fields, the Eighth Circuit held that a federal court should decline to hear a constitutional challenge to subpoenas issued pursuant to a prosecutor's subpoena power. 661 F.2d 1177, 1182 (8th Cir.1981). Similarly, courts have abstained from hearing actions disputing the validity of grand jury subpoenas. See, e.g., Law Firm of Daniel P. Foster, P.C. v. Dearie, 613 F. Supp. 278, 280 (E.D. N.Y.1985); Notey v. Hynes, 418 F. Supp. 1320, 1326 (E.D.N.Y.1976).
Finally, common sense dictates that a criminal investigation is an integral part of a criminal proceeding. Without subpoenas, grand jury investigations, and searches pursuant to search warrants, prosecutors seldom could amass the evidence necessary to commence criminal actions. Permitting the targets of state criminal investigations to challenge subpoenas or search warrants in federal court prior to their indictment or arrest, therefore, would do as much damage to principles of equity, comity, and federalism as allowing federal courts to suppress the fruits of subpoenas or search warrants in ongoing state criminal trials. Cf. Barr v. Abrams, 641 F. Supp. 547, 554 (S.D.N.Y.1986) (Leval, J.) ("Federal courts cannot permit the civil rights action to be used as a combative defense against a state criminal prosecutor's conduct of an investigation."), aff'd, 810 F.2d 358 (1987).
2. Important State Interest
New York's interest in supervising search warrants issued during criminal investigations constitutes an important state interest for Younger abstention purposes. The Supreme Court repeatedly has held that federal courts should abstain from hearing challenges to searches and seizures related to pending state criminal proceedings. See, e.g., Kugler v. Helfant, 421 U.S. *1057 117, 130, 95 S. Ct. 1524, 1533, 44 L. Ed. 2d 15 (1975) ("at least in the absence of `extraordinary circumstances' federal courts must refuse to intervene in state criminal proceedings to suppress the use of evidence claimed to have been obtained through unlawful means"); Stefanelli v. Minard, 342 U.S. 117, 120, 72 S. Ct. 118, 120, 96 L. Ed. 138 (1951) ("federal courts should refuse to intervene in State criminal proceedings to suppress the use of evidence even when claimed to have been secured by unlawful search and seizure"); Perez v. Ledesma, 401 U.S. 82, 84-85, 91 S. Ct. 674, 676-77, 27 L. Ed. 2d 701 (1971) ("the propriety of arrests and the admissibility of evidence in state criminal prosecutions are ordinarily matters to be resolved by state tribunals").
3. Opportunity for Judicial Review
The Plaintiffs have an adequate opportunity to challenge the Nick Search Warrant in state proceedings. As soon as an indictment issues, the Plaintiffs can challenge the Nick Search Warrant's validity. See N.Y.Crim.Proc.Law §§ 710.10(1), 710.20(1) (McKinney 1981).
The fact that the investigation may continue for some period before an indictment issues does not deprive the Plaintiffs of an opportunity for judicial review. As the Supreme Court has noted, "the cost, anxiety, and inconvenience of having to defend against a single criminal prosecution alone do not constitute `irreparable injury' in the `special legal sense of that term'" Kugler, 421 U.S. at 124, 95 S.Ct. at 1530 (quoting Younger 401 U.S. at 46, 91 S.Ct. at 751). If the Plaintiffs believe the Attorney General's office's pre-indictment investigation is unduly prolonged, they remain free to challenge the prosecutors' conduct in an Article 78 proceeding. The Second Circuit has recognized that an Article 78 proceeding offers parties "a due process hearing at a meaningful time and in a meaningful manner." Campo v. New York City Employees' Retirement Sys., 843 F.2d 96 (2d Cir.), cert. denied, ___ U.S. ___, 109 S. Ct. 220, 102 L. Ed. 2d 211 (1988).
Moreover, Wappett stated in his affidavit that the Attorney General's office currently is reviewing the seized materials to identify and release items not pertinent to the investigation. In light of these assurances, it is unnecessary for a federal court to intervene in the ongoing state criminal proceeding. See Ex parte Decious, 622 F. Supp. 40 (E.D.N.Y.), appeal dismissed, 779 F.2d 35 (1985).
Conclusion
Because the Plaintiffs have failed to meet their burden of establishing irreparable harm in light of Younger and University Club, their application for a preliminary injunction is denied.
It is so ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1600296/ | 120 F. Supp. 192 (1953)
SMITH
v.
ACADIA OVERSEAS FREIGHTERS, Limited.
THE VICTORIA COUNTY.
No. 103 of 1950.
United States District Court E. D. Pennsylvania.
April 15, 1953.
Stark & Goldstein, Philadelphia, Pa., for plaintiff.
Rawle & Henderson, Philadelphia, Pa., for defendant.
WELSH, District Judge.
This is a motion of libellant to set aside respondent's notice of the taking of depositions of Thomas Winters, Anthony Sharkey and Joseph Danby.
Libellant's contention is that respondents are barred from taking the depositions of said persons because respondents in their answers to interrogatories propounded by libellant failed to disclose the identity of said persons. Respondents' answer to the contention is that at the time they filed answers to interrogatories they had no information concerning said persons.
It would appear that respondents' answer to libellant's contention disposes of the matter. We feel however that the matter is governed by an order of this Court entered on April 20, 1953 in Wolf v. Dickinson, 15 F.R.D. 407, amending an opinion and order previously entered in said case. That order provides that where an interrogating party specifies the interrogatories shall be deemed continuing so as to require answers thereto up to the time of trial there is a *193 duty on the answering party, after it files its original answers to interrogatories, to furnish up to the date of trial any information it obtains with regard to the subject matter of the interrogatories.
True in the present case it was not specified that the interrogatories propounded to the respondents were to be deemed continuing. Nevertheless, we hold that they are, on the strength of the views expressed by us in Wolf v. Dickinson, supra. Those views expressed again are that the requirement of a party to furnish answers to interrogatories up to the date of trial is a means of accomplishing one of the primary objects of the Rules, that of full disclosure of facts relevant to the issues or subject matter and not privileged.
Accordingly, libellant's motion is granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1462043/ | 575 F. Supp. 1299 (1982)
Charles HOWARD, Plaintiff,
v.
Edward KOCH, et al., Defendants.
No. CV-81-1466.
United States District Court, E.D. New York.
January 11, 1982.
*1300 *1301 Charles Howard, pro se.
Allen G. Schwartz, Asst. Corp. Counsel, New York City, for defendants.
MEMORANDUM OF DECISION AND ORDER
COSTANTINO, District Judge.
This is a pro se action filed by the plaintiff Charles Howard ("Howard") seeking various forms of relief, including among other things, release from custody and monetary damages. The defendants have made motions to dismiss under Fed.R. Civ.P. 12(b)(1) & (6). For reasons set forth below, the motions are granted in part and denied in part. But, the complaint in any event is dismissed in all respects.
BACKGROUND
The defendants in this action include the Mayor of the City of New York, the District Attorneys of Kings and Queens counties, four Assistant District Attorneys in Kings County, and seven New York City police detectives and sergeants. In the complaint they are accused under 42 U.S.C. § 1983 of conspiring to deny the plaintiff, Charles Howard, of rights guaranteed to him by the United States Constitutionnamely, the Fourth Amendment prohibition against illegal search and seizure. In a subsequent affidavit, the plaintiff Howard has added both due process and equal protection claims.
Plaintiff's claims relate to a sequence of events starting in July of 1979 and including Mr. Howard's arrest, Grand Jury indictments, trial and incarceration. The complaint describes three criminal charges made against the plaintiff concerning the hijackings of gasoline and liquor trucks. The plaintiff was first arrested at his home in Brooklyn on July 19, 1979, and subsequently released. He was again arrested on January 22, 1980, indicted by the Kings County Grand Jury on April 18, 1980 for a truck hijacking which took place on December 21, 1979, tried on this charge, and convicted. He was thereafter indicted by a Queens County Grand Jury on September 22, 1980, for a truck hijacking which took place on December 17, 1979. Howard is currently incarcerated and awaiting sentencing in Kings County and trial in Queens County.
The plaintiff is alleging that in the course of these arrests and their aftermath, he was systematically denied of his constitutionally-protected rights. The Mayor and two District Attorneys are not specifically charged with any wrongdoing, but presumably are named in the suit under the theory of respondeat superior. One Assistant District Attorney, Larry Hartstein, is named in the complaint although no specific allegations are made against him. The remaining three Assistant District Attorneys and the various police officers all had some direct involvement in the handling of the plaintiff's case.
STANDING
The allegations of the plaintiff Howard in regard to police action toward his girlfriend and/or her children are easily dismissed. The issue is one of standing, as it goes to justiciability. Judicial power, as defined in Article III of the United States Constitution, extends only to the actual parties in controversy. Therefore, standing is a threshold which must be met before the court can proceed to judge the merits of the case. Warth v. Seldin, 422 U.S. 490, 498-9, 95 S. Ct. 2197, 2204-05, 45 L. Ed. 2d 343 (1975).
This court is therefore without authority to decide the merits of the allegations concerning police conduct towards Mr. Howard's girlfriend and/or her children. There must be a direct, personal relationship between the party seeking relief, and the parties to the action for which that relief is sought. Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 703, 7 L.Ed.2d *1302 663 (1962). It is possible for a plaintiff to allege a course of conduct which was harmful to a class of possible plaintiffs, of which he is a member. U.S. v. SCRAP, 412 U.S. 669, 687-8, 93 S. Ct. 2405, 2415-16, 37 L. Ed. 2d 254 (1973). But that is not the case before the court.
Thus, all allegations concerning police conduct toward anyone other than Howard himself, are hereby dismissed.
HABEAS CORPUS
In Howard's request for relief, he has included a demand that he be immediately released from custody. Without discussing the merits of this request, it is clearly not cognizable under Section 1983 and thus the court must dismiss for lack of jurisdiction that portion of the complaint which asks for Howard's immediate release. In Preiser v. Rodriguez, 411 U.S. 475, 93 S. Ct. 1827, 36 L. Ed. 2d 439 (1973), the Supreme Court noted that
when a state prisoner is challenging the very fact or duration of his physical imprisonment, and the relief he seeks is a determination that he is entitled to immediate release or a speedier release from that imprisonment, his sole federal remedy is a writ of habeas corpus. Id. at 500, 93 S.Ct. at 1841.
Since Howard instituted this Section 1983 in part to compel his release from custody, it goes to the very fact of his confinement and is thus equivalent to a habeas corpus petition. See Wolff v. McDonnell, 418 U.S. 539, 94 S. Ct. 2963, 41 L. Ed. 2d 935 (1974); Preiser v. Rodriguez, supra.
Inasmuch as a portion of this is a habeas corpus petition because Howard's attack is upon the fact of his confinement, Howard must exhaust his state remedies before a federal district court can consider the issues herein on a writ of habeas corpus. 28 U.S.C. § 2254(b); Picard v. Connor, 404 U.S. 270, 92 S. Ct. 509, 30 L. Ed. 2d 438 (1971); Albuquerque v. Bara, 628 F.2d 767 (2d Cir.1980); Johnson v. Metz, 609 F.2d 1052 (2d Cir.1979); Wilson v. Fogg, 571 F.2d 91 (2d Cir.1978); see Wolff v. McDonnell, supra; Preiser v. Rodriguez, supra. From the record, it is apparent that Howard has not yet been sentenced on the conviction in Kings County Supreme Court and is awaiting trial in Queens County. Thus, he has the panoply of appellate remedies still to pursue. Accordingly, the court must dismiss for lack of jurisdiction any portion of the pleadings which requests Howard's immediate release.
STATUTE OF LIMITATIONS IN SECTION 1983 ACTIONS
The defendants have moved to dismiss on the basis of the statute of limitations. While the court refuses to dismiss the complaint on this ground alone, the court for obvious reasons feels compelled to discuss the questions involved.
The confusion surrounding the statute of limitations in proceedings under 42 U.S.C. § 1983 prompts further discussion. Because the statute's language fails to stipulate the time within which suit may be brought, 42 U.S.C. § 1988 requires that state law be applied. See also Board of Regents of the University of the State of New York v. Tomanio, 446 U.S. 478, 100 S. Ct. 1790, 64 L. Ed. 2d 440 (1980). The Second Circuit has addressed this issue most recently in Pauk v. Board of Trustees of the City University of New York, 654 F.2d 856 (2d Cir.1981). The court in their discussion focuses on the twin goals of a statute of limitations in keeping with federal remedial purposes in enacting § 1983, and of statewide consistency. Although there exists some state court endorsement for the one-year-and-ninety-day period of §§ 50-i and 50-k(6) of the New York General Municipal Law (McKinney 1979) (Staffen v. City of Rochester, 80 App.Div.2d 16, 437 N.Y.S.2d 821 (4th Dep't 1981)), the federal courts are not bound by their preference. The court in Pauk found the state law claim under N.Y.Civ. Prac.Law & R. § 214(2) the most appropriate analogy to a claim under § 1983. Section 214(2) applies to claims based on statute (as opposed to common or case law), and since a § 1983 claim depends on the Constitution, it is a closer analogy by far than any comparable tort-related statute of limitations.
*1303 Therefore, the defendant's reliance on § 50-k(6) of the General Municipal Law is misplaced. For purposes of litigating claims under 42 U.S.C. § 1983, this court will be bound by the three-year statute of limitations provided in N.Y.C.P.L.R. § 214(2), as stipulated by Pauk. See Taylor v. Mayone, 626 F.2d 247 (2d Cir.1980).
MUNICIPAL EMPLOYEES' LIABILITY
To answer the question of municipal employees' liability in a § 1983 suit, the court must be guided by the Supreme Court's decision in Monell v. Dep't of Social Services, 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978). Monell reversed the earlier holding of Monroe v. Pape, 365 U.S. 167, 81 S. Ct. 473, 5 L. Ed. 2d 492 (1961), which held municipalities and their employees immune from § 1983 prosecution. However, Monell does not extend free reign to plaintiffs seeking damages under § 1983. To prevail, the plaintiff must allege that the action which is the subject of his complaint is in keeping with the municipality's official policy or custom. In addition, the local government may not be held to vicarious liability for the action of its employees (respondeat superior).
The plaintiff's complaint contains no allegation which would subject Mayor Koch and District Attorneys Gold and Santucci to personal liability. The plaintiff's allegations of intentional conduct, policy, and conspiracy to deprive him of his rights merely amass inferences to an unsupported conclusion, and at best attempt to impose liability upon defendants Koch, Santucci, and Gold on a respondeat superior theory. It is well settled, however, that "[t]he doctrine of respondeat superior is unavailable as a basis for imposing liability under § 1983; there must be some showing of personal responsibility." Duchesne v. Sugarman, 566 F.2d 817, 830 (2d Cir.1977) (emphasis in original), quoted in Taylor v. Mayone, supra, 626 F.2d at 250 n. 2. See Monell v. Department of Social Services, supra; Rizzo v. Goode, 423 U.S. 362, 371, 96 S. Ct. 598, 604, 46 L. Ed. 2d 561 (1976)); McKinnon v. Patterson, 568 F.2d 930, 934 (2d Cir.1977), cert. denied, 434 U.S. 1087, 98 S. Ct. 1282, 55 L. Ed. 2d 792 (1978); Johnson v. Glick, 481 F.2d 1028 (2d Cir.), cert. denied, 414 U.S. 1033, 94 S. Ct. 462, 38 L. Ed. 2d 324 (1973). In light of Howard's failure to allege that Koch, Santucci, or Gold was personally involved in the alleged wrongs, plaintiffs claims against these defendants must be dismissed.
The liability of the Assistant District Attorneys charged in the complaint are clearly barred by prosecutional immunity. Imbler v. Pachtman, 424 U.S. 409, 96 S. Ct. 984, 47 L. Ed. 2d 128 (1976); Fine v. City of New York, 529 F.2d 70 (2d Cir. 1975). A prosecutor acting as an advocate in a criminal procedure is immune from liability, and charges against him must be dismissed if he was acting within his official capacity. The policy behind this is to prevent the inhibition of judicial proceedings. Nothing in the plaintiff's complaint persuades this court that the Assistant District Attorneys were acting outside of their official prosecutorial duties, or in violation of this policy. Accordingly, the claims against the Assistant District Attorneys are dismissed. See Imbler v. Pachtman, supra; Taylor v. Kavanagh, 640 F.2d 450 (2d Cir.1981); Lee v. Willins, 617 F.2d 320 (2d Cir.), cert. denied, 449 U.S. 861, 101 S. Ct. 165, 66 L. Ed. 2d 78 (1980); Cerbone v. County of Westchester, 508 F. Supp. 780 (S.D.N.Y.1981).
FOURTH AMENDMENT CLAIMS
The balance of plaintiff's complaint makes broad accusations against police officers of the City of New York, seeking relief under 42 U.S.C. § 1983. The purpose of this statute, however, was "to interpose the federal courts between the states and the people, as guardians of the people's federal rightsto protect the people from unconstitutional action under color of state law, ..." Mitchum v. Foster, 407 U.S. 225, 242, 92 S. Ct. 2151, 2162, 32 L. Ed. 2d 705 (1972). But to prevent the proliferation of vague and wholesale allegations, encouraging the redress of imagined wrongs, the Second Circuit has long endorsed a requirement of specificity in entertaining *1304 such complaints. Powell v. Jarvis, 460 F.2d 551 (2d Cir.1972). See also Koch v. Yunich, 533 F.2d 80 (2d Cir.1976). In Powell, a pro se plaintiff accused a detective, responsible for his arrest and conviction for manslaughter, of conspiracy to deny him his freedom and Constitutional rights. In affirming the District Court's dismissal of the complaint, the Circuit Court described it as a "hodgepodge of vague and conclusory allegations." Powell v. Jarvis, supra, 460 F.2d at 553.
No choice of words could better describe the complaint before the court today. Even if all the plaintiff's allegations are true, he fails on the face of the complaint to state a cause of action as required by the Federal Rules of Civil Procedure. Such actions on the part of the police and District Attorney's office as an arrest based on information provided by an informant, or the prosecution at trial of a duly-indicted criminal defendant, describe no more than the carrying out of their lawful duties. The plaintiff's expectation that Haines v. Kerner, 404 U.S. 519, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972) endorses his complaint and insures it against dismissal is mistaken. If that were the ruling of Haines, any pro se plaintiff could come forward with a set of equivocal allegations, and compel the defendant to undergo the expense and ordeal of a full trial. This is not the aim of Fed.R.Civ.P. 8, which is designed to protect defendants from undefined charges, and to keep the federal courts free of frivolous suits.
Nonetheless, the court for procedural reasons chooses not to dismiss the complaint on the merits, but dismisses the complaint without prejudice on abstention grounds. As noted, Howard has not yet been sentenced on the Kings County conviction, and is still awaiting trial in Queens County. Were this court to allow this action to proceed, it would clearly be violating a basic tenet of federalism which bars federal involvement or interference in pending state court criminal proceedings. See Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971). In this case any Fourth Amendment violations could bear directly on the constitutionality of the state court convictions. Accordingly, considerations of comity compel this court to dismiss Howard's complaint without prejudice as any action that could be taken could call into question the validity of the state court conviction. See Matos v. Quealy, 524 F. Supp. 15 (S.D.N.Y.1981); see also Parkhurst v. State of Wyoming, 641 F.2d 775 (10th Cir.1981).
While the court is mindful that a party need not exhaust state remedies before litigating a section 1983 action before the federal court, Monroe v. Pape, supra, 365 U.S. at 183, 81 S.Ct. at 482, the use of the abstention grounds as set forth in Younger v. Harris, supra, are of paramount importance in cases such as this. Primarily, the concept of federalism is as noted preserved. Moreover, on a more practical level, any resolution of the Fourth Amendment claims by the state court could avoid duplicitous litigation before this court because a determination either against or for Mr. Howard could bar further litigation on collateral estoppel or res judicata grounds in future habeas corpus petitions, see Stone v. Powell, 428 U.S. 465, 96 S. Ct. 3037, 49 L. Ed. 2d 1067 (1976), and in section 1983 actions. See Allen v. McCurry, 449 U.S. 90, 101 S. Ct. 411, 66 L. Ed. 2d 308 (1980).
As for any fear that as a result of this dismissal Howard's section 1983 claims could be time-barred by the time the state court actions have been concluded, the court dismisses the complaint without prejudice and tolls the statute of limitations during the pendency of the state court actions. Although some courts have been reluctant to follow this path, see Leigh v. McGuire, 507 F. Supp. 458 (S.D.N.Y.1981), the court does have the power "to toll statutes of limitation borrowed from state law in appropriate circumstances." Meyer v. Frank, 550 F.2d 726, 729 (2d Cir.), cert. denied, 434 U.S. 830, 98 S. Ct. 112, 54 L. Ed. 2d 90 (1977). This court concludes that these are clearly appropriate circumstances for imposing a toll as it will not in *1305 any event prejudice the defendants, and it will allow the state criminal proceedings to run their course.
Accordingly, the causes of action against defendants Koch, Santucci, Gold, Gilbride, Staffa, Cserhalmi, and Hartstein are dismissed on the merits. As for defendants Skeete, Monahan, Miles, McEwan, Lee, Ryan, and Cunningham, the causes of action are dismissed without prejudice on abstention grounds.
So Ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1468870/ | 312 F. Supp. 485 (1970)
Neil I. MINDEL, Plaintiff,
v.
UNITED STATES CIVIL SERVICE COMMISSION et al., Defendants.
Civ. No. 49300.
United States District Court, N. D. California.
March 30, 1970.
*486 Paul Halvonick, San Francisco, Cal., for plaintiff.
Steven Kazan, Asst. U. S. Atty., San Francisco, Cal., for defendants.
ORDER
PECKHAM, District Judge.
Plaintiff Mindel received an appointment as clerk with the San Francisco, California, post office on January 21, 1967. On August 11, 1967, the United States Civil Service Commission requested that he appear for an "interview" on August 16, 1967. At that interview, he was told that an investigation by the Commission had disclosed that he had lived in San Francisco with a young lady without the benefit of marriage. (Exhibit A to Complaint). Thereafter, in a letter dated September 19, 1967, the Division of Adjudication of the Bureau of Personnel Investigations of the United States Civil Service Commission notified Mindel that it had determined that he did not meet "suitability requirements" for employment in the federal service because his living with a woman to whom he was not married constituted "immoral conduct." The Commission directed the Post Office to separate plaintiff from the federal service. (Exhibit B to Complaint).
Mindel appealed. In a letter dated October 30, 1967, the Bureau of Personnel Investigations of defendant Commission affirmed the decision of the Adjudication Division. (Exhibit E to Complaint). Mindel then appealed this decision to the Board of Appeals and Review of defendant Commission. On February 8, 1968, the Board upheld the Bureau's determination. (Exhibit F to Complaint).
On February 21, 1968, Mindel received a letter from defendant Lee, Postmaster of San Francisco, stating that by reason of the Civil Service action he would be removed from the Post Office rolls as of that date. (Exhibit G to Complaint). Since that date, Mindel has not been employed by the federal government.
Jurisdiction is founded on 5 U. S.C. Section 702, which reads:
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant *487 statute, is entitled to judicial review thereof.
Mindel's claim is that the agency action terminating him was unconstitutional in two regards: it was arbitrary and capricious thus violating the Due Process Clause, and it violated the right to privacy guaranteed him by the Ninth Amendment. The Government seeks to oust this court of jurisdiction, claiming that as the agency's judgment was a discretionary one, it is not subject to judicial review. This argument has recently been answered by Chief Judge Bazelon in Norton v. Macy, 135 U.S.App.D.C. 214, 417 F.2d 1161, 1163-1164 (1969), who found judicial review proper, stating:
The courts have * * * consistently recognized that the Commission enjoys a wide discretion in determining what reasons may justify removal of a federal employee; but it is also clear that this discretion is not unlimited. The government's obligation to accord due process sets at least minimal substantive limits on its prerogative to dismiss its employees: it forbids all dismissals which are arbitrary and capricious. These constitutional limits may be greater where, as here, the dismissal imposes a "badge of infamy," disqualifying the victim from any further Federal employment, damaging his prospects for private employ[ment], and fixing upon him the stigma of an official defamation of character. The Due Process Clause may also cut deeper into the Government's discretion where a dismissal involves an intrusion upon that ill-defined area of privacy which is increasingly if indistinctly recognized as a foundation of several specific constitutional protections.
See Pope v. Volpe, Civ. No. 1753-69, (D.C. February 5, 1970).
Plaintiff Mindel's motion for summary judgment is granted. This court holds that Mindel's termination was arbitrary and capricious, and therefore violated due process. Furthermore, the termination violated his right to privacy as guaranteed by the 9th Amendment.
I. Mindel's termination was violative of the due process clause because it was arbitrary and capricious.
At the outset it is noted that Mindel was employed in a most insensitive position, that of postal clerk, and thus security-related cases are not appropriate. See Soltar v. Postmaster General of United States, 277 F. Supp. 579, 580 (N.D.Cal.1967). Further, plaintiff's alleged conduct was discreet, not notorious or scandalous. As stated in Plaintiff's Memorandum in Support of Motion for Summary Judgment, at p. 3:
This lawful relationship was unknown to the public which he served and unknown to his fellow workers. One would have hoped that it would have been unknown to the government, too. The spectre of the government dashing about investigating this non-notorious and not uncommon relationship that was totally divorced from plaintiff's governmental duties is the most disturbing aspect of this case. It would be a peculiar scale of moral values that would condemn plaintiff's activities and endorse those of the government.
The government contends that Mindel's conduct is "immoral". But see Schmidt v. United States, 177 F.2d 450, 452 (2nd Cir.1949) (Opinion of Judge Learned Hand that "We have answered in the negative the question whether an unmarried man must live completely celibate, or forfeit his claim to a `good moral character'; * * *.")
Even if Mindel's conduct can be characterized as "immoral", he cannot constitutionally be terminated from government service on this ground absent a rational nexus between this conduct and his duties as a postal clerk. "A reviewing court must at least be able to discern some reasonably foreseeable, specific connection between an employee's potentially embarrassing conduct and the efficiency of the service." Norton, supra, 417 F.2d at 1167.
*488 The government's argument that the regulations do not require a showing of rational nexus is unconvincing, as such a reading would render them constitutionally suspect on due process grounds. In the administrative law area, a court will not presume that Congress intended regulations to enter constitutionally-dangerous areas, absent explicit Congressional authorization. See Greene v. McElroy, 360 U.S. 474, 79 S. Ct. 1400, 3 L. Ed. 2d 1377 (1959); United States v. Weller, 309 F. Supp. 60 (N.D.Cal.1969).
It should be well established today that no person can be denied government employment because of factors unconnected with the responsibilities of that position. Pickering v. Board of Education, 391 U.S. 563, 572-573, 88 S. Ct. 1731, 20 L. Ed. 2d 811 (1968); Konigsberg v. State Bar of California, 353 U.S. 252, 262, 77 S. Ct. 722, 1 L. Ed. 2d 810 (1957). As it was summed up in Plaintiff's Memorandum, p. 7:
Assuming that the Post Office has an interest in the private sex life of plaintiff, it has not in this case shown any legitimate reasons for imposing its undefined moral code upon plaintiff as the price for holding his job. There is no demonstration that his ability to be a dedicated, efficient and effective public servant was in any way affected by his conduct. The Post Office does not * * * demonstrate that plaintiff was less efficient, less diligent, or less devoted to the purposes of the bureau and the fulfillment of his duties because he lawfully and quietly lived with a woman not his wife.
II. Mindel's termination because of his private sex life violates the right to privacy guaranteed by the Ninth Amendment.[1]
The government cannot condition employment on the waiver of a constitutional right, Keyishian v. Board of Regents of New York, 385 U.S. 589, 605-606, 87 S. Ct. 675, 17 L. Ed. 2d 629 (1967); even in cases where it has a legitimate interest, it may not invade "the sanctity of a man's home and the privacies of life," Griswold v. Conn., 381 U.S. 479, 484, 85 S. Ct. 1678, 1681, 14 L. Ed. 2d 510 (1965), quoting from Boyd v. United States, 116 U.S. 616, 630, 6 S. Ct. 524, 29 L. Ed. 746 (1886). Here, of course, the Post Office has not even shown a rational reason, much less the "compelling reason" required by Griswold, to require Mindel to live according to its special moral code.
As Justice Brandeis said in his dissent in Olmstead v. United States, 277 U.S. 438, 478, 48 S. Ct. 564, 572, 72 L. Ed. 944 (1928):
The makers of our Constitution * * * sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations. They conferred, as against the government, the right to be let alonethe most comprehensive of rights of man and the right most valued by civilized men.
Plaintiff's motion for summary judgment is granted.
It is so ordered.
NOTES
[1] This subject has been recently exhaustively treated by the California Supreme Court. See Morrison v. State Board of Education, 1 Cal. 3d 214, 82 Cal. Rptr. 175, 461 P.2d 375 (1969) (and authorities cited therein). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2096683/ | 13 F. Supp. 469 (1936)
CLYMORE PRODUCTION CO. et al.
v.
THOMPSON et al.
No. 517.
District Court, W. D. Texas, Austin Division.
January 28, 1936.
A. K. Swann, of Tulsa, Okl., and B. D. Tarlton and Boone, Henderson, Boone & Davis, all of Corpus Christi, Tex., for complainants.
Wm. McCraw, Atty. Gen. of Texas, for respondents.
Lawler, Wood & Childress, of Houston, Tex., for intervener Texon Royalty Co.
Charles I. Francis and Vinson, Elkins, Sweeton & Weems, all of Houston, Tex., for United Production Corporation.
Before HUTCHESON, Circuit Judge, and KENNERLY and McMILLAN, District Judges.
McMILLAN, District Judge.
When this case was before the court on application for preliminary injunction, an opinion was handed down on which an order was subsequently entered denying the interlocutory relief prayed for. Clymore Production Co. et al. v. Thompson et al. (D.C.) 11 F. Supp. 791. The case is now before the court again on final hearing.
A full statement of the nature of the case was made in the opinion filed on the application for preliminary injunction and it is unnecessary to go over that ground again. While the evidence adduced by affidavits at the first hearing has been greatly extended and amplified by the oral evidence and exhibits presented on the final hearing, the record *470 is still in very much the same shape at this time as it was when the preliminary injunction was denied. In denying the interlocutory relief asked for, the court based its action upon the proposition that the evidence failed to show that the Commission was in error in classifying the complainant's wells as gas wells and regulating them as such; that the duty to regulate oil and gas wells having been confided by statute (Vernon's Ann.Civ.St. Tex. arts. 6008, 6014) to the Commission, the court would not disturb its action in the premises unless clearly shown to be wrong.
Complainants challenge this proposition and assert on the other hand that the statutes having defined what constitutes oil and gas wells, their provisions are self-executing and the findings of the Commission with regard thereto are entitled to no weight. We think it is undoubtedly true that the statutes having defined what constitutes an oil or gas well, the Commission is without authority to change or alter those definitions. However, we think it equally true that as an incident to various duties imposed upon, and powers delegated to, the Commission with regard to the regulation of the drilling and production of oil and gas wells, that body must necessarily determine at the outset, in each instance, whether the wells are oil or gas wells for the purpose of determining the character of regulation to be applied. Its determination that a certain well was either oil or gas contrary to the true facts and in derogation of the legislative definition would, of course, be entitled to no weight, but when these classifications for regulation are based upon substantial facts, the court should be slow to substitute its judgment for their judgment in the premises.
Upon this theory of the matter, and on the state of the record as it now stands, we might dispose of this case now as it was disposed of on the prior hearing and without more ado. However, having heard at great length all the evidence in the matter, and the action of the Commission now being challenged as arbitrary and without basis or foundation in law or fact, we think it appropriate to add the following:
Complainant's right to relief hinges entirely upon the question of whether these wells are oil wells or gas wells. Their contention that they are oil wells is apparently based entirely on the fact that in a separator connected to a choke certain water-white liquid is accumulated, which upon analysis shows to contain various hydrocarbon compounds characteristic of crude petroleum oil. The catching of this liquid is the only thing that could in any possible way be claimed to classify the wells as oil wells. They are not drilled in or produced as oil wells; there is nothing to indicate any fluid level in the formation, or any fluid column in the tubing when the wells are closed down; pressure as between the tubing and the casing gives no such indication; the wells do not flow by heads when reopened, nor is there any visible or perceptible liquid given forth at that time. When the wells are opened into the air what is apparently a gas is produced, and though a small amount of moisture may be accumulated on one's hand by placing it in that gas, the ground is in no way wet and no amount of liquid is accumulated, and the gas dissipates and goes off into the air leaving no trace. On the other hand, when this gas is run through a choke and turned into a separator provided with baffle plates, a water-white liquid, heretofore mentioned, is precipitated and saved.
It is our opinion, from the evidence, that complainant's wells do not produce any crude petroleum oil in the statutory sense of that term. They produce wet gas, which when acted on by the baffle plates in the separator causes a distillate which complainants claim is oil. It is only by the most strained and technical construction that wells of this character could be classed as oil wells. The statutes must be given a reasonable construction and construed with the view of effecting the legislative intent, if valid. We think it perfectly obvious that the statutory definition of an oil well was never intended to cover wells of this character, which normally produce gas and can only be made to produce oil by the use of manufacturing processes, however crude, at the head of the well.
Furthermore, it is our opinion that regardless of the question of the manner of production the water-white liquid caught and saved in the separator is not crude oil within the sense of the statute defining oil wells. The logs of complainant's various wells, and other wells in this apparently common reservoir, together *471 with cores and samples of sand from these wells, would indicate that there is no fluid level in the reservoir and no liquid crude petroleum existing therein as such. The sand is uniformly gray in color, contains no fluid, and is classified as typical gas sand, and not as oil sand. Liquid caught in the separator becomes such through mechanical devices or condensation after it leaves the head of the well, and not because it existed in such form in the reservoir. If such an operation at the well head can transform a gas well into an oil well, then there are very few fields which should not be classified as oil fields, because the history of the industry, as indicated by the record, shows that volatile liquid of the character caught by complainants can be wrung from practically all gas wells in greater or less amounts. We believe that there enters into the definition of crude oil in all applicable statutes the proposition that the substance referred to should lie in the bed or reservoir as oil and as oil be produced from it. It was certainly never intended to cover distillates such as those involved here when the statute speaks of the production of crude petroleum oil. It may be, and possibly is true, that this product of the separator has many of the characteristics of crude petroleum and under certain technical chemical definitions might be so classified. Water-white as it is, and so volatile as to be adaptable for immediate use in gasoline engines, it has certainly never been considered as crude oil by the oil and gas industry generally. We think it manifest that the Legislature in speaking of crude petroleum oil meant a liquid existing in the ground as oil and as such produced from it. It is our opinion that this condensate or distillate caught in complainant's separators is not crude petroleum oil within the contemplation of the statute.
What has been said disposes of complainant's alternative contention that the gas is "casing head gas." The statute provides that casing head gas shall mean any gas and/or vapor indigenous to an oil stratum and produced from such stratum with oil.
While we are of the opinion that complainant's gas is wet and has at some point contacted oil, it is most certainly not at this time produced from an oil stratum, nor is it produced with oil.
The permanent injunction prayed for will be denied, and an appropriate decree in accordance with this opinion may be prepared and presented for entry. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1545555/ | 342 B.R. 132 (2006)
In re LORAL SPACE & COMMUNICATIONS LTD., et al., Debtors.
Loral Stockholders Protective Committee, Appellant,
v.
Loral Space & Communications Ltd., et al., Appellees.
No. 05 Civ. 7975(VM).
United States District Court, S.D. New York.
May 26, 2006.
*133 Phillip Peter Ivaldy, Huntington Beach, CA, pro se.
Steven Karotkin, Huntington Beach, CA, for Official Committee of Unsecured Creditors.
DECISION AND ORDER
MARRERO, District Judge.
Pending before the Court is the motion of appellees Loral Space & Communications Ltd. ("Loral Ltd.") and its affiliated reorganized debtors and debtors in possession (collectively, "Loral" or the "Reorganized Debtors") to dismiss as moot the appeal of pro se appellant Loral Stockholders Protective Committee ("LSPC") from two orders of the United States Bankruptcy Court for the Southern District of New York. Loral's motion was joined by appellee Official Committee of Unsecured Creditors of Loral Space & Communications Ltd. (the "Creditors Committee"). For *134 the reasons set forth below, Loral's motion to dismiss is granted.
I. BACKGROUND
A. BANKRUPTCY COURT PROCEEDINGS AND APPEALS THEREFROM
On August 1, 2005, Judge Robert Drain of the United States Bankruptcy Court of the Southern District of New York (the "Bankruptcy Court") entered two orders in connection with Chapter 11 bankruptcy proceedings involving Loral. The first order (the "Confirmation Order") confirmed Loral's Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the "Reorganization Plan").[1] The second order (the "Denial Order") denied the motion of the Official Committee of Equity Security Holders for leave to prosecute a fraudulent conveyance claim.[2]
On or about August 10, 2005, LSPC apparently attempted to appeal the Bankruptcy Court's two orders by submitting certain documents to Judge Robert Patterson of this Court, who had adjudicated a previous appeal of a Bankruptcy Court order brought by LSPC in 2004 in connection with the Loral bankruptcy proceedings. Judge Patterson denied the application, indicating that the Court did not have plenary jurisdiction over the Loral bankruptcy proceedings and that any appeal of an order or decision of the Bankruptcy Court must be filed with the Clerk of Court for random assignment to a district court judge. See Endorsed Letter (Docket No. 36), In re Loral Space & Communications, 04 Civ. 8645(RPP) (S.D.N.Y. Aug. 16, 2005). On August 10, 2005, LSPC also submitted to the Clerk of the Bankruptcy Court a notice of appeal captioned "Appeal of Drain's Orders Approving 4th Amended Plan, Disclosures and Denying Leave to Sue Request on Fraudulent Conveyance Charge In re: Loral Space & Communications Ltd., et al. Brought by the Loral Stockholders Protective Committee" (the "Notice of Appeal"), along with a designation of items in the record on appeal (the "Designation"). According to Loral, LSPC did not serve a copy of the Notice of Appeal or the Designation on Loral or any other party in interest, and Loral did not receive notice of the appeal until the Clerk of the Bankruptcy Court entered the documents on the Bankruptcy Court's docket on September 6, 2005 and September 7, 2005.
On September 14, 2005, the Notice of Appeal was transmitted to this Court.[3] This Notice of Appeal contains arguments in support of LSPC's appeal; however, other than correspondence in September 2005 from the parties regarding scheduling a conference call, this Court received no further briefing on this appeal.
On September 16, 2005, Loral filed a motion in the Bankruptcy Court to strike certain items from the Designation. On October 3, 2005, the Bankruptcy Court issued an order (the "Strike Order") granting the motion to strike in large part and directed Loral and LSPC to draft a joint *135 designation of record reflecting the Bankruptcy Court's determination regarding which items would be included in the record on appeal.
On or about October 14, 2005, LSPC allegedly submitted to the Bankruptcy Court a notice of appeal of the Strike Order; according to Loral, no record exists of that notice of appeal being filed with the Clerk of the Bankruptcy Court.[4] Nonetheless, on October 19, 2005, LSPC submitted papers to this Court in support of its appeal of the Strike Order (the "Strike Appeal") under the same docket number as the instant appeal. (See Loral Stockholders Protective Committee Appeal of U.S. Bankruptcy Court Order, Dated October 3, 2005 Granting Motion to Strike Certain Items from the Record on Appeal by the Loral Stockholders Protective Committee, dated October 18, 2005.) On November 1, 2005, Loral filed its response to the Strike Appeal, arguing both that the Strike Order was correct and that LSPC's appeal was untimely; the Creditors' Committee joined Loral's response. LSPC filed a reply on November 10, 2006.
B. IMPLEMENTATION OF THE REORGANIZATION PLAN
Following entry of the August 1, 2005 orders of the Bankruptcy Court, Loral undertook several steps required to implement the Reorganization Plan, including (1) obtaining approval from the Federal Communications Commission to transfer space and earth station licenses to Loral Space & Communications Inc. ("New Loral"), the entity through which Loral was to begin conducting business following the effective date of the Reorganization Plan; (2) entering into numerous agreements, including a Note Indenture, required to implement the Reorganization Plan; and (3) filing with the Secretary of State of the State of Delaware the New Loral Certificate of Incorporation and Reorganized Subsidiary Debtors' Certificates of Incorporation. (See Appellees' Mem. of Law in Supp. of Mot. to Dismiss the Loral Stockholders Protective Committee's Appeal, dated February 3, 2006 ("Loral Mem."), at 6; Zahler Decl. ¶ 4.)
On November 21, 2005, the Reorganization Plan became effective. On that date, Loral emerged from Chapter 11 and began conducting business as New Loral. (Zahler Decl. ¶¶ 3, 5.)
Following the effective date, Loral engaged in numerous actions to consummate the Reorganization Plan, including:
(1) distributing $81.2 million in cash under the Reorganization Plan to over 600 creditors, in satisfaction of various claims under the Reorganization Plan;
(2) distributing 18.7 million shares of new common stock and 987,000 shares of new preferred stock of New Loral to certain creditors in satisfaction of their claims;
(3) cancelling over 44 million shares of common stock and over four million shares of preferred stock held by the pre-existing shareholders of Loral Ltd., including all stock held by members of LSPC;
*136 (4) causing the stock of New Loral to begin trading on the NASDAQ on December 8, 2005;
(5) distributing new notes defined under the Reorganization Plan to creditors who exercised subscription rights defined under the Reorganization Plan;
(6) closing the sale of certain assets enumerated in the Reorganization Plan; and
(7) assuming executory contracts and unexpired leases in reliance on the restructuring effected by the Reorganization Plan.
(Zahler Decl. ¶ 6.) Thus, substantially all of the property of Loral proposed to be transferred, and all equity interests in Loral proposed to be cancelled under the Reorganization Plan, were transferred and cancelled, respectively; the Reorganized Debtors assumed all business operations and all property dealt with by the Reorganization Plan; and nearly all distributions to be made under the Reorganization Plan have been completed. (Zahler Decl. ¶ 7.)
Additional transactions have also taken place in reliance on the Reorganization Plan. For example, in reliance on the occurrence of the effective date of the Reorganization Plan, Loral entered into a settlement resolving long-standing disputes with another entity; such settlement was approved by the Bankruptcy Court on January 6, 2006. (Zahler Decl. ¶¶ 8-9.)
Although LSPC appealed the Bankruptcy Court's orders, it did not seek a stay of the Reorganization Plan. LSPC admits that it "has not attempted to oppose numerous actions of Debtors to consummate the Reorganization Plan," including all of the enumerated actions above. (Appellant's Resp. Br. to Debtors' Mot. to Dismiss the Loral Stockholder Protective Committee's Appeal and Appellant's Motion for Order to Reopen the Confirmation Hearing of Debtors' Confirmation Plan Such That No Actions That Have Been Consummated Be Disturbed, dated March 3, 2006 ("LSPC Opposition Br."), at 5.) Indeed, LSPC asserts that there was "absolutely no requirement and absolutely no need to seek a stay of the Confirmation Order." (Id.)
C. MOTION TO DISMISS THE APPEAL AS MOOT
On February 3, 2006, Loral filed a motion to dismiss LSPC's appeal of the Confirmation Order and the Denial Order as moot. The Creditors' Committee joined in the motion on February 8, 2006. LSPC filed an opposition brief on March 3, 2006;[5] and Loral filed a reply on March 17, 2006.
II. DISCUSSION
A. LEGAL STANDARD
When a plan of reorganization has been substantially consummated, an appeal is presumed moot. See In re Chateaugay Corp., 94 F.3d 772, 776 (2d Cir.1996) ("Chateaugay III") ("Reviewing courts presume that it will be inequitable or impractical to grant relief after substantial consummation of a plan of reorganization."); In re Enron Corp., 326 B.R. 497, 502 (S.D.N.Y.2005); In re Best Prods. Co., 177 B.R. 791, 803 (S.D.N.Y.1995); In re Texaco Inc., 92 B.R. 38, 46 (S.D.N.Y.1988). *137 Substantial consummation is defined under the Bankruptcy Code to mean:
(A) transfer of all or substantially all of the property proposed by the plan to be transferred;
(B) assumption by the debtor or by the successor to the debtor under the plan of the business or of the management of all or substantially all of the property dealt with by the plan; and
(C) commencement of distribution under the plan.
11 U.S.C. § 1101(2); see also In re Metromedia Fiber Network, Inc., 416 F.3d 136, 144 (2d Cir.2005) Texaco, 92 B.R. at 46 n. 12.
Mootness has two aspects in the context of a bankruptcy appeal. First, Article III of the Constitution requires that there be a live case or controversy so that the court can grant effective relief. See In re Best Prods. Co., 68 F.3d 26, 29-30 (2d Cir.1995); In re Chateaugay Corp., 10 F.3d 944, 952 (2d Cir.1993) ("Chateaugay II"); In re Chateaugay Corp., 988 F.2d 322, 325 (2d Cir.1993) ("Chateaugay I"). Second, equitable considerations provide that even if the court could conceivably fashion relief, the appeal should be dismissed as moot if implementation of that relief would be inequitable. See Metromedia, 416 F.3d at 143; Best Prods., 68 F.3d at 30; Chateaugay I, 988 F.2d at 325.
These principles are "especially pertinent" in the bankruptcy context, "where the ability to achieve finality is essential to the fashioning of effective remedies." Chateaugay I, 988 F.2d at 325. It is for this reason that substantial consummation of a reorganization plan will often moot an appeal. See, e.g., Metromedia, 416 F.3d at 144 ("Equitable mootness is a prudential doctrine that is invoked to avoid disturbing a reorganization plan once implemented."); Chateaugay I, 988 F.2d at 326 ("As a practical matter, completed acts in accordance with an unstayed order of the bankruptcy court must not thereafter be routinely vulnerable to nullification if a plan of reorganization is to succeed."); Texaco, 92 B.R. at 45 ("When a confirmed plan of reorganization is involved, . . . it is not hard to imagine that hundreds or even thousands of good-faith transactions by innocent parties may be undertaken in reliance thereon before an appeal is decided on the merits. Under such circumstances, it would be manifestly unjust to reverse on appeal. . . . ").
The failure to seek a stay of the confirmation order pending appeal, with the result that the reorganization is substantially consummated, in particular lends itself to a finding that an appeal is moot. See Texaco, 92 B.R. at 46 ("Under these circumstances there fairly exists a strong presumption that appellants' challenges have been rendered moot due to their inability or unwillingness to seek a stay.") (citation and quotation omitted); accord Enron, 326 B.R. at 502.
However, although a "momentous event," substantial consummation does not necessarily make it impossible or inequitable for a court to grant effective relief. Chateaugay II, 10 F.3d at 952. An appellant can overcome the presumption of mootness by establishing all of the following five factors (the "Chateaugay factors") set out by the Second Circuit in Chateaugay II:
(a) the court can still order some effective relief;
(b) such relief will not affect the reemergence of the debtor as a revitalized corporate entity;
(c) such relief will not unravel intricate transactions so as to knock the props out from under the authorization for every transaction that has taken place and create an unmanageable, uncontrollable situation for the Bankruptcy Court;
(d) the parties who would be adversely affected by the modification have notice *138 of the appeal and an opportunity to participate in the proceedings; and
(e) the appellant pursued with diligence all available remedies to obtain a stay of execution of the objectionable order[,] if the failure to do so creates a situation rendering it inequitable to reverse the orders appealed from.
Id. at 952-53 (citations and quotations omitted).
B. APPLICATION
1. The Reorganization Plan Has Been Substantially Consummated
Loral has presented ample evidence that Reorganization Plan has been substantially consummated. Substantially all of the property proposed to be transferred, and all equity interests proposed to be cancelled, have been transferred and cancelled, respectively; the Reorganized Debtors have assumed all business operations and all property dealt with by the Reorganization Plan; and distributions under the plan have nearly been completed. LSPC freely acknowledges that these transactions have occurred and indeed admits that it did not even attempt to oppose consummation of the Reorganization Plan. It is clear, then, that the Reorganization Plan has been substantially consummated, creating a presumption that LSPC's appeal of the Bankruptcy Court's orders is moot.
2. The Chateaugay Factors Have Not Been Met
LSPC has not established each of the five Chateaugay factors necessary to rebut the presumption that its appeal is moot.
a. It Is Highly Improbable that the Court Can Fashion Effective Relief
Central to the issue of whether LSPC's appeal is moot is whether the Court can fashion effective relief. The Court's analysis of this issue is complicated by LSPC's failure to indicate exactly what relief it is seeking. The underlying appeal was not fully briefed. However, from LSPC's original Notice of Appeal, as well as arguments in its opposition brief, the Court deduces that LSPC is seeking a reopening of the confirmation proceedings so that LSPC can obtain additional discovery and inspect and re-value Loral's assets. LSPC states in its brief opposing dismissal that "[t]he only issue presented in the instant appeal is that the actions of the Court has [sic] systematically deprived the Debtors' shareholders' right to inspect Debtors' assets" (LSPC Opposition Br. at 5), and that the appeal was filed because the Bankruptcy Court "systematically deprived Debtors' shareholders the constitutional right to inspect and protect their property without disturbing necessary business affairs while Debtor was seeking Chapter 11 Bankruptcy Protection" (Id. at 6.). LSPC further states that "[a]t the core of the instant appeal is the belief that the Plan of Reorganization cannot comply with (11 U.S.C. section 1129(a)(1)) until practical, reasonable and just inspection procedures under Rule 2004 (or of a full compliance of a Request for the Production of Documents) can provide empirical values of debtors' assets. The objective in such an inspection is to replace the unreliable and extremely broad range of estimates presented during the Confirmation Hearing with empirical evidence of the true value of Debtors' assets." (Id. at 7.) LSPC puts forth several hypothetical calculations as to what the valuation should or could have been, and indicates that it needs discovery and inspection of Loral's assets to prove its case. (See id. at 9-14.) See also Notice of Appeal at 9 (stating that the issues on appeal are (1) due process violations; (2) improper reliance on the business judgment rule; and (3) omissions and selective *139 application of facts that constitute clearly erroneous application of the facts to the law); id. at 2 (arguing that the Bankruptcy Court violated appellants' due process and equal protection rights by not allowing them to "inspect their property"); id. at 3 (arguing that the Bankruptcy Court wrongfully relied on Loral's estimates, thus causing a "significant understatement of values" of certain Loral assets and an erroneous ruling "that the Debtor was insolvent and hence in favor of the proposed Debtor/Creditor cram down that eliminates the common shareholders of Loral").
The Court thus concludes that LSPC seeks to reopen the confirmation proceedings for a re-valuation of all the assets that were distributed pursuant to the Reorganization Plan, and redistribution of such assets should the reevaluation prove different. Although Loral concludes its opposition brief with a request for an order "to reopen the confirmation hearing of Debtors' confirmation plan such that no actions that have been consummated be disturbed" (LSPC Opposition Br. at 18), the Court does not see how the requested relief would not disturb the numerous consummated transactions and further transactions taken in reliance thereon. Even if the Court could order such relief, this would raise, as will be discussed below, substantial equitable concerns addressed by two other Chateaugay factors: affecting the re-emergence of the debtor as a revitalized corporate entity, and unraveling intricate transactions in a way that creates an unmanageable, uncontrollable situation for the Bankruptcy Court.
b. The Relief Sought Will Affect the Re-Emergence of the Debtor as a Revitalized Corporate Entity and Will Unravel Intricate Transactions so as to Create an Unmanageable Situation for the Bankruptcy Court
Chateaugay II also requires that to overcome the presumption of mootness generated by substantial confirmation of a reorganization plan, appellants must establish that the requested relief "will not affect the re-emergence of the debtor as a revitalized corporate entity" and "will not unravel intricate transactions so as to knock the props out from under the authorization for every transaction that has taken place and create an unmanageable, uncontrollable situation for the Bankruptcy Court." 10 F.3d at 953 (citation and quotation omitted). The Court finds that the relief sought by LSPC would cause both of these events to occur.
First, to reopen the confirmation plan would result in the reinstatement of over $1.3 billion of indebtedness that the Reorganized Debtors are incapable of servicing. (Zahler Decl. ¶ 12.) This likely would have a ripple effect, creating a loss of confidence among New Loral's customers, vendors, and other business partners and leading to the Reorganized Debtors' breach of existing contractual relationships. (Id.) This would in turn lead to loss of revenues, inability to secure new contracts, and cash flow problems threatening the viability of New Loral.
Second, reopening the proceedings and unwinding the transfers and transactions that have taken place as part of the Reorganization Plan and in subsequent reliance on the Reorganization Plan, so that the Bankruptcy Court can revalue the debtors assets and redistribute accordingly, would clearly "knock the props out from under the authorization for every transaction that has taken place." Chateaugay II, 10 F.3d at 953 (citation and quotation omitted). Conceivably, the Debtors would have to attempt to recover $81.2 million in cash distributions to hundreds of creditors; New Loral stock that has been trading on NASDAQ for several months would have *140 to be cancelled and de-listed; satisfied claims and cancelled equity interests would have be reinstated; asset transfers and sales implemented under the Reorganization Plan would have to be unwound; and complications related to the liquidation proceedings of Loral Ltd. and Loral Licensing, Ltd. would arise in the Supreme Court of Bermuda. (Zahler Decl. ¶ 13.) Moreover, recovery of the $81.2 million in cash distributions would be difficult and involve additional expense, and thus assets available for distribution to creditors would be reduced. (Id. ¶ 14.) To order a reopening of the confirmation proceedings would thus clearly create an unmanageable situation for the Bankruptcy Court. Quite simply, too many transactions have taken place at this point to grant LSPC the relief it seeks. See, e.g., In re Home Holdings, Inc., No. 98 Civ. 5690, 2001 WL 262750, at *6 (S.D.N.Y. Mar. 16, 2001) ("Like other substantially consummated complex reorganizations, [the] reorganization here affects numerous parties, including various classes of creditors and shareholders, and involves a multitude of complex transactions making tinkering with the Plan impracticable."); In re E-II Holdings Inc., No. 94 Civ. 2246, 1995 WL 387650, at *5 (S.D.N.Y. June 30, 1995) (finding appeal moot when consummated transactions "included, among other things, over a billion dollars of transfers from the debtor to its creditors, the procurement of financing for the post-bankruptcy corporation, and the issuance of stock and other securities in the post-bankruptcy corporation"); In re Ionosphere Clubs, Inc., 184 B.R. 648, 652 (S.D.N.Y.1995) ("The appellants do not seek to modify a discrete aspect of the Plan that would leave the remainder of the Plan intact. Rather, the appellants challenge the Plan in its entirety they seek to undo sales of assets made both prior to and following the confirmation of the Plan."); see also In re Fours On Seventh, LLC, 251 B.R. 784, 794 (S.D.N.Y.2000)("[B]ecause mootness analysis focuses on the impact that reversal of a consummated plan would have on third parties, cases where appeals are found to be moot often involve a . . . [large] number of creditors and transactions.").
c. The Parties Who Would Be Adversely Affected by Modification Have Not Had Notice of the Appeal and an Opportunity to Participate
To overcome the presumption of mootness, Chateaugay II also requires that the parties who would be adversely affected by the modification have notice of the appeal and an opportunity to participate in the proceedings. 10 F.3d at 953. Here, those who would be adversely affected include the Reorganized Debtors' creditors, customers, vendors, and others who participated in and relied upon transactions approved in the Reorganization Plan and subsequently completed, and the further transactions taken in reliance thereon. There is no indication on the record nor even an assertion by LSPC that these parties have been notified of the appeal and been given an opportunity to participate in these proceedings. Thus, this factor also weighs toward a finding that LSPC's appeal is moot.
d. LSPC Did Not Seek a Stay
Under Chateaugay II, the appellant seeking to overcome the presumption that its appeal of a bankruptcy confirmation order is moot must have "pursued with diligence all available remedies to obtain a stay of execution of the objectionable order[,] if the failure to do so creates a situation rendering it inequitable to reverse the orders appealed from." 10 F.3d at 953 (citation and quotation omitted). LSPC concedes that it did not seek a stay, but wrongly asserts that there was "absolutely *141 no requirement and absolutely no need to seek a stay of the Confirmation Order." (LSPC Opposition Br. at 5) In fact, seeking a stay is of the utmost importance to an appellant desiring to preserve an appeal of a confirmation order. See Metromedia, 416 F.3d at 144 (noting that whether the appellant sought a stay of confirmation is a "chief consideration" under Chateaugay II). The Second Circuit "insist[s] that a party seek a stay even if it may seem highly unlikely that the bankruptcy court will issue one." Id.; see also Chateaugay I, 988 F.2d at 326 ("The party who appeals without seeking to avail himself of that protection does so at his own risk."); Texaco, 92 B.R. at 46.[6]
Where, as here, the appellant failed to seek a stay, the court will "consider additionally whether that failure renders relief inequitable." Metromedia, 416 F.3d at 144. The question "is not solely whether [the Court] can provide relief without unraveling the Plan, but also whether [the Court] should provide such relief in light of fairness concerns." Id. at 145. Here, in the absence of a stay, countless transactions involving numerous parties and millions of dollars, as set forth above, have taken place in furtherance of and in reliance on the Reorganization Plan. Upsetting these intricate transactions and numerous reliance interests in the absence of an attempt to seek a stay would be inequitable. See, e.g., Enron, 326 B.R. at 504 (finding, when appellant did not seek stay, that it "would be manifestly inequitable at this late stage to modify even this one provision of the Plan that so many parties have relied upon in making various, potentially irrevocable, decisions"); In re Sunbeam Corp., No. 03 Civ. 536, 2004 WL 136941, at *3 (S.D.N.Y. Jan. 27, 2004) (dismissing two pro se appeals of confirmation order when reorganization had been substantially consummated and one appellant mailed a motion to stay after the deadline to move for a stay had passed, while the other never requested a stay); Texaco, 92 B.R. at 46, 51, 54 (dismissing appeal after reorganization had been substantially consummated *142 and appellants had not sought a stay). The relief sought by LSPC would create a situation of major uncertainty. LSPC, having not sought a stay, bears the burden of this uncertainty. See Metromedia, 416 F.3d at 145; Chateaugay I, 988 F.2d at 326.
3. The Strike Appeal Is Also Moot
Because the Court finds that LSPC's appeal of the Confirmation Order and Denial Order is moot, it also finds that the Strike Appeal should be dismissed as moot, as it concerns which documents should be considered as part of the record on this appeal. Since the Court is dismissing this appeal as moot, there is no need to decide which documents should be part of the record on appeal.
III. ORDER
For the foregoing reasons, the Court finds that the appeal of Loral Stockholders Protective Committee ("LSPC") is moot. Accordingly, it is hereby
ORDERED that the motion [Docket No. 6] of appellees Loral Space & Communications Ltd. and its affiliated reorganized debtors and debtors in possession to dismiss LSPC's appeal of the Bankruptcy Court's August 1, 2005 orders confirming the Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code and denying the Official Committee of Equity Security Holders leave prosecute a fraudulent conveyance claim is GRANTED; and it is further
ORDERED that LSPC's appeal [Docket No. 1] of the Bankruptcy Court's August 1, 2005 orders is DISMISSED; and it is finally
ORDERED that LSPC's appeal [Docket No. 2] of the Bankruptcy Court's October 3, 2005 order striking certain items from the record on appeal is DISMISSED.
The Clerk of Court is directed to close this case.
SO ORDERED.
NOTES
[1] See Order Confirming Debtors' Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, as Modified, dated August 1, 2005, attached as Exhibit 1 to the Declaration of Eric J. Zahler in Support of Appellees' Motion to Dismiss the Loral Stockholders Protective Committees' Appeal, dated February 3, 2006 ("Zahler Decl.").
[2] See Order Denying Motion of the Official Committee of Equity Security Holders for Leave to Prosecute Claim, dated August 1, 2005, attached as Exhibit 2 to Zahler Decl.
[3] This Notice of Appeal, although assigned to this Court, is addressed to Judge Robert Patterson.
[4] The Docket Sheet for the underlying bankruptcy case, No. 03-41710, does not indicate that any notice of appeal of the Strike Order was filed. On October 14, 2005, this Court's chambers received a copy of a document dated October 12, 2005 and entitled "Notice of Appeal," indicating an appeal of the Strike Order, with a certificate of service indicating service upon the Bankruptcy Court, this Court, and attorneys for Loral. However, this document was not entered as filed either with the Bankruptcy Court or this Court. In its opposition to LSPC's Strike Appeal, Loral argues that because there is no evidence that LSPC's appeal was filed with the Bankruptcy Court by October 14, 2005, it should be dismissed as untimely under Bankruptcy Rule 8002(a).
[5] LSPC's opposition brief was served upon Loral on March 3, 2006, but was not filed with the Court until March 27, 2006. LSPC brought to the Court's attention that its opposition brief filed with the Court on March 27 contained corrections to typographical errors in the March 3 brief served upon Loral. After review of both the March 3 and March 27 LSPC briefs, counsel for Loral indicated to the Court that Loral consented to have its March 17, 2006 reply be deemed a reply to the March 27, 2006 LSPC brief filed with the Court.
[6] The only evidence remotely suggesting that LSPC attempted to seek some form of expedited review is a September 14, 2005 letter to the Court from Phil Ivaldy, requesting an "emergency conference call" based on the concern that Loral "will run out of operating funds in October 2005 and because if this appeal proceeds as scheduled Loral will certainly oppose any and all appeals on the grounds that irreparable harm will be suffered by Loral Ltd." No such conference call took place, and no other requests for any expedited proceedings were received. LSPC does not argue that this letter was an attempt to seek a stay and concedes in its brief that it did not seek a stay. However, even if the Court were to construe LSPC's pro se pleadings liberally enough to consider this letter an attempt to stay the confirmation order or seek expedited review, the Court further finds that this single letter does not demonstrate that LSPC "pursued with diligence all available remedies to obtain a stay." Chateaugay II, 10 F.3d at 953 (citation and quotation omitted) (emphasis added). In this regard, the Court notes that a review of the docket for a previous appeal before Judge Patterson of a bankruptcy court order involving Loral and LSPC reveals that LSPC sought both a stay pending appeal and expedited review of the appeal. It did so first through a letter to Judge Patterson; then, in response to Judge Patterson's instructions that the motion must be served with a notice of motion and supporting memorandum of law, LSPC filed a motion seeking a stay or an expedited hearing, thus belying any suggestion that LSPC did not know of the procedures for seeking a stay. See Docket, In re Loral Space & Communications Ltd., No. 04 Civ. 8645(RPP) (S.D.N.Y.) (Docket No. 7 (Letter from Appellant, filed Nov. 16, 2004); Docket No. 34 (Endorsed Letter, filed Nov. 22, 2004); Docket No. 6 (Motion for Stay, filed Nov. 23, 2004)). After the motion for a stay was denied, LSPC sought an expedited hearing, demonstrating more diligent pursuit of expedited review than in this case. See id. (Docket No. 10 (order setting expedited hearing schedule in response to letter from LSPC)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1809356/ | 758 F. Supp. 1430 (1991)
SOUTHEAST KANSAS COMMUNITY ACTION PROGRAM, INC., Plaintiff,
v.
Richard E. LYNG, in his Office Capacity as Secretary of Agriculture of the United States, Stanley C. Grant, in his Office Capacity as Secretary of the Kansas Department of Health and Environment and Their Agents, Employees and Those Working in Concert with Them, Defendants.
No. 88-1562.
United States District Court, D. Kansas.
February 7, 1991.
*1431 William E. Metcalf, Metcalf and Justus, Topeka, Kan., for plaintiff.
Marvin G. Stottlemire, Kansas Dept. of Health and Environment, Topeka, Kan., for Stanley C. Grant et al.
Stephen K. Lester, Asst. U.S. Atty., Wichita, Kan., and John L. Daugherty, Staff Atty., U.S. Dept. of Agriculture, Washington, D.C., for Richard E. Lyng.
MEMORANDUM ORDER
CROW, District Judge.
This matter comes before the court upon the defendants' motions for dismissal of the plaintiff's amended complaint. Southeast Kansas Community Action Program (SEK-CAP), a not-for-profit corporation, is a local agency which formerly received grant funds under the Supplemental Food Program for Women, Infants and Children (WIC).[1] The defendants are the Secretary of Agriculture and the Secretary of Kansas Department of Health and Environment (KDHE). This federal question case arises from the non-renewal of SEK-CAP's contract to administer a WIC nutrition program. SEK-CAP also challenges federal regulations promulgated by the Secretary of Agriculture. SEK-CAP seeks both monetary and injunctive relief.
In its amended complaint, SEK-CAP alleges five separate counts. In Count I, SEK-CAP claims that the KDHE issued a monitoring report to the public that made derogatory statements about SEK-CAP. *1432 SEK-CAP alleges that it could defend most of the charges found in that report. Apparently, that report formed the basis of the decision not to renew SEK-CAP's contract. SEK-CAP claims that it was not provided with a hearing on the issue of contract renewal or the monitoring report. SEK-CAP claims this action of the KDHE are violations of its rights under the 14th Amendment in that it was deprived of liberty and property without due process of law. SEK-CAP claims actual damages in excess of $10,000 and punitive damages in excess of $10,000.
In Count II, SEK-CAP incorporates its factual contentions in Count I, but claims irreparable injury and no adequate remedy at law and seeks a mandatory injunction compelling the defendants to continue funding until an adequate hearing is conducted on the issue of non-renewal. In Count III, SEK-CAP seeks actual and punitive damages as well as a mandatory injunction compelling the defendants to continue funding until an adequate hearing is held.
In Count IV, SEK-CAP alleges that Richard Lyng has promulgated regulations that violate the statutory mandate of 42 U.S.C. § 1986. SEK-CAP claims that it is entitled to a hearing under the statute, but that the regulations deny it of that right. SEK-CAP seeks an order declaring those regulations void and a mandatory injunction compelling the continued funding of the WIC program until an adequate hearing has been held.
In Count V, SEK-CAP claims that the regulations promulgated by Richard Lyng which establish a priority system to be used for the selection of new agencies to administer WIC programs are not authorized by Congress and that the use of the regulatory system established by the priority system has been used to deny its application. SEK-CAP seeks to declare those regulations void and an order compelling the defendants to continue funding its operation until an adequate hearing is held on the merits.
On September 30, 1988, the court conducted a hearing to determine whether SEK-CAP was entitled to a temporary restraining order. The court denied SEK-CAP's motion for a temporary restraining order.
The court, having considered the briefs of counsel and applicable law, is now prepared to rule on the defendants' motions to dismiss. "Under Rule 12(b)(6), dismissal is inappropriate unless plaintiff can prove no set of facts in support of his claim to entitle him to relief." Thatcher Enterprises v. Cache County Corp., 902 F.2d 1472 (10th Cir.1990).
Due Process
The protection of procedural due process is not available until the plaintiff establishes the existence of a recognized property or liberty interest. Setliff v. Memorial Hosp. of Sheridan County, 850 F.2d 1384, 1394 (10th Cir.1988). "[T]he range of interests protected by procedural due process is not infinite." Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d 548 (1972). Corporations are persons within the meaning of the Fourteenth Amendment. Minneapolis & S.L.R. Co. v. Beckwith, 129 U.S. 26, 9 S. Ct. 207, 32 L. Ed. 585 (1889); see First National Bank of Boston v. Bellotti, 435 U.S. 765, 98 S. Ct. 1407, 55 L. Ed. 2d 707 (1978) (court rejects argument that liberty guaranteed by the Fourteenth Amendment against deprivation without due process of law only applies to natural persons); see also Old Dominion Dairy Products Inc. v. Secretary of Defense, 631 F.2d 953, 961-962 (D.C.Cir. 1980) (corporation may be deprived of due process liberty interest).
Property Interest
"To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have legitimate claim of entitlement to it." 408 U.S. at 577, 92 S.Ct. at 2709. "The hallmark of property, the Court has emphasized, is an individual entitlement grounded in state law, which cannot be removed except `for cause.'" Logan v. Zimmerman Brush Co., 455 U.S. *1433 422, 430, 102 S. Ct. 1148, 1155, 71 L. Ed. 2d 265 (1982).
In Superior Engineering & Electronics Co. v. Sanders, 833 F.2d 823 (9th Cir.1987), the ninth circuit rejected the plaintiff's contention that due process required a hearing before the expiration of its term of participation in a Small Business program. The court commented:
A firm's interest in participating in the Section 8(a) Program must rise to a claim of "entitlement" in order to require fair process in determining whether termination is proper. Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701-2709, 33 L. Ed. 2d 548 (1972); J. Nowak, R. Rotunda & J. Young, Constitutional Law, § 15.3 at 549 (2ed.1983). Entitlement is determined by looking at the applicable law. If the statute creates no claim to future benefits, there is no entitlement to continued benefits. Id. at 550. "... [A] state may be allowed to eliminate the need for hearings to determine the basis for termination of benefits by establishing a system which clearly indicates that there is not right to continuation of benefits ..." Id.. The mutual negotiation of a fixed program participation term between the SBA and the participant provides clear notice that once the term has expired the participant has no right to continue receiving benefits.
Id. at 826-827.
SEK-CAP's contends that it has a property interest in continued funding due to the "existing rules and understandings" defining the WIC grant. The WIC grant contract itself does not support such a contention. The contract covered the time period from July 1, 1987 to September 30, 1988; the preamble fixed the expiration date as September 30, 1988. The contract itself clearly demonstrates that it had no entitlement to WIC grant funds beyond September 30, 1988. In short, the non-renewal of SEK-CAP's WIC contract was not a deprivation of a property interest.
Liberty Interest
Notwithstanding the absence of a property interest, a procedural due process hearing may still be necessary if a liberty interest is implicated. Rich v. Secretary of the Army, 735 F.2d 1220, 1226 (10th Cir. 1984). In Paul v. Davis, 424 U.S. 693, 96 S. Ct. 1155, 47 L. Ed. 2d 405 (1976), the Supreme Court considered the issue of whether the plaintiff who was allegedly defamed by a flier circulated by the police department bearing his name and photograph which supposedly depicting "active shoplifters" stated a claim for relief under 42 U.S.C. § 1983 and the Fourteenth Amendment. The Court concluded that injury alone to reputation does not violate the liberty or property interests of the due process clause.
The Court stated that there is "no constitutional doctrine converting every defamation by a public official into a deprivation of liberty within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment." Id. at 702, 96 S.Ct. at 1161. The proper remedy for such an injury is through a state tort action for defamation. Id. at 697-699, 96 S.Ct. at 1158-60. In Paul, the Court concluded that the plaintiff had suffered no constitutional injury because he could not "assert denial of any right vouchsafed to him by the State and thereby protected under the Fourteenth Amendment." Id. at 712, 96 S.Ct. at 1166.
Thus, in order to present a viable liberty deprivation claim, the plaintiff must demonstrate more than a mere injury to reputation; due process requirements are not triggered unless the injury to reputation is entangled with the loss of a more tangible interest. See Setliff, 850 F.2d at 1396. The plaintiff is also required to demonstrate that the publication of information was false and stigmatizing. See Derstein v. State of Kan., 915 F.2d 1410 (10th Cir. 1990); Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988); Sipes v. United States, 744 F.2d 1418, 1421 (10th Cir.1984).
Codd v. Velger, 429 U.S. 624, 97 S. Ct. 882, 51 L. Ed. 2d 92 (1977), requires a plaintiff seeking to recover for deprivation of a liberty interest to allege that the defendant's "defamatory" statements are false. *1434 The defendants in the case at bar contend that SEK-CAP has failed to allege that the monitoring review was false and defamatory. In its amended complaint, SEK-CAP alleges that the defendant's statements were "derogatory" or that it can "defend against most of the charges." In its response to the defendants' motions to dismiss, SEK-CAP states:
In this case, so that there will be no mistake, the Plaintiff is alleging that many of the factual characterizations of the report are untrue and that the conclusion of the report ... is also. Clearly, such statements are defamatory and may deprive the Plaintiff form federal, state, and local grants in the future the life-blood of its existence. Plaintiff believes that it can establish on the record that it was clearly deprived of liberty without due process.
SEK-CAP does not identify which statements contained in the report are "false" factual characterizations. The report concludes:
We are greatly concerned about the quality of the WIC program as administered by SEK-CAP. There are very clear and serious deficiencies in the provision of the WIC program.
The conclusion of the report is merely the opinion of the preparer's and is therefore difficult to categorize as "false". While it might be possible to end the court's inquiry of this issue at this point, SEK-CAP probably satisfies the requirements of Codd.
While the plaintiff's case clears one hurdle toward proving the deprivation of a liberty interest, the next two hurdles prove to be insurmountable. SEK-CAP does not allege, nor can it demonstrate that the report is "stigmatizing." In addition, even if the defendants' statements were stigmatizing, SEK-CAP cannot demonstrate that it has been deprived of a more tangible interest.
A statement is not stigmatizing if it merely alleges incompetence, negligence, low productivity and dereliction. See Sullivan v. Stark, 808 F.2d 737, 739 (10th Cir.1987). In order for a statement to be stigmatizing, a statement must allege dishonesty, stealing or some other allegation that gives rise to a "badge of infamy," public scorn, or the like. See Wells v. Hico Independent School Dist., 736 F.2d 243, 256 n. 16 (5th Cir.1984); Bailey v. Kirk, 777 F.2d 567, 580, n. 18 (10th Cir.1985). The report, viewed as a whole, does not allege dishonesty or attach a badge of infamy, but rather suggests incompetence. The report does not stigmatize SEK-CAP, and thus no liberty interest is implicated.
Even if SEK-CAP's claim could survive the first two obstacles, it clearly fails on the third. SEK-CAP is unable to demonstrate that the statements of the defendant led to the denial of a protected interest without due process of law. The court has already concluded that SEK-CAP was not deprived of a property interest. SEK-CAP did not have a cognizable property interest in the continued receipt of WIC funds. Non-renewal of the SEK-CAP's grant contract did not disqualify it from further participation in WIC; rather non-renewal allowed other organizations to apply for the WIC grant contract for the 1989 fiscal year. The defendants in this case have not deprived SEK-CAP of any tangible right. The mere expectation of contract renewal does not rise to the level of a tangible right. But see J.O.M. Corp. v. Department of Health of State of N.Y., 697 F. Supp. 720 (S.D.N.Y.1988).
The cases cited by SEK-CAP which recognize a deprivation of a corporation's liberty interest are distinguishable from the case at bar. The court's decision in Southern Mutual Help Ass'n, Inc. v. Califano, 574 F.2d 518 (D.C.Cir.1977), turned in large part on the specific terms of the grant involved in that case. In Old Dominion the government contracting officer declared that the plaintiff "lacked integrity" as evidenced by its past business with government. This determination actually lead to the denial of two substantial contracts which the plaintiff would otherwise have received. 631 F.2d at 962-963. The contracting officer's determination that the plaintiff "lacked integrity" specifically imputed the good name, honor and obviously the integrity of the plaintiff. In that case, *1435 the defendant's statements stigmatized the plaintiff. Under those circumstances, the plaintiff was entitled to notice and an opportunity to be heard. In the case at bar, the defendants' statements have not resulted in the loss of any tangible right or acted as an absolute bar to obtaining grants in the future.
The third case cited by SEK-CAP in support of its liberty claim, Transco Security, Inc. of Ohio v. Freeman, 639 F.2d 318 (6th Cir.1981), is also distinguishable. In that case, the Government blacklisted the plaintiff, who had been dealing with the government on an ongoing basis, without affording the plaintiff procedural safeguards including notice of charges, opportunity to rebut those charges or a hearing. The court concluded that "[w]hile the deprivation of the right to bid on government contracts is not a property interest ..., the bidder's liberty interest is affected when that denial is based on charges of fraud and dishonesty." 639 F.2d at 318 (emphasis added). In the case at bar, SEK-CAP has not been blacklisted, nor did the report charge fraud or dishonesty.
The court concludes SEK-CAP's interest in reputation asserted in this case is neither "liberty" nor "property" guaranteed against deprivation without due process of law.
Standing
Standing to sue relates to the right to relief by one who will suffer an injury in fact. Phico Ins. Co. v. Providers Ins. Co., 888 F.2d 663, 665-666 (10th Cir.1989). "For purposes of Article III of the Constitution of the United States, standing is met if a party shows that he personally has suffered some actual or threatened injury that can be traced to the challenged action and is likely to be redressed by a favorable decision." Id. at 666. The court is satisfied that SEK-CAP has standing to challenge the regulations and the defendants' alleged violations of those regulations. If the regulations are contrary to the authority granted the Secretary by Congress or if the regulations have been violated, SEK-CAP has suffered an injury. See Southern Mutual Help Ass'n, Inc., 574 F.2d at 522-525.
WIC Regulations
The letter notifying SEK-CAP that its contract would not be renewed did not state the reasons for non-renewal. As mentioned above, the monitoring report was apparently the reason for the non-renewal. SEK-CAP claims that the regulations required the state defendant to provide a reason for non-renewal. The relevant regulations provide:
The expiration of an agreement is not subject to appeal. The State agency shall provide local agencies with advance written notice of the expiration of an agreement as required under [7 C.F.R.] §§ 246.5(e)(3)(ii) and 246.18(b)(1).
7 C.F.R. § 246.6(a). Section 246.5(e)(3)(ii) requires the state to "[p]rovide the affected local agency with written notice not less than 60 days in advance of the pending action which includes an explanation of the reasons for disqualification ..." The regulations provide for the giving of reasons only in the event of disqualification and do not appear to require the giving of reasons in the instance of non-renewal. Disqualification is "the act of ending the Program participation of a participant, authorized food vendor, or authorized State or local agency, whether as a punitive sanction or for administrative reasons." 7 C.F.R. § 246.2. The reasons for disqualification are found in 7 C.F.R. § 246.5(e). It seems clear SEK-CAP was not "disqualified" as it was able to and has reapplied for a WIC grant. In this context, non-renewal is not synonymous with disqualification. In any event, SEK-CAP was given notice of non-renewal at least 60 days in advance of expiration. The court concludes that the defendant did not violate the notification requirements.
SEK-CAP contends that 7 C.F.R. § 246.6 violates Congressional intent. SEK-CAP contends that both the statute and legislative history indicate that a fair hearing is required where a State takes any action which adversely affects a local agency's participation. The defendants respond *1436 that the regulations are reasonable interpretations of the authority delegated to the Secretary.
The Child Nutrition Act provides that the "Secretary shall prescribe such regulations as the Secretary may deem necessary to carry out this Act ..." 42 U.S.C. § 1779. When Congress explicitly or implicitly delegates to agencies the power to elucidate a specific provision of a statute, the resulting agency action is entitled to deference. Hecla Min. Co. v. United States, 909 F.2d 1371, 1375 (10th Cir.1990). See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).
The regulations originally promulgated by the Secretary provided for a hearing in the event of non-renewal. On July 8, 1983, the Department of Agriculture proposed to change the regulation requiring a hearing in the event of a non-renewal of a local agency contract. The Department described the purpose of the change:
This section sets forth minimum rules that State agencies must follow when establishing a hearing procedure for local agencies or vendors whose participation is the subject of an adverse action. The current regulations provide that any such vendor or local agency adversely affected by a State decision is entitled to an impartial administrative appeal. Further, the adverse action must be postponed until the hearing decision is rendered. However, the delay of the adverse action until the hearing decision has been rendered may hamper the State agency's ability to deal effectively with abusive vendors or poorly managed agencies. This, in turn, can lead to loss of Program funds.
Therefore, the Department is proposing in paragraph (a)(a(1) that nonrenewal of a food vendor's or local agency's agreement not be subject to appeal. Aside from management consideration, appeal of nonrenewal is inappropriate since both parties to the contract have freely agreed upon an expiration date.
48 Fed.Reg. 31510 (1983) (proposed July 8, 1983). The regulation currently found at 7 C.F.R. § 246.6(a) eliminates the fair hearing requirement in the case of non-renewal.
The court concludes that this modification is not inconsistent with the statutes creating the WIC program. 42 U.S.C. § 1786(f)(9) provides:
The State agency shall grant a fair hearing, and a prompt determination thereafter, in accordance with regulations issued by the Secretary, to any applicant, participant, or local agency aggrieved by the action of a State or local agency as it affects participation.
SEK-CAP is not an "aggrieved party" and is therefore not entitled to a hearing. SEK-CAP's contract expired by its own terms; no affirmative act was required to terminate the contract. Nor does the court view the regulations as coercive, unfair, or contrary to Congressional intent.
SEK-CAP also alleges that the priority system used for selecting new agencies, 7 C.F.R. § 246.5(d), is not authorized by the Child Nutrition Act. The court concludes that the regulation is within the authority of the Secretary. Section 10 of the Child Nutrition Act states that "[t]he Secretary shall prescribe such regulations as he may deem necessary to carry out this Act." 42 U.S.C. § 1779. The regulations are simply an attempt to pick the local agencies best-suited for administration of the WIC program. The court concludes the regulation reflects a reasonable interpretation of the Child Nutrition Act.
IT IS THEREFORE ORDERED that the defendants' motions to dismiss (Dk. 19 and 21) are granted.
NOTES
[1] The purpose of the WIC program is to provide supplemental foods and nutrition education to women, infants and children "at special risk with respect to their physical and mental health." 42 U.S.C. § 1786(a). See Alexander v. Polk, 750 F.2d 250 (3rd Cir.1984) (discussing the WIC program). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1871244/ | 499 F. Supp. 2d 437 (2007)
In re SKI TRAIN FIRE IN KAPRUN AUSTRIA ON NOVEMBER 11, 2000.
This document relates to the following actions:
Johann Blaimauer, et al., Plaintiffs,
v.
Omniglow Corporation, et al., Defendants.
Herman Geier, et al., Plaintiffs,
v.
Omniglow Corporation, et al., Defendants.
Nanae Mitsumoto, et al., Plaintiffs,
v.
The Republic of Austria, et al., Defendants.
Nanae Mitsumoto, et al., Plaintiffs,
v.
Robert Bosch Corporation, et al., Defendants.
Joop H. Stadman, et al., Plaintiffs,
v.
Austrian National Tourist Office Inc., et al., Defendants.
MDL No. 1428 (SAS), Nos. 03-CV-8960 (SAS), 03-CV-8961 (SAS), 06-CV-2811 (SAS), 07-CV-935 (SAS), 07-CV-3881 (SAS).
United States District Court, S.D. New York.
June 19, 2007.
*438 *439 Edward D. Fagan, Esq., c/o Hantman & Associates, Robert J. Hantman, Esq., Hantman & Associates, New York, NY, James F. Lowy, Esq., International Law Group, LLC, Tampa, FL, for Plaintiffs.
Paul P. Rooney, Esq., Reed Smith LLP, New York, NY, Liaison Counsel for all Defendants.
Ryan M. Morettini, Esq., Kirkland & Ellis LLP, Robert W. Littleton, Esq., Littleton Joyce Ughetta & Park LLP, New York, NY, Brant W. Bishop, Esq., Kirkland & Ellis LLP, Washington, D.C., for Defendant Siemens Transportation Systems, Inc.
Arnd N. von Waldow, Esq., Paul P. Rooney, Esq., Reed Smith LLP, New York, NY, for Defendant Robert Bosch Corp.
Eileen T. McCabe, Esq., Stephen Roberts, Esq., William Lalor, Esq., Mendes & Mount LLP, New York, NY, for Defendant Wika Instrument Corp.
Nancy Ledy-Gurren, Esq., Ledy-Gurren, Bass & Siff LLP, New York, NY, for Defendant Hydac Technology Corp.
E. Gordon Haesloop, Esq., Bartlett McDonough, Bastone & Monaghan LLP, Mineola, NY, for Defendants American Cyanamid Inc. and Omniglow Corp.
John F. Tully, Esq., Robert Owen, Esq., Fulbright & Jaworski LLP, New York, NY, for Defendant Exxon Mobil.
OPINION & ORDER
SCHEINDLIN, District Judge.
These cases arise from a disaster that occurred on November 11, 2000, in which a ski train in Kaprun, Austria caught fire, killing 155 people. American and foreign survivors and/or relatives of those who died in the fire brought a number of lawsuits in federal court against numerous defendants alleging, inter alia, negligence and strict liability. The Judicial Panel on Multidistrict Litigation assigned these actions to this Court for coordinated or consolidated pretrial proceedings. The actions within this multidistrict litigation ("MDL") fall easily into two groups those filed on behalf of American plaintiffs,[1] and those filed on behalf of foreign plaintiffs. There are five actions falling in the latter category, and defendants now jointly move to dismiss three of them ("Blaimauer," "Geier" and "Mitsurnoto v. Robert Bosch") on several grounds, including forum non *440 conveniens.[2] For the reasons stated below, defendants' motion is granted, and all five of the foreign plaintiffs' actions are dismissed.[3]
I. BACKGROUND[4]
Both Blaimauer and Geier were filed originally on November 10, 2003, and since have been amended numerous times. According to the most recently amended complaints, the Blaimauer plaintiffs all hail from Germany, Austria, Japan and Slovenia;[5] the Geier plaintiffs are all "citizens and/or residents of Germany."[6] The defendants in both actions are identical and include the following parties: Cyalume Technologies Inc., Omniglow Limited Partners of New York ("Omniglow"), Siemens Transportation Systems Inc. ("STS"), Bosch Rexroth Corporation ("Bosch"), Hydac Technology Corporation ("Hydac") and Wika Instrument Corporation ("Wika").
Because all defendants named in Blaimauer and Geier are American corporations, this Court presumably has federal diversity jurisdiction pursuant to section 1332 of title 28 of the United States Code.[7] Although several defendants' individually-filed motions to dismiss raise colorable jurisdictional questions, I do not reach them here, as this Court "has discretion to respond at once to a defendant's forum non conveniens plea, and need not take up first any other threshold objection."[8]
II. APPLICABLE LAW
A. Collateral Estoppel
"Under the doctrine of offensive collateral estoppel, a plaintiff may preclude a defendant from relitigating an issue the *441 defendant has previously litigated and lost to another plaintiff."[9] In order to bar a defendant from raising a legal issue on collateral estoppel grounds, a plaintiff must show that (1) the issues in both proceedings are identical; (2) the issue in the prior proceeding was actually litigated and decided; (3) the defendant had a "`full and fair opportunity" to litigate the issue in the prior proceeding; and (4) "the issue previously litigated . . . [was] necessary to support a valid and final judgment on the merits.'"[10]
B. Forum Non Conveniens
"Forum non conveniens is a discretionary device permitting a court in rare instances to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim."[11] The doctrine authorizes courts to dismiss cases where "an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiffs convenience."[12] Courts may decline to exercise jurisdiction under this doctrine when it is determined that, weighing "relative advantages and obstacles to fair trial" in the alternative fora, and the practical considerations of which forum will "make trial of a case [more] easy, expeditious and inexpensive," "the balance is strongly in favor" of the defendant's request for dismissal in favor of a more convenient forum.[13]
In deciding whether to dismiss for forum non conveniens, courts in this Circuit undertake a three-step analysis. First, courts determine the degree of deference due the plaintiffs choice of forum.[14]Second, courts examine whether there is an adequate alternative forum for the dispute.[15]Third, courts engage in a balanced assessment of the competing private interests of the parties in the choice of forum, and the public interests of the alternative fora under consideration.[16] Throughout this analysis, the defendant bears the burden of showing that each step "tilt[s] strongly in favor of trial in the foreign forum."[17] "The action should be dismissed only if the chosen forum is shown to be genuinely inconvenient and the selected forum significantly preferable."[18]
1. The Degree of Deference Accorded a Plaintiff's Choice of Forum
"Any review of a forum non conveniens motion starts with `a strong presumption in favor of the plaintiffs choice of forum.'"[19] However, the strength of this *442 presumption, and the degree of deference due the plaintiffs selection, "varies with the circumstances."[20] The degree of deference to be accorded the plaintiff's choice of forum is not determinative of the final outcome; rather, it merely re-calibrates the scales for the remaining two steps of the analysis.[21] "[T]he greater the degree of deference to which the plaintiffs choice of forum is entitled, the stronger a showing of inconvenience the defendant must make to prevail in securing forum non conveniens dismissal."[22] Conversely, where less deference is due, "the easier it becomes for the defendant to succeed on a forum non conveniens motion by showing that convenience would be better served by litigating in another country's courts."[23]
A "plaintiff's choice of forum is generally entitled to great deference when the plaintiff has sued in the plaintiff's home forum."[24] "The reason great deference is generally afforded a plaintiffs choice of its home forum `is because it is presumed to be convenient.'"[25] By contrast, the choice of a United States forum by a foreign plaintiff is entitled to less deference, for the presumption that the choice is convenient "is much less reasonable."[26]
Courts must also consider whether the plaintiffs choice of forum appears to be "motivated by desire to impose tactical disadvantage on the defendant."[27] Additionally, where indicia of forum shopping are present, the presumption in favor of the plaintiff's choice of forum "may not apply, either at all or with full force."[28] Indicia of forum shopping may include: "attempts to win a tactical advantage resulting from local laws that favor the plaintiffs case . . . [and] the inconvenience and expense to the defendant resulting from litigation in that forum."[29]
2. Adequacy of the Alternate Forum
After determining the appropriate degree of deference to accord plaintiff's choice, "the court must consider whether an adequate alternative forum exists."[30] The movant bears the burden to demonstrate the adequacy of the alternate forum.[31] "Ordinarily, this requirement will be satisfied when the defendant is amenable to process in the other jurisdiction. In rare circumstances, however, where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied."[32] The mere fact that the substantive law in the alternative forum is less favorable to the plaintiffs is not sufficient to show that the alternative forum is inadequate.[33] However, proposed alternative *443 fora have been ruled inadequate "where the alternative forum does not permit litigation of the subject matter of the dispute,"[34] and where "a statute of limitations bars the bringing of a case in a foreign forum that would be timely in the United States."[35]
However, it is the plaintiff that carries the burden of proof when contesting the adequacy of the alternate forum on the basis that the court system is corrupt or inefficient, because "considerations of comity preclude a court from adversely judging the quality of a foreign justice system absent a showing of inadequate procedural safeguards."[36] are reluctant "`to assume the responsibility for supervising the integrity of the judicial system of another sovereign nation.'"[37] Consequently, "[t]he `alternative forum is too corrupt to be adequate' argument does not enjoy a particularly impressive track record."[38] Along those lines, in Tuazon v. R.J. Reynolds Tobacco Co., the Ninth Circuit held that the trial court erred in concluding that the Philippines was an inadequate forum, where that conclusion relied on plaintiff's "general allegations" of corruption and delay in the Philippine court system.[39] In other words, in order for a plaintiff to establish successfully the inadequacy of an alternative forum, she must "plainly demonstrate that [she is] highly unlikely to obtain basic justice [in the foreign jurisdiction]."[40]
3. Balancing Public and Private Factors
With respect to the third stage of a forum non conveniens analysis, the first set of factors courts must consider are the relative conveniences to the parties of litigating in plaintiffs chosen forum or in the alternative forum proposed by defendant.[41] These factors encompass: "the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling [witnesses], and the cost of obtaining attendance of willing[] witnesses . . . and all other practical problems that make trial of a case easy, expeditious and inexpensive.'"[42] In undertaking this analysis, courts should examine the specifics of the claims: "Mather than simply characterizing the case as one in negligence, contract, or some other area of law, the court should focus on the precise issues that are likely to be actually tried."[43] However, courts need not undertake to identify all "the rights, remedies, and procedures available under the law that would be applied in each forum."[44]
The second set of factors courts must balance are those of public convenience. "Public interest factors include: court congestion; *444 the interest of forums in having local disputes decided at home; and, the interest in having issues of law decided by courts of the nation whose law is involved."[45]
III. DISCUSSION
A. Collateral Estoppel
As a threshold consideration, plaintiffs argue that the doctrine of collateral estoppel precludes defendants moving for forum non conveniens dismissal.[46] Plaintiffs present this as their strongest defense against defendants' joint motion, but it may be disposed of swiftly. The prior proceeding underpinning plaintiffs' collateral estoppel claim is a previous decision by this Court denying a motion to dismiss the American plaintiffs' Habblett cases for forum non conveniens.[47] Foreign plaintiffs contend that collateral estoppel applies because "nothing has changed" since that ruling, in which the Court addressed issues "virtually identical" to those raised by defendants' present motion.[48] This analogy is just as disingenuous as it is unavailing, for it glosses over a stark and critical distinction that has been reiterated time and again, which is that the Habblett plaintiffs are all American citizens. By any reading of Ski Train III, the fact that the Habblett plaintiffs are American citizens (two of whom then resided in the Southern District of New York) was a decisive factor in the Court's forum non conveniens analysis.[49] Because the issues currently before the Court are not identical to those previously litigated, plaintiffs' invocation of the collateral estoppel doctrine must fail.
B. Forum Non Conveniens
1. Deference to Plaintiffs' Choice of Forum
From the outset, because none of these plaintiffs is an American citizen, plaintiffs' choice of the United States as a forum commands "considerably less" deference than it would if this country were their home.[50] Additionally, defendants urge this Court to accord plaintiffs' forum choice zero deference on the grounds that it was based on impermissible forum shopping.[51] As the Second Circuit has recognized, where a foreign plaintiff has chosen a United States forum, "a plausible likelihood exists that the selection was made for forum shopping reasons, such as the perception that United States courts award higher damages than are common in other countries."[52] This likelihood rises dramatically in situations where neither the plaintiffs nor the event giving rise to the lawsuit have any "bona fide connection[s]" to the United States.[53] While defendants proffer no hard evidence that plaintiffs' decision was aimed at obtaining an impermissible tactical advantage, procedural considerations such as fee awards raise a *445 strong inference that forum shopping motivated foreign plaintiffs' decision to sue in the United States.[54]
To start, defendants observe that nowhere in plaintiffs' opposition do they articulate a single Legitimate, substantiated justification for electing to pursue their claims in the United States.[55] Defendants further suggest that the following factors are suggestive of forum shopping: plaintiffs are more likely to get higher damages awards and contingency fees for attorneys in the United States; plaintiffs are not suing to enforce federal laws;[56] these are diversity actions arising in Austria and governed by Austrian law;[57] all plaintiffs hail from Europe and Asia, thus rendering the United States a comparatively inconvenient forum; and in at least one instance, plaintiffs brought suit against the American affiliate of a real party in interest merely "in a transparent attempt to secure diversity jurisdiction in federal court."[58] Taken together, these considerations particularly the last one, which plaintiffs neglect to oppose and which is more fully discussed below are probative of forum shopping.[59]
As foreigners, plaintiffs properly can invoke this Court's diversity jurisdiction by bringing suit against American business entities, i.e., STS, a Delaware corporation; Hydac, a Pennsylvania corporation; and Wika, a New York corporation. Plaintiffs, however, cannot bring suit in this Court where another foreign entity is named as the primary defendant, for such party would destroy diversity.[60] For example, it is no mystery that plaintiffs do not name Siemens Austria as a defendant even though it is the only Siemens entity that built systems for the Kaprun train.[61] Nor do plaintiffs name Siemens AG as a defendant, a German corporation with its principal place of business in Munich, although Siemens AG supplied Siemens Austria with parts that may have been incorporated on the train systems (and thus Siemens *446 AG has long since been a defendant in the Habblett cases).[62] Facts borne out in the early stages of these suits indicate that plaintiffs were aware at the time they filed their initial complaints that the allegations contained therein implicate Siemens Austria and Siemens AG more than any other Siemens entity.[63] Tellingly, plaintiffs target the allegations in their amended complaints at the foreign affiliates of STS, to wit the "SIEMENS-Transportation . . . entities located in Germany or Austria."[64] In order to overcome the jurisdictional hurdles of pursuing their claims in this forum, plaintiffs were forced to sue STS, whose only alleged connection to the Kaprun disaster is the wrongdoing of its foreign affiliates.[65] That there are powerful indicators that plaintiffs are suing STS solely to preserve diversity in effect using STS as a conduit for asserting claims against real parties in interest who are foreign leads this Court to accord very little deference to plaintiffs' choice of forum.[66]
C. Austria as an Adequate Forum
Defendants have met their burden of demonstrating the adequacy of an alternative forum. Defendants offer unrebutted evidence that Austria has an effective and efficient judicial system,[67] bolstering this Court's own previous finding that Austria *447 provides an adequate alternative forum for litigating disputes arising out of the Kaprun disaster.[68] Additionally, the fact that all foreign plaintiffs presently are pursuing actions in Austrian courts arising out of the ski train fire dramatically undercuts any argument that Austria is an inadequate forum.[69] Specifically, it belies plaintiffs' conclusory and wholly unsubstantiated claim that Austrian courts have "already pre-judged the victim [sic] claims."[70] Nor do plaintiffs offer any bases for their assertion that Austria is an inadequate alternative forum because the "majority of the defendants" are "not subject to the jurisdiction of [Austrian] courts."[71] The second requirement for forum non conveniens dismissal is satisfied.
D. Balancing of Public and Private Interests
1. Private Convenience Factors
Defendants show that private interest factors weigh in favor of dismissal. No relevant events occurred in the United States, no relevant evidence is located in this county, and most key defendants and key witnesses (including most plaintiffs) are found in Austria or elsewhere in Europe. Plaintiffs argue that "everything that has occurred in this case in the last five years strengths [sic] the Courts [sic] keeping the plaintiffs [sic] claims in the United States," but the record in these cases demonstrates precisely the opposite.[72] Plaintiffs cannot refute defendants' observation that only "desultory progress" has been made in these cases since they were filed in 2003, and what little progress has been made relates largely to the jurisdictional hurdles plaintiffs face in prosecuting their actions in this forum.[73] For example, since December 2006, much of the parties' time and efforts have been spent addressing plaintiffs' attempts to marshal evidence in support of their motion for this Court to reconsider, pursuant to Federal Rule of Evidence 60(b), its previous ruling dismissing defendant Gletscherbahnen Kaprun Aktiengesellschaft ("GBK") from this MDL for lack of personal jurisdiction.[74]*448 And nearly all of the discovery that plaintiffs list as having been accomplished in these actions relate solely to preliminary considerations such as jurisdiction and standing, which remain unresolved.[75] With respect to these plaintiffs' actions that name sovereign entities as defendants, no progress has been made at all, for several of these entities are contesting service and/or moving to quash plaintiffs' subpoenas and deposition notices on the grounds that this Court already ruled in previous actions filed by the same counsel who represent foreign plaintiffs here that personal and/or subject matter jurisdiction was lacking.[76] Defendants also point out that to date, there has been no discovery of the individual foreign plaintiffs in the Blaimauer case not a single plaintiff has been deposed.[77] For the purposes of defendants' present motion, the key point is that vast amounts of time and energy have been expended simply in attempts to overcome severe jurisdictional obstacles, without any significant progress being made toward a resolution of these cases.
Nor do plaintiffs refute defendants' contentions that the difficulties the American plaintiffs' have had in pursuing their Kaprun-related litigation here in the United States reinforces the conclusion that Austria would be a far more convenient forum.[78] Effectively all documentary evidence in the American plaintiffs' actions has come from Europe, and the same will be true of these actions.[79] Moreover, the *449 difficulties of obtaining all relevant evidence and having it translated into a useable form for this Court are particularly burdensome in light of the record that exists from the criminal trial relating to the ski train fire that took place in Salzburg, Austria, in 2002.[80] Sixteen people were tried, including two state officials; the trial involved sixty days of hearings, testimony from ninety-five witnesses,[81] numerous expert reports and testimony from court-appointed experts.[82] On February 19, 2004, the trial court rendered its verdict acquitting the individual defendants, and also issued a 872-page opinion examining, in detail, the fire, its causes, and the responsibilities of various entities and individuals.[83] It would indeed be "incomprehensibly cumbersome, incredibly costly and time-consuming" to attempt to obtain and translate all of this testimony and tangible evidence.[84]
Most of the witnesses necessary to prosecute the foreign plaintiffs' cases also hail from Europe (even apart from the plaintiffs themselves). Plaintiffs claim, without basis, that "[w]histleblower witnesses have come forward with critical evidence that can only be presented in the United States and others [sic],"[85] but this is patently false, as the Court is aware that both "whistleblowers," Georg Schwarz and Maria Steiner, testified at the Austrian criminal trial, and that neither conveyed information during their recent depositions that could be construed as critical.[86] And plaintiffs' further assurance that "all witnesses who plaintiffs intend to call as witnesses will voluntarily appear" hardly tips the scales at all, for defendants have implied that the third-party witnesses who defendants would require to defend these suits currently reside in Europe and may not be amenable to appearing in a United States courtroom.[87] This Court cannot compel the testimony of non-party witnesses living in Austria.
Plaintiffs bootstrap their argument that private convenience factors tip against dismissal on this Court's previous decision in Ski Train III. As noted above, plaintiffs' reliance on that opinion is misplaced, for it addressed forum non conveniens issues with respect to the Habblett cases. As a threshold comparison, because the plaintiffs in those actions are American, the *450 Court properly accorded their forum choice much greater deference than it accords here.[88] Moreover, in Ski Train III, the Court expressly stated that the convenience of the named plaintiffs was a "most important" factor to its forum non convenience analysis.[89] Had the named plaintiffs not been American, the Court's balancing of private conveniences would have been very different. Here, the fact that all plaintiffs are non-U.S. residents "severely limits any interest they may have in pursuing their claims in this forum."[90]
Another private interest that weighs heavily in favor of dismissal here which was not present in the Habblett cases is the fact that defendants will be unable to implead certain foreign parties as third-party defendants because doing so would defeat diversity.[91] For instance, in light of the Austrian trial court's findings suggesting that GBK, "if anyone," shoulders a large portion of responsibility for the Kaprun accident, the fact that defendants are foreclosed from impleading third-parties such as GBK strongly militates in favor of forum non conveniens dismissal.[92]
Lastly, plaintiffs fail to address the fact that Austria does not recognize foreign judgments, and thus no decision rendered in this litigation would be accorded res judicata effect in Austria.[93] The Court's concern that defendants could not achieve complete finality if they are ultimately absolved of liability in this forum is heightened by the fact that many plaintiffs have commenced their own suits in Austria. As defendants note, a "defense judgment in these actions would have no effect on whether a company such as GBK who is a defendant in the Austrian suits could seek contribution or indemnity from STS or the *451 other co-defendants."[94] The inability to enforce whatever judgment results in this forum supports forum non conveniens dismissal.[95]
2. Public Convenience Factors
The balance of public interests also weighs heavily in favor of dismissal. First, there is no dispute that the Kaprun tragedy was the most deadly national tragedy in Austria since World War II. Accordingly, Austria undoubtedly has a significant "`local interest in having [this] localized controvers[y] decided at home.'"[96] As this Court has noted previously, Austria's interest in all Kaprun-related litigation is "far greater" than New York's interest, given that "many if not most of the 155 victims were Austrian, the safety of Austria's transportation system is implicated", and "much of the alleged wrongful conduct [was committed] within Austria's borders."[97]Second, for many of the same reasons, it is a virtual certainty that Austrian law will govern most issues in these cases.[98] Although this Court previously found that the necessity of broaching questions of Austrian law did not warrant the dismissal of Kaprun-related litigation, defendants now argue, convincingly, that recent proceedings in Austria "highlight the massive commitment of resources that Austria has made, over which plaintiffs in the[se] cases explicitly ask this Court to pass judgment."[99] The Austrian trial court which oversaw the 2002 criminal proceeding reserved the right of victims, survivors and their families to pursue civil lawsuits under Austrian tort law. Many such lawsuits were subsequently filed. The Austrian government formed a mediation committee for the purpose of actively promoting the settlement of Kaprun-related litigation.[100] Although the existence of these related civil proceedings is not decisive, plaintiffs' total failure to address this issue is troubling, especially because many of the foreign plaintiffs here are pursuing potentially overlapping individual lawsuits in Austria.
Plaintiffs also neglect defendants' assertions that because Austrian tort law is undergoing reexamination and revision in the wake of the Kaprun disaster, the task of ascertaining and applying Austrian law will be unusually difficult.[101] To the extent that this Court is willing to apply even the most complicated or convoluted principles of foreign law, it is of some concern that plaintiffs implicitly are urging this Court to "simply ignore what is transpiring in, Austria. . . ."[102] As the Supreme Court has instructed, the avoidance of such "unnecessary problems in conflict of laws" supports forum non conveniens dismissal.[103]
*452 Plaintiffs make the outlandish statement that because the "Kaprun Criminal Process" is over "there is no longer any public or private interest in Austria for the claims to be adjudicated there."[104] Such sweeping conclusions cannot rescue these foreign plaintiffs from the obvious: their U.S. cases have "dragged on for years, without resolution of the threshold jurisdictional issues, let alone development [or complete discovery] of the merits" of their claims, due to the inconvenience of litigating them in this forum an inconvenience that is "out of all proportion" to plaintiffs' purported convenience.[105]
III. CONCLUSION
In accordance with this Court's findings that plaintiffs' choice of forum is entitled to greatly diminished deference, that Austria is an adequate alternative forum, and that the scales of convenience tip overwhelmingly in favor of dismissal, all five actions within this MDL brought solely on behalf of foreign plaintiffs are dismissed on the ground of forum non conveniens.[106] The Clerk of Court is directed to close these cases [Nos. 03 Civ. 8960; 03 Civ. 8961; 06 Civ. 2811; 07 Civ. 935; 07 Civ. 3881].[107]
SO ORDERED.
NOTES
[1] See, e.g., Habblett v. Omni-Glow Corp., Nos. 01 MDL 1428, 02 Civ. 2492 (filed April 1, 2002) Civ. 2492 (filed April 1, 2002); Habblett v. Siemens AG, Nos. 01 MDL 1428, 01 Civ. 6554 (filed July 19, 2001). Hereafter, I refer to the cases brought on behalf of American plaintiffs as the "Habblett cases."
[2] The parties have engaged in extensive motion practice. To avoid repetitive briefing, only one defendant, Siemens Transportations Systems, Inc., briefed the motion to dismiss Blaimauer and Geier on the ground of forum non conveniens, which the remaining Blaimauer and Geier defendants incorporated by reference into their individually-filed motions to dismiss. Similarly, the defendants in Mitsumoto v. Robert Bosch jointly move for dismissal on the ground of forum non conveniens, as briefed by Exxon Mobil. See Memorandum of Law in Support of Exxon Mobil Corporation's Motion to Dismiss ("Exxon Mem.") at 13-22. Motions to dismiss have not yet been filed in Mitsumoto v. The Republic of Austria (all briefing of dispositive motions was stayed pending service of plaintiffs' amended complaint on sovereign defendants), or in Stadman v. Austrian Nat'l Tourist Office Inc. (filed May 17, 2007).
[3] Because I dismiss these actions based on forum non conveniens, I do not reach defendants' alternative arguments for dismissal, such as those predicated on statutes of limitations.
[4] For a more thorough discussion of the procedural history of this MDL, see In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, Nos. 01 MDL 1428, 01 Civ. 6554, 01 Civ. 7242, 04 Civ. 1402, 2005 WL 1523508, at *1-2 (S.D.N.Y. June 27, 2005) ("Ski Train I"); In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 403, 404 (S.D.N.Y. 2002) ("Ski Train II"). There have been many more rulings in this MDL than I cite herein; it is only for ease of reference that throughout this Opinion, I assign these decisions consecutive roman numerals in the order in which I refer to them.
[5] See Blaimauer Fourth Amended Complaint ("Blaimauer 4th Amend. Compl.") ¶ 3.
[6] Geier Fourth Amended Complaint ("Geier 4th Amend. Compl.") ¶ 3.
[7] See 28 U.S.C. § 1332.
[8] Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., ___ U.S. ___, ___, 127 S. Ct. 1184, 1188, 167 L. Ed. 2d 15 (2007) (holding that "a court need not resolve whether it has authority to adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event," the case may be properly dismissed under the doctrine of forum non conveniens).
[9] Faulkner v. National Geographic Enters. Inc., 409 F.3d 26, 37 (2d Cir.2005) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979)).
[10] Id. (quoting Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir.1986)).
[11] Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 100 (2d Cir.2000) (quotations and citation omitted).
[12] Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 102 S. Ct. 252, 70 L. Ed. 2d 419 (1981) (quotations and citation omitted).
[13] Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S. Ct. 839, 91 L. Ed. 1055 (1947).
[14] See Iragorri v. United Techs. Corp., 274 F.3d 65, 73 (2d Cir.2001) (en Banc).
[15] See id.
[16] See id. at 73-74.
[17] Wiwa, 226 F.3d at 108. Accord P.T. United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 74 (2d Cir.1998).
[18] Iragorri, 274 F.3d at 74-75.
[19] Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 154 (2d Cir.2005) (quoting Piper Aircraft, 454 U.S. at 255, 102 S. Ct. 252).
[20] Iragorri, 274 F.3d at 71.
[21] See id. at 73-74.
[22] Id. at 74.
[23] Id. at 72.
[24] Piper Aircraft, 454 U.S. at 255, 102 S. Ct. 252.
[25] Norex Petroleum, 416 F.3d at 154 (quoting Iragorri, 274 F.3d at 71).
[26] Piper Aircraft, 454 U.S. at 256, 102 S. Ct. 252.
[27] Iragorri, 274 F.3d at 73.
[28] Norex Petroleum, 416 F.3d at 154.
[29] Iragorri, 274 F.3d at 72. Accord Norex Petroleum, 416 F.3d at 155.
[30] Iragorri, 274 F.3d at 73.
[31] See Norex Petroleum, 416 F.3d at 157.
[32] Piper Aircraft, 454 U.S. at 255 n. 22, 102 S. Ct. 252.
[33] See id. at 247, 102 S. Ct. 252.
[34] Id.
[35] Norex Petroleum, 416 F.3d at 159. With respect to the cases at bar, plaintiffs do not allege that their claims must be brought in the United States because they would be time-barred in Austria.
[36] P.T. United Can, 138 F.3d at 73.
[37] Id. (quoting Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 982 (2d Cir. 1993)).
[38] Eastman Kodak Co. v. Kavlin, 978 F. Supp. 1078, 1084 (S.D.Fla.1997) (collecting cases).
[39] 433 F.3d 1163, 1178-80 (9th Cir.2006) (affirming dismissal on other grounds).
[40] Leon v. Million Air, Inc., 251 F.3d 1305, 1312 (11th Cir.2001).
[41] See Iragorri, 274 F.3d at 73.
[42] Id. at 73-74 (quoting Gulf Oil, 330 U.S. at 508, 67 S. Ct. 839).
[43] Id. at 74.
[44] Piper Aircraft, 454 U.S. at 252, 102 S. Ct. 252.
[45] Carey v. Bayerische Hypo-Und Vereinsbank, A.G., 370 F.3d 234, 237 (2d Cir.2004).
[46] See Plaintiffs' Response to [Second] Motion to Dismiss Based on Alleged Forum Non Conveniens and Statute of Limitations Grounds ("Pl.Mem.") at 6-8.
[47] See In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 376 (S.D.N.Y.2002) ("Ski Train III").
[48] Pl. Mem. at 9.
[49] See Ski Train III, 230 F.Supp.2d at 388.
[50] Gilstrap v. Radianz, Ltd., 443 F. Supp. 2d 474, 479 (S.D.N.Y.2006).
[51] See Reply Memorandum of Law in Support of Siemens Transportation Systems, Inc.'s Motion to Dismiss ("STS Reply Mem.") at 7.
[52] Iragorri, 274 F.3d at 72.
[53] Id.
[54] See Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 73 (2d Cir.2003) (in assessing the degree of deference to accord a plaintiff's choice of forum, courts should look to the plaintiff's "likely motivations in light of all the relevant indications").
[55] See STS Reply Mem at 9. The only legitimate reason for choosing a U.S. forum suggested in plaintiffs' brief is that "[w]histleblower witnesses have come forward with critical evidence that can only be presented in the United Statesand others [sic]." Pl. Mem. at 4. But these "waistleblower witnesses" did not come forward until sometime in 2006, years after plaintiffs first filed these actions in federal court.
[56] cf. DiRienzo v. Philip Servs. Corp., 294 F.3d 21, 28 (2d Cir.2002) (reasonable to presume that foreign plaintiffs invoking United States securities laws would choose United States forum for convenience).
[57] Cf. Gilstrap, 443 F.Supp.2d at 479.
[58] STS Reply Mem. at 8.
[59] See Strategic Value Master Fund, Ltd. v. Cargill Fin. Servs. Corp., 421 F. Supp. 2d 741, 762 (S.D.N.Y.2006) (according less deference to foreign plaintiffs' choice of forum where plaintiffs decided not to sue the real party in interest (an English company with its principal place of business in England), but rather its affiliate (a Delaware corporation), in order to preserve diversity jurisdiction).
[60] See 28 U.S.C. § 1332(a)(2).
[61] See Memorandum of Law in Support of Siemens Transportation Systems, Inc.'s Motion to Dismiss ("STS Mem.") at 7-8. Prior to foreign plaintiffs' filing of these actions, the American plaintiffs had identified Siemens AG, Siemens Corporation and Siemens Austria as parties in interest and named them as defendants in the Habblett cases. In 2002, this Court granted Siemens Austria's motion to dismiss for lack of personal jurisdiction and denied Siemens AG's motion to dismiss on the same grounds. See Ski Train III, 230 F.Supp.2d at 376.
[62] See STS Mem. at 8.
[63] See id.
[64] Blaimauer 4th Amend. Compl. ¶ 73; Geier 4th Amend. Compl. ¶ 73.
[65] Compared to its foreign affiliates, STS is only remotely connected to the wrongdoing alleged in plaintiffs' complaints. See STS Mem. at 2 (noting that STS has never been named as a defendant in the Habblett cases). Prior to amending their complaints for a fourth time, plaintiffs had named Siemens AG and Siemens Austria as defendants "doing business as" Siemens Corporation, STS, and a host of other U.S.-based Siemens companies. In their Fourth Amended Complaints, plaintiffs ultimately dropped all Siemens entities save for STS as defendants. See Blaimauer 4th Amend. Compl. ¶¶ 68; 73; Geier 4th Amend. Compl. ¶¶ 67, 72. Additionally, because foreign plaintiffs' claims against Siemens Corporation were recently dismissed with prejudice from a parallel New York state action, their federal court claims against Siemens Corporation would likely be barred as a result of res judicata. See Order, Mitsumoto v. Bosch Rexroth AG, No. 06/105008 (Sup.Ct. N.Y.Co. Dec. 8, 2006).
[66] See Capital Currency Exch., N.V. v. Nat'l Westminster Bank PLC, 155 F.3d 603, 612 (2d Cir.1998) ("Because the real parties in interest are foreign corporations, there is not a strong presumption in favor of the plaintiffs' choice of forum."). See also Pollux Holding Ltd., 329 F.3d at 74 ("[A] plaintiff's choice to initiate suit in the defendant's home forum . . . only merits heightened deference to the extent that the plaintiff and the case possess bona fide connections to, and convenience factors favor, that forum."). That plaintiffs are using American corporations as a pretext for asserting claims against their foreign affiliates who are the real parties in interest is most obvious as to STS, although Wika argues a similar point in its separately filed motion to dismiss. To wit, Wika argues unopposed that even accepting plaintiffs' allegations as true, by the complaints' plain language, the real parties in interest are clearly Wika's foreign affiliates, rather than Wika itself. See Wika Amended Memorandum of Law in Further Support of Wika Instrument Corporation's Motion to Dismiss at 2-5 (citing, inter alia, Blaimauer 4th Amend. Compl. ¶¶ 114-116, stating that "Wika is the subsidiary, alter ego, actual and/or de facto agent for their German foreign parents Defendant WIKA" and that "Defendant WIKA works together with and provides technology, materials, equipment and services, to other Defendants . . . which were involved with The Train, Tunnel, Alpine Center & Valley Station").
[67] See Expert Report of Austrian Superior Court Judge Georg E. Kodek ("Kodek Report"), Exhibit ("Ex.") B to Declaration of Ryan M. Morettini, counsel for STS ("Morettini Decl.") ¶¶ 1.2, 1.3, 1.4.
[68] See Ski Train III, 230 F.Supp.2d at 387-88 (noting that although plaintiffs raised "serious questions going to the integrity of the criminal investigation in Austria," it is the integrity of Austria's judicial system "not that of the executive branch" that is important to the forum non conveniens inquiry).
[69] Indeed, plaintiffs' counsel has informed the Court that each foreign plaintiff (either individually or as a family) currently has an action pending in an Austrian court against at least one defendant, arising out of the Kaprun disaster. See 6/18/07 Email from Edward D. Fagan, counsel for foreign plaintiffs, to the Court. See also STS Mem. Appendix 2 (listing the thirty-four Blaimauer plaintiffs and seven Geier plaintiffs with actions pending in Austria, as well as the corresponding Austrian case numbers and the names of plaintiffs' local counsel).
[70] Pl. Mem. at 4.
[71] Id. Plaintiffs do not dispute defendants' observation that STS, along with other defendant corporations, have foreign affiliates that are much more closely linked to the allegedly tortious conduct spelled out in plaintiffs' complaints, and that these foreign affiliates would be subject to the jurisdiction of an Austrian court. See STS Reply Mem. at 7-9; Blaimauer 4th Amend. Compl. ¶ 73 (alleging wrongdoing on the part of "SIEMENS-Transportation" entities "located in Germany and Austria"); Geier 4th Amend. Compl. ¶ 72 (same).
[72] Pl. Mem. at 9.
[73] STS Mem. at 11.
[74] See In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, No. 01 MDL 1428, 2003 WL 22909153, at *6 (S.D.N.Y. Dec.9, 2003) ("Ski Train IV"); Foreign Plaintiffs' Motion for Rule 60 and Other Relief as Against GBK, relating to 03 Civ. 8960, 03 Civ. 8961, 06 Civ. 2811 (dated "January 11 & 16, 2007"). GBK is a privately held corporation that has its principal place of business in Kaprun, Austria; GBK owns and operates a ski resort located on Kitzsteinhorn Mountain, including the ski train and tunnel involved in the accident. See Ski Train IV, 2003 WL 22909153, at *1. In April of this year, days of depositions took place in Austria of the purported "whistleblowers" that plaintiffs claimed would support their motion to have GBK brought back in as a party to this MDL. These depositions were attended by nearly all counsel involved in foreign plaintiffs' actions, in light of plaintiffs' representations that one of the whistleblowers would testify as to first-hand technical knowledge of the train operations and the dangerous products that were allowed to be put on the train. See 12/18/06 Conference Transcript (12/18/06 "Conf. Tr.") at 41-42. Ultimately, this proved untrue. See 4/12/07 Translated Deposition Transcript of Georg Schwarz ("Schwarz Tr.") at 44-45, Ex. 2 to Declaration of Paul P. Rooney, counsel for Bosch Rexroth Corporation, in Support of Defendant Bosch Rexroth Corporation's Motion to Sanction Plaintiffs' Counsel Pursuant to 28 U.S.C. § 1927 and to Disqualify Plaintiffs' Counsel (filed 5/17/07) ("Rooney Decl.").
[75] See Pl. Mem. at 3-5. Defendants note that plaintiffs' opposition sets forth numerous factual allegations in "a series of unelaborated and unsupported bulletpoints" that lack any citation to the record. STS Reply Mem. at 11.
[76] See Memorandum of Law of Oesterreichische Electrizitaetswirtschafts AG and Verbund-Austrian Hydro Power AG in Further Support of their Motion to Quash the Subpoena Duces Tecum and Deposition Notice (filed 2/7/07 in Mitsumoto v. Republic of Austria, 06 Civ. 2811) ("OE-AG Mem.") at 2-4; Kern v. Oesterreichische Elektrizitaetswirtschaft Ag ("OE-AG"), 178 F. Supp. 2d 367 (S.D.N.Y. 2001) (dismissing complaint against OE-AG for lack of subject matter jurisdiction); In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, Nos. 01 MDL 1428, 01 Civ. 7342, 2003 WL 1807148, at *6 (S.D.N.Y. Apr.4, 2003) (dismissing complaint against Verbund-Austrian Hydro Power AG for lack of personal jurisdiction); 12/18/06 Conf. Tr. at 11-14 (plaintiffs' counsel acknowledging that Austrian sovereign entities had yet to be properly served).
[77] See STS Reply Mem. at 11.
[78] See STS Mem. at 25.
[79] Because Austria is not a party to the Hague Convention, plaintiffs' efforts to obtain evidence from Austria through letters rogatory in these cases has proven time consuming and largely unproductive. See 5/7/06 Letter from B. Ha, former counsel for plaintiffs, to the Court (requesting seventeen letters rogatory seeking testimony from Austrian witnesses), Ex. G to Morettini Decl.; OE-AG Mem. at 1-2 (stating that as of February 7, 2007, plaintiffs had yet to process the Letters Rogatory authorized by this Court on June 26, 2006); 12/18/06 Conf. Tr. at 10-13 (plaintiffs' counsel explaining difficulties encountered in serving letters rogatory).
[80] See Exxon Mem. at 17 (citing Expert Report and Declaration of Dr. Georg E. Kodek ("Kodek 2007 Deer), Ex. A to the Declaration of John F. Tully, counsel for ExxonMobil, in Support of ExxonMobil Corporation's Motion to Dismiss, al §§ 1.5, 4).
[81] According to defendants, many of these witnesses were questioned by the Austrian attorneys who represent plaintiffs in their respective individual actions currently pending in Austria. See STS Mem. at 14.
[82] See Kodek 2007 Dec. §§ 1.5, 4.
[83] The prosecutor appealed this verdict, but the Court of Appeals in Linz, Austria, affirmed the trial court's judgment on September 27, 2005. See STS Mem. at 14 (citing Kodek 2007 Decl. § 1.5). See also Kodek 2007 Decl. § 4 (opining that Austrian courts took "unprecedented efforts . . . to find out the true cause of this catastrophe" and that the trial court's judgment offers a "meticulous" and carefully reasoned analysis of the evidence adduced at the criminal trial, which included fifty thousand pages of documents).
[84] Exxon Mem. at 16.
[85] Pl. Mem. at 4.
[86] See Schwarz Tr.; 4/12/07 Translated Deposition Transcript of Maria Steiner, Ex. 7 to Rooney Decl.
[87] STS Reply Mem. at 12.
[88] See Ski Train III, 230 F.Supp.2d at 387-88.
[89] Id. at 388 n. 6.
[90] Matli v. Strategic Minerals Corp., No. 04 Civ. 5555, 2004 WL 2297373, at *1 (S.D.N.Y. Oct. 12, 2004).
[91] This private convenience factor weighs particularly heavily in favor of dismissal where the action is brought by foreign plaintiffs. See Piper Aircraft, 454 U.S. at 259, 102 S. Ct. 252 ("The District Court correctly concluded that the problems posed by the inability to implead potential third-party defendants clearly supported holding the trial in Scotland."); Gulf Oil Corp., 330 U.S. at 511, 67 S. Ct. 839 ("Certainly to fix the place of trial at a point where litigants cannot compel personal attendance and may be forced to try their cases on deposition, is to create a condition not satisfactory to the court, jury or most litigants."); Fitzgerald v. Texaco, Inc., 521 F.2d 448, 453 (2d Cir.1975) ("The inability to implead other parties directly involved in the controversy is a factor which weighs against the retention of jurisdiction in the Southern District of New York."). See also Strategic Value Master Fund, 421 F.Supp.2d at 770 (defendant's inability to implead foreign third parties favored dismissal); Kilvert v. Tambrands Inc., 906 F. Supp. 790, 796 (S.D.N.Y. 1995) ("A defendant's inability to implead other direct tortfeasors has been held to constitute `clear prejudice' and thus to point strongly in favor of dismissal. . . . [W]hen an action involves foreign plaintiffs . . . the argument for dismissal is even stronger." (citation omitted)).
[92] Plaintiffs' efforts to add GBK as a party to Blaimauer and Geier persist notwithstanding the fact that if they are successful, they will have destroyed the very diversity on which this Court's jurisdiction relies. See In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 198 F. Supp. 2d 420, 426-27 (S.D.N.Y. 2002) (holding that GBK is not an "agent or instrumentality" of Austria and thus does not qualify as a sovereign entity for purposes of ascertaining jurisdiction), aff'd, 67 Fed.Appx. 24 (2d Cir.2003) (unpublished decision).
[93] See Kern v. Siemens Corp., 393 F.3d 120, 129 n. 8 (2d Cir.2004) ("questions as to the enforceability of a judgment if one is obtained" weigh in favor of dismissal on forum non conveniens grounds).
[94] STS Reply Mem. at 14.
[95] See Gulf Oil, 330 U.S. at 508, 67 S. Ct. 839 (recognizing the enforceability of a final judgment, if obtained, as a proper forum non conveniens inquiry).
[96] Piper Aircraft 454 U.S. at 241 n. 6, 102 S. Ct. 252 (quoting Gulf Oil, 330 U.S. at 509, 67 S. Ct. 839).
[97] Ski Train III, 230 F.Supp.2d at 390.
[98] See id. (holding that because Austria was "the locus of vie tort" and has a greater interest in the litigation than New York, this Court will "likely be required to apply" Austrian law to plaintiffs' claims).
[99] STS Mem. at 15.
[100] See id.
[101] See id. (citing Kodek 2007 Decl. § 4).
[102] Id.
[103] Piper Aircraft, 454 U.S. at 241 n. 6, 102 S. Ct. 252 (citation omitted).
[104] PL Mem. at 4.
[105] Sinochem, 127 S.Ct. at 1190.
[106] Aside from the fact that Mitsumoto v. The Republic of Austria, No. 06 Civ. 2811, and Stadman v. Austrian Nat'l Tourist Office, No. 07 Civ. 3881, name sovereign entities (amongst others) as defendants, they are so substantially similar to Blaimauer, Geier and Mitsumoto v. Robert Bosch i.e., all five actions were filed solely on behalf of foreign plaintiffs and arise out of the November 11, 2000 ski train fire in Kaprun, Austria that a nearly identical forum non conveniens analysis applies, and dictates the same result.
[107] Because these cases are dismissed on the ground of forum non conveniens, the following motions are now moot: (1) Bartlett, McDonough, Bastone & Monaghan LLP's Motion to Quash Subpoena Served on Behalf of Foreign Plaintiffs (Docket No. 138; 03 Civ. 8960); (2) Omniglow's Motion to Dismiss Pursuant to Fed.R.Civ.P. 56 for Lack of Standing (Docket No. 121; 03 Civ. 8960); (3) Foreign Plaintiffs' Motion to Disqualify and Sanction E. Gordon Haesloop, Esq. and Bartlett, McDonough, Bastone & Monaghan LLP (Docket Nos. 25, 29, 30; 07 Civ. 935); (4) St. Paul Travelers' Motion to Quash Subpoena Served on Behalf of Foreign Plaintiffs (Docket Nos. 45, 46; 06 Civ. 2811); and (5) Foreign Plaintiffs' Motion for Rule 60 and Other Relief as Against GBK (Docket No. 48; 06 Civ. 2811). Additionally, several defendants have joined in Bosch Rexroth's Motion for Sanctions Under 28 U.S.C. § 1927 and to Disqualify Edward D. Fagan, Esq. as Plaintiffs' Counsel (Docket No. 159; 03 Civ. 8960). Although the disqualification portion of this motion is now moot, the Court will address defendants' request for sanctions in a separate Order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2416482/ | 173 F. Supp. 2d 1185 (2001)
TRANSIT HOMES OF AMERICA, DIVISION OF MORGAN DRIVE AWAY, INC., Plaintiff,
v.
HOMES OF LEGEND, INC., Defendant.
No. CV 01-BU-2035-M.
United States District Court, N.D. Alabama, Middle Division.
October 12, 2001.
*1186 Mark P. Williams, Norman, Wood, Kendrick & Turner, Birmingham, AL, for plaintiff.
Gregory S. Ritchey, Richard S. Walker, Ritchey & Ritchey PA, Birmingham, AL, for defendant.
Memorandum Opinion & Order
BUTTRAM, District Judge.
In its amended complaint, Plaintiff Transit Homes of America, Division of Morgan Drive Away, Inc. ("Morgan") seeks to recover unpaid freight charges from Defendant Homes of Legend, Inc. ("HOL"). (Doc. 2). Now before the Court is HOL's motion to dismiss, filed September 7, 2001, which the Court has advised it will treat as a motion for summary judgment, as HOL appended exhibits to its motion. (Doc. 7). HOL filed a brief in support of its motion, and Morgan has filed a brief and evidence in opposition to HOL's motion. On October 9, 2001, HOL filed a motion seeking permission to file a reply to Morgan's opposition (Doc. 16), a reply brief should that motion be granted, as well as a motion to strike certain materials in Morgan's evidentiary submission. (Doc. 17). The Court concludes, however, that it lacks subject matter jurisdiction and that this action is, therefore, due to be DISMISSED, without prejudice to Morgan to refile its claim in the appropriate state court. HOL's pending motions will be deemed MOOT.
I. BACKGROUND
According to the amended complaint, the relevant facts are these: Morgan is an interstate motor carrier of property engaged in interstate commerce. HOL is a manufacturer of single-section and multi-section manufactured homes. HOL and Morgan entered into a contract, effective July 1, 1997, under which Morgan, as the carrier, agreed, among other things, to transport for HOL, as shipper, certain single-section and multi-section manufactured homes from points of manufacture at or near Boaz, Alabama, to points in the continental United States. Pursuant to the contract, Morgan provided transportation services to HOL during a period of time *1187 including, but not limited to, February 28, 2000 and March 7, 2000. Shortly thereafter, Morgan submitted invoices to HOL reflecting that the total amount due and owing was $162,357.21. On April, 18, 2000, HOL made a partial payment in the amount of $53,903.53. On June 26, 2000, HOL tendered a check to Morgan in the amount of $62,229.45, claiming that same was "full and final payment of all outstanding amounts owed to" Morgan by HOL. Morgan deposited this check "under protest" and demanded that HOL pay what Morgan considered to be the balance still due, $46,224.23. HOL refused, claiming a valid accord and satisfaction. On August 13, 2001, Morgan filed the instant action in this Court, seeking a judgment for $46,224.23, the amount due under its invoice; plus interest, costs, and any other relief the Court might deem just.
II. DISCUSSION
Federal courts are courts of limited jurisdiction; thus, this Court may hear only cases that the Constitution or Congress has authorized. See, e.g., Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994) (citing cases). "It follows from this principle of limited jurisdiction that a federal court has an independent obligation to review its authority to hear a case before it proceeds to the merits." Mirage Resorts, Inc. v. Quiet Nacelle Corp., 206 F.3d 1398, 1400-01 (11th Cir.2000). "Thus, even if the litigants do not question the court's jurisdiction, the court must inquire into its jurisdictional basis sua sponte." Id. at 1401.
As a threshold matter, the Court recognizes that it does not have diversity jurisdiction since the amount in controversy $46,224.23 does not meet the $75,000 jurisdictional prerequisite. See 28 U.S.C. § 1332(a). However, in its amended complaint, Morgan asserts that this Court has subject matter jurisdiction pursuant to both 28 U.S.C. § 1337 and 49 U.S.C. § 14101(b)(2). Where a plaintiff has affirmatively sought to recover under federal law, "[d]ismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is `so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy.'" Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 89, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998) (quoting Oneida Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661, 666, 94 S. Ct. 772, 39 L. Ed. 2d 73, (1974)).
Morgan seeks primarily to found jurisdiction upon 28 U.S.C. § 1337, which provides in pertinent part as follows:
(a) The district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce and protecting trade and commerce against restraints and monopolies: Provided, however, That the district courts shall have original jurisdiction of an action brought under section 11706 or 14706 of title 49, only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interest and costs.
Morgan argues that its action is "brought under 49 U.S.C. § 10101 et seq.," the Interstate Commerce Act ("ICA"). By its own terms, § 1337 provides that jurisdiction will be present with respect to actions arising under at least certain sections of the ICA. However, it is not clear exactly what section of the ICA Morgan conceives its action as arising under.
In its brief, Morgan repeatedly references the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, and emphasizes its applicability in this case. However, by its terms that section pertains only to the liability of *1188 carriers for loss or damage under receipts and bills of lading. The purpose of the Carmack Amendment "is to establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier's liability when damage occurs to a shipper's interstate shipment." Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir.1987). Thus, it expressly gives a federal cause of action against carriers and uniformly establishes the limits of a carrier's liability. See 49 U.S.C. § 14706(d). HOL has not, as Morgan highlights, filed an action seeking to recover under it. However, the Carmack Amendment gives no indication whatsoever that it creates a corresponding remedy for a carrier to sue a shipper for freight charges allegedly due under a contract, which is the nature of Morgan's claim against HOL. Thus, Morgan's claim against HOL cannot be said to arise under the Carmack Amendment for purposes of 28 U.S.C. § 1337. See Kansas City Terminal Ry. Co. v. Jordon Mfg. Co., 750 F.2d 551, 552 (7th Cir.1984); Old Dominion Freight Line v. Allou Distributors, Inc., 86 F. Supp. 2d 92, 94 (E.D.N.Y.2000).
Nonetheless, Morgan suggests that a court will inevitably be required to interpret the Carmack Amendment during this litigation. Morgan first notes that the Carmack Amendment is the exclusive remedy for a shipper to recover against a carrier for loss or damage. See Bear MGC Cutlery Co. v. Estes Express Lines, Inc., 132 F. Supp. 2d 937, 946 (N.D.Ala.2001). Therefore, Morgan argues, the rights and procedures the amendment specifies will dictate whether HOL, as a shipper, could, because of alleged loss or damage, properly effect an offset against amounts otherwise due Morgan and whether HOL might avail itself of the defense of accord and satisfaction. More specifically, Morgan claims that in order for HOL to recover against it for any loss or damage under the Carmack Amendment, HOL had to comply with the notice-of-loss or damage requirements set forth at 49 C.F.R. § 370.3, which Morgan alleges HOL did not do. Morgan also contends that the Carmack Amendment would apply to preempt the common law defense of accord and satisfaction, which HOL has indicated that it will assert.
The problem with this position, as the Court sees it, is that whether a case is one "arising under" federal law for purposes of a jurisdictional statute "must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose." Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 10, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983) (quoting Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S. Ct. 724, 58 L. Ed. 1218 (1914)). It may be assumed that the Carmack Amendment would bar HOL from raising certain defenses or counterclaims, such as set off or accord and satisfaction.[1] The fact remains, however, that the right Morgan here seeks to vindicate, i.e., to recover unpaid freight charges, cannot be said to spring from the Carmack Amendment. By its instant line of argument, Morgan is, in effect, attempting to base jurisdiction upon an application of federal law to anticipated defenses. This, the Court concludes, Morgan may not do.
Morgan argues, however, that it does, in fact, have a federal right, neigh, a duty, to recover unpaid freight charges from HOL. For support, Morgan points to Southern *1189 Pacific Transportation Co. v. Commercial Metals Co., 456 U.S. 336, 343, 102 S. Ct. 1815, 72 L. Ed. 2d 114 (1982), wherein the Supreme Court noted "that a carrier has not only the right but also the duty to recover its proper charges for services performed." See also 49 U.S.C. § 13707 ("[A] carrier providing transportation or service subject to jurisdiction under this part shall give up possession at the destination of the property transported by it only when payment for the transportation or service is made.") The Court concludes, however, that federal law no longer gives rise to a right or a duty of a carrier to recover unpaid charges from a shipper under the circumstances present in this case.
Although such is not the case today, the trucking industry was for years subject to heavy government regulation. The court in Munitions Carriers Conference, Inc. v. United States, 147 F.3d 1027 (D.C.Cir. 1998), presented this abstract:
Once upon a time the United States banned price competition among interstate motor carriers of freight. See Howe v. Allied Van Lines, Inc., 622 F.2d 1147, 1152-54 (3rd Cir.1980) (describing institution of tariff regime for railroads in 1887 and its extension to motor carriers in 1935). Each carrier was required to file with the late Interstate Commerce Commission a tariff of its prices and conditions of carriage. See 49 U.S.C. § 10762(a)(1) (1994) (repealed 1995). The carrier could not charge a shipper any rate other than the rate in the filed tariff, see 49 U.S.C. § 10761(a) (1994) (repealed 1995), give any shipper "preferential treatment," see § 10735(a)(1), or discriminate "unreasonably" in its charges to similarly situated shippers, see § 10741(b) (1994) (repealed 1995).
....
In 1995 the Congress found that motor carriage had become a "mature, highly competitive industry where competition disciplines rates far better than tariff filing and regulatory intervention," and that rate regulation was no longer necessary except for "[two] specialized categories of trucking operations." S.Rep. No. 104-176, at 10 (1995) (referring to household goods and certain noncontiguous domestic trade, hereinafter collectively "household goods"); see id. at 43 (noting that "[f]or the two categories of traffic for which rates would be regulated, new [§] 13701(a) would import the basic rate reasonableness requirement"); see also 49 U.S.C. § 13701 (also imposing reasonableness requirement on "through routes," "divisions of joint rates," and rates "made collectively by [any group of] carriers under agreements approved" by the Surface Transportation Board). Therefore, the Congress abolished the ICC and repealed the provisions (1) requiring that a carrier file tariffs for all types of goods it transports; (2) prohibiting discrimination and preferential treatment; (3) prohibiting government requisition of reduced rate transport; and (4) permitting a carrier voluntarily to offer the Government reduced rates.
The Congress then enacted a new statutory scheme under which a carrier need file tariffs only for the transportation of household goods, as to which preferential treatment is still prohibited. See 49 U.S.C. ch. 137, § 13704(a)(2) (Supp. I 1995).
147 F.3d at 1028-29.
During the period that carriers were required to maintain tariffs on file with the ICC, federal jurisdiction unquestionably was present under 28 U.S.C. § 1337 in cases in which a carrier sought to recover unpaid freight charges from a shipper due *1190 under a filed tariff. See Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 103 S. Ct. 1343, 75 L. Ed. 2d 260 (1983). This was so, the Supreme Court explained, because "`[t]he Interstate Commerce Act requires carrier to collect and consignee to pay all lawful charges duly prescribed by the tariff in respect of every shipment. Their duty and obligation grow out of and depend upon that act.'" Id. at 534, 103 S. Ct. 1343 (quoting Louisville & Nashville R. v. Rice, 247 U.S. 201, 202, 38 S. Ct. 429, 62 L. Ed. 1071 (1918)). However, because the Supreme Court's decision in Thurston is grounded upon the theory that a carrier's right and duty to seek recovery of unpaid charges depended upon a filed tariff and the requirements of the ICA, that case has no application to a claim for unpaid freight charges where the carrier was not required to file a tariff for the transportation provided. Henslin v. Roaasti Trucking, Inc., 69 F.3d 995, 998 (9th Cir.1995).
Morgan does not allege anywhere in its complaint that it is seeking to recover amounts due under a filed tariff. Indeed, Morgan concedes that at no time relevant to this action did the ICA require it to file a tariff with the Surface Transportation Board ("STB"), the successor to the ICC. Morgan does not suggest that it has filed a tariff, and even if it had, the tariff would be of no legal effect. See 49 U.S.C. § 13710(a)(4); Tempel Steel Corp. v. Landstar Inway, Inc., 211 F.3d 1029, 1030 (7th Cir.2000). Thus, it is apparent that Morgan's right to recover unpaid freight charges is not founded upon any federally required tariff, so Thurston Motor Lines does not aid Morgan.[2]Henslin, supra.
Nonetheless, Morgan suggests that even without a tariff, it still has a federally mandated duty under the ICA to recover unpaid freight charges. Morgan cites no authority holding that such is still the case after the demise of the tariff system and the accompanying filed rate doctrine as applied to interstate trucking generally, *1191 and the Court sees no reason why it should be so. The strict obligation of a carrier to collect its full fee was based upon the policy underlying the tariff system, which was "to achieve uniformity in freight transportation charges, and thereby eliminate the discrimination and favoritism that had plagued the railroad industry in the late 19th century." Southern Pacific Transp. Co., 456 U.S. at 344, 102 S. Ct. 1815. Under that system, carriers had to charge and collect the "filed rate" set forth in their filed tariffs, no more and no less, see Security Services, Inc. v. K Mart Corp., 511 U.S. 431, 435, 114 S. Ct. 1702, 128 L. Ed. 2d 433 (1994), so a carrier's failure to recover unpaid charges due under a tariff from one shipper would be the equivalent of showing unlawful discrimination in rates. See generally Gross Common Carrier, Inc. v. Baxter Healthcare Corp., 51 F.3d 703, 706 (7th Cir.1995) ("The [filed rate] doctrine has been the very cornerstone of the anti-discrimination policy that has had such historic importance in the transportation industry.") But because there is no applicable tariff in this action, the filed rate doctrine has no application, and there is no reason that federal law creates an interest or obligation for carriers to collect particular rates from all shippers. Thus, the right of Morgan to recover unpaid charges arises solely out of the terms of its agreed upon contract with HOL. This brings us to Morgan's final jurisdictional argument.
Morgan contends that its contract with HOL was entered into pursuant to 49 U.S.C. § 14101(b)(1) and that this Court has jurisdiction under § 14101(b)(2). Section § 14101(b), provides as follows:
(b) Contracts with shippers.
(1) In general. A carrier providing transportation or service subject to jurisdiction under chapter 135 may enter into a contract with a shipper, other than for the movement of household goods described in section 13102(10)(A), to provide specified services under specified rates and conditions. If the shipper and carrier, in writing, expressly waive any or all rights and remedies under this part for the transportation covered by the contract, the transportation provided under the contract shall not be subject to the waived rights and remedies and may not be subsequently challenged on the ground that it violates the waived rights and remedies. The parties may not waive the provisions governing registration, insurance, or safety fitness.
(2) Remedy for breach of contract. The exclusive remedy for any alleged breach of a contract entered into under this subsection shall be an action in an appropriate State court or United States district court, unless the parties otherwise agree.
As Morgan asserts, § 14101(b)(1) authorized it as a motor carrier to enter into its shipping contract with HOL, as there is no question that the transportation was not of "household goods," as defined by statute. It does not necessarily follow from § 14101(b)(1)'s authorization of carriers and shippers to contract, however, that original jurisdiction is created in a federal district court under § 14101(b)(2) where a carrier sues a shipper for unpaid freight charges based upon a simple contract of carriage. The Court is unable to find any cases addressing whether § 14101(b)(2) can be read as a grant of original jurisdiction for purposes of 28 U.S.C. § 1337. However, identical language found in former 49 U.S.C. § 10713(i)(2), which applied to contracts for rail service, was interpreted as reflecting a Congressional intent to reduce federal involvement in the transportation industry by providing that matters of contract dispute between shipper and carrier are to *1192 be decided by courts of law rather than by the federal agency charged with enforcing the ICA. Cleveland-Cliffs Iron Co. v. ICC, 664 F.2d 568, 592 (6th Cir.1981). Thus, Morgan's suggestion that § 14101(b)(2) should be read to confer federal court jurisdiction over what would otherwise be an ordinary contract collection claim seems contrary to the purpose of the statute and the unmistakable recent course of Congress in generally rolling back federal involvement in carrier-shipper relationships. Indeed, when former 49 U.S.C. § 10713(i) was recodified at 49 U.S.C. § 10709(b)(2), it was made express that its language did not confer original jurisdiction under 28 U.S.C. § 1331 or § 1337. And while the omission to include similar language upon passage of 49 U.S.C. § 14101(b)(2) could perhaps hint that it should be read otherwise, the Court finds this reed of statutory construction is simply too slender to support the notion that Congress intended this section to be an affirmative grant of original jurisdiction to the federal district courts. Therefore, the Court concludes that it cannot have jurisdiction under § 14101(b)(2).
III. CONCLUSION
Based on the foregoing, the Court concludes that it lacks subject matter jurisdiction over this action. Therefore, this action is hereby DISMISSED, without prejudice to Morgan to refile its claim in an appropriate state court. Accordingly, all of HOL's pending motions (Doc's 7, 16, & 17) are deemed MOOT.
NOTES
[1] The Court expresses no opinion on the validity of Morgan's arguments concerning the construction and requirements of the Carmack Amendment.
[2] The Court acknowledges that the result in one post-1995 ICA amendments case, Old Dominion Freight Line v. Allou Distributors, Inc., 86 F. Supp. 2d 92 (E.D.N.Y.2000), could support the notion that federal jurisdiction still exists under 28 U.S.C. § 1337 where a carrier seeks to recover unpaid freight charges from a shipper. In Old Dominion, the court was faced with such claims by a carrier, and the shipper asserted that the court lacked jurisdiction specifically because none of the individual bills of lading forming the basis of the carriers claims exceeded $10,000. Id. at 93. The shipper maintained that the carrier's claims were brought under 49 U.S.C. § 14706 but failed to meet the jurisdictional amount required for such claims under 28 U.S.C. § 1337. Id. The district court rejected this argument, finding that the $10,000 jurisdictional amount was inapplicable because, it reasoned, as has this Court, a carrier's claim for unpaid freight charges simply does not arise under § 14706. Id. at 94. The court further concluded that it had jurisdiction over the carrier's claims under § 1337 based upon the Supreme Court's decision in Thurston Motor Lines that federal jurisdiction exists over a carrier's claim alleging a right to recover under a filed tariff. Id. at 93-94. However, the issue of whether a federally required tariff underlaid the carrier's claims in Old Dominion does not appear to have been raised, although given the date of the decision, it would seem likely that the conduct in the case was subsequent to the effective date of the 1995 amendments to the ICA. If that were so, the carrier's claims may have been based upon a simple contract only, as is the case here. But the Old Dominion opinion itself is silent on this point, and the court did not hint whether its analysis might be altered if there were no filed tariff, as is the case here. Given the ambiguity of the Old Dominion opinion on whether a filed tariff was actually there involved and that the court did not address the application of Thurston Motor Lines in the context of cases where there is no tariff, to the extent Old Dominion implicitly holds that jurisdiction still exists under § 1337 where a carrier seeks unpaid freight charges and it cannot rely upon a filed tariff, this Court declines to follow it. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2317118/ | 454 F. Supp. 2d 1185 (2006)
ALLAPATTAH SERVICES, INC., et art., Plaintiffs,
v.
EXXON CORPORATION, Defendant.
No. 91-0986-CIV-GOLD.
United States District Court, S.D. Florida.
July 6, 2006.
*1186 *1187 Jewel H. Grutman, Lauderdale, FL, Russel A. Cline, Crippen & Cline, Salt Lake City, UT, Daniel G. Jarcho, Mckenna Long & Aldrige, Washington, DC, Gerald M. Bowen, Oakhill, VA, Marshall Joel Osofsky, Moyle Flanigan Katz Kolins Raymond & Sheehan, West Palm Beach, FL, Leah Lariviere, Pertnoy Solowsky & Allen, Sidney Mark Pertnoy, Jay Howard Solowsky, Mark P. Dikeman, Stearns Weaver Miller Weissler Alhadeff & Sitterson, Eugene E. Stearns, Thomas Emerson Scott, Jr., Cole Scott & Kissane, Herman Joseph Russomanno, Russomano & Borello, Miami, FL, for Plaintiffs.
Jamie Lynn Zysk, Bunton & Williams, Terry L. Sullivan, Stuart H. Harris, Martin F. Cunniff, Robert J. Brookhiser, Robert G. Abrams, Coral Gables, Burlington, Weil, Schwiep, Kaplan & Blonsky, Miami, FL, Alejandra Hernandez Pennie, Ted Christopher Craig, Thomas Richard Julin, Martin Leonard Steinberg, Robert Wallis, Exxon Corporation, Legal Department, Houston, TX, Rene J. Mouledoux, Darren B. Bernhard, Lowrey Simon Arnold & White, Washington, DC, for Defendant.
ORDER ON PETITIONS FOR AN AWARD OF ATTORNEYS' FEES, COSTS, AND REIMBURSABLE EXPENSES AND FOR INCENTIVE AWARDS TO NAMED PLAINTIFFS
GOLD, District Judge.
I. INTRODUCTION
THIS MATTER is before the Court on the Attorneys' Fee Petition by McKenna, Long & Aldridge LLP [DE # 2108]; Application/Motion by Rylyns Enterprises, Inc. for an Incentive Award [DE # 2109]; Attorneys' Fee Petition by the Grutman Firm [DE # 2112]; Petition of Class Representatives Allapattah Services, Inc., Alberto Gonzalez, Robert Lewis, Inc. and John Pinder (the "Florida Representatives") for an Incentive Award [DE # 2116]; Motion by Certain Class Representatives [Paul Bove, Martin Cook, George Dalton, R. William McGillicuddy and David Wise] For A Common Benefit *1188 Award [DE # 2118];[1] Petition by Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A. [hereinafter "Stearns, Weaver"] for Attorneys' Fees in Three Fee-Shifting States [DE # 2124]; Petition by Stearns, Weaver for Attomeys' Fees, Costs and Reimbursable Expenses [DE # 2126]; Motion by Pertnoy, Solowsky & Allen [hereinafter "Pertnoy & Solowsky"] for Attorneys' Fees Against Exxon Under Court's Fee Shifting Order of September 23, 2004 [DE # 2129]; Motion by Pertnoy & Solowsky for Attorneys' Fees and Reimbursable Expenses [DE # 2131]; Motion by Gerald M. Bowen to Accept Fee Petition and Deem It Filed Nunc Pro Tune [DE # 2174]; Verified Petition of Attorneys Farrell & La Mantia For An Award Of Attorneys' Fees [DE # 2626, 2627 & 2630]; Supplement by Grutman Firm To Motion For Attorneys' Fees and Costs [DE # 2628 & 2629]; Superseding Motion By Pertnoy & Solowsky for Attorneys' Fees and Reimbursement of Expenses [DE # 2635]; Stearns Weaver's Revised and Supplemental Petition For An Award Of Attorneys' Fees, Costs and Reimbursable Expenses [DE # 2637 & 2638], and Supplement to Application of Class Representatives Paul Bove, Martin Cook, George Dalton, R. William McGillicuddy and David Wise For A Common Benefit Fund Award [DE # 2634],[2] and an Emergency Motion by Stearns Weaver for Alteration of Attorneys' Fees and Incentive Award Procedures [DE # 2864][3]
By my Amended Order on Attorneys' Fees and Incentive Awards Procedures, dated February 7, 2006 [DE # 2613], I bifurcated the hearings on attorneys' fees and incentive awards. Oral argument on the percentage of attorneys' fees and incentive awards to be awarded to Class Representatives was held on Thursday, April 27, 2036. The evidentiary hearing addressing the allocation of attorneys' fees among Class Counsel was held on Wednesday, May 3, 2006, Thursday, May 25, 2306, and Friday, May 26, 2036. The evidentiary hearing concerning the allocation of incentive awards among the Class Representatives was held on Wednesday, June 5, 2006. Final oral argument was held on Monday, June 26, 2006.
In this Order, I first address the percentage award of attorneys' fees to be approved for Class Counsel and the entitlement to, and percentage of, incentive awards to be awarded to the Class Representatives.[4] I next address the allocation *1189 of the fees and awards. Finally, determine the manner of payment of both attorneys' and incentive awards.
For reasons which I address at length in this Order, I hereby establish the percentage to be awarded. I conclude that Class Counsel should be awarded an attorneys' fee of thirty-one and one-third percent (31 and 1/3%), and that the Class Representatives should be awarded an incentive award of 1.3% (as corrected) to be divided equally among the eight Class Representatives. Class Representative McGillicuddy's reduced incentive award will be paid by Gerald Bowen whose attorneys' fee will be partially forfeited.
Without doubt, this Order deals with a lot of money for attorneys' fees and incentive awards. A casual observer, not familiar with the case, may readily conclude that the attorneys' fees and incentive awards are too high. This case, however, is unique. This is not a situation where a class action is brought, soon settled, and Class Members receive an insignificant award and the lawyers get millions. This is a case that has lasted fifteen years, resulted in two trials, extensive appeals including before the United States Supreme Court, a hotly contested Claims Administration Process, and a settlement whereby Class Members will receive their full compensatory damages and nearly all of their prejudgment interest. It is an unprecedented case where over ninety-two percent of the Class Members will receive a recovery and where, through settlement, twenty-one States will be permitted to participate in any remaining distribution in favor of currently unknown Class Members.
I now articulate, in summary form, the essential rationale behind the award of attorneys' fees in this case. Class Counsel refers to it as the "Gold Standard". Any similarity to this Judge's name is merely coincidental. The essence is straight-forward. The amount of attorney's fees awarded should directly correlate to the number of Class Members benefitted; the amount of money received by each class member; and the risk borne by Class Counsel, over time, in achieving the benefits obtained. Attorneys' fees should be structured as an incentive for lawyers to risk achieving the highest possible benefits for the greatest number of Class Members. This is what happened in this case. It was not only the size of the verdict achieved that was significant, but the staggering number of over 11,000 Class Members who were identified to share in the award.[5]
During all this time, the attorneys have received no fees and litigated at substantial risk to themselves and in the best interest of the Class. It is time for their contributions, and that of the Class Representatives, to be recognized. The Class itself has recognized the contributions involved by their lack of any significant objection to the awards requested.
*1190 II. Background
1. Current Requests For Attorneys' Fees and Class Awards; Summary of Objections Filled, and Historical Background Concerning Fee and Incentive Petitions.
The above listed petitions for attorneys' fees and class awards were filed prior to the parties' announcement of a proposed settlement which was negotiated during the Claims Administration Process. Since then, I have received supplemental petitions from Stearns Weaver; Pertnoy & Solowsky; the Grutman Law Firm, and from several of the Class Representatives. In their initial petitions for attorneys' fees, Class Counsel filed requests for an award of attorneys' fees not to exceed one-third of the recovery and an award of litigation costs and expenses (not to exceed 5% of any recovery). The Class Representatives also filed petitions seeking incentive awards of 1.5% (in the aggregate to be divided among them) of any recovery.
Following the original class notification regarding a proposed hearing on the award of attorneys' fees and incentive fees,[6] and the subsequent re-notification in conjunction with the Fairness Hearing, six Class Members filed objections to the petitions for attorneys' fees and costs.[7] Only three Class Members objected to the petitions by Class Representatives for incentive awards. Of the Class Members who filed objections, three Thomas Lee, Josephine Choi and Larry Freeland are represented by an attorney. These three Class Members also filed objections to the proposed incentive awards. All three of these Class Members are represented by Russell A. Cline who has filed an affidavit claiming that he represents in excess of 400 claimants in the Claims Administration Process. Mr. Cline is currently in a dispute with Class Counsel in the Claims Administration Process to determine who actually represents the claimants at issue. This matter remains unresolved at the present time.
Nonetheless, I have reviewed Mr. Cline's objections and find them to be without merit.[8] Mr. Cline essentially argues that, under the Camden I method of *1191 calculating attorneys' fees, the benchmark range in this case should be between six and ten percent. As to the incentive awards, Mr. Cline objects to the absence of specific monetary declarations by Named Class Representatives Paul Bove, George Dalton and David Wise, and further argues that there should not be an aggregate percentage amount awarded to the Named Class Representatives as a whole. All of these matters are discussed at length in this Order.
At the time the petitions for attorneys' fees and incentive awards were originally filed, it was not possible to determine the magnitude of the total recovery to the Class because the total could only be derived after completion of the Claims Administration Process. A percentage of an uncertain number would not allow calculation of the request for attorneys' fees or incentive awards in dollars or as a percentage of each claim. These circumstances have changed radically as a result of the negotiated settlement reached by the parties during the Claims Administration Process and approved by the Court on April 7, 2005 following a Fairness Hearing [DE # 2773]. Of considerable significance to the consideration of appropriate attorneys' fees and incentive awards, I note that more than 11,000 individual notices were sent to members of the Class which detailed the terms of the settlement and the proposed award of attorneys' fees and incentive awards. The notices were specific that the amount of attorneys' fees requested could be as high as $353.333 million and the incentive awards could reach $15.9 million. Examples were provided in the notice as to how the requested attorneys' fees and incentive awards could reduce individual claims. Accordingly, I conclude that each Class Member clearly received notice of the magnitude of the requested fees and awards.
In terms of the settlement agreement, only one objection was filed which has been subsequently withdrawn. It dramatically understates the obvious that the near totality of the Class has no objection to the proposed award of attorneys' fees and incentive awards, as were detailed at length in the notice to the Class.
Going back historically, on December 22, 2005, Plaintiffs filed a "Motion to (1) Preliminarily Approve the Terms of the Settlement of this Action, (2) Approve the Form of Notice to the Class of the Settlement, (3) Establish the Means of Communication of the Notice to the Class, (4) Schedule the Time for Objections to be Made to the Proposed Class, (5) Schedule the Time for Objections to be Made to the Proposed Settlement and to Petitions for Attorneys' Fees and Class Representatives' Incentive Awards, and (6) Schedule a Final Fairness Hearing on the Proposed Settlement" [DE # 2561]. The proposed settlement [discussed more fully below] contemplated that Exxon was to deposit $1.075 billion into a Settlement Common Fund.
As I mentioned, the effect of reaching a settlement amount eliminates uncertainty as to the amount sought by Class Counsel and the Class Representatives in both percentages and dollars. Of the $1.075 billion payment Exxon paid in settlement of the case, $15 million will be allocated to offset the fee obligation of claimants with stations in Texas, Arizona, and Arkansas. Accordingly, Class Counsel now seeks to recover their percentage award against $1.060 billion of the amount Exxon has paid. Although there are disagreements among the law firms as to their respective entitlements to recover attorneys' fees, they do agree that in no event should the total legal fees exceed one-third of the total recovery in the case, or one-third of every claim (including the claims of the *1192 states). That is, if a one-third recovery was granted, the total of attorneys' fees to be divided among the five law firms would be $353.33 million.[9] At the April 27, 2006 hearing, all of the law firms, except for Mr. Gerald Bowen, have agreed to limit their claim of recovery to 31 and 1/3 % of the Settlement Common Fund.[10] Mr. Bowen does suggests that a cap should not exceed twenty (20) percent. In addition, the five law firms request reimbursement of expenses in the amount of $4.2 million, and further request the Court to permit an estimated $1.5 million in expenses for continuing the Claims Administration Process.[11]
The nine Class Representatives also filed petitions seeking recovery of incentive awards to be shared among them of 1.5% of the total Settlement Fund. The sum total of the requested incentive awards totals $15.9 million. The Class Representatives include their claim for out-of-pocket costs and expenses in the 1.5% incentive award they seek. Thus, the total of all attorneys' fees, expense reimbursements, and incentive awards is 35.37% (expressed as a percentage of the $1.060 billion) and $374.88 million (expressed in dollars).
By Order dated January 31, 2006 [DE # 2607]. I preliminarily approved the settlement upon recommendation of the parties and the Special Master. Notice was provided and a fairness hearing was scheduled for April 5, 2006. The notice provided that Class Members could both object to the settlement, and they could, once again, raise any objection to the proposed award of attorneys' fees and incentive awards now that the actual dollars involved could be calculated against the Settlement Fund. Only one objection (later withdrawn) was filed to the settlement, and, as I mentioned, only six objections were filed regarding attorneys' fees and incentive awards.
The issues associated with these petitions, as amended, are varied and complex. In this portion of the Order, I begin by briefly discussing the case history and the settlement. I next discuss the method of awarding attorneys' fees to Class Counsel, the proper percentage to be awarded, and, the award of incentive fees to the Class *1193 Representatives. I then discuss and resolve issues of allocation and payment.
2. Case History
This is a unique class action suit with a long history.[12] As suggested by Stearns, Weaver, it is fair to say that nearly all federal class actions end by dismissal, summary judgement, or settlement. Few are resolved by trial. Fewer still are decided by an appellate court. Almost none reach the Nation's highest court. None that I can find have involved a comprehensive claims administration process that has been so highly contentious. None has resulted in a settlement after trial and appeal whereby, at the end of the day, over 11,000 Class Members will receive full compensation of their claims, including nearly all of their prejudgment interest. This class action is the exception to every one of these particulars.
a. The Complaint and Exxon's Defenses.
This class action was brought by several Exxon dealers (the "Plaintiffs") on behalf of themselves and on behalf of all Exxon direct served dealers who purchased motor fuel from Exxon during the period March 1, 1983 until August 28, 1994. The Plaintiffs alleged that Exxon was contractually obligated to reduce the wholesale price of motor fuel by an amount that, on average, offset the credit cost recovery fees charged by Exxon in connection with its Discount for Cash program. They further alleged that Exxon had breached that obligation, causing its dealers damages in an amount equal to the credit cost recovery fees collected during the Class period. Plaintiffs also sought the recovery of prejudgment interest based on the laws of the 35 states in which Exxon marketed motor fuel through direct served dealer service stations.
Exxon vigorously defended the claims, asserting that it had no legal obligation to offset credit fees with wholesale price reductions but it had done so in any event by virtue of the competitive nature of the marketplace. Exxon also sought to limit or bar individual class member claims through the application of statutes of limitation, thousands of form releases signed by terminated dealers, and by the superceding contract clause of the standard form sales agreement. Exxon opposed class certification although it was later granted. It then sought review of class certification by the United States Court of Appeals for the Eleventh Circuit Court which was rejected.
The most apparent feature distinguishing this class action from virtually every other class action in the reported federal decisions is obviously that it did not settle before trial. Prior to trial, there were extensive discovery battles, extensive class certification briefings, at least six motions to dismiss, another ten summary judgment motions on different issues, an extraordinary number of motions in limine, and a week-long Daubert hearing. In addition, the Court required the parties to extensively brief the manner and method by *1194 which the case would be tried, with particular attention to the form of verdict the jury would consider. To say the least, the pretrial work in the case was substantial.
b. The Jury Finds liability and Breach and Awards Damages on a Cents Per Gallon Basis.
The case was first tried in 1999 but the jury deadlocked and was unable to reach a verdict. At the second trial in 2001, the jury found for the Class on each disputed issue. The jury found that Exxon had a contractual obligation to offset credit fees with wholesale price reductions, that Exxon breached that obligation, and that the Class of dealers suffered money damages measured on a cents per gallon basis (on average, 1.3 cents per gallon). The jury found that Exxon could not enforce the statutes of limitation because it had fraudulently concealed its breach. This Court rejected Exxon's attempt to limit or deny claims through the superceding contracts clause or releases. This Court also found that Exxon was liable for prejudgment interest based on the laws in each of the 35 states in which Exxon direct served dealer stores were located.
Following the jury's verdict, the Class requested entry of an aggregate final judgment for the full amount of money owed to the Class. This Court denied the request, finding instead that each class member would be required to establish individual damages, based on gallons purchased by filing a claim establishing ownership of a particular station during a particular time period. By virtue of this ruling, Exxon was only obligated to pay Class Members who filed a timely claim in the Claims Administration Process.
c. The Jury's Verdict and District Court Rulings are Affirmed on Appeal
Exxon appealed to the Eleventh Circuit, challenging the jury's verdict and this Court's orders certifying the Class, rejecting the releases and superceding contract defenses, awarding prejudgment interest, and exercising jurisdiction over claims less than $50,000.00. The Class appealed this Court's order denying entry of an aggregate judgment for the Class.
The Eleventh Circuit rejected both sides' appeals, thereby affirming the jury verdict and the entitlement of each class member to damages in the Claims Administration Process. Exxon's and the Class' requests for rehearing before the Eleventh Circuit were denied.
The United States Supreme Court heard oral argument on March 1, 2005, and on June 23, 2005, rendered its decision affirming this Court's exercise of jurisdiction over the claims of all members of the Class. The Eleventh Circuit's opinion was upheld on the merits.
d. The Claims Administration Process and Notice of Request for Attorneys' Fees and Incentive Awards
After trial and while the appeals were still pending, this Court implemented a Claims Administration Process for the purpose of processing individual class member claims for their respective share of the Class recovery. The Court approved a form of notice to the Class requiring each eligible class member to file a formal claim with the Claims Administrator by December 1, 2004. The notice advised that each claimant was required to pursue that claim in an adversary damages proceeding against Exxon. Exxon was entitled to participate in the Claims Administration Process, file objections to the payment of individual claims and, where appropriate, file claims for set-offs against damages. The notice further advised that Class Counsel was seeking an award of attorneys' fees not to exceed thirty-three and *1195 one-third percent of each damage award, and that the Class Representatives were seeking incentive awards. Objections to the proposed fees and incentive awards were to be filed by August 31, 2005.
During the Claims Administration Process, Class Counsel has, on behalf of the Class, participated in three distinct phases, the first being collection, digitizing and coding of all dealer records from Exxon's files, the second being the location of Class Members or their beneficiaries wherever they might be to advise Class Members of their right to collect these funds and assist Class Members in filing claims, and the third being the advancement of individual claims on a claim by claim basis to final judgment. To manage the process of receiving, reviewing and approving these claims for payment, this Court appointed former United States District Judge Thomas Scott as Special Master and the Garden City Group, Inc. as Claims Administrator.
e. Exxon Objects to All the Claims Filled, Asserts Set-Offs and Threatens More Appeals
More than 11,000 claims were filed with the Claims Administrator by the claim filing deadline of December 1, 2004. In response, Exxon filed an objection to every claim, asserting that each class member's entitlement to recovery of damages and interest had yet to be resolved through the trial and appeals. Exxon announced its intention to appeal any judgment entered in the Claims Administration Process and challenge, again, the damages and interest determined at trial and in this Court's prior orders. Moreover, Exxon filed thousands of "set-off" claims in which it alleged that the DFC claim should be either reduced or eliminated altogether because of monies owed by former dealers to Exxon for such things as money paid upon signing releases, fuel, accessories, rent or advances for station improvements.
Class Counsel moved to sanction Exxon for these objections and sought an order prohibiting Exxon from taking further appeals of any issues previously decided at trial and later affirmed on appeal. This Court granted the motion and entered an order which (1) sanctioned Exxon, (2) restricted the objections Exxon could assert in the Claims Administration Process, and (3) narrowed the scope of Exxon's set-off claims. I ruled that, if Exxon filed appeals on matters previously decided, I would impose upon Exxon, as a sanction, a postjudgment interest rate equal to Exxon's internal rate of return, which was 23.8% at the time the sanctions order was entered. See Allapattah Servs., Inc. v. Exxon Corp., 372 F. Supp. 2d 1344 (S.D.Fla.2005).
Exxon announced that it intended to appeal the sanctions order limiting its right to take further appeals. In addition, Exxon continued to object to almost every claim filed in the Claims Administration Process, requiring Class Counsel to assist every claimant in establishing the bona fides of their claim. Exxon also continued to assert approximately 650 set-off claims for damages totaling in excess of $40 million dollars exclusive of interest.
Class Counsel moved for judgment against Exxon on all of the set-of claims. The Special Master recommended allowing these claims, and Class Counsel's appeal of that order to this Court was pending when settlement was proposed.
f. Class Counsel's Effort to Categorize Claims to Facilitate Claims Administration Up Through the Date of the Settlement Proposal
Up through the date of the settlement proposal, Class Counsel sought to advance the approximately 11,000 claims in an order that was based on the nature of the objection that had been asserted. The first claims to be considered were those *1196 few hundred claims to which Exxon asserted minimal objections. Those claims to which Exxon's objections could be resolved through moderate revision to the claim were to be processed next, followed by those for which Exxon's objections raised significant legal or factual issues involving ownership (e.g. dissolutions, bankruptcies, heir issues, and assignments).[13]
g. State Governments Claim on Behalf of Claimants Who Did Not File Claims
Relying on state abandoned property statutes, twenty-one of the thirty-five states in which Exxon dealerships were operated filed claims against Exxon asserting entitlement to recover the unfiled claims on behalf of the claimants who did not timely appear. At least one state that did not Me directly in the Claims Administration Process advised Exxon and this Court that it intended to exercise the right to bring claims against Exxon on behalf of dealers who did not do so outside of this action. If state claims were allowed and the states recovered payment on behalf of absent Class Members, the states would hold the recovered money in trust for the true owner.
Exxon objected to the states' assertion of claims on behalf of Class Members who failed to timely do so. The Special Master and this Court had not resolved, by the date of the announced settlement, the issue of whether the states were entitled to assert claims for absent Class Members.
h. Motions for Entry of Individual Judgments and Potential Further Appeals
Since July 5, 2005, Class counsel weekly filed motions seeking summary judgment on claims to which there is alleged to be no remaining evidentiary dispute with Exxon. The process was in its early stages when settlement was announced. As of December 19, 2005, twenty-two motions for summary judgment were filed with respect to approximately 1,300 claims for a total of approximately $330 million dollars. Of these, the Special Master already adjudicated 20 motions for summary judgment, thereby posturing some $276 million in class member claims for immediate distribution [DE # 2757 at 2].
i. The Court's Rulings on Class Members' Obligation for Payment of Attorneys' Fees.
To facilitate the award of attorneys' fees, I ruled (prior to the announced settlement) that with respect to Class Members whose stations were located in states other than Texas, Arizona, and Arkansas, Class Counsels' attorneys' fees were to be paid by deducting from each Class Member's payment a fixed percentage to be later determined.[14] With respect to Class Members whose stores were located in Texas, Arizona or Arkansas, I further ruled that *1197 the laws of those states entitle those Class Members to require Exxon to pay at least a portion of their attorneys' fees in addition to its obligations to pay damages and prejudgment interest. Exxon announced that it intended to appeal that order. It argued that any liability for these attorneys' fees should be measured by a different criterion than that applicable to the percentage awarded for attorneys' fees in the other thirty-two states.
j. Terms of the Settlement
The following is a summary of the terms of the settlement:[15]
1. Settlement Fund and Exxon's Waiver of an Objections and Appeals
Exxon will wire funds in the amount of $1,075,000,000 (the "Total Settlement Proceeds") to an account at a banking institution approved by the Court (hereinafter, the "Exxon DFC Class Action Account" maintained at the "Exxon DFC Depository Institution"). Of this amount, $1,060,000,000 will be designated for payment of claims (the "Settlement Fund") and $15,000,000 will be designated for partial payment of the attorneys' fees owed by Exxon for Class Members whose stores were located in the states of Arkansas, Arizona, and Texas (the "Three State Fund"). Upon final approval of the agreement, Exxon waived and relinquished all objections and appeals to all claims. Exxon will no longer participate in the claims adjudication process, except that Exxon will be available to respond to inquiries by Class Counsel regarding the need for additional documentation.
2. Release to Exxon
Exxon will be released and discharged from any and all further liability for any and all causes of action, judgments, liens, indebtedness, costs, damages, obligations, attorneys' fees, losses, claims, liabilities and demands of whatever kind or character that are related to the cause of action that was adjudicated in this lawsuit.
3. Claims Administration Process
The Claims Administration Process will go forward before the Special Master to adjudicate each Proof of Claim that was postmarked on or before December 19, 2005, including those claims that were filed after the claims filing deadline of December 1, 2004 and including those claims that were filed by members of the Class who previously had opted out (if they filed claims prior to December 19, 2005).
Throughout the duration of the Claims Administration Process, Class Counsel will remain responsible for designating and presenting all claims for adjudication before the Special Master on a rolling basis, marshaling the supporting documentation that may be available for each claim, and identifying those gallons as to which there are competing claims requiring adjudication.
4. Two Percent (2%) Reduction and Five Percent (5%) Reserve from Claims
Each claim filed by a claimant by December 19, 2005 will be reduced by two percent (2%) as a reserve for contingent. circumstances. In addition, when a claim is ordered to be paid, a five percent (5%) reserve will be taken from each claim to ensure that sufficient funds will exist at the end of the Claims Administration Process to fund all claims timely filed by December 19, 2005 and determined to be valid. Payment of that reserve will be made only if sufficient funds exist at the *1198 end of the Claims Administration Process to allow it to be paid and only in the amount of the funds then available. The funds reserved and not paid will not bear interest. Thus, until the end of the Claims Administration Process, claimants will be paid 93% of their awarded recovery less deductions for attorneys' fees, costs, expenses and incentive awards. Class Member's actual recovery would depend on this Court's award of attorneys' fees to Class Counsel.
5. Termination of prejudgment interest and funding of costs of Claims Administration Process
Effective October 31, 2005, prejudgment interest will cease to accrue on all claims. Instead, the interest that accrues on the money held in the Exxon DFC Class Action Depository Account will be utilized to fund the costs of the Claims Administration Process, including the payment of fees of the Special Master, the fees of the Claims Administrator, the fees of the attorney(s) appointed on behalf of the state governments as discussed below, and all bank and transaction fees (collectively, the "Claims Adjudication Costs").
6. Exxon's Set-Off Claims Abandoned
All of the thousands of set-off claims raised by Exxon in the Claims Administration Process will be dismissed with prejudice.
7. Appointment of States' Counsel; Residual Funds Go to the States as Abandoned Property
(i) Exxon's departure from the Claims Administration Process will eliminate a role that it has previously filled screening claims to challenge invalid claims in the Claims Administration Process. Class Counsel cannot fulfill this role because it cannot take a position adverse to claiming Class Members. The Claims Administrator, Garden City Group, also cannot fulfill this role because it is acting in a neutral capacity as an arm of the Court, as is the Special Master. The state governments of the 35 states who have an unresolved claim to any monies not claimed by Class Members in the Claims Administration Process, however, have a sufficient interest and the proper incentives to fulfill this role. In particular, under the various states' abandoned property laws, the states will hold any unpaid funds they recover for the benefit of the true owner and thus have no incentive to needlessly oppose or unduly delay payment of valid claims.
(ii) To fill the role, the state governments collectively retained attorneys who will fully participate in the Claims Administration Process, have standing to object to claims, assist in the resolution of conflicting claims, and facilitate the settlement of disputed claims (which settlements will resolve with finality the right to claim the gallons at issue). In the event the states cannot agree on counsel to serve in this capacity, states' counsel will be appointed for all states by the District Court States' counsels' attorneys' fees and expenses, as approved by the Special Master and District Court, shall be paid from the interest income earned on the Exxon DFC Class Action Depository Account.
(iii) Any money remaining in the Settlement Fund or the Three State Fund after adjudication and payment of all claims (including payment in full of the 5% reserve from adjudicated claims, litigation expenses, and Claims Adjudication Costs) will be disbursed pro rata to the 35 state governments in which the Class member stations were located. This money will be held in perpetuity by the state governments pursuant to their abandoned property statutes or law for the benefit of the rightful owner. Any class member who did not submit a Proof of Claim on or before December 19, 2005 will be able to *1199 make a claim directly to the appropriate state government pursuant to the applicable abandoned property statute or law. The value of the claim will be derived from the difference between the amount of the residual fund and the total of all claims that were not timely asserted.
8. No Interpleader; Sole Venue for Claims
The settlement provides that all claims, including disputes between competing claimants, must be adjudicated under the jurisdiction of the United States District Court for the Southern District of Florida pursuant to the authority and supervision of the Court and cannot be interplead to other courts. Moreover, any and all thirdparty liens, garnishments, attachments, and other claims against Exxon must be brought as part of this litigation and cannot be brought against Exxon in any other court of law or jurisdiction.
9. Appeals From Claims Decisions Limited
Any party seeking to recover monies in the Claims Administration Process will be entitled to due process before a Special Master and review of any decisions following that process by appeal to the District Court. There will be no appellate review of decisions of the District Court with respect to claims decisions.
10. Authority of the States' Counsel to Recommend Discounts of Claims Where Disputed Legal or Factual issues Exist
To facilitate the Claims Administration Process, the States' counsel will be empowered to recommend to the Special Master agreed-upon discounts of claims in recognition of the risk of litigation of those disputes in the Claims Administration Process. The amount of any negotiated and approved discount will remain in the Settlement Fund to enhance the probability of excess funds in the Settlement Fund upon the adjudication of all claims.
11. Mediation
Where requested by the parties or ordered by the Special Master, parties to contested claims will be directed to mediation to attempt to resolve disputes.
III. CLASS ACTION ATTORNEYS' FEE AWARDS
A. Under United States Supreme Court And Eleventh Circuit Precedent, Class Counsel are Entitled to an Award of Fees Pursuant to the "Common Fund" Doctrine
The approved settlement has clearly established a "common fund" for the benefit of the Class.[16] Pursuant to the settlement, Exxon has contributed a sum certain to an account at a federal banking institution to be distributed in accordance with the terms of the settlement and pursuant to the further orders of this Court. Exxon is no longer responsible for the payment of any attorneys' fees (other than in three fee-shifting states). Here, the settlement provides all the attributes of a "common fund," namely, (1) the class of beneficiaries is sufficiently identifiable, (2) the benefits can be accurately traced to them, and (3) the fee can be shifted with some exactitude to those benefiting from the settlement.
*1200 It is axiomatic that "attorneys in a class action in which a common fund is created are entitled to compensation for their services from the common fund, but the amount is subject to court approval. Fed. R.Civ.P. 23(e)." Camden I Condo. Ass'n, Inc. v. Dunkle, 946 F.2d 768, 771 (11th Cir.1991). The district court presiding over a diversity-based class action pursuant to Fed.R.Civ.P. 23 has equitable power to apply federal common law in determining fee awards irrespective of state law. In addition, all of the states, with the possible exception of Florida, either recognize or have no contrary authority against the use of the percentage of the recovery method for the determination of a reasonable fee in such circumstances. See Attachment "1" to this Order (specifying the law of the applicable states). Under such circumstances, even Florida law[17] does not trump under an Erie analysis. See, e.g., Weinberger v. Great Northern Nekoosa Corp., 925 F.2d 518, 522 n. 5 (1st Cir.1991)(recognizing that district court presiding over diversity-based class action has equitable power to apply federal common law in determining fee award irrespective of state law); Mathewson Corp. v. Allied Marine Indus. Inc., 827 F.2d 853, 853 n. 3 (1st Cir.1987)(federal court settlement implicating matters of considerable federal concern requires resolution by federal common law principles as opposed to state law); Perfect Fit Indus. v. Acme Quilting Co., Inc., 646 F.2d 800, 806 (2d Cir.1981)(federal court's equitable powers not governed by state law even when state law provides the rule of decision); Clark Equip. Co. v. Armstrong Equip. Co., 431 F.2d 54, 57 (5th Cir.1970)(Erie doctrine does not deprive federal court in diversity case from power to employ equitable remedies not available under state law).
In fact, the United States Supreme Court has, since 1882, repeatedly recognized that, where counsel secures a "common fund" for the benefit of a class, counsel is entitled to be compensated from the funds recovered. See Trustees v. Greenough, 105 U.S. 527, 15 U.S. 527, 26 L. Ed. 1157 (1882); Sprague v. Ticonic National Bank, 337 U.S. 161, 59 S. Ct. 777, 83 L. Ed. 1184 (1939); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 392-94, 90 S. Ct. 616, 24 L. Ed. 2d 593 (1970); Alyeska v. Pipeline Svc. Co. v. Wilderness Society, 421 U.S. 240, 257, 95 S. Ct. 1612, 44 L. Ed. 2d 141 (1975); Boeing v. Van Gernert, 444 U.S. 472, 478, 100 S. Ct. 745, 62 L. Ed. 2d 676 (1980). The "common fund" doctrine is based on the perception that those who benefit from the prosecution of a lawsuit will be unjustly enriched if they do not share the costs in direct proportion to the benefit each receives. See Boeing, 444 U.S. at 478, 100 S. Ct. 745; Camden, 946 F.2d at 771.
An award of attorneys' fees from a common fund necessitates a final judgment or settlement fixing the total amount of damages and ordering such amount to be placed in an escrow account from which Class Members would receive their share simply by proving their individual claims against the judgment fund. See Boeing, 100 S.Ct. at 749-50, 100 S. Ct. 745 (". . . the criteria are satisfied when each member of a certified class has an undisputed and *1201 mathematically ascertainable claim to part of a lump-sum judgment [or settlement] recovered on his behalf. Once the class representatives have established the defendant's liability and the total amount of damages, members of the class can obtain their share of the recovery simply by proving their individual claims against the judgment [settlement] fund. This benefit devolves with certainty upon the identifiable persons whom the court has certified as members of the class. Although the full value of the benefit to each absentee member cannot be determined until he presents his claim, a fee awarded against the entire judgment fund will shift the costs of litigation to each absentee in the exact proportion that the value of the claim bears to the total recovery.") (emphasis added).
This key requirement has now been met in this case. A fee award against the entire judgment fund will shift the costs of litigation to each Class Member in the exact proportion that the value of the claim bears to the total recovery. In this manner, each individual recovery is to carry its proportionate share of the total amount allowed for attorneys' fees, expenses and disbursements as such class member's recovery bears to the total recovery afforded the class. See Boeing, 444 U.S. at 478, 100 S. Ct. 745 (emphasis added); see also Camden, 946 F.2d at 771 ("common fund" doctrine permits an award of fees where the court's jurisdiction over the subject matter of the suit and the defendant "make[s] possible an award that will operate to spread costs proportionately among class members")(quoting H. Newberg, Attorney Fee Awards, § 2.01 at 28-29 (1986)); In re Everglades Air Disaster, 549 F.2d 1006, 1017-18 (5th Cir.1977)(affirming then District Judge Fay's order applying the "common fund" doctrine which provided for payment of fixed percentage of anticipated claim proceeds as fees).
B. The Eleventh Circuit's Decision in Camden Applying the Common Fund Doctrine Requires Attorneys' Fees Awarded Thereunder To Be Established as a Percentage of the Recovery
The Eleventh Circuit in Camden held that, in applying the "common fund" doctrine, class counsel's attorneys' fees are to be awarded as a percentage of the class' recovery, as opposed to a complex hoursbased lodestar approach. Camden, 946 F.2d at 773-74. The Camden Court specified that, "henceforth, in this circuit, attorneys' fees awarded from a common fund shall be based upon a reasonable percentage of the fund established for the benefit of the class. The lodestar analysis shall continue to be the applicable method used for determining statutory fee-shifting awards." 946 F.2d at 774.
The Camden Court further specified that, in determining such awards, the "bench mark" percentage is 25%, "which may be adjusted up or down based on the circumstances of each case." Id. at 775. This 25% "bench mark" arose in the context of a typical class action which had been settled prior to a trial for a fraction of the defendant's potential liability, thus mitigating counsel's risk of a negative outcome. The Court recognized that circumstances may be quite different in other cases and adopted a flexible approach to determining a percentage given all of the circumstances. Thus, for instance, in this case, contrary to Camden, Class Counsel bore the full risk of losing the case through trial, a direct appeal on the merits, a proceeding before the United States Supreme Court, and during the fluid circumstances of the Claims Administration Process.
Consistent with this approach, the Court held that, in considering adjustments, district courts should evaluate the *1202 twelve "Johnson factors" (Johnson v. Georgia Highway Expr., Inc., 488 F.2d 714 (5th Cir.1974)), with particular emphasis on the "monetary results achieved" in the case. The twelve factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability of the case"; (11) the nature and the length of the professional relationship with the client, and (12) awards in similar cases. 946 F.2d at 772 n. 3.
In addition to these factors, the Eleventh Circuit recognized that "[O]ther pertinent factors are the time required to reach a settlement, whether there are any substantial objections by class members or other parties to the settlement terms or the fees required by counsel, any nonmonetary benefits conferred upon the class by the settlement, and the economics involved in prosecuting a class action." Id. at 775. Furthermore, it stated that there ". . . will also be additional factors unique to a particular case which will be relevant to the district court's consideration." Id. But, the Court stated that, as a general rule, 50% may be established as an upper limit. See id. at 774.
The Eleventh Circuit directed that, in order to facilitate appellate review, district courts should articulate the specific reasons for selecting the percentage awarded, including identification of the factors upon which it relied and how each factor affected the percentage awarded. Id. at 775. The Court recognized that there are no hard and fast rules mandating the weight to be given to each factor and the percentage to be awarded. The Court further recognized that the factors which will impact upon the appropriate percentage to be awarded as a fee in any particular case will vary. Id.
In objections to the proposed award of attorneys' fees, counsel for Objectors Thomas Lee, Josephine Choi and Larry Freeland relies on the Eleventh Circuit's more recent decision in Waters v. Int'l Precious Metals Corp., 190 F.3d 1291, 1291 (11th Cir.1999). This case, however, supports, rather than detracts, from my analysis of the factors set forth below. In Waters, the Court affirmed the district court decision that Class Counsel was entitled to a small upward adjustment in the benchmark of 30%, and that the appropriate percent should be 33 1/3% or $13,333,333.00. 190 F.3d at 1295. In that case, the settlement amount was $40 million (as compared to $1.075 billion here). See id. The settlement in that case was reached after seven years of extremely contentious litigation and five months of trial. See id. Here, the settlement was reached following fourteen years of contentious litigation, two jury trials, extensive appeals, and in the middle of an extremely contentious Claims Administration Process. Accordingly, the facts of this case are quite different from those in Waters and the ultimate percentage to be awarded ". . . may be adjusted in accordance with the individual circumstances of each case." Waters, 190 F.3d at 1294 (citations omitted).
C. Consideration of the Johnson and Other Factors
1. Summary of Analysis and Conclusion[18]
*1203 I begin with the conclusion that the 25% "bench mark" should be considered a floor for a fee award in this case, and that the percentage should be adjusted upward in light of the application of the relevant Camden/Johnson factors. I do so with the confidence of presiding over this case in nearly all its significant details for over seven years. This was an "all or nothing" case for the Plaintiffs. Class Counsel, having worked on this case since 1992, faced a potential catastrophic risk in the event the case was lost at trial or, thereafter, at each level of review. Given the length of this case, and the significant risks inherent in the litigation, I conclude that the most appropriate way to establish a bench mark is by reference to the market rate for a contingent fee in private commercial cases tried to judgment and reviewed on appeal. See Camden, 946 F.2d at 772 n. 5 (referencing fifth and sixth Johnson factors regarding the customary fee in a particular case and whether the fee is fixed or contingent, emphasizing that each case's unique circumstances dictate relative importance of factors); In re Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir.2001)(requiring that "common fund" percentage awards be determined by market rate for contingency fee agreements on a prospective basis at the outset of the representation).
But, even this approach minimizes the risks involved for Class Counsel. After successfully defending the case at trial and on appeal, Class Counsel's entitlement to an attorneys' fee, including the total amount of the attorneys' fee, was directly dependent upon the number of Class Members who actually filed claims pursuant to notice, and, further, upon the merit each of each claim, resulting in a final judgment for individual damages. I made this clear in my Order on Plaintiffs' Motion for Determination of Legal Basis and Responsibility for Payment of Attorneys' Fees [DE # 1721] which denied an "advancement" of attorneys' fees by Exxon. Confronted with this reality, Class Counsel undertook an extraordinary effort to contact Class Members and encourage the filing of claims. The result is now selfevident with over 11,000 claims (over 92%) being filed in this case.
Even with this success, Class Counsel was confronted with another major task. Given Exxon's unflagging defenses, each claim potentially required a "mini-trial" before the Special Master. Exxon made it clear that each final judgment would be subject to further appeal, notwithstanding that it potentially faced severe sanctions for its "unwarranted" defenses. This presented a unique and challenging task for the most committed of counsel who potentially had to wait until the end of the day to be compensated for years of excellent service.
Even after the settlement approval, Class Counsel remains responsible to pursue each claim to judgment. This will require Class Counsel (as later addressed) to place a large staff of attorneys, paralegals and other professionals to assist claimants in prosecuting their claims. They will stay in that role for the duration of the Claims Administration Process. No other attorneys' fees will be charged by Class Counsel for these services. By fully aligning Class Counsel's interest in attorneys' *1204 fees with the maximum recovery for each Class member, the Class, as a whole receives a benefit, as compared to leaving each member on his or her own after the settlement. There is a price to the Class, however, for this full alignment of interest. In my view, the Class, and each Class Member, must be prepared to compensate Class Counsel at the full market rate for such past and present extraordinary services. Evidently, the Class itself recognized Class Counsel's remarkable services in that so few objections were filed to a percentage fee. The lack of significant objection from the Class supports the reasonableness of the fee request. See Stoetzner v. United States Steel Corp., 897 F.2d 115, 118-19 (3d Cir.1990) (even when 29 members of a 281 person class (i.e. 10% of the class) objected, the court concluded that the response of the class as a whole "strongly favors [the] settlement"); In re Rite Aid, 396 F.3d 294, 305 (3d. Cir.2005) (stating that the fact that only two class members objected to the fee request supports approval of the fee); In re Rent-Way Sec. Litig., 305 F. Supp. 2d 491, 514 (W.D.Pa.2003) ("[t]he absence of substantial objections by other class members to the fee application supports the reasonableness of Lead Counsel's request", thus indicating the strong support of the Class for the award of fees and expenses requested); see also Order of Final Approval of Class Settlement Agreement [DE # 2773 at 23-24 (citing cases on lack of objection)].
As aptly stated by Professor Issacharoff, in his Declaration in Support of Attorneys' Fees:
[T]he resolution to date has resulted in the creation of a claims process whereby individual class members will press claims for compensation one at a time. In my view, the key task before the Court in setting attorneys' fees is to create the incentives that will maximize the amount of recovery to the class. This is best accomplished by awarding class counsel a fee based upon a percentage of what the class recovers. Not only does that minimize any conflict between the class and class counsel, but it also rewards class counsel for recovering as much as possible for the class.
ISSACHAROFF DEC. ¶ 3 [DE # 2638, Exhibit "B"].
For these reasons, and the reasons set forth below, I conclude that the appropriate percentage to be awarded to Class Counsel is 31 and 1/3 percent. In reaching this conclusion, I am mindful that two of the law firms serving as Class Counsel, Steams, Weaver and Pertnoy & Solowsky, have proposed that the fee award should be reduced in consideration of the lessened risk arising from the settlement agreement. They do so in order that the 2% reduction in claims would be fully offset with fee reductions. I concur with their position and conclude that the totality of the findings support an award of 31 and 1/3 percent to Class Counsel.
2. Application of the Factors
I do not consider the Johnson factors in the order they are listed in that opinion. Instead, I have rearranged the order of each Johnson factor in terms of the priority and weight I have assigned to it.
Amount Involved and Results Obtained
The eighth Johnson factor-"[t]he amount involved and the results obtained"recognizes that a fee award should reflect the relief obtained. Johnson, 488 F.2d at 718. This corresponds to the United States Supreme Court's directive that an enhancement of the fee award is appropriate in cases of "exceptional success." Blum v. Stenson, 465 U.S. 886, 901, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). Factors indicating "exceptional success" include success achieved under unusually difficult or risky circumstances and the size of *1205 plaintiffs' recovery. See Yates, 719 F.2d at 1533 (enhancing fee in part because of the very favorable result for the plaintiff).
Regarding the most important factor, Class Counsel's performance establishes the highest level of achievement. See Silver Report at 51 (App.C)[DE # 26381 The gross settlement amount of $1.075 billion represents one of the largest settlements in class action history. See Silver Supplemental Report at 4-5 (App.-D)[DE # 2638]. Plaintiffs prevailed on every claim and overcame every defense at trial and on appeal. Full and complete recovery was achieved on behalf of the entire Class and every individual Class Member.
In addition, by virtue of Class Counsel's successful dealer outreach program, they have also achieved an unprecedented claim response rate of 92% of the total gallons sold during the Class period. See Affidavit of Eugene Stearns, ¶ 8 (App.G)[DE # 2638]. Class Counsel's outreach effort contributed significantly to this accomplishment. Before the settlement was negotiated, Class Counsel contacted Class Members and encouraged them to file claims. The 92% claims rate is unprecedented. See Supplemental Report of Charles Silver at 6-7 (App.-D)[DE # 2638]. As noted by Professor Silver, "In the context of this case, where the class had already prevailed at trial, this outreach effort presented Exxon with the very real prospect of having to pay almost the full value of the trial judgment to the class via the claims process." Id.
As stated by Professor John Coffee of Columbia University (the foremost academic scholar on class action attorneys' fees awards whose initial law review articles on the "common fund" doctrine provided the impetus for the conclusions of the Third Circuit Task Force and the Eleventh Circuit in adopting the percentage method), the result obtained in this case is truly extraordinary. "No other action that I have seen approaches this one in the degree of success obtained for the class, the effort expended by class counsel, or the risk assumed." Coffee Declaration, ¶ 2 (App.A)[DE # 2638].
In a supplemental affidavit filed after the settlement, Professor Coffee expanded upon his view of the accomplishments in this case, observing that the effect of Class Counsel's efforts post-settlement will substantially enhance the recoveries by claimants in the Claims Administration Process. Supplemental Coffee Declaration at 3-4 (App.-B)[DE # 2638]. I concur with this observation (and those of Professor Silver) and give this factor very significant weight.[19]
*1206 Novelty and Difficulty
The second Johnson factor recognizes that attorneys should be appropriately compensated for accepting novel and difficult cases. Johnson, 488 F.2d at 718. Courts in this Circuit recognize that large class actions involving various legal theories are, by their nature, very difficult. See Yates v. Mobile County Personnel Bd., 719 F.2d 1530, 1535 (11th Cir.1983)(extremely complicated litigation requires thorough and detailed research of almost every question involved); Behrens, 118 F.R.D. at 547 (observing that the size of the class, the difficult theories of liability, and the always-troublesome problems associated with damages demonstrated that the case was an awesome and complex matter masterfully handled by plaintiffs counsel); R.C. by Alabama Disabilities Advocacy Program v. Nachman, 992 F. Supp. 1328, 1334 (M.D.Ala.1997) ("The size of the class and the nature and scope of the relief are among the factors that contribute to complexity and difficulty of this case.")
The factual and legal framework out of which this case arose made it an extraordinarily difficult case, which required great legal skill to achieve the unprecedented outcome. Indeed, until the verdict obtained in this case, the oil companies had been universally successful in defeating dealer pricing claims generally, and discount for cash claims particularly. See, e.g., Ajir v. Exxon Corp., 1999 WL 393666, at *1 (9th Cir. May 26, 1999); Havird Oil Co. v. Marathon Oil Co., 149 F.3d 283 (4th Cir.1998); Remus v. Amoco Oil Co., 794 F.2d 1238 (7th Cir.1986); Au Rustproofing Ctr. v. Gulf Oil, 755 F.2d 1231 (6th Cir. 1985); TAM. v. Gulf Oil, 553 F. Supp. 499 (E.D.Pa.1982); Abbott v. Amoco Oil Co., 249 Ill.App.3d 774, 189 Ill. Dec. 88, 619 N.E.2d 789 (1993). In addition, franchisors have typically been successful in avoiding liability in class claims brought by their franchisees because of the legal and factual difficulties inherent in attempting to establish duty, liability and damages on a uniform basis as to the class as a whole. See, e.g., Broussard v. Meineke Discount Muffler Shops, 155 F.3d 331 (4th Cir.1998); Hall v. Burger King Corp., 1992 WL 372354 (S.D.Fla. Oct.26, 1992) (denying class certification to putative class of franchisees).
The legal difficulty of this case was further compounded by the application of state law to numerous issues which repeatedly required surveys and reconciliations on numerous legal issues across the laws of 36 states, including issues relating to the application of contract law, the Uniform Commercial Code, releases, statutes of limitation, fraudulent concealment and prejudgment interest. Class Counsel also prevailed on the issue of supplemental jurisdiction from this Court all the way to the United States Supreme Court, a complicated and contentious issue of law that has deeply divided the circuit courts of appeal and the Supreme Court since the supplemental jurisdiction statute was enacted in 1991.
On top of the legal difficulties was the economic complexity of the downstream petroleum marketplace and the staggering volume and intricacies of Exxon's wholesale, retail, and margin databases which tracked these data on a daily basis across 3 grades of gasoline in 70 to 80 markets in 36 states over a 12 year period. While *1207 Exxon had full mastery of its systems and these facts at the outset of the case, Plaintiffs did not.
For example, Exxon's wholesale pricing database was provided to Plaintiffs on IBM mainframe computer tape drives in an archaic computer language "APL", that few modern day programmers have even heard of. After converting the data, at great expense and effort, to a modern computer language, and cabling together a series of desktop computers to load and query the database which was too large to run on a single computer, Class Counsel obtained access to Exxon's pricing information and began to unravel the mysteries of Exxon's pricing practices. At Class Counsel's request, Exxon produced millions of documents in discovery, which its senior officer jokingly referred to at trial as having been written in a foreign tongue Exxoneese. In order to decipher their meaning, Class Counsel repeatedly analyzed and synthesized these documents, ultimately enabling Plaintiffs to prove their case at trial with Exxon's own words, which points up yet another difficulty in proving this case.
Not, only did Plaintiffs have to prove the case on a uniform basis as to all dealers across all markets throughout the Class period, they had to do so based almost exclusively on the testimony of Exxon's own witnesses. Proving a direct case based on cross-examination of the opposition is no easy feat, but through extraordinarily detailed pre-trial analysis and preparation, Class Counsel was able to prove Exxon's wrongs through its own words, documents and testimony.
Further adding to the difficulty of the case was the quality of Plaintiffs' legal adversaries. Exxon hired some of the most able lawyers and experts in America and spared no expense in doing so. Exxon was represented by its long time counsel, the Washington firm of Howrey & Simon, which had lengthy experience in petroleum marketing litigation. Howrey deployed multiple lawyers in this case to argue every conceivable legal and factual issue. Exxon also hired Miami trial lawyer Larry Stewart, former president of the American Trial Lawyers' Association, and one of the most respected trial lawyers in Florida. Post trial, Exxon hired Carter Phillips, of Sidley & Austin, reputed to have one of the best Supreme Court practices in the country, and also retained the respected nationwide firm, Hunton & Williams, and another respected Miami firm, Burlington Weil, to represent it in the Claims Administration Process. In addition, Exxon hired the renowned, full time testifying expert, Harvard economist Joe malt, and his consulting firm ERG, who have heretofore been universally successful in rationalizing the wrongful behavior of oil companies. Professor Kalt's skill as an articulate, unflappable, and knowledgeable expert on the witness stand was evident at trial.
During the course of this case, Class Counsel also created and implemented new and cutting edge trial techniques that greatly assisted jury comprehension of this complex case. All jurors were provided notebooks containing the important trial exhibits which the jurors conscientiously and consistently reviewed during trial. Class Counsel also developed the ability to scan, store, and project on a twenty foot screen assembled in the courtroom the Exxon business records and demonstrative exhibits that proved Exxon's breach. These images could not only be highlighted, underlined, excised, or blown-up, but, in addition, witnesses on the witness stand could use a light pen to mark and write on the images to aid their testimony for the jury. Class Counsel also introduced the use of digitized videotape depositions to be projected onto the large screen in the *1208 courtroom for purpose of both deposition designations and impeachment.
Class Counsel continued to overcome all hurdles to success presented by the rigorous appellate process by obtaining affirmance of the jury verdict and class certification in the Eleventh Circuit and affirmance of the Court's subject matter jurisdiction over the entire Class in the United States Supreme Court. Class Counsel have continued their ground breaking work in the Claims Administration Process by deploying large numbers of staff to cull Exxon's extraordinarily voluminous dealer files, extract and code the relevant information, create the systems required to locate missing dealers and establish the bona fides of individual dealer claims, and otherwise spearhead the effort to develop and get the Claims Administration Process underway. Class Counsel have done so [pre-settlement] in the face of continued Exxon intransigence which led, on Plaintiffs' motion, to this Court's entry of a sanctions order that deters Exxon from taking frivolous appeals in order to further delay payment by imposing post-judgment interest at Exxon's internal rate of return rather than the federal low post-judgment rate.
Requisite Skill
The third Johnson factor is the "[t]he skill requisite to perform the legal service properly." Johnson, 488 F.2d at 718. This factor ties directly to the second Johnson factor and requires the judge to "closely observe the attorney's work product, his preparation, and general ability before the court." Id. The Eleventh Circuit recognizes skill as the "ultimate determinate of compensation level," as "reputation and experience are usually only proxies for skill." Norman, 836 F.2d at 1300.
In Norman, the Eleventh Circuit listed several elements that district courts may consider in determining an attorney's skill. 836 F.2d at 1300. First, the Court explained that skill may be measured by evaluating the degree of prudence and practicality exhibited by counsel at the beginning of the case. See id. Second, skill may manifest itself through arduous preparation and efficient organization, particularly if the case goes to trial. See id. Next, the Court explained that an attorney who has a sharp command of trial practice and a sound understanding of the substantive law, governing the case, such that his time may be spent exploring the finer points raised by the issues, should be compensated at a higher rate of pay than one who has to educate himself just to gain a general working knowledge of trial practice and law. See id. at 1301. Finally, the Court noted that persuasiveness is an attribute of legal skill and defines a good advocate as one who advances his client's position in a clear and compelling manner. See id. The Eleventh Circuit also explained that the complexity of the case at hand may indicate skill. See Yates, 719 F.2d at 1535 (recognizing that the extreme complexity of the proceedings, as well as the significant factual difficulty of the case, required Considerable skill by lawyers for the plaintiff).
Applying these factors, I conclude, without hesitation, that Class Counsel have proven themselves to be highly skilled. The complexity of this litigation, the size of the class, the need for two trials, and Exxon's position to fight the dealer plaintiffs on virtually every single issue, required considerable skill by Class Counsel, particularly when coupled with the complexity of the extraordinary Claims Administration Process. I recognize the sheer logistical challenge of coordinating and administering a case involving over 10,000 dealers and the laws of 36 jurisdictions. In evaluating the skill involved, I also consider the quality of Class Counsel's opposition. Sunbeam, 176 F.Supp.2d at 1334 *1209 ("[I]n assessing the quality of representation, courts have also looked to the quality of the opposition the plaintiffs' attorneys faced. . . ."). For reasons Z noted above, I give significant weight to this Johnson factor as well.
Customarry Fee in Contingent Commercial Litigation
The fifth Johnson factor is "[t]he customary fee for similar work in the community." Johnson, 488 F.2d at 718. A fee of 31 and 1/3% to Class Counsel is well within the range of customary fees. Professor Issacharoff, Pertnoy & Solowsky's expert, supports this view:
It is my further opinion that the percentage amount of attorney's fees sought here (sic) one-third of the gross recovery is in line with what is typically awarded in comparable cases. A total fee of one-third of the total class recovery is in line with the expectations of the class, as apparently reflected in the individual retainer agreements of the class representatives. Such an award is especially justified in that class counsel will have to further defend the interests of individual class members in the claims process.
ISSACHAROFF DEC. ¶ 4 [DE # 2638, Exhibit "B"].
See also Coffee Declaration ¶¶ 6 & 27 (App.-A) [DE # 2638]; Silver Report at 32 (App.-C) [DE # 2638]; Theodore Eisenberg and Geoffrey Miller, Attorneys Fees in Class Action Settlements an Empirical Study, 1 Journal of Empirical Legal Studies at 12 n. 15 (2004)(App.J)[DE # 2638].
Preclusion of Other Employment
The fourth Johnson factor is "[t]he preclusion of other employment by the attorney due to acceptance of the case." Johnson, 488 F.2d at 718. This factor requires the dual consideration of otherwise available business which is foreclosed because of conflicts of interest arising from the representation, and the fact that once the employment is undertaken, the attorney is not free to use the time spent on the case for other purposes. See id.; see also Yates, 719 F.2d at 1535 (determining that this factor should raise the fee award because the expenditure of 1,000 billable hours necessarily had some adverse impact on the attorney's ability to accept other work).
The substantial investment of resources demanded by the prosecution of this case in both attorney time and the investment of out-of-pocket expenses cost Class Counsel not only the revenue it would have ordinarily derived from its traditional hourly billing practice, but also precluded Class Counsel from otherwise concentrating and expanding its practice with its existing client base and with respect to potential new clients. Taking on this resource-sapping, risk-based venture also precluded Class Counsel from accepting other contingent matters during the period of representation.
Experience, Reputation, and Ability of Attorneys
The ninth Johnson factor is "[t]he experience, reputation, and ability of the attorneys." Johnson, 488 F.2d at 718. Courts in this circuit routinely emphasize this factor in calculating percentage fee awards. See, e.g., Yates, 719 F.2d at 1535 (noting that the magistrate judge was familiar with the experience, reputation and ability of the lawyers and that the lawyers were justifiably held in high esteem); Ressler, 149 F.R.D. at 655 ("The standing and experience of plaintiffs counsel was an important factor in the settlement of this action . . . [t]his jury and appellate experience has earned the respect of defense counsel and no doubt contributed to the efficient prosecution and the settlement of this action.").
*1210 Class Counsel who have worked on this case are talented and experienced attorneys with excellent reputations in the legal community. I conclude this is a very strong factor in favor of the percentage sought. After seven years, I am very familiar with the quality and representation of Class Counsel. I need not belabor this point.
Awards in Similar Cases
The last Johnson factor considers "[a]wards in similar cases." Johnson, 488 F.2d at 719. This factor dictates that the reasonableness of a fee "may also be considered in light of awards made in similar litigation within and without the court's circuit." Id. There are no reported cases similar to this one. Coffee Declaration ¶ 2 (App.-A)[DE # 2638]; Silver Report at 50-51 (App.-C)[DE # 2638]. In the typical federal court class action, class counsel settles early on for literally cents on the dollar, eliminating their risk of nonpayment in exchange for nominal recovery for their clients. Coffee Declaration ¶ 23 (App.-A)[DE # 2638]; Elaine Buckberg, et al., Recent Trends in Securities Class Action Litigation: Are Worldcom and Enron the New Standard? at 6 (NERA July 2005) (App.-J)[DE # 2638](since 2302, average securities class action settles for less than 3% of investor losses). Few class actions ever reach trial. See Waters, 190 F.3d at 1299. Fewer still result in a jury verdict for the class that is affirmed on appeal.
No class action of which I am aware has approached the remarkable recovery achieved in this case, through two trials, a jury verdict, a direct appeal, and an appeal to the United States Supreme Court. Coffee Declaration ¶ 2 (App.-A)[DE # 2638]; Silver Report at 11-12 (App.-C) [DE # 2638]. Nor has any class action of this magnitude seen a remotely comparable claims response rate, or required a more dedicated effort on the part of Class Counsel to complete the Claims Administration Process. The results achieved in this case, and the obligations imposed upon Class Counsel going forward, are simply unprecedented.
Accordingly, I conclude that decisions involving fee awards in class action settlements should not control the determination of an appropriate fee award in this case. On the other hand even many of those decisions have approved fee awards comparable to or higher than that requested here.
In particular, federal district courts across the country have, in the class action settlement context, routinely awarded class counsel fees in excess of the 25% "benchmark," even in so-called "megafund" cases. Coffee Declaration ¶¶ 14-20 (App.-A) [DE # 2638]; Silver Report at 42-48 (App.-C)[DE # 2638]. A few examples include:
Cash Fee
Case Year Recovery Award (%)
In re Brand Name
Drugs 2000 $696M 25.4%
In re Vitamins 2001 $365M 34.6%
In re Busporine 2003 $220M 331/3%
In re Linerboard 2004 $202M 30%
In re Lease Oil 1999 $190M 35.1%
In re Relafen 2004 $175M 331/3%
In re Sumitomo 1999 $132M 28.3%
Kurzweil 1999 $123M 30%
In re Cardizem 2002 $110M 30%
See In re Linerboard Antitrust Litig., 2004 WL 1221350 (E.D.Pa. June 2, 2004); In re Relafen Antitrust Litig., No. 0112239-WGY (D.Mass. Apr. 9, 2004); In re Busporine Antitrust Litig., No. 01-MD1410 (S.D.N.Y. Apr. 11, 2003); In re Cardizem CD Antitrust Litig., No. 99-73259 (E.D.Mich. Nov. 25, 2002); In re Brand Name Prescription Drugs Antitrust Litig., 2003 WL 204112 (N.D.Ill. Feb.10, 2000); In re Vitamins Antitrust Litig., 2001 WL 34312839, 2331 U.S. Dist. Lexis 25067 (D.D.C. July 16, 2001); In re Lease Oil Antitrust Litig., 186 F.R.D. 403 (S.D.Tex. 1999); In re Sumitomo Copper Litig., 74 F. Supp. 2d 393 (S.D.N.Y.1999); Kurzweil v. *1211 Philip Morris Companies, Inc., 1999 WL 1076105 (S.D.N.Y. Nov.30, I999); Theodore Eisenberg and Geoffrey Miller, Attorneys' Fees in Class Action Settlements an Empirical Study, 1 Journal of Empirical Legal Studies at 34 (2004)(reporting mean percentage award of 22% to 27.5% across all class action settlements)(copy attached at App.-J)[DE # 2638].
This Court is no exception. In fact, in the last several years, I, and my colleagues, have approved large class action settlements and awarded class counsel fees in the range of 33 and 1/3% of the amounts recovered:
Cash Fee
S.D. Fla. Class Action Year Recovery Award (%)
In re Managed Care
Litig. 2003-04 $310M 35.5%[20]In re Sunbeam Sec.
Litig. 2001 $110M 25%
Gutter 2003 $77.5M 331/3%
Terasozin Antitrust
Litig. 2005 $ 75M 331/3%
Waters 1999 $ 40M 331/3%
See In re Managed Care Litig. v. Aetna, 2003 WL 22850070, at *6 (S.D.Fla. Oct.24, 2003); In re Managed Care Litig. (Cigna), 00-1334-MDL-MORENO (S.D.Fla. Feb. 2, 2004); In re Sunbeam Sec. Litig., 176 F. Supp. 2d 1323 (S.D.Fla.2001); Gutter v. E.I. Dupont De Nemours & Co., 95-2152CIV-GOLD (S.D.Fla. May 30, 2003); In re Terazosin Hydrochloriide Antitrust Litig., 99-1317-MDL-SEITZ (S.D.Fla. Apr. 19, 2005); Waters v. International Precious Metals Corp., 190 F.3d 1291 (11th Cir. 1999).[21]
While these decisions support the fee award requested here, I conclude, since this is not a typical class action which settled early for a few cents on the dollar, the more appropriate measure of a reasonable percentage is the market rate for a contingent fee in commercial cases. Silver Report at 13-37 (App.-C)[DE# 2638]. Indeed, in an effort to ensure that Class Counsel has the proper incentives to press forward for maximum recovery, other federal courts have already endorsed such an approach even in the class action settlement context itself, See, e.g., In re Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir.2001); In re Linerboard Antitrust Litig., 2004 WL 1221350, at *14 (E.D.Pa. June 4, 2004); In re RJR Nabisco, Inc. Sec. Litig., 1992 WL 210138, at *7 (S.D.N.Y. Aug.24, 1992); see also Silver Report at 24 (App.-E)[DE # 2638]. In the words of Judge Easterbrook:
We have held repeatedly that, when deciding on appropriate fee levels in common-fund cases, courts must do their best to award counsel the market price for legal services, in light of the risk of nonpayment and the normal rate of compensation in the market at the time.
* * * * * *
The district judge defined megafunds as settlements of $75 million and up [and held that fees in such] cases should be capped at 10% of the recovery, . . . although she recognized that fees of 30% and more are common and proper in smaller cases. This means that counsel for the consumer class could have received *1212 $22 million in fees had they settled for $74 million but were limited to $8.2 million in fees because they obtained an extra $14 million for their clients. . . . Private parties would never contract for such an arrangement, because it would eliminate counsel's incentive to press for more than $74 million.
* * * * * *
On remand the district court must estimate the terms of the contract that private plaintiffs would have negotiated with their lawyers, had bargaining occurred at the outset' of the case (that is, when the risk of loss still existed). . . .
In re Synthroid Marketing Litig., 284 F.3d at 718; see also In re Linerboard Antitrust Litig., 2004 WL 1221350, at *14 ("What the market would pay is significant because, as the Seventh Circuit has explained, the goal of the fee setting process is to `determine what the lawyer would receive if he were selling his services in the market rather than being paid by Court Order.'") (quoting In re Continental Ill. Sec. Litig., 962 F.2d 566, 568 (7th Cir.1992)); In re RJR Nabisco, Inc. Sec. Litig., 1992 WL 210138, at *7 ("What should govern such awards is not the essentially whimsical view of a judge, or even a panel of judges, as to how much is enough in a particular case, but what the market pays in similar cases.").
The Seventh Circuit's "market approach" requires district courts to estimate the hypothetical terms of a contract that private plaintiffs would have entered into with counsel at the outset of the case, by referring to benchmarks such as actual agreements between members and attorneys and data from other suits. This is because "the best time to determine the rate is in the beginning of the case, not the end when hindsight alters the perception of the suits' riskiness, and sunk costs make it impossible for lawyers to walk away if the fee is too low." Id. at 718.
Applying this approach, I conclude that the fee requested is unquestionably within the range of, if not below, the market rate for private contingency fee agreements in commercial cases. As one recent study concluded: "Substantial empirical evidence indicates that a one-third fee is a common benchmark in private contingency fee cases." Eisenberg & Miller, Attorney Fees in Class Action Settlements: An Empirical Study, at 12 (App-J)[DE # 2638]; Silver Report at 26, 31, 32-35 (App.-C)[DE # 2638]. That benchmark is then often adjusted upward to 40% or higher in the event of an appeal. Silver Report at 32 (App.-C)[DE # 2638]. Here, Class Counsel and the Class Representatives achieved a "market approach" on their own by agreeing that a 31 and 1/3 percent fee would be appropriate under the circumstances. I merely concur that the "market approach" referred to above independently confirms the basis of their agreement.
One additional related matter requires attention. In mega cases, such as this one, the attorneys' fee request, under a "market approach" can be for truly large amounts. In such cases, of course, the monetary recovery to the class typically is also in the hundreds of millions of dollars, even in the billions. See, e.g., In re Prudential Ins. Co. of Am. Sales Practice Litig., 148 F.3d 283, 339-40 (3d Cir.1998). Here, the final aggregate Class recovery has now been determined. What is remarkable is that all Class Members who have filed claims will recover their full compensatory damages and most of their prejudgment interest. In addition, the settlement envisions a procedure whereby additional persons may seek claims through the various States involved.
Objectors Lee, Choi and Freeland have argued that, as the total recovery increases, the percentage allocated to fees should decrease. While such an approach may *1213 have validity when there is a large settlement short of a full trial, I conclude that the rationale has no reasonable application in this unique case for the reasons I have already discussed. See In re Sunbeam Sec. Litig., 176 F. Supp. 2d 1323, 1337 (S.D.Fla.2001)(deciding that the large size of the settlement did not require the court to hesitate before departing upward from the 25% benchmark because the 30% fee award to counsel was "well within the range of fees award in comparable classaction cases.") Likewise, the court in In re Ikon Office Solutions, Inc. Sec. Litig., 194 F.R.D. 166, 197 (E.D.Pa.2000) rejected this "declining percentage" method:
Such an approach also fails to appreciate the immense risks undertaken by attorneys in prosecuting complex cases in which there is a great risk of no recovery. Nor does it give significant weight to the fact that "large attorneys' fee" serve to motivate capable counsel to undertake these actions.
While some reported cases have advocated decreasing the percentage awarded as the gross class recovery increases, that approach is antithetical to the percentage of the recovery method adopted by the Eleventh Circuit in Camden, the whole purpose of which is to align the interests of Class Counsel and the Class by rewarding counsel in proportion to the result obtained. See Camden, 946 F.2d at 774 (percentage award should be determined early on in the litigation so that attorneys can devote their full time to attempting to increase the fund for the class, which in turn increases their own fee). By not rewarding Class Counsel for the additional work necessary to achieve a better outcome for the class, the sliding scale approach creates the perverse incentive for Class Counsel to settle too early for too little. As stated by Professor Coffee:
Put simply, if courts were to hold that the percentage should decline sharply after, say, the $100 million threshold was passed, then plaintiff's counsel in a case such as this would have had little incentive to hold out for nine long years for the $1.2 billion recovery that it obtained. Holding out in this fashion exposed class counsel to real litigation and appellate risk and eroded the value of their recovery because of the time value of money. Moreover, if such a formula were mandated, defendants would quickly come to understand that plaintiffs' counsel lacked an incentive to maximize the recovery (at least beyond some threshold), and they could exploit this lack of incentive.
Coffee Declaration ¶¶ 24-26 (App.A)[DE # 2638][22]
Time and Labor Required
The first Johnson factor is "time and labor." Johnson, 488 F.2d at 717. This factor requires the court to "weigh the hours claimed against his own knowledge, experience, and expertise of the time required to complete similar activities". Id. The key consideration simply is whether Class Counsel's claimed hours are reasonable given the circumstances of the case and the results achieved. For purposes of establishing a percentage, I do not find it necessary to review in detail the time records of the law firms involved as Class Counsel. See Savoie v. Merchants Bank, 166 F.3d 456, 461 n. 4 (2d. Cir.1999)(noting that one of the benefits of the percentage method is that it does not require a detailed review of time records). Other *1214 than as it relates to the controversy among Plaintiffs' attorneys, I consider it to be a meaningless exercise which, at best, is "mind numbing."
After reviewing the affidavits involved, and personally observing this case, I conclude that the time spent was significant. For instance, without discussing the merit of the time incurred, Pertnoy & Solowsky claims that 46,000 professional hours were integral to the success of this case. The firm claims its current lodestar-calculated at current market rates to adjust for delay of payments nearly $15.2 million dollars. ODE # 2635 at 20, 34]; see also PSA DEC. at ¶ 9 [DE # 2635, Exhibit "A"].
Since 1996, Stearns, Weaver claims that it has invested over $23 million in unpaid hours. See Affidavit of Eugene E. Stearns, Esq., (App.G)[DE # 2638]; [DE # 2126, 2127]. But Stearns, Weaver further claims that this merely represents a snapshot of its hours at this point in time. To prosecute over 11,000 claims against Exxon, Stearns, Weaver has, in addition to its regular team of lawyers and staff assigned to this case, employed and trained an additional team of lawyers and staff. At current and projected staffing levels for the Claims Administration Process, Stearns, Weaver will be incurring $500,000.00 on a monthly basis, or $6 million annually. See Affidavit of Eugene E. Stearns, Esq., 9f 5 (App-G)[DE # 2638].
Prior to the settlement, Stearns, Weaver conservatively estimated that the presentation and adjudication of the 11,003 filed claims necessary to bring this matter to conclusion could take five more years. Id. Thus, prior to the settlement, additional attorneys' time in excess of $30 million was a reasonable estimate of what would have been required of the Stearns, Weaver, meaning that before the litigation is concluded, it would have invested over $50 million of time on an "at risk basis" that would otherwise be paid when the services were rendered. Id. A reduction of this number is required due to the settlement, although Stearns, Weaver remains obligated under the terms of the Settlement Agreement to continue to represent the Class through the completion of the Claims Administration Process. The most current assessment of Stearns Weaver's time, from October 1996 through December 2005, is (1) 57,224 attorney hours, translating to a total attorneys' fee of $22,492,324 (at present rates), and (2) 32,917 paralegal and clerk hours, for a total of $3,868,801.50. Thus, the total billable fees incurred by Stearns Weaver in connection with this matter through the end of December 2305 is $26,361,125.50. See Affidavit of Eugene E. Stearns, Esq., ¶ 4 (App.G)[DE # 2638].
I place the least emphasis on this factor, especially given the controversy among Class Counsel as to "who did what and when." A more detailed review of the actual time spent by each attorney involved would not affect my conclusion as to the appropriate percentage to apply. I accept, for purposes of this criteria, that the time involved by Class Counsel was extensive and not out of the range of the hours Exxon claimed it expended. Coffee Declaration ¶¶ 6, 27 (App.-A)[DE # 2638]; Silver Report at 32 (App.-C)[DE # 2638]; Theodore Eisenberg and Geoffrey Miller, Attorneys Fees in Class Action Settlements an Empirical Study, 1 Journal of Empirical Legal Studies at 12 n. 15 (2004)(App.-J)[DE # 2638].
Fixed ar Contingent Fee
The sixth Johnson factor concerns the type of fee arrangement (hourly or contingent) entered into by the attorney. Johnson, 488 F.2d at 718. "A contingency fee arrangement often justifies an increase in the award of attorneys' fees." Behrens v. Wometco Enters., 118 F.R.D. 534, 548 (S.D.Fla.1988); see also Hall v. Bd. of Sch. *1215 Comm'rs, 707 F.2d 464, 435 (11th Cir.1983)(concluding that district court abused its discretion where it failed to award an enhancement of the amount of attorneys' fees where plaintiffs' counsel was retained under a contingency fee agreement). As recognized in Behrens, without a contingent fee, "very few lawyers could take on the representation of a class client given the investment of substantial time, effort and money, especially in light of the risks of recovering nothing." 118 F.R.D. at 548 (citations omitted).
This factor weighs heavily in favor of a 31 and 1/3% percentage fee for Class Counsel because the fee in this action has been completely contingent. Despite their extraordinary work, Class Counsel has not recovered any attorneys' fees since this case was filed in 1992. This lengthy time period justifies such special consideration given the investment of substantial time, effort and money, especially in light of the risks of recovering nothing. While the fact that there was a private contingent fee agreement establishing a fee arrangement at 31 and 1/3% is not determinative, it is nonetheless important. Accordingly, the fee arrangement remains one factor to be considered and weighed under the Johnson analysis.
Time Limitations Imposed by the Client or the Circumstances
The seventh Johnson factor concerns "[t]ime limitations imposed by the client or circumstances." Johnson, 488 F.2d at 718. This factor recognizes that "priority work that delays the lawyer's other legal work is entitled to some premium." Id. In considering this factor, many courts have found that "time pressures" warrant an increased fee award. See Reynolds v. Alabama Dept. of Transp., 926 F. Supp. 1448, 1458 (M.D.Ala.1995)(finding evidence of this factor because of the demanding trial schedule and the large number of claims that had to be evaluated and presented in a short time); Louis v. Nelson, 646 F. Supp. 1300, 1313 (S.D.Fla.1986)("The time pressures of this case were constant. They were imposed, in large part, by the Court, and by the appellate courts, but were also due in part to the exigencies of the situation. The demands of the Court were overwhelming. In sum, the pace was rather hectic throughout this case.").
In February 1999, this case was transferred to this Division upon the death of Judge James Kehoe. Prior to the transfer, a regime of hard work was required by my predecessor. After the transfer, the pace became even harder in order to reach the trial date agreed upon by the Court and counsel. Substantial work was required to narrow the issues. As one firm put it, "[I]n the months that followed, the lawyers in this Firm had no other cases and no other life." Stearns Weaver's Petition for An Award of Attorneys' Fees, Costs and Reimbursable Expenses [DE # 2125 at 46]. From my own personal experience, I believe this to be a true statement. The time commitments were adhered to by all concerned and the first trial timely commenced, and, because of a lack of a unanimous verdict, thereafter "recommenced." The frantic pace continued throughout the appellate proceedings and the Claims Administration Process due to the complexity of the issues involved and the exigencies surrounding the number of claims filed. If anything, the pace increased once the Claims Administration Process began in earnest. By the time of the Settlement Agreement, twentytwo motions for summary judgment had been filed by Class Counsel with respect to 1,300 claims. Accordingly, I give significant weight to this factor in setting the percentage.
Nature and Length of Professional Relationship; Undesirability
The tenth Johnson factor is the "[t]he `undesirability' of the case." Johnson, 488 *1216 F.2d at 719. This factor acknowledges that attorneys should be rewarded for taking on cases that other firms have rejected due to thorny factual circumstances, the possible outcome of the case, or any other number of reasons. Sunbeam, 176 F.Supp.2d at 1336. Here, a number of well-known attorneys abstained from taking on Exxon. See PSA DEC. ¶ 98 [DE # 2635, Exhibit "A"].
The eleventh Johnson factor is "[t]he nature and length of the professional relationship with the client." Johnson, 488 F.2d at 719. As observed in Ressler, 149 F.R.D. at 655, a higher fee may be warranted in class actions where counsel for the class had no prior relationship with the named plaintiffs. Here, the named plaintiffs had no "track record" with either the Pertnoy & Solowsky or Stearns, Weaver firms.
I place significant weight on the tenth factor and minimal weight on the eleventh factor. Regarding "undesirability," I recognize the risks to Class Counsel in accepting representation at the early stages of the proceedings when other notable lawyers had declined. Accordingly, under the tenth Johnson factor, I conclude that such risk should be significantly recognized in establishing the percentage.
Regarding the eleventh Johnson factor, the significance of the risk of representation was not diminished by a long and beneficial previous relationship with the client. I concur with the Court's evaluation in Ressler that ". . . to the extent this factor may have independent significance in the context of a class action, it militates in favor of the 30% fee award [31 and 1/3% in this case] sought here because plaintiff did not have a `track record' with the law firm that agreed to prosecute the action on his behalf." Id. 149 F.R.D. at 655.
c. Additional Factors
I also consider "additional factors" unique to [this] "particular case which [are] relevant." Camden I, 946 F.2d at 775. Here, I conclude that two such additional factors are particularly relevant: (1) the additional work that remains to complete the Claims Administration Process, and (2) the role that Class Counsel played as "private attorneys general" to vindicate the rights of the dealer plaintiffs.
The Continuing Claims Administration Process
Under the settlement, the Claims Administration Process is far from complete. The unique aspect of the settlement is that Class Counsel continues to represent the Class through the process; that is, throughout the duration of the Claims Administration Process, Class Counsel will remain responsible for designating and presenting all claims for adjudication before the Special Master on a rolling basis, marshaling the supporting documentation that may be available for each claim, and identifying those gallons as to which there are competing claims requiring adjudication. This aspect of the class representation requires recognition as a factor unique to this case which supports the application of a higher percentage award. As of the date of the Fairness Hearing, the Special Master had already adjudicated 20 motions for summary judgment, thereby posturing more than $276 million in Class Member claims for immediate distribution.
Economics of Prosecuting a Class Action, Public Policy, and the Private Attorneys General
The Supreme Court has observed that without the possibility of recovering an attorneys' fee, most class actions would never be filed. Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 339, 100 S. Ct. 1166, 63 L. Ed. 2d 427 (1980)(observing that "[w]here it is not economically feasible to obtain relief within the traditional framework *1217 of a multiplicity of small individual suits for damages, aggrieved person may be without any effective redress unless they may employ the class action device"). Attorneys who undertake the risk to vindicate legal rights that may otherwise go unredressed function as "private attorneys general." Id. at 338, 130 S. Ct. 1166. The courts treat successfully fulfilling such a role as a Johnson factor when awarding class counsel attorneys' fees. E.g. Ressler, 149 F.R.D. at 657 (noting that when class counsel act as private attorneys general, "public policy favors the granting of counsel fees sufficient to reward counsel for bringing these actions and to encourage them to bring additional such actions.").
In the context of this case, the oil companies' typical success in dealer litigation has stemmed in large part from their ability to overwhelm the small firm plaintiff lawyers that typically represent the dealers' interests. In this case, the Class was able to battle Exxon because Class Counsel was of sufficient size, capitalization and skill to withstand the defense's onslaught. As noted above, Class Counsel has risked millions of dollars in un-reimbursed attorneys' time and additional millions in out-ofpocket costs. Unless that risk is compensated with a commensurate reward, few firms, no matter how large or well financed, will have any incentive to rep represent the small stake holders in class actions against corporate America, no matter how worthy the cause or wrongful the defendant's conduct.[23]
Absent an award of fees that adequately compensates Class Counsel, the entire purpose and function of class litigation under Rule 23 of the Federal Rules of Civil Procedure will be undermined and subverted to the interests of those lawyers who would prefer to take minor sums to serve their own self interest rather than obtaining real justice on behalf of their injured clients. See John J. Coffee, Jr., Rescuing the Private Attorney General: Why the Model of the Lawyer as Bounty Hunter is Not Working, Maryland Law Review, 216, 225-26 (1983) (the private attorney general provides an important mechanism "to enforce the federal antitrust and securities laws, to challenge corporate self-dealing in derivative actions, and to protect a host of other statutory policies," but in the absence of appropriate incentive structures, "litigated judgments are few, cheap settlements are common, and . . . the private watchdog can be bought off by tossing him the juicy bone of a higher-than-ordinary fee award in return for his acceptance of an inadequate settlement").
The "private attorney general" aspect is unique to the facts of this case. Class *1218 Counsel concluded that with respect to each claim not timely filed by a Class Member, the unclaimed property statutes of each of the respective states in which Exxon dealers were located authorized the state attorneys general to step in the shoes of the missing claims, file a claim on its behalf, and hold any monies recovered for the missing claimant in perpetuity. As a result of Class Counsel's efforts, 20 state attorneys general, representing 75% of the missing claimants by dollar amount, filed claims during the last week of the Claims Administration Process. This effort substantially enhanced the opportunity for settlement. The possibility that the states would be entitled to the proceeds of any claim that Exxon might defeat was one of the critical factors leading to the settlement of this case. I give significant weight to this factor in deciding in favor of a full 31 and 1/3% award to Class Counsel.
Therefore, having determined the appropriate percentage of fees to be awarded at 31 and 1/3 percent, I now turn to issue of incentive awards.
IV. INCENTIVE AWARDS
The Class Representatives consist of nine named Plaintiffs who are: Rylyns Enterprises, Inc., through Richard P. Durishin as president; Paul Bove; Martin Cook; George Dalton; R. William McGillicuddy ("McGillicuddy"); David Wise; Allapattah Services, Inc., through Alberto Gonzalez; Robert Lewis, Inc., through Robert Lewis, and John Pinder. Collectively, the Class Representatives are seeking 1.5% of the common benefit received by the Class as an incentive award. The basis for the 1.5% request comes from the fact that Class Counsel have reduced their fee from 33 and 1/3% to 31 and 1/3%, and the Class Representatives have sought to maintain their request within the scope of that reduction. Given the settlement amount of $1,075,000,000.00, less the $15,000,000.00 reduction for attorneys' fees in the three fee-shifting states, the total incentive award at 1.5% equals $15,900,000.00 or approximately (when divided by 9) $1,766,666.00 per named plaintiff. Here, the issues include (1) whether an incentive award is proper, and (2) how much of an incentive award is reasonable. In sum, I conclude that an incentive award is appropriate in this case, and that an appropriate percentage amount is one and one-half percent (1.5%). As discussed below, I reduce the amount to be paid to Class Representative McGillicuddy because of partial forfeiture.
a. Legal Analysis Regarding Appropriateness of incentive Award
Incentive awards are not uncommon in class action litigation where, as here, a common fund has been created for the benefit of the class. Incentive awards compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation. In re Southern Ohio Corr. Facility, 175 F.R.D. 270, 272-76 (S.D.Ohio 1997). Incentive awards serve an important function, particularly where the named plaintiffs participated actively in the litigation. Denney v. Jenkens & Gilchrist, 230 F.R.D. 317, 2005 WL 388562, at *31 (S.D.N.Y. Feb.18, 2005).
While the Eleventh Circuit has not expressly set forth guidelines for courts to use in determining incentive awards, there is ample precedent for awarding incentive compensation to class representatives at the conclusion of a successful class action. In fact, "[c]ourts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation.'" Ingram v. Coca-Cola Co., 200 F.R.D. 685, 694 (N.D.Ga.2001)(quoting In re Southern Ohio Corr. Facility, 175 F.R.D. 270, 272 (S.D.Ohio 1997)(collecting cases)); see also *1219 Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir.1998) (affirming award of $25,000 to named plaintiff); In re Lorazepam & Clorazepate Antitrust Litig., 235 F.R.D. 369, 400 (D.D.C.2002) ("Incentive awards are not uncommon in class action litigation and particularly where . . . a common fund has been created for the benefit of the entire class. . . . In fact, [c]ourts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation") (internal quotations and citation omitted); Godshall v. Franklin Mint Co., 2004 WL 2745890, at *6 (E.D.Pa. Dec.1, 2004) (granting special award of $20,000 to each named plaintiff for their work as class representatives); In re Linerboard Antitrust Litig., 2004 WL 1221350, at *18-19 (E.D.Pa. June 2, 2004) (awarding $25,000 for each of the five class representatives); Tenuto v. Transworld Sys., 2002 WL 188569, at *4-5 (E.D.Pa. Jan.31, 2032) (granting award of $2,000); Dornberger v. Metropolitan Life Ins. Co., 203 F.R.D. 118, 124-125 (S.D.N.Y.2001) (approving an award of $10,000 for Dornberger and $1,500 for the eight sub-class representatives); Cullen v. Whitman Med. Corp., 197 F.R.D. 136, 145 (E.D.Pa.2000) ("courts routinely approve incentive awards to compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation."); In re Lease Oil Antitrust Litig., 186 F.R.D. 403, 449 (S.D.Tex.1999) (granting awards of between $1,000 and $10,000); In re Residential Doors Antitrust Litig., 1998 WL 151804, at *11 (E.D.Pa. Apr.2, 1998) (awarding an incentive award of $10,000 to each of the four Class representatives); In re Plastic Tableware Antitrust Litig., 1995 WL 723175, at *2 (E.D.Pa. Dec.4, 1995) (granting award of 83,000); In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. 297, 357. (N.D.Ga.1993) (granting award of $2,000 to plaintiffs that produced documents and awarding $5,000 to plaintiffs that were also deposed).
In Ingram, the district court approved a settlement of an employment discrimination class action that included payments of $300,000 to each of four class representatives (for a total of $1.2 million) as well as lesser compensation to class members who submitted affidavits. Id. The awards to the four principal class representatives totaled more than 1% of the "total current cash settlement fund," of $ 103.5 million, although smaller awards were made to other class representatives. 200 F.R.D. at 692 n. 11 (describing percentage share awarded as attorneys' fee).[24]
Without doubt, there is a need for special scrutiny for such awards, particularly in settlements, because of the danger of collusion. See Holmes v. Continental Can. Co., 706 F.2d 1144, 1147 (11th Cir.1983)("Settlements entailing disproportionately greater benefits to named parties are proper only when the totality of circumstances combine to dispel the `cloud of collusion which such a settlement suggests' ")(quoting Women's Comm. for Equal Employment Opportunity v. NBC, 76 F.R.D. 173, 182 (S.D.N.Y.1977); United States v. City of Miami, 614 F.2d 1322, 1330-31 (5th Cir.1980); Staton v. Boeing Co., 327 F.3d 938, 975 (9th Cir.2003)). However, the need for structural safeguards against collusion does not apply to cases like this one that have been litigated *1220 to judgment. There is no uncertainty about whether the Class Representatives in this case sought the maximum recovery for the class. They did, and they have succeeded in the settlement.
b. Appropriateness of an Incentive Award
An Incentive Award is appropriate in this case. This conclusion, however, understates the significance of the result. While I have reviewed numerous precedents that have approved incentive awards, I have found no case that has required as much from the Class Representatives. Each of the gentlemen involved, and their families, have shown unusual courage and commitment. As noted in the Petition from the Florida Representatives, "[T]he facts of their service sets the standard that may one day be equaled but which can never be bested." Petition of Class Representatives Allapattah Services, Robert Lewis, Inc., and John Pinder [DE # 2116 at 2]. I join in this statement with much admiration.
The Class Representatives in general played a substantial role in this litigation. This is not a case where lawyers inappropriately recruit plaintiffs to serve as "figureheads" for suits the lawyers themselves want to file and settle. In contrast, the Class Representatives brought Exxon's breach to the attention of the lawyers. They were involved in selecting and replacing trial counsel, communicating with the Class, gathering information from the Class, and participating in decision-making about how to conduct the case.
Besides the Class Representatives' unusual commitment of time and effort to the litigation, the other extraordinary feature of their role in this case is the risk they each took to see the case through to a successful conclusion. In a typical class action, the named plaintiffs although nominally liable for costs face no real downside risk. This case, however, was different. When the theory of liability was untested, the Class Representatives agreed to accept liability for litigation costs, made personal contributions to defray those costs, and promised to help collect money from other dealers to cover the costs. Although Class Counsel made their own heavy investments of skill, time and money in the case, the financial commitment by the Class Representatives sets this case apart from the typical class action.
In addition to accepting responsibility for their own side's costs, the Class Representatives faced liability for Exxon's substantial taxable costs. The first retainer agreements recognized that potential liability. Soon after, the potential for greater individual liability became evident in the event Exxon prevailed. First and foremost was Exxon's aggressiveness in defending the litigation. The message that Exxon would retaliate against the Class Representatives and try to bankrupt them was unambiguously delivered at a mediation attended by them (and some of their spouses) in Houston, Texas in 1998.[25] Second, Exxon's offer of judgment in August 1998[26] was intended to heighten the risk of *1221 personal liability for the Class Representatives even if the Class won. Although Exxon's taxable costs would be smaller than the offer, those costs would be divided only among the Class Representatives. Thus, even a modest victory for the Class could have been financially ruinous for the Class Representatives. Third, due to the magnitude of the case and the fact that it was tried twice, the taxable costs were substantially greater than in the ordinary case. Finally, the mistrial made the risk that Exxon could win and collect its costs more than a theoretical concern. In sum, the potency of Exxon's threat and the seriousness with which the Class Representatives regarded it was evident when two of the original eleven Class Representatives, Roy Page and Jim Edmonds, withdrew as class representatives, before the second trial.[27] A larger exodus may have prompted Exxon to request a re-examination of class certification.
The willingness of the Class Representatives to face substantial risks of personal harm is particularly striking when those risks are compared to their individual potential gains. The average damage award (not including prejudgment interest) of the nine individuals owning the dealerships named as plaintiffs was slightly less than $175,000. Of those damage amounts, the Class Representatives agreed to pay one-third of compensatory damages as a contingency fee. Under these circumstances, the potential individual liability for costs was potentially more than the actual net recovery for most or all of the Class Representatives. In my view, such significant personal risk, coupled with the expenditure of time and effort to guide the litigation to a successful conclusion, should be compensated, lest the Class itself be unjustly enriched. Otherwise stated, it would be inequitable for them to alone bear the costs and risks they incurred for the benefit of the Class as it would to impose the full costs of paying lawyers to litigate this action on the Class Representatives.
Additional reasons support the case for compensating the Class Representatives here. Because this case was tried (twice), and not initially settled, the Class Representatives proved their fidelity to the Class over more than a decade of fiercely-defended litigation. The interests of the Class, such as here, are better served when they are presented by vigilant, competent and independent class representatives who actively monitor class counsel and the conduct of the litigation. Moreover, where lawyers are rewarded for their *1222 risk and efforts on behalf of a class, but class representatives are not, there is little incentive for class representatives to serve as active client participants in the litigation, thus negating the "adequate representation" safeguard of Rule 23 and transferring all decision-making responsibility to counsel.
With this background, I turn to the task of determining what percentage of the recovery obtained by the Class should be attributed to the Class Representatives. Absent specific criteria from the Eleventh Circuit,[28] in setting the percentage, I rely on the specific factors evidenced here. These factors include the time, money and effort incurred, the duration of the litigation, the relatively small personal benefit enjoyed by the Class Representatives as a result of the litigation, the risk of their own litigation costs, the risk of liability for Exxon's costs, the risk of retaliation from Exxon, the out-of-pocket expenses incurred, and the unusual fidelity to the Class Representatives under extraordinarily difficult circumstances. In fact, a case could be made for a higher percentage than one-and-one-half percent. Nonetheless, the Class Representatives have sought to keep their request within the scope of the reduced attorneys' fee for Class Counsel so that the Class Members would not be subject to payment of a sum over the 33 and 1/3% initially requested by Class Counsel.
V. ALLOCATION OF THE ATTORNEYS' FEES
a. Effect of Letter Agreement on Allocation and Award of Attorneys' Fees
Pertnoy & Solowsky, Bowen and Grutman have moved the Court to enforce the October 14, 1996, fee allocation agreement among Class Counsel ("the 1996 Letter Agreement"). [See DE # 1845, 1846 & 1848]. Specifically, the 1996 Agreement provided:
[W]e have evaluated the respective contributions each of us has already made and will be required to make and apportioned our respective participation in any proceeds which may be recovered after reimbursement of hard costs as outlined below, to correspond with our overall historical and future professional contributions as follows:
Stearns, Weaver, Miller, Weissler,
Alhadeff & Sitterson, P.A. 25%
Jewel Grutman, Esq. 3%
Law Offices of Gerald M. Bowen 25%
Engels, Pertnoy, Solowsky & Allen 47%
The aforementioned participating percentages are agreed upon as generally *1223 corresponding to the division of responsibility and contributions made from the inception of each of the respective law firms.
Exhibit 6 to Motion to Enforce [DE # 1845].
The 1996 Letter Agreement further provided that "[a]lthough each firm may be required to file separate attorney's fees applications with the court, it is agreed that all such fees shall be divided as provided herein.'"[29] It further specified the work to be performed by Stearns, Weaver and Bowen. In exchange for its 25% share, Stearns, Weaver agreed:
Eugene E. Stearns of the firm of [Stearns, Weaver] shall serve a principal trial counsel in this cause. Mr. Stearns agrees to provide such other partners, associates, paralegals and staff at Stearns Weaver as he deems reasonably necessary to perform the responsibilities of principal trial counsel and to handle the organization of the case; Mr. Stearns . . . agrees that he and his firm will use the discovery process between now and trial as a means of becoming completely versed in all aspects of the pending litigation. In addition to their role as principal trial counsel, Eugene E. Stearns and the firm of Stearns, Weaver will conduct and defend principal depositions of the parties, witnesses and experts as agreed upon among plaintiffs' counsel of record; will handle and defend motions for summary judgment, motions for decertification of the plaintiff class; will provide litigation support; will organize documents and all trial exhibits in such a way that is comfortable and acceptable to their manner of working; Stearns Weaver agrees to have at least one lawyer from its firm present at all depositions, hearings and conferences in the case; Mr. Stearns will personally handle the overall management and prosecution of this case in consultation with principal members of [Pertnoy, Solowsky] and Gerald Bowen.
Pertnoy & Solowsky's initial position in its motion to enforce was that their 47% share was intended to compensate them for (a) past legal and financial contributions to the case, and (b) their continued contributions to the litigation fund, and (c) their agreement that:
[Pertnoy & Solowsky] will act as coordinating and litigation counsel in the management of the case, in collaboration with the law offices of Stearns Weaver and the Law Offices of Gerald M. Bowen.
Bowen's position is that his 25% share reflected his past performance, his agreement to contribute to the litigation fund, and his agreement that:
It is further understood that Gerald M. Bowen has acted and will continue to act as petroleum marketing counsel. In that regard, Gerald Bowen has been one of the principal architects of the substantive legal arguments to date, and has alternated as acting lead counsel with [Pertnoy & Solowsky] following Roy Grutman's passing. Mr. Bowen will attend key depositions and will prepare all plaintiff class members for deposition and trial. The clients originally contacted Gerald M. Bowen, who although a sole practitioner, not only originated the matter, but is a repository of substantive *1224 expertise applicable to the substantive issues involved in the case, as to which he has provided and will continue to provide the primary guidance and direction.
Id.
Stearns, Weaver rejects Pertnoy & Solowsky/Bowen/Grutmans' principal contention that the allocation of fees among class counsel is a private contractual matter beyond the purview of the Court's authority. Instead, Stearns, Weaver argues that it is the district court which retains the ultimate fee allocation among Class Counsel, and that any disproportionate allocation of attorneys' fees in class actions are unenforceable. Evidently, Pertnoy & Solowsky now concedes this position by acknowledging, at the evidentiary hearing on allocation of fees, that attorneys' fees must be proportionate to the work performed. [See Transcript of May 5, 2006 at pages 90, 91, 94, 95, 96].[30] Mr. Pertnoy's position remains, however, that Pertnoy & Solowsky's contributions were proportional to what was included in the Letter Agreement so that it could be enforced. [See Transcript of proceedings of May 5, 2006 at page 99].[31]
I begin by analyzing the Federal Court's authority to control fee allocations among Class Counsel. As noted in FPI/Agretech Sec. Litig., 105 F.3d 469, 473 (9th Cir. 1997), "there is very little case law concerning the allocation of attorneys' fees among co-counsel." Notwithstanding, I adhere to the majority view (as discussed below) which recognizes the district court's broad discretion when the issue arises in class actions following settlement which establishes a common fund. In such cases, the court must provide a "concise but clear explanation" of its reasons. Id. I shall now attempt to do so.
*1225 It is fundamental that the submission of a fee application in a federal court always implicates the court's equitable review function. This is especially true where counsel is seeking a percentage award of the common fund. See, e.g., Camden I, 946 F.2d at 771 (explaining that historically the rationale entitling counsel to a percentage of the common fund derives from the equitable power of the court) (citing Trustees v. Greenough, 105 U.S. 527, 15 U.S. 527, 26 L. Ed. 1157 (1881) and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 5 S. Ct. 387, 28 L. Ed. 915 (1885)). As further explained in the Fifth Circuit's pre-Bonner[32]Hoffert decision, ". . . where, as here. . . ., the plaintiff's attorney himself invokes the court's equitable power to approve a settlement agreement to distribute the proceeds, the court must scrutinize the reasonableness of the contingent attorney's fee contract which affects the net recovery to the plaintiff." Hoffert v. General Motors, 656 F.2d 161, 164 (5th Cir. 1981). This principle is even more obvious in the class context under Fed.R.Civ.P. 23(g)(specifying considerations for the court's appointment and determination of the adequacy of class counsel including counsel's experience, knowledge, resources, and proposed terms for attorneys' fees).[33]
Admittedly, Rule 23 did not require at the time,[34] nor did Class Counsel obtain, court approval of their fee arrangements during 1997. Furthermore, Judge Kehoe's Order on class certification did not address the issue of "lead counsel" or the allocation of counsel's responsibilities. But, by not pursuing this alternative at the time, the law firms involved are now confronted with the legal reality that a federal court always has authority to reject agreements allocating fees among class counsel whenever there is cause to do so. See In re Synthroid Marketing Litig., 325 F.3d 974, 977 (7th Cir.2003)(concluding that an agreement as to fees reached by counsel in a class action is not binding, rather it must be approved by the court); Longden v. Sunderman, 979 F.2d 1095, 1103 (5th Cir.1992)(citing In re Agent Orange Prod. Liab. Litig., 818 F.2d 216, 222-26 (2nd Cir.1987)); In re Agent Orange Prod. Liab. Litig., 818 F.2d 216, 222-26 (2nd Cir.1987)(discussing the district court's role as protector of the class interests under Fed.R.Civ.P. 23(e) and its role to assure reasonableness in the awarding of fees in equitable fund cases); Smiley v. Sincoff, 958 F.2d 498, 501-02 (2nd Cir.1992)(concluding that court may reject an attorneys' fee agreement if it "finds good reason to do so"); Prandini v. National Tea Co., 557 F.2d 1015, 1019 (3rd Cir.1977)(noting that district court judge correctly rejected fee agreement which divided fees without regard to work performed), disapproved on other grounds by Evans v. Jeff D., 475 U.S. 717, 106 S. Ct. 1531, 89 L. Ed. 2d 747 (1986).
In In re Agent Orange Prod. Liab., Litig., 818 F.2d 216, 223 (2nd Cir.1987), the Second Circuit ruled that the distribution of fees in a fee allocation agreement must be in proportion to the services rendered, *1226 and distinguished those cases in which the court permitted class counsel to amicably divide a fee among themselves, holding, in a manner appropriate to this case:
We reject this authority, however, to the extent it allows counsel to divide the award among themselves in any manner they deem satisfactory under a private fee sharing agreement. Such a division overlooks the district court's role as protector of the class interests under Fed. R.Civ.P. 23(e) and its role of assuring reasonableness in the awarding of fees in equitable fund cases . . . In addition, this approach overlooks the class attorney's "duty" . . . to be sure that the court, in passing on [the] fee application, "has all the facts" as well as their "fiduciary duty to the class . . . not to overreach."
Id. at 223 (citations omitted).
The Second Circuit also rejected the argument that a successful outcome in the litigation could cure an improperly disproportionate allocation of fees: "the test to be applied is whether, at the time a fee sharing agreement is reached, class counsel are placed in a position that might endanger the fair representation of their clients and whether they will be compensated on some basis other than for legal services performed." Id. at 224.
The Second Circuit's analysis in In re Agent Orange Prod. Liab. Litig. raises the further question as to when, and under what criteria, is there "good cause" not to approve a fee allocation agreement. In an earlier decision, the Second Circuit, while stating that presence of an arms' length negotiated agreement among the parties weighs strongly in favor of approval, also recognized that . . . "a district judge's discretion [to set aside an agreement] is not limited to situations in which it finds windfall, adverse class impact, or other irregularities in a fee agreement. Despite the absence of such factors, if the court finds good reason to do so, it may reject an agreement as to attorney's fees just as it may reject an agreement as to the substantive claims." Mary Jones v. Amalgamated Warbasse Houses, Inc., 721 F.2d 881, 884 (2nd Cir.1983)(emphasis added).
The Ninth Circuit, after reviewing the case law, followed the Second Circuit's analysis, by also rejecting the proposition that a district court may decline to approve a fee allocation only if it is contrary to the interests of the class or in violation of the rules of professional conduct. Thus, in In re FPI/Agretech, Securities Litig., 105 F.3d 469 (9th Cir.1997), the Ninth Circuit rejected a private and undisclosed agreement to divide attorneys' fees in a class action: "the district court had broad authority over awards of attorneys' fees" and "may refuse to accept a fee allocation agreement whenever there is good cause to do so." Id. at 472-473. Accordingly, the Ninth Circuit declined to "curb the district court's broad discretion in exercising their equitable power to award attorneys' fees in common fund class actions by requiring that the fee allocation proposals be treated as enforceable contracts." The Court concluded that "the relative efforts of, and benefits conferred upon by the class by co-counsel are proper bases for refusing to approve a fee allocation proposal." Id. at 474. It stated: ". . . this case supports the proposition that district courts have the authority to reject a fee allocation that does not accurately reflect the amount of work performed by the various attorneys." Id., 105 F.3d at 473.
I do not consider that following the well-reasoned majority approach constitutes "judicial meddling."[35] This is especially *1227 true since the "good cause" for my intervention in this case is not based on some whimsical ground. Rather, its is firmly rooted on the conclusion that enforcing the 1996 Letter Agreement would result in a grossly disproportionate award among the five law firms in relation to services actually rendered, and benefits bestowed on the class, and would, even at this late date, prejudice the Class' interests.[36] For the reasons which follow, I conclude that an allocation of fees should be based on the relative contributions that each law firm provided to the Class. The exception is for McKenna, Long & Aldridge who will be awarded fees on a lodestar basis. Accordingly, I respectfully decline to enforce the 1996 Letter Agreement. Instead, I look to allocating the attorneys' fees in accordance with each firm's contribution during the various phases of the case. In so doing, I elaborate on the "good cause" I find to not enforce the 1996 Letter Agreement.
b. Allocation of the professional Services Into Two Periods
Over the fourteen years this case had been pending, five law firms have provided legal services to the Class and now seek compensation. Three of those law firms, the Law Offices of Gerald Bowen, Grutman Greene and Humphrey, and the successor to the Denver firm of McKenna Cuneo, left the case many years ago. One law firm, now known as Pertnoy, Solowsky & Allen, was part of the legal team during each of its phases. Stearns, Weaver was brought into the case in October 1996, initially in the limited role of "trial counsel" but took over the case in all major aspects in early 1997.
In applying the Camden and Johnson factors to the fourteen years of litigation, I conclude that a rational process for determining the relative contributions of the five law firms seeking an " award of attorneys' fees in this case must begin with a division of the labor as a whole into smaller and workable parts. Although I did not preside over this case in its early years, I have reviewed the entire file, the affidavits offered by the parties, and have considered the testimony offered at the evidentiary hearings. I am intimately familiar with the case after it was assigned to my Division in 1999. Given these circumstances, I can rationally decide how an allocation can be made to fairly represent the contributions of the lawyers in the case.
The allocations reached are derived after considerable analysis of the various positions offered by the law firms involved in this dispute. The firms offered different versions of their contributions which starkly differed from one another. I have reconciled these differences based my view of the more credible and persuasive evidence, and also my own personal observations and experience. I conclude that, for purposes of allocating attorneys' fees, the case should be divided into two phases.
The first phase is the period of 1992 through 1997, being the filing of the initial Complaint and concluding with the entry of Stearns, Weaver into the case and its subsequent "redirection" in 1997.[37] The second phase is from the period of "redirection" in 1997 to date. I further *1228 conclude that the first phase should be allocated only twenty percent of the total award, and that the second phase should be allocated the remaining eighty percent. Of the eighty percent, I conclude that Stearns, Weaver is to be awarded seventy-five percent and Pertnoy and Solowsky should be awarded five percent. As to the first part, Bowen/Grutman/Pertnoy & Solowsky will divide the twenty percent in proportion to the percentages envisioned in the 1996 Letter Agreement in that these percentages (as adjusted) best represent their own assessment of contributions through the first period.[38] After considering the totality of the evidence submitted, I independently conclude that such an allocation is fair and reasonable given the factors I must consider.
McKenna, Long & Aldridge LLP (then McKenna & Cuneo)(hereinafter "McKenna") was not a signatory to the 1996 Letter Agreement. Nonetheless, the 1996 Letter Agreement stated that payment to them would be negotiated upon a successful conclusion, and absent agreement, it was contemplated that the court would award them fees based upon "some quantum meruit claim." Despite efforts, no agreement has been reached relative to their fees.
In their Petition, McKenna requests an attorneys' fee in the amount of $1,032,695.00 based on a lodestar analysis. McKenna's affidavits support a total of 4,338 billable hours of work on the case. Their fee calculation applies rates that reflect the lost time value of the fees. This approach has been recognized as appropriate by the Eleventh Circuit. See Camden I, 946 F.2d at 775 n. 7. No party contests the amount requested or the lodestar methodology applied. After independent review, I conclude that McKenna's fee application is well-founded and is consistent with a result based on quantum meruit. Accordingly, $1,032,695.00 will be awarded to McKenna as attorneys' fees.
Next, I conclude that the Farrell & La Mantia Law Firm is entitled to no attorneys' fees because its petition was not timely filed, and because it contributed nothing of substance to this case.[39] At *1229 the evidentiary hearing, Richard Farrell testified that his advice contributed to Plaintiffs' winning the second trial. I conclude that this testimony is contrary to the greater weight of the more credible evidence.[40] I further disregard as unconvincing his reliance on the deposition testimony *1230 of McGillicuddy for support of his attorneys' fee petition. I disregard McGillicuddy's testimony as not credible and against the manifest weight of the evidence. I waste no further effort commenting on the Farrell petition and its late entry into the attorneys' fee allocation proceedings.
c. `Reasons in Support of "Good Cause" for Disregarding the 1996 Letter agreement and Requiring an Allocation Among the Law Firms
During first period, Gerald Bowen, Sidney Pertnoy and Jay Solowsky met with Exxon dealers, the Complaint was filed and amended, motions to dismiss were resisted, the Class was at first conditionally certified and later fully certified, and initial discovery was conducted.[41] I do not underestimate what was involved, and achieved, in filing this case, surviving the initial motions to dismiss, obtaining class certification, and undertaking, and analyzing the complex discovery initially obtained. Appropriate weight needs to be given to these early efforts and also to the attorneys' views of their own historical contributions as assessed and memorialized in the 1996 Letter Agreement.[42] Nonetheless, I conclude that the significance of this first period to the overall result in this case is manifestly overstated by Bowen/Grutman/Pertnoy & Solowsky. At the same time, I conclude that Stearns, Weaver's minimization of the accomplishments of the first phase of the case understates its importance to the whole.[43]
1. Grutman and Farrell
Grutman ceased involvement in the case in 1995,[44] although Jewel Grutman has claimed participation during the subsequent periods. Although the 1996 Letter Agreement allocated only three percent to Grutman, Jewel Grutman now claims she has performed significant services for the class at the request of the Class Representatives in observing the first trial and advising on preparation for the second trial. She claims that she is now entitled to four percent of the entire fee award. I conclude that Jewel Grutman has contributed nothing of substance to the case, and that her claim, based on her participation after her husband's death, and its significance to *1231 the outcome of the case, totally lacks merit and is contrary to the manifest weight of the more credible evidence. Like the Farrell & La Mantia firm, she claims credit for contributing to the redirection, and the viability of the case, between the first and second trial. Jewel Grutman's claim has no more substance than does the claims of the Farrell & La Mantia firm. In my view, the Plaintiffs were successful in the second trial because the first trial provided the "discovery" that Stearns, Weaver lacked after accepting representation. It was successful because Stearns, Weaver was able to directly impeach key Exxon fact witnesses and to discredit Exxon's expert witness who was critical to Exxon's defense.. The result had nothing to do with the "redirection" claimed by Farrell & La Mantia, Bowen, and Jewel Grutman.
2. Bowen/Pertnoy & Solowsky/Stearns, Weaver
Bowen ceased participation in the case in the first half of 1997, but has filed papers claiming that his involvement was significant after that time. I conclude that his claim of meaningful participation subsequent to 1997 totally lacks merit, and, like Jewel Grutman's claim, is contrary to the greater weight of the more credible evidence. I further discuss Bowen's claim later below.
While Pertnoy & Solowsky have retreated from their claim to enforce the 1996 Letter Agreement, Grutman and Bowen have not.[45] For the reasons I already have discussed, I reject enforcement of the 1996 Letter Agreement on their behalf. To award any of them such a fee would result in a disproportionate and patently unjustified attorneys' fee. None of the so-called facts they assert support any finding of entitlement. To the contrary, the manifest weight of the evidence supports a much more limited award to each.
At the time the 1996 Letter Agreement was executed, the case was set for trial. A limited period of discovery remained. I give weight to Stearns, Weaver's representations that when they entered into the 1996 Letter Agreement, they reasonably believed, based on the limited information made known to them at the time, that the case was essentially "trial ready."[46] I further conclude that they are correct in stating that it was not. Nor, in my view, was it in a "winnable posture"[47] when it was *1232 turned over to Stearns, Weaver in 1996.[48] I conclude that Bowen and Pertnoy & Solowsky significantly underestimated what was required to effectively proceed to trial and beyond. As it turned out, much more was required of the Stearns, Weaver than what was envisioned as their "professional future contributions" in the 1996 Letter Agreement.
For Pertnoy & Solowsky/Bowen/Grutman to simply argue caveat emptor misses the point. No reasonable law firm would have been able in a few weeks in 1996, through due diligence, to have a complete comprehension of the work that had been done over the prior five years and the work that remained to be done. Many of the problems and deficiencies only became obvious as the case proceeded toward trial. Regretfully, more deficiencies have been disclosed during the evidentiary hearings on the allocation of attorneys' fees.
Perhaps if the case went forward to trial before Judge Kehoe, the "overall historical and professional future professional contributions," as envisioned in the 1996 Letter Agreement, would have been more accurate. This, however, is not how the case evolved. Based on my own observations, and the greater weight of the more convincing credible evidence, I conclude that, from the time Stearns, Weaver entered the case, their contribution manifestly eclipsed that of any other firm, and far exceeded the assignment of work in the 1996 Letter Agreement, as it proceeded through numerous motions for summary judgment (before me), numerous motions in limine, a week long Daubert evidentiary hearing, two trials, the appeals, the Claims Administration Process, and the Settlement. To limit Stearns, Weaver to the 25% contemplated by the 1996 Letter Agreement simply provides an unwarranted windfall to other counsel at Stearns, Weaver's expense and to the detriment of the Class.
It would be blatantly and grossly disproportionate to the actual work undertaken, and contrary to the reality of who obtained the actual benefits for the Class.[49] It would also be a detriment to the Class because it would create a disincentive to Stearns, Weaver to complete their work in favor of each Class member in the Claims Administration Process, in accordance with the terms of the Settlement Agreement.[50]*1233 Significant weight must be given to the fact that Stearns, Weaver will remain as sole Class Counsel under the Settlement Agreement, and, in accordance with this Order, must await their full compensation, while Pertnoy & Solowsky, and other early Class Counsel, will be excused with full payment of their proportionate share of the attorneys' fee award.
While Pertnoy & Solowsky argue that they worked "shoulder to shoulder" and "behind the scenes" with Stearns, Weaver, and shared the work equally, the more credible and convincing evidence supports the contrary conclusion. Following Stearns, Weaver's entry into the case, the most active work undertaken by Pertnoy & Solowsky has been in relation to their attorneys' fee application. Otherwise, Pertnoy & Solowsky's role in the litigation following its "redirection" has been very limited. Merely "showing up" and sitting in court, or at strategy sessions, does not constitute an equal sharing of the workload. Notwithstanding the number of hours purportedly spent by the firm during the second phase of the case, I conclude that Pertnoy & Solowsky's substantive contribution does not exceed five percent of the allocation for the second phase of the case. The five percent allocated to them recognizes their contribution during the second trial and in the Claims Administration Process.
During his testimony, Mr. Pertnoy suggested that the "cost contribution" made by his law firm justifies a "fifty-fifty" allocation between the two firms.[51] I reject this contention because it is not substantiated by the greater weight of the more credible evidence, and, in any event, even if true, does not alter my view of an appropriate allocation. Regardless of who paid what, Pertnoy & Solowsky's role became negligible when Stearns, Weaver entered the case. The near totality of the real legal work, from the time of "redirection" in 1997 through the Claims Administration Process and the Settlement, was performed by Stearns, Weaver.[52] I also give *1234 significant weight to Steams, Weaver contribution to the Class Members, both known and unknown, by adroitly involving the State Attorney Generals of twenty-one states in the Claims Administration Process. This effort was extraordinarily beneficial to accomplishing the settlement with Exxon because, as a result, Exxon was confronted with a majority of the States potentially recovering the remaining unclaimed damages. Without Stearns, Weaver's role, this benefit would not have been realized.[53]
Because of their early contributions in this case, I respectfully decline to engage in "fact finding" on all of Stearns, Weaver's positions against Pertnoy & Solowsky. It serves no purpose to embarrass anyone further. Suffice it to say, I find merit in Stearns, Weaver's position that, following the redirection of the case in 1997, Pertnoy & Solowsky's fundamental concern was to obtain "public recognition" of the results achieved in favor of their firm[54] and to protect their claim to a disproportionate fee under the 1996 Letter Agreement. Even if I engage in detailed fact finding, I would simply come to the same conclusion. Pertnoy & Solowsky's contribution to the second phase of the case constitutes only five percent of the eighty percent I have allocated. Without Stearns, Weaver's contribution to the case, Pertnoy & Solowsky would not be receiving an attorneys' fee allocation of more than $50,000,000.00, which, in my view, more than generously compensates them for the entirety of their efforts.
3. The Conflict-of-Interest of Bowen and McGillicuddy
The situation with Gerald Bowen has become more complicated. Without doubt, he significantly contributed to the first phase of the case, and was recognized for his efforts in the 1996 Letter Agreement. Absent the circumstances that I now describe, Mr. Bowen would be entitled to a percentage award for the first phase of the case in the manner as contemplated in the 1996 Letter Agreement and as adjusted by this Court. Regretfully, it has now been disclosed that both Bowen and McGillicuddy have had significant, and self-evident, conflicts-of-interests that warrant partial forfeiture.[55]
Since the beginning of the case in 1992, Bowen has borrowed in excess of $400,000.00 from McGillicuddy to cover his personal and business expenses and to help finance his participation in this case. In early 2000, he entered into a written agreement with McGillicuddy in which Bowen agreed to pay McGillicuddy the lesser of $13 million or 50% of any attorneys' fees he would receive in this proceeding. He further testified that he *1235 subsequently had a falling out with McGillicuddy, that McGillicuddy sued him in Virginia state court, and that McGillicuddy now has a final judgment dated March 16, 2005 against him for $13 million, plus interest at 22% per year, but not exceeding 50% of his fee award in this proceeding.[56] McGillicuddy and Bowen deny that this judgment incorporates a "fee sharing" agreement, but the manifest weight of the evidence supports the contrary conclusion.
None of these circumstances were disclosed to Stearns, Weaver, to the other Class Representatives or to this Court. Instead, these matters only became known through discovery associated with these allocation hearings. Specifically, Bowen has filed affidavits in support of enforcing the 1996 Letter Agreement, and to justify his "significant" contribution to the case, including after the first trial, without disclosing the fee sharing arrangement with McGillicuddy. Likewise, McGillicuddy has executed affidavits in these proceedings in support of his own position for a disproportionate incentive award and in support of enforcing the 1996 Letter Agreement, without revealing his personal interest in Bowen's fee. I conclude that McGillicuddy knew before he entered into his written agreement with Bowen that Stearns, Weaver was dissatisfied with the 1996 Letter Agreement and planned to request the Court to reallocate attorneys' fees based on each law firm's total contribution to the case.
After entering into his written agreement with Bowen, McGillicuddy, in collaboration with Bowen, took steps to replace Stearns, Weaver and to bring Richard Farrell into the case following the "hung jury" on the first trial. The circumstantial evidence strongly supports the inference that Richard Farrell would agree to a fee arrangement acceptable to Bowen and McGillicuddy. Also, both Bowen and McGillicuddy had every reason to believe that Stearns, Weaver would seek to withdraw in the event Richard Farrell entered the case. McGillicuddy denies that he intended to replace Stearns, Weaver but I do not credit his testimony. The inference is too compelling that, at this point, both Bowen and McGillicuddy were more concerned with protecting the fee percentages under the 1996 Letter Agreement than in acting in the best interest of the Class.
The fact that neither Bowen nor McGillicuddy disclosed their written agreement to Class Counsel or to the other eight Class *1236 Representatives supports this conclusion. Even without that information, several Class Representatives resisted Bowen and McGillicuddy's efforts to bring Richard Farrell into the case. They had the good sense to conclude that it would not have been in the best interest of the Class. Furthermore, withholding of their feesharing agreement, and the Virginia judgment, from Stearns, Weaver placed the second trial at risk in the event Exxon had discovered this information and used it for impeachment purposes during the second trial.
For Bowen, his clear conflict-of-interest violated the rules of this Court which incorporate the Florida Bar Rules. See Rule 11.1(c), Local Rules of the United States District Court for the Southern District of Florida ("The standards of professional conduct of members of the Bar of this Court shall include the current Rules Regulating the Florida Bar."); see also Rules 4-1.7 and 4-1.8 of the Rules of Professional Conduct of the Florida Bar (governing conflicts-of-interest), Rule 4-4.1 (truthfulness in statements to others), and Rule 4-3.3 (candor towards the tribunal). Class Counsel must not, on threat of sanction, use the class action for his own personal aggrandizement, ignore conflicts, or prejudice the class by self-interested misbehavior. See Piambino, 757 F.2d at 1144-45 & n. 88. I conclude that Bowen acted with self-interested misbehavior in this case.[57]
McGillicuddy also had a fiduciary duty to the Class. As stated in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 549, 89 S. Ct. 1221, 1227, 93 L. Ed. 1528 (1949):
"A [class representative] assumes a position, not technically as a trustee perhaps, but one of a fiduciary character. He sues, not for himself alone, but as representative of a class comprising all who are similarly situated. The interest of all in the redress of the wrongs are taken into his hands dependent upon his diligence, wisdom and integrity . . . He is a self-chosen representative and a volunteer champion. The Federal Constitution does not oblige the State to place its litigating and adjudicating processes at the disposal of such a representative, at least without imposing standards of responsibility, liability and accountability which it considers will protect the interests he elects himself to represent. It is not without significance that this Court has found it necessary long ago in the Equity Rules and now in the Federal Rules of Civil Procedure to impose procedural regulations of the class action not applicable to any other. . . . "
Id. at 69 S. Ct. at 1227.
Applying these fundamental principles, I conclude that McGillicuddy acted in violation of his fiduciary duty. In many respects, he has shown excellent traits of a class representative, including great courage and tenacity. It is regrettable that, *1237 for his own purposes, he also pursued his own self-interest.
4. Partial Forfeiture
Stearns, Weaver, on behalf of the Class, urges that I forfeit the entirety of McGillicuddy's incentive award. He is joined in that request by Class Representatives Pinder, Luis and Gonzalez. Class Representative Durishin urges forfeiture "to some extent," but that "total forfeiture" would be inappropriate due to McGillicuddy's overall contribution to the case, including his contribution of over $100,000.00 in out-of-pocket costs. Class Representatives Bove, Cook, Dalton and Wise urge that forfeiture should be limited to McGillicuddy's loss of the right to request a disproportionate award.
Fee forfeiture is an equitable remedy that requires careful consideration of all the relevant circumstances. See In Re Austrian and German Bank Holocaust, 317 F.3d 91, 102 (2nd Cir.2003). For the reasons that I state below, I conclude that a limited forfeiture is appropriate. Putting aside the fee-splitting agreement, I cannot ignore that both Bowen and McGillicuddy have provided substantial contributions to this case which have directly benefitted Class Counsel, other Class Representatives and Class Members. At the time Bowen entered his written fee-splitting agreement with McGillicuddy, he was not actively representing the Class. Nonetheless, while he was actively representing the Class, he had borrowed substantial sums of money from McGillicuddy. He did not notify the other Class Representatives or other Class Counsel about his arrangement. Moreover, during that time period, he pursued claims against Exxon more beneficial to McGillicuddy than to the Class as a whole. By doing so, he ignored and breached his "heavy fiduciary responsibility to his clients." See Piambino, 757 F.2d at 1138.[58]
He also sought to reinstate himself in the litigation as the "navigator," after the second trial. McGillicuddy actively supported his effort. He further advocated that Richard Farrell should take over as litigation counsel for the second retrial, again, without disclosing his real interest in removing Stearns, Weaver from the case that is, because Stearns, Weaver was not willing to abide by the 1996 Letter Agreement. Again, Bowen made no disclosure of his arrangement with McGillicuddy at the time at the time he promoted Richard Farrell. Most significantly, Bowen filed a fee application with this Court and did not disclose his arrangement with McGillicuddy or the judgment against him. Similarly, McGillicuddy made no such disclosure to this Court in his application for incentive awards. At the evidentiary hearings, *1238 neither offered a satisfactory explanation.
I resolve this difficult situation by imposing a partial forfeiture on Bowen and McGillicuddy. Regarding McGillicuddy, an incentive award is purely discretionary with the Court. I find that McGillicuddy has forfeited his right to seek a disproportionate incentive award from the Class itself. Instead, McGillicuddy must look to Bowen to pay his incentive award[59] Moreover, I exercise my discretion by reducing his incentive award by twenty-five percent because of his bad faith in failing to disclose his fee-splitting agreement with Bowen while, at the same time, seeking a disproportionate incentive award in relation to the other Class Representatives. I have considered forfeiting all incentive awards to McGillicuddy. I refrain from doing so only because he was personally instrumental in bringing this case and has significantly contributed to the results achieved.
At the same time, I will neither sanction nor be a party to enforcing the Virginia judgment against Bowen.[60] I find the feesplitting arrangement condoned by that judgment to be repugnant to the requirements of Fed.R.Civ.P. 23(h) governing the award of reasonable attorneys' fees.[61] The judgment also appears to be in violation of Virginia law because it imposes an usurious interest rate at double the amount of all sums advanced at 22% per year. Under Virginia law, no contract shall be made for the payment of interest on a loan greater than twelve percent per year. See § 6.1-330.55, Code of Virginia. The judgment rate of interest is at an annual rate of six percent. See § 6.1-330.54, Code of Virginia.
I will enjoin McGillicuddy and his corporation from collecting on that judgment against Bowen except for the monies Bowen actually borrowed, together with a lawful rate of interest in accordance with Virginia law.[62] I do so under the All Writs Act, 28 U.S.C. § 1651 (1982) which permits me to issue all writs and orders necessary and appropriate to preserve the Court's jurisdiction and to prevent frustration of the proper administration of justice.
I also so act under my "inherent powers" which are derived from the court's need "to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases." Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 2132, 115 L. Ed. 2d 27 (1991); Thomas v. Tenneco Packaging Co., Inc., 293 F.3d 1306, 1319 (11th Cir.2002); Allapattah, v. Exxon Corporation, 372 F.Supp.2d at 1372. I conclude that both Bowen and McGillicuddy *1239 have acted in "bad faith" by failing to fully disclose their fee splitting agreement to Class Counsel, the other Class Representatives and by filing their affidavits in this Court without making appropriate disclosures. Because Bowen has acted in "bad faith," I also may consider his conduct in determining his ultimate attorneys' fee under Fed.R.Civ.P. 23(h). A finding of "bad faith" is warranted where an attorney knowingly or recklessly disrupts the litigation or provides false information to the Court. Thomas, 293 F.3d at 1320.
Based on Bowen's conduct, I reduce his attorneys' fee by twenty-five percent. I further penalize him by requiring Bowen to pay McGillicuddy's reduced incentive award from the share of the attorneys' fees awarded to Bowen. The reduced amount remains in favor of the Class and is not allocated to any other attorney or Class Representative. In addressing these sanctions, I conclude that due process requirements have been met. Both Bowen and McGillicuddy have had the opportunity to respond in writing and defend against the request for forfeiture. However, I would forfeit the entirety of Bowen's fee award and McGillicuddy's incentive award if the Order I have entered cannot be enforced for any legal reason. I make this alternative finding rather than to allow a fee-splitting arrangement which is repugnant to this Court. I also give notice to McGillicuddy that any willful attempt to enforce the Virginia judgment against Bowen's attorneys' fees in a manner inconsistent with this Order will result in an order to show cause why criminal contempt proceedings should not be filed against him.
d. Findings on Net Amount for Attorneys' Fees and on Payment of Fees; Timing of Payments.
1. Award of Attorneys' Fees and Incentive Awards
The Settlement Fund's gross amount is $1,075,000,000. From this amount, $15,000,000.00 is first deducted as attorneys' fees paid by Exxon in the three fee-shifting States. The $15,000,000.00 will be distributed pro rata among the Claimants in the three fee-shifting States. After this reduction, a total of $1,060,000,000.00 remains in the Settlement Fund.
I will reduce this amount by 1.5% as an incentive award for the Class Representatives in the amount of $15,900,000.00. This results in a net total of $1,044,100,000. I recognize that I have ordered Gerald Bowen to pay William McGillicuddy's incentive award, as adjusted, so that no portion of Mr. McGillicuddy's incentive award will be paid by the Class. Nonetheless, I conclude that neither the Class Representatives, nor Class Counsel should benefit as a result of the McGillicuddy and Bowen's forfeitures.[63] The remaining incentive awards will be paid equally to each of the eight Class Representatives in the amount of $1,766,666.00. McGillicuddy's equal share of the total incentive award, $1,766,666.00 is reduced by a forfeiture of twenty-five percent for a total of $1,325,000.00. Bowen will pay McGillicuddy the amount of $1,325,000.00.
*1240 Next, I reserve an estimated amount of $5,650,000.00 from the Settlement Fund for the reimbursement of costs.[64] A final cost calculation will be recommended by the Special Master after a hearing. If the total amount of costs is less than the estimated amount, then the amount of incentive awards and attorneys' fees will be adjusted proportionately consistent with this Order. The net result of the estimated reduction, however, results in a remaining total of $1,038,450,000.00 in the Settlement Fund.
Applying 31 and 1/3% to the remaining $1,038,450,000.00, the net amount available for attorneys' fees is $325,380,997.00. Of this amount, I have allocated twenty percent to Pertnoy and Solowsky/Grutman/Bowen (prior to adjustment as to Bowen) for the first phase of the litigation. This equals $65,006,199.00. I deduct from this amount a total of $1,032,695.00 to be awarded to McKenna. The remaining amount is $64,043,504.00. I then allocate this amount in the following percentages, as adjusted: Pertnoy and Solowsky-62.67% or $40,136,063; Bowen-33.33% or $21,345,699, and Grutman-4% or $2,561,740.
I reduce Bowen's share by twenty-five percent ($5,336,425.00) for a net total of $16,009,274.00. However, this amount is reduced by $300,000.00 which was previously provided to him as an advanced attorneys' fees by this Court's Order of November 18, 2005 [DE # 2514], for a revised total of $15,709,274.00. This amount is further reduced by $1,325,000.00 because Bowen is ordered to pay Mr. McGillicuddy his reduced incentive award. The revised total for Mr. Bowen is $14,384,274.00. I will reduce this amount further after considering the report and recommendation of the Special Master as to a further deduction for Bowen's prior debt to McGillicuddy.
The amount allocated to the second phase is $260,304,797.60. I have allocated Pertnoy and Solowsky five percent of this amount for a total of $13,015,240.00. The remaining amount of $247,289,557.00 is allocated to Stearns, Weaver as its attorneys' fee in this case. Pertnoy and Solowsky's total attorneys' fee award, combining its award from the first and second phases of this litigation, is $53,151,303.00.
2. Timing of Distributions; Credit to Class Members on Forfeited Fees
A further matter at issue is the manner of payment. There are four options. The first is to order that the attorneys and Class Representatives would be paid as a percentage of each claim as each claim is adjudicated. The second is to order that the attorneys and Class Representatives are to be paid from the Settlement Common Fund. The third is to order a combination of both methods, with some funds paid upon from the Settlement Common Fund and other amounts paid as claims are adjudicated. The fourth method to pay an amount from the Settlement Common Fund and hold back from final payment some portion pending the conclusion of the Claims Administration Process. I have elected the fourth method for the reasons stated below.
A primary concern is whether the payment of attorneys' fees, incentive awards, and past due costs in lump sum would jeopardize the necessary reserves to pay the anticipated cost of the Claims Administration Process. To analyze this issue, I directed the Special Master to obtain the *1241 advice of a certified public accountant given the range of requested relief under the various pending motions and the available options for payment. Upon consideration of the Special Master's recommendation, I conclude that I can directly pay all of the attorneys' fees for the four law firms (McKenna, Pertnoy & Solowsky, Grutman and Bowen), one-half of Stearns, Weaver's attorneys' fee, all of the incentive awards, and the prior incurred costs, and still maintain a sufficient reserve for the Claims Administration Process. This approach has several advantages. First, this option will simplify the Claims Administration Process. Second, all attorneys, except for Stearns, Weaver, can be discharged as Class Counsel. Third, Stearns, Weaver, as the sole remaining Class Counsel, will have an incentive to expeditiously proceed with the Claims Administration Process in order to obtain their remaining attorneys' fee. In the meantime, the outstanding balance of their attorneys' fee will earn interest at the Florida statutory judgment rate. This amount will be paid to Steams, Weaver before any distribution to the States. I also will permit Stearns, Weaver to file for an intermediate additional distribution of their remaining attorneys' fee when more than one-half of the total Class Members have received their distributions, provided that there are sufficient interest funds and reserves generated at that time to pay the remaining costs of the Claims Administration Process.
Finally, the partial forfeiture by Bowen and McGillicuddy has resulted in an additional $6,661,425.00[65] being available for distribution. I have determined that it is in the best interest of the Class Members to receive a pro rata distribution of this amount at the time of final distribution at the conclusion of the Claims Administration Process. This amount will be distributed to the Class Members prior to any distribution to the States. I select this option because, under the Settlement Agreement, other final distributions to Class Members are contemplated at that time. The effect is to reduce the percentage of attorneys' fees actually paid by the Class from 31 and 1/3% to a smaller percentage.
V. ORDERS OF THE COURT.
WHEREFORE, it is ORDERED:
1. The Objections [DE # 2710] to the award of attorneys' fees and incentive awards are denied. Attorneys' fees will be awarded based on a percentage of 31 and 1/3% in a manner consistent with this Order. Incentive awards will be awarded based on a percentage of 1.5% in a manner consistent with this Order.
2. The motions by Pertnoy & Solowsky/Bowen/Grutman to enforce the 1996 Letter Agreement [DE # 1845, 1846 & 1848] are denied.
3. Stearns, Weaver's Opposition to Motions Seeking Allocation of Attorneys' Fees on a Basis Other Than Proportionate Contribution to the Class [DE # 1894] is approved. Consistent with this Order, attorneys' fees will be awarded based on the services rendered by each law firm to the Class.
4. Stearns, Weaver's Petitions for Attorneys' Fees [DE # 2124, 2126, 2637 & 2638] are granted in part. The law firm is awarded $247,289,557.00 in attorneys' fees. Payment of one-half of this attorneys' fee shall be paid forthwith by the Claims Administrator from the Settlement Fund. The remaining one-half of the attorneys' fee shall be paid as set forth in this Order.[66] I reserve on the Petitions to the *1242 extent that the Petitions request an award of costs and expenses pending recommendation by the Special Master.
5. Pertnoy & Solowsky's Petitions for Attorneys' Fees [DE # 2129, 2130 & 2635] are granted in part. The firm is awarded $53,151,303.00 in attorneys' fees. Payment of the entire amount of this attorneys' fee shall be paid forthwith by the Claims Administrator. I reserve on the. Petitions to the extent that the Petitions request an award of costs and expenses pending recommendation by the Special Master.
6. Grutman, Greene & Humphrey's Petitions for Attorneys' Fees [DE # 2112, 2628 & 2629] are granted. The Grutman firm is awarded $2,561,740.00 in attorneys' fees. Payment of the entire amount of this attorneys' fee shall be paid forthwith by the Claims Administrator. I reserve on the Petitions to the extent that the Petitions request an award of costs and expenses pending recommendation by the Special Master.
7. Bowen's Petition for Attorneys' Fees [DE # 2174] is granted in part and denied in part. He is denied twenty-five percent ($5,336,425.00) of his attorneys' fee award because of partial forfeiture. Subtracting the twenty-five percent, Mr. Bowen's total would be $16,009,274.00. However, this amount is reduced by $300,000.00 which was previously provided to him as an advanced attorneys' fees by this Court's Order of November 18, 2005 [DE # 2514], for a revised total of $15,709,274.00. This amount is subject to further deduction for McGillicuddy's incentive award ($1,325,000.00), as set forth in this Order, for a revised total of $14,384,274.00. This amount shall be subject to a further reduction following the recommendation from the Special Master as to the amount that Bowen owes to McGillicuddy under the Virginia judgment, as set forth in this Order. The Special Master shall issue a report and recommendation as to an amount to paid for Mr. Bowen's debt to Mr. McGillicuddy in accordance with Virginia law. Accordingly, Bowen shall be paid only $5,000,000.00 in attorneys' fees forthwith by the Claims Administrator. The remaining amounts shall be paid to Bowen and McGillicuddy in accordance with further order of this Court.
8. McKenna's Petition for Attorneys' Fees [DE # 2108] is granted. The law firm is awarded $1,032,695.00 in attorneys' fees. The fee shall be paid forthwith by the Claims Administrator.
9. Farrell & La Mantia's Petition for Attorneys' Fees [DE # 2626] is denied in its entirety.
10. Stearns, Weaver shall remain as the sole Class Counsel to continue the Claims Administration Process. All other law firms are hereby discharged.
11. I reserve on the various cost petitions filed by the attorneys pending recommendation by the Special Master. Any further costs awards for future expenses shall be subject to further recommendation by the Special Master.
12. The Petitions for Incentive Awards filed by the nine Class Representatives [DE # 2109, 2116, 2118] are granted. Each Class Representative, except for Mr. R. William McGillicuddy, will receive an incentive award in the amount of $1,766,666.00, which shall be paid forthwith by the Claims Administrator. Mr. McGillicuddy's incentive award will be paid by Mr. Bowen and not the Class. Mr. McGillicuddy's incentive award is reduced by *1243 twenty-five percent due to partial forfeiture, for a total of $1,325,000.00. Pursuant to this Order, Mr. McGillicuddy is enjoined from collecting on the Virginia judgment against Mr. Bowen, subject to criminal contempt. The Claims Administrator shall pay Mr. McGillicuddy's incentive award forthwith from the amount of attorneys' fees allocated to Mr. Bowen. The remaining distribution to Mr. McGillicuddy will be subject to further order of this Court upon recommendation from the Special Master.
13. Lastly, the Court notes that it is impossible to foresee the total amount of funds necessary to complete the Claims Administration Process and to pay all costs and expenses associated with the Settlement Fund at this time. As a result, the Court reserves the right to consider taking some portion of the funds to be set aside for the States in order to ensure completion of the Claims Administration Process and the full payment of prejudgment interest to the Class.
DONE AND ORDERED.
Attachment "1"
STATE SURVEY REGARDING
"COMMON FUND" AWARDS OF ATTORNEY'S FEES
---------------------------------------------------------------------------------------------------
State Authority Citation
---------------------------------------------------------------------------------------------------
ALABAMA ✓ Edelman & Combs v. Law, 663 So. 2d 957, 958 (Ala.
1995)
ARIZONA ✓ Kerr v. Killian, 197 Ariz. 213, 3 P.3d 1133, 1137-38
(Ariz.Ct.App.2000)
ARKANSAS ✓ Powell v. Henry, 267 Ark. 484, 592 S.W.2d 107, 109
(Ark.1980)
CALIFORNIA ✓ Bell v. Farmers Ins. Exch., 115 Cal. App. 4th 715, 725-26,
765 (Cal.Ct.App.2004); Cziraki v. Thunder Cats,
Inc., 111 Cal. App. 4th 552, 557-58 (Cal.Ct.App.2003)
COLORADO ✓ Kuhn v. State, 924 P.2d 1053, 1058, 1060 (Colo.1996)
CONNECTICUT ✓ Doe v. Heintz, 204 Conn. 17, 526 A.2d 1318, 1323
(Conn.1987)
DELAWARE ✓ Goodrich v. E.F. Hutton Group., Inc., 681 A.2d 1039,
1043-45 (Del.1995)
DISTRICT OF ✓ Passtou, Inc. v. Spring Valley Ctr., 501 A.2d 8, 11-12
COLUMBIA (D.C.1985)
FLORIDA ✓ Kuhnlein v. Department of Rev., 662 So. 2d 309, 311-12
(Fla.1995)
GEORGIA ✓ Friedrich v. Fidelity Nat'l Bank, 247 Ga.App. 704, 545
S.E.2d 107 (Ga.2001)
INDIANA ✓ In. R. Tr. P. 23(D); Northern Ind. Pub. Serv. Co. v.
Citizens Action Coalition of Ind., Inc., 548 N.E.2d 153,
161-62 (Ind.1989)
KENTUCKY ✓ Ky.Rev.Stat. Ann. § 412.070; Commonwealth of Ky.
Rev. Cabinet v. Ledger, 955 S.W.2d 539, 545 (Ky.Ct.
App.1997)
LOUISIANA ✓ La.Code Civ. Proc. Ann. art. 595; Avants v. Kennedy,
837 So. 2d 647, 656 (La.Ct.App.2002)
MAINE ✓ York Ins. Group of Maine v. Van Hall, 704 A.2d 366,
388 (Me.1997)
MARYLAND ✓ United Cable Television of Baltimore, Ltd. v. Burch,
732 A.2d 887, 902-03 (Md.1999), superseded in part by
statute on other grounds as noted in Dua v. Comcast
*1244
Cable of Md., Inc., 370 Md. 604, 805 A.2d 1061, 1066
(Md.2002)
MASSACHUSETTS ✓ Coggins v. New England Patriots Football Club, Inc.,
550 N.E.2d 141, 143-45 (Mass.1990)
MISSISSIPPI ✓ Yerby v. United Healthcare Ins. Co., 846 So. 2d 179,
189-90 (Miss.2002)
MONTANA ✓ Murer v. State Comp. Mut. Ins. Fund, 283 Mont. 210,
942 P.2d 69, 76 (Mont.1997)
NEVADA ✓ State v. Elcano, 106 Nev. 449, 794 P.2d 725, 726-27
(Nev.1990)
NEW HAMPSHIRE ✓ Private Truck Council of Am., Inc. v. State, 517 A.2d
1150, 1157 (N.H.1986); Claremont v. Sch. Dist. v. Governor
144 N.H. 590, 761 A.2d 389, 392-93 (N.H.1997)
NEW JERSEY ✓ N.J.R. Ct. 4:42-9(a)(2); Henderson v. Camden County
Municipal Utility Auth., 176 N.J. 554, 826 A.2d 615,
621-22 (N.J.2003)
NEW MEXICO ✓ Martinez v. St. Joseph Healthcare Sys., 117 N.M. 357,
871 P.2d 1363, 1366 (N.M.1994)
NEW YORK ✓ N.Y.C.P.L.R. 909; Seinfeld v. Robinson, 676 N.Y.S.2d
579, 582 (N.Y.App.Div.1998)
NORTH CAROLINA ✓ Bailey v. State, 348 N.C. 130, 500 S.E.2d 54, 71-73
(N.C.1998)
OREGON ✓ Or. R. Civ. P. 32N(1)(c); State Farm Mut. Auto. Ins.
Co. v. Clinton, 518 P.2d 645, 647 (Or.1974)
PENNSYLVANIA ✓ Pa. Const. Stat. § 2503; Couy v. Nardei Enters., 587
A.2d 345, 346 (Pa.Super.Ct.1991)
RHODE ISLAND ✓ Malinou v. Power, 114 R.I. 399, 333 A.2d 420, 423-24
(R.I.1975); Sullivan v. Oakley, 1990 WL 10000555, at
*1-3 (R.I. Sup.Ct. July 18, 1990)
SOUTH CAROLINA ✓ Shillito v. City of Spartanburg, 214 S.C. 11, 51 S.E.2d
95, 100, 104 (S.C.1948); Condon v. State, 354 S.C. 634,
583 S.E.2d 430, 432, 434-35 (S.C.2003)
TENNESSEE ✓ Kline v. Eyrich, 69 S.W.3d 197, 204-05 (Tenn.2002);
Hobson v. First St. Banks, 801 S.W.2d 807, 809 (Tenn.
Ct.App.1990)
TEXAS ✓ Knebel v. Capital Nat'l Bank, 518 S.W.2d 795, 799-801
(Tex.1994)
VERMONT ✓ Guiel v. Allstate Ins. Co., 170 Vt. 464, 756 A.2d 777,
780-81 (Vt.2000)
VIRGINIA ✓ Dupont v. Shackelford, 235 Va. 588, 369 S.E.2d 673, 677
(Va.1988)
WASHINGTON ✓ Covell v. City of Seattle, 127 Wash.2d 874, 905 P.2d 324,
333 (Wash.1995)
WEST VIRGINIA ✓ Security Nat'l Bank & Trust Co. v. Willim, 180 S.E.2d
46, 52-53 (W.Va.1971)
WYOMING ✓ Butler v. Conwell, 14 Wyo. 166, 82 P. 950, 951-52
(Wyo.1905)
NOTES
[1] Class Representatives Martin Cook and David Wise are named plaintiffs in this class action. Class Representative George Dalton owns the corporation G.G.S.K., Inc. and G.G.S.K.1., Inc., which are named plaintiffs in this action. Similarly, Class Representatives Paul Bove and R. William McGillicuddy own named plaintiffs Lee-Langley Corp. and Willston Center Autocare, Inc., respectively.
[2] The various motions and supplements were accompanied by numerous affidavits, appendices and exhibits. See Docket Entry Numbers [DE # s]: 2110, 2113, 2116-2122, 2127, 2132, 2136, 2143-2156, 2627, 2629-2630, 2634 and 2638.
[3] Since the filing of the various motions, the Law Finns and Class Representatives have filed numerous additional matters in support of their petitions: See DE # s 2792, 2801, 2802, 2803, 2804, 2805, 2806, 2807, 2808, 2809, 2810, 2811, 2814, 2815, 2816, 2817, 2824, 2822, 2823, 2827, 2836, 2833, 2837 2862, and 2863.
[4] I will address the amount of costs and reimbursable expenses to be awarded to Class Counsel in a separate order. I have referred the matter to Special Master Thomas E. Scott to conduct a detailed review and provide a report and recommendation to the Court on the proper amount of costs and reimbursable expenses to be awarded. He is to do so after applying the appropriate legal standard for assessment of court costs and upon assessing the reliability and reasonableness of the requested reimbursable expenses and costs. The Special Master is permitted to retain the services of an accountant to assist in the review.
[5] Subsequent to the verdict, Class Counsel requested this Court to order Exxon to post the full amount of damages, as ministerially calculated by the Court, into a common fund which, in turn, would allow for attorneys' fees to be paid prior to the Class Administration Process and leave for the Claims Administrator the burden of finding the Class Members through advertising and direct contact. For a number of reasons, denied the relief sought. Even if I had ordered payment of damages into a common fund, I would not have awarded attorney's fees at that time. By linking the potential award of attorneys' fees with the success of the Claims Administration Process, I aligned the interests of Class Counsel in receiving a high percentage fee with that of each potential class member in participating in the Claims Administration Process and receiving the maximum recovery allowable.
[6] It became necessary to publish a detailed notice to the Class setting forth the proposal for incentive awards and attorneys' fees, and setting a date for a final hearing, so that, if granted, appropriate fees could be awarded in conjunction with final judgments entered in the Claims Administration Process. This hearing was postponed when the settlement was announced. Of significance, no member of the Class filed any objection to the proposed attorneys' fees and incentive awards within the prescribed time period. The objections at issue arose after the settlement itself was re-noticed with the right to again object to attorneys' fees and incentive awards.
[7] Three objections were directly from Class Members. One Class Member thought that attorneys' fees should be set at an hourly rate, plus an "annual raise" and warned against "sneaking extra profit by inflating costs." Another complained that there should not be a duplication of attorneys' fees between Class Counsel and the "Claims Compensation Bureau, Inc.," with whom the Class Member signed an agreement for services. [This matter is currently before the Special Master]. Finally, another Class Member filed an objection claiming that an award of $353,000,000.00 in attorneys' fees is "outrageous," especially given that the ". . . settlement [is] already below the full amount of the claims held by the class members." The Class Member stated that he never agreed to pay "a third of his claim" and recommended that the attorneys ". . . should be paid by the hour at a normal rate of billing."
[8] I find of interest that Mr. Cline has entered his own fee agreements with Class Members which envision contingent fees as high as 40% for simply filing a claim when Class Counsel has done all the work. Although Mr. Cline claims to represent over 400 claimants in the Claims Administration Process, only three have authorized him to file objections. At the end of the day, Mr. Cline will have to appear before this Court to justify his fees.
[9] The Farrell & La Mantia Law Firm has only recently filed a petition for an award of attorneys' fees. I later address the untimeliness and lack of merit of its petition.
[10] Stearns, Weaver states that: "A proper application of the standards for the award of attorneys' fees compels an award of one third of the common fund (33 and 1/3 percent) less the two percent reduction proposed in connection with the motion to approve the settlement with Exxon. A total fee of 31.33 % of the common fund has been earned and should be awarded." [DE # 2637 at 13].
Pertnoy & Solowsky states: "Of the $1.075 billion that Exxon will pay under the Proposed Settlement, $15 million is specifically allocated to offset the fee obligation of the dealer plaintiffs in the three fee-shifting states (Arizona, Arkansas, and Texas). Accordingly, Class Counsel seek to recover their percentage award against only the $1.060 billion of the amount Exxon is paying, as only that comprises the `common fund.' Before the Proposed Settlement, PSA previously requested a total fee award to Class Counsel of 33 1/3% of the gross sums recovered, and PSA now requests a total fee award to Class Counsel of 31 1/3% of the common fund. This 2% reduction acknowledges the lessened risk arising from the Proposed Settlement with respect to the legal services that must continue to be provided in the claims process." [DE # 2636 at 4 n. 4].
[11] In the initial portion of this Order, I refer to "Class Counsel" and the "Class Representatives" collectively and make no distinction among them as to their contribution or scope of work. I do this for convenience. The allocation issue is addressed in other sections of this Order.
[12] A full history of this case may be reviewed in the April 21, 1998 Order Denying Exxon's Motion for Summary Judgment on Count I (Kehoe, J.) [DE # 908]; Allapattah Servs. Inc. v. Exxon Corp., 61 F. Supp. 2d 1300 (S.D.Fla. 1999); Allapattah Servs. Inc. v. Exxon Corp., 61 F. Supp. 2d 1308 (S.D.Fla.1999) (setting forth the essential facts of the dispute); Allapattah Servs. Inc. v. Exxon Corp., 61 F. Supp. 2d 1326 (S.D.Fla.1999); Allapattah Servs. Inc. v. Exxon Corp., 188 F.R.D. 667 (S.D.Fla.1999); Allapattah Servs., Inc. v. Exxon Corp., 157 F. Supp. 2d 1291 (S.D.Fla.2001); Allapattah Servs., Inc. v. Exxon Corp., 372 F. Supp. 2d 1344 (S.D.Fla.2005); Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d 1248 (11th Cir.2003), rehearing en banc denied, 362 F.3d 739 (11th Cir.2004), affirmed, Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 125 S. Ct. 2611, 162 L. Ed. 2d 502 (2005).
[13] Nearly 200 claims were filed after the December 1, 2004 claim filing deadline. Exxon moved to strike and deny all such late-filed claims. The Special Master recommended entry of an order permitting some and disallowing others, including barring any claim that was filed after April 27, 2005. Class Counsel had appealed that recommendation, which remained pending at the time of the announced settlement.
In addition, following certification of the Class and prior to trial, Exxon dealers were given the opportunity to "opt out" of the Class. A number of dealers did so. Since the favorable outcome, however, some of the dealers who opted out of the Class have filed claims or expressed a desire to be allowed to do so. Exxon objected to these claims, asserting that the claims of all dealers who opted out are barred as a matter of law.
[14] The reasons behind the ruling are now set forth in this Order.
[15] Not all of the terms of the Settlement Agreement are included. Only the significant terms are discussed for the purposes of evaluating the results achieved.
[16] Even without the settlement, I would have found a "common fund" based upon the collective filing of monies into the Court's escrow account following the entry of final judgments during the Claims Administration Process. I do not view that the "law of the case" doctrine would have precluded such a ruling. Neither I, nor the Eleventh Circuit, had directly dealt with this issue as it concerns attorneys' fees.
[17] See Kuhnlein v. Dept. of Revenue, 662 So. 2d 309 (Fla.1995)(specifying lodestar with multiplier up to 5 for determination of common fund fee award in class action governed by Florida law). Kuhnlein, however, implicated none of the critical concerns warranting application of the percentage method in this case, including the proportionate sharing of costs in a class action arising under the laws of numerous jurisdictions and the need for a fair and efficient mechanism to compensate counsel in connection with an ongoing Claims Administration Process which continues in accordance with the Settlement Agreement.
[18] An analysis of the Johnson factors overlaps, in part, with an analysis of the factors set forth in Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir.1984) which are considered for purposes of approving or disapproving a settlement in a class action lawsuit. As applied here, the Bennett factors are discussed at length in the Special Master's Amended Report and Recommendation on the Class Settlement Agreement, pages 31-50 [DE # 2607] which I adopted by Final Order [DE # 2773]. I incorporate that Amended Report and Recommendation by reference in this Order to the extent it further elaborates on the Johnson related factors.
[19] Professor Coffee notes: "That this settlement with Exxon was achieved again seems principally attributable to the efforts of class counsel. Class counsel's efforts in this regard included: (1) achieving a 90% claims filing rate, (2) successfully soliciting 21 or 35 class state governments to file claims under their respective abandoned property statutes for monies not claimed by class members (thereby signaling to Exxon that it would not necessarily benefit by contesting claims), (3) obtaining an order from the District Court sanctioning Exxon for bad faith in impeding the claims process by re-asserting defenses already resolved at trial; and (4) vigorously pursuing the Claims Administration Process by presenting a series of summary judgment motions on individual dealer claims before the Special Master, of which some $200 million in claims have already been approved for payment and another $150 million are in the pipeline for entry of judgment. Faced with this pressure and the risk of sanctions, Exxon appears to have-at last-ended its scorched earth campaign." Supplemental Coffee Declaration at 3 (App.-B) [DE # 2638].
Another leading authority in this area of the law, University of Texas Law School Professor Charles Silver, joins Professor Coffee in praise of this accomplishment: "Because it so closely resembles the best possible outcome of litigation, this settlement achieves a nearly unique combination of large absolute dollars recovered ($1.075 billion) and a high percentage of the dollars Class Dealers are thought to have lost (approximately 98%). Settlements with enormous dollar values tend to recover a small fraction of claimants' losses, and settlements that recover high percentages of claimants' losses tend to involve total dollars that are fairly small. By winning a nearly complete recovery in an enormous case, Class counsel have achieved a rare accomplishment." Supplemental Report of Charles Silver at 6-7 (App.-D)[DE # 2638].
[20] The In re Managed Care Litigation entry combines two settlements arising out of the same consolidated proceedings and the percentage award is inclusive of costs.
[21] See also Sands Point Partners, LP v. Pediatrix Med. Group, Inc., 2002 U.S. Dist. Lexis 25721 (S.D.Fla.2002) (30%); In re CHS Elecs., Inc. Sec. Litig., 99-8186-CIV-GOLD (S.D.Fla.2002)(30%); Golden v. U.S. Diagnostics, Inc., 97-8010-CIV-GOLD (S.D.Fla.1998) (30%); Ehrenreich v. Sensormatic Elecs. Corp., 95-6637-CIV-ZLOCH (S.D.Fla.1998) (30%); Bakalor v. Integrated Communication Network, Inc., 96-2021-CIV-KING (S.D.Fla. 1997) (33.33%); Silver v. Sensormatic, 93-8619-CIV-MARCUS (S.D.Fla.1996) (331/3%); Tapken v. Brown, 90-0691-CIV-MARCUS (S.D.Fla.1995) (33%); In re Perfumania, Inc. Sec. Litig., 92-1490-CIV-MARCUS (S.D.Fla. 1993) (30%); In re Royce Labs, Inc. Sec. Litig., 92-0923-CIV-MOORE (S.D.Fla.1993) (30%).
[22] By "exploit", Professor Coffee means to induce Class Counsel to enter into a cheap settlement, something that happens regularly given that the typical class action settles for less than 3 cents on the dollar. See Recent Trends in Securities Class Action Litigation, at 6 (NERA July 2005) (App.-J); Coffee Declaration ¶¶ 3 (App.A)[DE # 2638].
[23] I agree with the well-written thoughts of District Judge Miles W. Lord: "The contingent fee and the class action are the `poor man's keys to the courthouse.' Both vehicles allow the average citizen and taxpayer to have their injuries redressed and their rights protected. Both permit persons of limited resources to obtain competent legal counsel, an essential ingredient in our adversary system of justice. . . . The annals of class action case law are replete with examples of lawyers who were willing to commit their personal resources over a substantial period of time to present a class of injured plaintiffs, motivated only by the incentive that if they succeed in vindicating the rights of their class clients, they would be paid an attorney's fee at least commensurate with what they would have received for winning an equivalent sum representing a single client. Often, these suits are brought against companies with resources that allow them to retain squadrons of topflight lawyers, and all of the technological paraphernalia and human resources that have become characteristic of modern litigation. . . . If the plaintiff's bar is not adequately compensated for its risk, responsibility, and effort when it is successful, then effective representation for plaintiffs in these cases will disappear." Muehler v. Land O'Lakes, Inc., 617 F. Supp. 1370, 1375-76 (D.Minn.1985).
[24] See also RMED Intern., Inc. v. Sloan's Supermarkets, Inc., 2003 WL 21136726 (S.D.N.Y. May 15, 2003)(court awarded class representatives which faced liability for costs $25,000, which constituted 2.5% of the $975,000 settlement); Enter. Energy Corp. v. Columbia Gas Transmission Corp., 137 F.R.D. 240 (S.D.Ohio 1991)(awarding a total of $300,000 to class representatives, or .93% of the current cash portions of the settlement and about .53% of its estimated present value).
[25] According to Stearns Decl. ¶ 204, the Class Representatives (and some of their spouses) attended the mediation session at Exxon's invitation in Houston, Texas. Instead of making a serious settlement proposal, Exxon's counsel literally brought the risk of losing home to the Class Representatives and their families: "Directing his words directly to the named Plaintiffs and their spouses, telling them that when Exxon won the case, it was going to obtain cost judgments against them personally and financially ruin each and every one of them (each of these words had large pauses in between)." Id.
[26] On August 28, 1998, Exxon made a $15 million Offer of Judgment pursuant to Fed. R.Civ.P. 68. Deducting attorneys' fees and costs, that offer would have left the 10,000 Class Members an average recovery of about $1000.00, or the equivalent of the widelycriticized "coupon" settlements that extinguish the claims of class members for a small faction of their value. The offer meant that, even if the plaintiffs prevailed on liability, but the jury did not award enough in damages, Exxon could still seek costs. It was estimated, at the time, that the Class Representatives could have been liable for between $100,000.00 to $500,000.00
[27] On January 11, 2001, only a few days before the second trial began, Class Counsel sent a letter to the Class Representatives presenting the potential risks and benefits of going forward in stark terms. McGillicuddy Decl. ¶ 43, Ex. 0. In the letter, Class Counsel advised that Exxon had offered not to seek its taxable costs against any of the named plaintiffs who agreed to withdraw, and that Roy Page and Jim Edmonds had accepted the offer. As for the remaining Class Representatives, Class Counsel acknowledged that the "risk exists" that Exxon would seek taxable costs against them, but promised to oppose those efforts and "to vigorously pursue the payment of premiums." Based on news articles at the time, the perception was that the first jury significantly favored Exxon's case, and that Exxon lost by one vote. Accordingly, the Class Representatives faced a difficult choice, but decided to continue in the interests of the Class.
[28] "The criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation." See Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294, 299 (S.D. Cal. 1995); Enter. Energy Corp., 137 F.R.D. at 250 (considering a number of factors including (1) the action taken by the class representative to protect the interest of the class, (2) whether those actions resulted in a benefit to the class, (3) whether the class representatives assumed direct financial risk, and (4) the amount of time and effort spent by the class representatives in pursuing the action); Denney v. Jenkens & Gilchrist, 230 F.R.D. 317, 355 (S.D.N.Y.2005) ("In granting compensatory awards to the representative plaintiff in PSLRA class actions, courts consider the circumstances, including the personal risks incurred by the plaintiff in becoming a lead plaintiff, the time and effort expended by that plaintiff in prosecuting the litigation, any other burdens sustained by that plaintiff in lending himself or herself to prosecuting the claim, and the ultimate recovery."); Richard Greenfield, "Rewarding the Class Representative: An Idea Whose Time Has Come," 9 Class Action Reports 4 (1986).
[29] The 1996 Letter Agreement also anticipated a future claim by McKenna & Cuneo for fees and costs in the event of a settlement or verdict for plaintiffs. It provided that Class Counsel will attempt to negotiate with McKenna & Cuneo but, if no agreement is reached and the Court awards McKenna & Cuneo a fee and reimbursement of costs on the basis of quantum meruit, "said monies shall first be paid to McKenna & Cuneo before any monies distributed pursuant to the terms of this agreement."
[30] Mr. Pertnoy stated: "In our firm's motion to enforce, when followed by the hearing that Judge Gold conducted where all parties conceded that he has the wide latitude and discretion to determine whether there's good cause to deviate from those numbers [i.e. the percentages in the letter agreement], I believe our position has been that it has been proportional and I believe that Judge Gold has the discretion, and I think there are circumstances that have arisen since the case has progressed a lot longer than anyone thought it would, that would warrant Judge Gold making some adjustments."
[31] Mr. Pertnoy further stated: "That, yes, we should allow the Court to exercise some of its discretion and there should be some alterations, but the proportional alterations, I believe; should not be as significant as you're proposing." Id. at 100. Mr. Pertnoy further states: "I believe that the Court should look at the contract as the starting point. . . . I believe that adjustments should be made to the letter agreement and that the judge should consider all of the factors when determining who contributed what to this outcome and that he has the discretion to modify the terms of that letter agreement and make adjustments in it, based upon what Judge Gold finds to be the relative and proportionate contributions of counsel." Id. at 101 (emphasis added).
Mr. Stearns asked: "Is it your view that when Judge Gold modifies the contract, as you've characterized it, that your firm should receive a fee, at the end of the day when its's modified, proportionate to your contribution to the Class?"
Mr. Pertnoy responded: "I believe that is a correct statement." Id. at 101. (emphasis added).
I conclude that Mr. Pertnoy's position at the evidentiary hearing is consistent with the research done by his own associate only a few weeks after the 1996 Letter Agreement was signed. See Stearns, Weaver Trial Exhibit Number 350. This research discussed many of the same decisions referenced in this Order. It is also consistent with representations made by Mr. Pertnoy and Mr. Solowsky to Mr. Stearns during the course of the Exxon litigation. Given these circumstances, it is inexplicable that Pertnoy & Solowsky would request this Court to enforce the 1996 Letter Agreement, without the benefit of an evidentiary hearing, in order to award them 47% of the fee award [See DE # 1845].
[32] In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir.1981)(en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit decided prior to October 1, 1981.
[33] As noted in In re Synthroid Marketing Litig., 325 F.3d 974, 977 (7th Cir.2003), with respect to agreements among counsel to divide fees, "At all events, until a contract is signed and in class litigation, approved by the court under Fed.R.Civ.P. 23(e) no one is bound by any of its proposed terms."
[34] The subsequent adoption of Fed.R.Civ.P. 23(g), which requires formal court approval of class counsel after consideration of skills, resources and fee arrangements, should in the future prevent a reoccurrence of the issue addressed by this Order.
[35] The cases argued by Pertnoy & Solowsky do not involve attorneys' fees in a class action, resulting from a common fund, where such fees are derived from principles of equity, and not contract. Boeing Co., 444 U.S. at 478, 100 S. Ct. 745 (attorneys' fees in common fund cases are allowed by virtue of an equitable exception to the American Rule that prevailing parties are not awarded attorneys' fees).
[36] Because I find "good cause" on these grounds, I do not reach the issue as to whether the 1996 Letter Agreement violated the Florida Bar Rules of Professional Conduct. See Florida Bar Rule 4-1.5(g) (providing ". . . a division of fee between lawyers who are not in the same firm may be made only if the total fee is reasonable and the division is in proportion to the services performed by each lawyer.")
[37] The redirection period began in October 1996 when Stearns, Weaver replaced McKenna Cuneo. Subsequent to that date, Stearns, Weaver redirected Plaintiffs' claim to a "pricing case" and Bowen withdrew.
[38] The split in accordance with the 1996 Letter Agreement was 47% for Pertnoy and Solowsky; 25% for Bowen, 3% for Grutman, and 25% for Stearns, Weaver. For reasons stated in this Order, I remove Stearns, Weaver from the 1996 Letter Agreement and reallocate its 25% percent among Pertnoy and Solowsky, Bowen and Grutman. The proportional reallocation results in the following revised percentages: Pertnoy and Solowsky62.67%; Bowen-33.33%, and Grutman-4%. The revised percentages total 100%. These percentages will apply to the twenty percent I allocated to the first phase of the litigation.
In my view, the revised reallocation for this phase is consistent with the greater weight of the evidence. I base this conclusion on my own review and assessment of the record of the first phase of this litigation. It is also consistent with the attorneys' own assessment as contained in the 1996 Letter Agreement which I credit as a factor. Although Stearns, Weaver/Grutman/Bowen argue that Pertnoy and Solowsky's participation in this first phase is overstated in the 1996 Letter Agreement, and that a greater allocation should be given to Bowen and Grutman, I conclude otherwise. I place considerable weight on Pertnoy and Solowsky's contributions as included in their Annotated Declaration [DE # 2635]. I discount Stearns, Weaver's analysis of Pertnoy and Solowsky's role during this first phase based on the obvious animosity between the law firms.
[39] By Order dated November 2, 2004 [DE # 1760], I required that all petitions for attorneys' fees were to be filed no later than February 1, 2005. On February 3, 2005, I extended the date for filing of attorneys' fee petitions until August 1, 2005 [DE # 1805]. On September 30, 2005, I permitted "supplemental briefs" to be filed on issues identified by the Court at the prior status conferences [DE # 1760 at 2]. By Order dated February 7, 2006, I extended the filing date for "supplemental affidavits" until Friday, April 14, 2006 [DE # 2613]. I did not, by this Order, extend the deadline for filing of attorneys' fee petitions, as suggested by the Farrell Law Group. Here, the petition by the Farrell Law Group was filed on February 13, 2006, more than six months after the deadline of August 1, 2005. The Farrell Law Group did not move for leave to file a late petition or offer any good cause to excuse its late filing. I categorically reject the Farrell Law Group's argument that the ". . . time schedule established for the submission of applications for attorneys' fees was held in abeyance due to the settlement discussions between the Plaintiffs and Exxon Corporation" [DE # 2626 at 2]. The date for filing attorneys' fee petitions was not held in abeyance by any order of this Court. Rather, the date for filing supplemental affidavits in support of timely filed attorneys' fee was extended.
[40] Farrell & La Mantia was paid a fee in the amount of $15,000 at the time it performed work for certain of the Class Representatives in preparation for the retrial. It now contends that, in addition to the payment of its fixed fee of $15,000.00 for an "initial review," it expended 251.5 additional hours in representing the interests of the Class. It claims, on a lodestar basis, an additional fee of $60,450.00.00. At oral argument on June 26, 2006, Richard Farrell contended that his firm should receive over a million dollars in attorneys' fees. The firm's petition purports to apply the Camden I factors, claiming that its efforts were critical to the successful outcome of this litigation. I find the claim for one million dollars to be shocking.
Up until the date of its petition for attorneys' fees, Farrell & La Mantia had filed no appearance in the case. The firm was not retained by the Class, as compared to the Virginia Class Representatives, to evaluate Stearns, Weaver's performance during the first trial. I conclude that it was William McGillicuddy who proposed that Farrell & La Mantia be involved in the retrial. This is the same William McGillicuddy who failed to disclose his fee sharing arrangement with Gerald Bowen to the other Class Representatives and to this Court. This is the same William McGillicuddy who had a direct conflict-ofinterest in removing Stearns, Weaver as Class Counsel in order to protect his fee arrangement with Bowen.
The greater weight of the evidence establishes that the Farrell & La Mantia law firm was never retained by the Class after the conclusion of a series of meetings which occurred prior to the retrial. Notwithstanding, Farrell & La Mantia now claims that its significant contribution to the result is readily evident from its Exhibits A-5, A-6 and A-7. I have carefully reviewed these exhibits and conclude that Mr. Farrell's contribution is without any significance whatsoever to the retrial and the outcome of the case. I conclude that no additional fee, in addition to the $15,000.00 fixed fee, is appropriate or warranted. Yet, Farrell & La Mantia claims that it had brought "decades of experience" in litigating petroleum cases throughout the country to help refocus the_ Plaintiffs' case. After reviewing, the firm's exhibits, it appears obvious to me that Richard Farrell did not understand the complexities of this case at all. This is evidenced by Farrell's major conclusion in his Exhibit A-7 where he states: "CONCLUSION WITH OVERIDING (sic) THEME OF CASE, WHETHER PEOPLE, INCLUDING LARGE COMPANIES, SHOULD KEEP THE PROMISES THEY MAKE WITH THE PEOPLE THEY DO BUSINESS WITH (ETC.)." For this type of elementary legal work, Farrell & La Mantia now claims additional fees. In its verified petition, it inexplicably states that: "It is therefore unlikely that the outcome would have been favorable without the efforts of F & L, with regard to preparations for retrial." The best that I can say about Farrell & La Mantia's petition is that it is specious, frivolous and incredible. In so holding, I am not concluding that a law firm which neither filed an appearance, nor attended a single hearing could not be entitled to an award of an attorneys' fee in a class action case. Rather, 1 conclude that the law firm of Farrell & La Mantia did nothing of substance to earn an award of any attorneys' fee in these proceedings.
[41] The initial complaint was filed on May 13, 1991 and the amended complaint was filed in February 1993. The Plaintiffs engaged in extensive motion practice with Exxon during the initial years before the case became at issue. Exxon filed six motions to dismiss and six full or partial summary judgement motions between November 1992 and May 1999. The Plaintiffs' attorneys also did significant work to obtain class certification and had engaged in extensive pretrial discovery as well as an extensive discovery motion practice before Stearns, Weaver appeared in the case. I place considerably more weight on obtaining class certification than does Stearns, Weaver.
[42] At the evidentiary hearing on allocation of attorneys' fees, Jewel Grutman testified that the Grutman firm should be entitled to an award of 25% in the event the Court allocated a certain percentage to the first phase of the litigation. I reject her testimony as being inconsistent to my assessment of Mr. Grutman's contribution to the first phase of the litigation and to the case as a whole. The prior 25% allocated to him in the fee agreement preceding the 1996 Letter Agreement assumed his full participation as the senior litigator. His role, however, greatly diminished due to his illness and untimely death.
[43] Stearns, Weaver claims that it is entitled to 82.827% of the fee award. In its proposed allocation chart, Stearns, Weaver recognizes that Pertnoy and Solowsky performed more than 4.7% of the work from the time of "redirection" through the Claims Administration Process. My own assessment does not significantly differ from that of Stearns, Weaver. My difference with Stearns, Weaver's proposed allocation is that it undervalues the initial phase of the litigation.
[44] Grutman entered the case in July, 1991. He died on June 26, 1994.
[45] While Bowen insists that the 1996 Letter Agreement should be enforced, he acknowledges that Stearns, Weaver should receive a large share. He argues that it should come from Pertnoy & Solowsky due to its failure to provide the "army" of lawyers which was supposed to be the basis for Pertnoy & Solowsky's larger share in the first instance. Pertnoy & Solowsky, in turn, acknowledges that Stearns, Weaver should receive more than the share allocated in the 1996 Letter Agreement, and that this increased share should come from both Bowen who quit the case. Even Grutman acknowledges that Stearns, Weaver should receive a larger share, but argues that this increase should come from both Bowen, who left the case, and Pertnoy & Solowsky, which failed to fulfill its duties.
[46] The more credible evidence establishes that, at the time of the signing of the 1996 Letter Agreement, Steams, Weaver was told that it had only to take some merits depositions and to then to try the case. Sidney Pertnoy represented that his firm would remain "coordinating and litigation counsel in the management of the case" responsible for the staff and overhead of the litigation on a day-to-day basis. Bowen would continue in his role as "navigator" on all petroleum marketing issues, both legal and factual. None of these representations proved true. There was no discussion of dividing either work or fees for appeals or a Claims Administration Process.
[47] Gerald Bowen evidently reached the same conclusion in his communication to co-counsel prior to Stearns, Weaver's entry into the case. On June 20, 1996, just several months before the signing of the 1996 Letter Agreement, Bowen wrote his "sinking ship" memorandum to Pertnoy & Solowsky and McKenna partner Cortes, complaining that no one but Bowen was willing to work, that the lawyers were primarily focused on fee allocation, and that, as a consequence, the case was a "sinking ship." This memoranda was not disclosed to Stearns, Weaver during their due diligence review.
[48] At the time Stearns, Weaver entered the case, the prior Plaintiffs' law firms had not retained an expert, had not taken merits depositions on critical issues, and had failed to request some of the most essential records required to prove Exxon's breach and the Class' damages.
[49] Thus, for instance, two of the law firms claiming a total of 2% of the total fee abandoned the case years ago.
[50] I further conclude that Stearns, Weaver was faced with a significant dilemma. As the case unfolded, Stearns, Weaver could hardly request this Court to resolve their attorneys' fees issues without significantly prejudicing the Class. Nor was Stearns, Weaver in a position to renegotiate the 1996 Letter Agreement or to threaten to withdraw from representation in this matter. All such actions would have been detrimental to the Class. Lawyers who undertake the duty of class counsel in the federal court assume a "heavy duty" to the Class, the Court, and to the public, who supply the resources which enable the prosecution of such suits. Piambino v. Bailey, 757 F.2d 1112, 1139 (11th Cir. 1985). Stearns, Weaver scrumptiously met their duty. Their only proper and professional choice was to continue representation with the expectation (and hope) that the matter would later be resolved and their efforts recognized. I commend them for their professionalism in assuming a duty to the Class superior to themselves.
On May 3, 2006, Pertnoy and Solowsky forwarded to this Court a supplemental citation, Ballow Brasted O'Brien & Rusin P.C. v. Logan, 435 F.3d 235 (2d Cir.2006), apparently to support an argument that Stearns, Weaver waited too long to assert a "rescission claim," and, therefore, should be barred from doing so now. This case did not involve a class action and essentially applied New York contract law. Given Mr. Pertnoy's testimony at the allocation hearings, I am unsure why this supplemental citation was provided to this Court. It has no precedential or factual application here.
[51] At closing argument on June 26, 2006, Pertnoy and' Solowsky's attorney argued, for the first time, that a fifty-fifty split is appropriate based on a comparison of risk factors and adjusted lodestar during the pertinent time periods. I reject this analysis as being baseless for two reasons. First, I place little reliance on Pertnoy and Solowsky's lodestar assessment. Second, I disagree with Pertnoy and Solowsky's assignment of greater risk factors attributable to the earlier part of the case. To the contrary, the risk factors increased significantly after the first trial, the appellate process and during the Claims Administration Process. For instance, prior to the Settlement Agreement, the award of attorneys' fees was tied directly to the success of the Claims Administration Process which was hotly contested. I conclude that the "risk factors" weigh heavily in favor of Steams, Weaver and certainly do not support a fifty-fifty split as advocated by Pertnoy and Solowsky.
[52] The period before the first trial was particularly demanding for the attorneys and on the Court. When I assumed responsibility of the case, I requested both the Plaintiffs and Exxon to provide a schedule that would result in a specific trial date. The date selected, and the work proceeding trial, placed significant burdens on the parties and the Court. While Stearns, Weaver sometime complained that I "re-tried" matters already decided by Judge Kehoe, I concluded that such an effort was necessary because I did not agree with all of Judge Kehoe's conclusions in the early summary judgment order, and because an "never ending" array of legal issues had to be resolved prior to the first trial. I credit Stearns, Weaver's efforts during this period.
[53] I recognize the individual contributions made by Eugene Stearns and the lawyers and staff at the Stearns, Weaver law firm. Even his co-counsel, with whom he is now in dispute, acknowledge Mr. Stearns' individual role in this case as extraordinary. I join Mr. Stearns in recognizing the unique contribution of Mr. Tony Menendez, a member of Stearns, Weaver, in proving the pricing case. Unfortunately for all concerned, Mr. Menendez, like Roy Grutman, died during this litigation. Their prior efforts are appreciated by all Plaintiffs' attorneys and the Class Members.
[54] Stearns, Weaver argues that Pertnoy and Solowsky had successfully manipulated West Publications in a manner to create the false impression that their law firm was lead counsel and significantly contributed to the results reported in published opinions. The greater weight of the more credible evidence unfortunately supports this conclusion. I have considered this factor in my "good cause" analysis.
[55] Stearns, Weaver advocates a forfeiture against Pertnoy and Solowsky. I find no basis for forfeiture against them and deny the request.
[56] McGillicuddy claims that Bowen borrowed in excess of $408,000.00. The agreement was that, from a contingency fee award, Bowen would repay to him double the amount of all sums advanced, with interest at 22% per year, plus $12,500,000, but not to exceed 50% of the fee recovered by Bowen. The parties agreed that their agreement would remain confidential. Thereafter, McGillicuddy claimed that Bowen breached their agreement by making it and its terms known to third parties and by repudiating the agreement. McGillicuddy sued Bowen in Virginia state court and obtained a default against Bowen and a declaratory judgment from the state court. The final judgment concludes that ". . . Gerald Bowen [is] legally obligated to pay . . . William R. McGillicuddy (in consideration of certain services, which had been and were to be rendered by the Complainant and the funding of a loan, the proceeds of which the Complainant had and was to provide the Respondent from time to time), a sum which now totals $13,308,000 (not including sums paid since the filing of the Bill of Complaint in this matter) with interest at 22% on $808,000.00 of said total, with the interest on said sum commencing on December 10, 20004, and continuing thereafter until paid, subject to the award of attorney fees to the Respondent in the case of Allapattah v. Exxon, 91-0986-Civ-Gold, which is now pending in the United States District Court for the Southern District of Florida; but in no event is the Complainant entitled to receive more than 50% of the amount awarded to the Respondent. . . ."
[57] At the June 26, 2006 closing argument, and as expressed in earlier motions, Bowen claims that he was somehow denied due process in these proceedings. He claims that he needed more time to present all his evidence. I conclude his claim in not well-founded. Unlike any other lawyer in this case, Bowen was specifically awarded $300,000 by order of this Court, dated November 11, 2005, so that he could fully participate in these proceedings. These monies were transferred to him on November 29, 2005. Bowen then used most of the money to pay off a forfeiture of his house rather than to perfect his claim in this case. After listening to his testimony during the allocation proceedings, I concluded that Bowen could offer nothing more of substance if he had been given more time to present his evidence. I find that his contrary argument lacks credibility and any substantive support.
[58] Where false filings and perjured testimony are advanced, forfeiture is an appropriate remedy-and, in some instances, is mandated. See Piambino, 757 F.2d at 1141; see also In re Austrian & German Bank Holocaust Litig., 317 F.3d 91, 102 (2nd Cir.2003)(recognizing forfeiture as a remedy for violation of fiduciary duty to class); Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1156 (8th Cir.1999)(affirming disqualification of class counsel for violation of fiduciary duty and denial of recovery of any fees even if services provided some benefit); Lowenschuss v. Bluhdorn, 78 F.R.D. 675, 678 (S.D.N.Y.1978)(disqualifying class counsel for breach of fiduciary duty resulting from fee arrangements demonstrating counsel's preoccupation for large fee). Federal courts have also imposed the remedy of forfeiture in nonclass actions cases involving breaches of fiduciary duties to clients or the court, or a result of the submission of exaggerated or false fee petitions containing fabricated or double billed hours and inflated billing rates. See, e.g., Futuronics Corp. v. Arutt, Nachamie & Benjamin, 655 F.2d 463, 470-71 (2nd Cir.1981)(forfeiture for breach of fiduciary duty owed bankruptcy court); Keener v. Department of Army, 136 F.R.D. 140 (M.D.Tenn. 1991 )(forfeiture for fabricated fee petition).
[59] I further find that McGillicuddy has forfeited any entitlement to an incentive award greater than that awarded to the other Class Representatives. Accordingly, I reduce his incentive award by twenty-five percent from the amount awarded to each of the other Class Representatives.
[60] McGillicuddy has personally filed for an incentive award in this case in his own name and in the name of his wholly-owned company. The Virginia judgment is in his own name.
[61] On May 30, 2006, McGillicuddy filed a "Notice of Partial Relinquishment of Virginia Judgment" whereby he now relinquishes any right to enforce the judgment in any amount in excess of $808,000.00 plus twenty-two percent (22%) simple interest commencing on December 10, 2003. For reasons stated above, I have significant concerns about the interest rate. I am leaving this issue for consideration by the Special Master in a separate report and recommendation on the amount that Mr. Bowen shall pay to Mr. McGillicuddy on the Virginia judgment.
[62] I will request the Special Master to provide a report and recommendation on the amount of monies Bowen legitimately owes McGillicuddy and the interest due on such amount under the laws of the State of Virginia.
[63] Mr. Stearns, as Class Counsel, argues for a complete forfeiture of Mr. McGillicuddy's incentive award. The effect of such an action would be to increase the net amount available for allocation for attorneys' fees. This raises a potential conflict-of-interest which needs to be neutralized. I have done so by using the 1.5% figure to determine the total amount of incentive awards. As I have concluded that Mr. Bowen, and not the Class, should pay Mr. McGillicuddy's reduced incentive award, in effect, the Class will pay only 1.3% in total incentive awards to the remaining Class Representatives from the Settlement Fund. The amount of the reduced incentive award that would have been paid to Mr. McGillicuddy will remain in the Settlement Fund in favor of the Class.
[64] Past costs and expenses already incurred will be paid from this amount upon recommendation by Special Master Scott. All future costs and expenses will be paid from this amount as a draw after application for reimbursement, upon approval from Special Master Scott.
[65] This figure is comprised of the 25% forfeiture ($5,336,425.00) taken from Bowen's original attorneys' fee award ($21,345,699.00) plus McGillicuddy's entire reduced incentive fee award ($1,325,000.00) which will be paid by Bowen (as reduced).
[66] The Court notes that it is its intent to pay a reasonable amount of judgment interest on the second-half of attorneys' fees which it is withholding from the initial payment to Stearns, Weaver for its attorneys' fee award in this matter. The Court will determine the appropriate amount of interest at the conclusion of the Claims Administration Process in the event that funds remain to pay such interest award. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/106271/ | 367 U.S. 316 (1961)
CIVIL AERONAUTICS BOARD
v.
DELTA AIR LINES, INC.
No. 492.
Supreme Court of United States.
Argued April 27, 1961.
Decided June 12, 1961.[*]
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.
John F. Davis argued the cause for petitioner in No. 492. On the briefs were former Solicitor General Rankin, Solicitor General Cox, Assistant Attorney General Loevinger, Assistant Attorney General Bicks, Richard A. Solomon, Irwin A. Seibel, O. D. Ozment and Franklin M. Stone.
*317 Albert F. Grisard argued the cause and filed a brief for petitioner in No. 493.
R. S. Maurer argued the cause for respondent. With him on the briefs were James W. Callison and Robert Reed Gray.
MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.
This case concerns the power of the Civil Aeronautics Board to alter a certificate of public convenience and necessity, granted to respondent Delta Air Lines, after that certificate had become effective under § 401 (f) of the Federal Aviation Act of 1958. 72 Stat. 731, 755, 49 U.S. C. § 1371 (f).[1] The administrative proceedings from which the present dispute arises date back to May 1955, and involve consideration by the Board of a number of applications for new service between cities located in an area extending from the Great Lakes to Florida. The Board divided the proceedings into two general categories, consolidating the applications for long-haul service in the *318 Great Lakes-Southeast Service Case and those for shorthaul flights in the Great Lakes Local Service Investigation Case. In order to protect fully the interests of local service carriers, the Board allowed these carriers, including petitioner Lake Central Airlines, to intervene in the hearings on the long-haul applications.
At the conclusion of the Great Lakes-Southeast Service Case a number of awards were made, including one permitting Delta to extend an existing route northwest so as to provide service from Miami to Detroit and to add Indianapolis and Louisville as intermediate points on its existing Chicago-to-Miami route. Certain restrictions for the protection of local carriers were imposed on many of the awards, these restrictions generally providing that flights between specified intermediate cities had to originate at or beyond given distant points. The stated purpose of these restrictions was to prevent the long-haul carrier from duplicating so-called "turn-around" service already provided by existing local carriers. One such restriction was applied to Delta's run between Detroit and various locations in Ohio but, by and large, Delta's award was free of protective limitations.
The Board's order issued on September 30, 1958, and it specified that Delta's certificate was to become effective on November 29, 1958, unless postponed by the Board prior to that date. Shortly thereafter, within time limits set by the Board,[2] numerous petitions for reconsideration *319 were filed, including one by Lake Central protesting the breadth of Delta's certificate. Lake Central requested that, if the Board should be unable to decide its petition for reconsideration before November 29, the effective date of the certificate be put off. On November 28, one day before Delta's certificate was to become effective, the Board issued a lengthy memorandum and order, which stated in substance that the requests for stays, with one immaterial exception, were denied, but that judgment on the merits of the petitions for reconsideration would be reserved. The Board explained that the parties had not made a sufficient showing of error to justify postponements and that, in view of the advent of the peak winter season, further delay would be particularly inappropriate; the Board then said:
"To the extent that we have considered the petitions for reconsideration in the present order we have done so only for the purposes of assessing the probability of error in our original decision. We feel that such action is necessary to a fair consideration of the stay requests, and is in no way prejudicial to the legal rights of those parties seeking reconsideration. Nothing in the present order forecloses the Board from full and complete consideration of the pending petitions for reconsideration on their merits."
*320 For reasons not presently pertinent, Delta's certificate became effective on December 5,[3] rather than November 29, 1958, and Delta commenced its newly authorized operations shortly thereafter. On May 7, 1959, the Board issued a new order disposing of the still-pending petitions for reconsideration. By this order, the Board amended Delta's certificate in response to the restrictions proposed by Lake Central. Specifically, the Board barred Delta's operations between ten pairs of intermediate cities unless the flights initiated at Atlanta or points farther south; the effect of this order was to bar certain flights Delta was then operating. Even then, the Board's action was not final; the Board reserved the power to lift these restrictions pending the outcome of the Great Lakes Local Service Case.[4] The Board's disposition of the petitions was taken summarily, without formal notice to the parties or the opportunity for a hearing prior to decision.
Delta sought review of this order before the Board, challenging the Board's power to change the terms of its certificate after the effective date thereof without notice or hearing. The Board overruled Delta's objection, stating that: "[W]e believe we have such power, and we have exercised it in the past. Moreover, there is no showing, and we are unable to conclude, that any significant adverse effect will result to either Delta or the public from observance of the conditions here involved." On review in the Court of Appeals for the Second Circuit, however, *321 the Board's order was overturned, the court reasoning that Congress had made notice and hearing a prerequisite to the exercise of the Board's power to change an existing certificate. Delta Air Lines, Inc., v. Civil Aeronautics Board, 280 F.2d 43.
The issue in this case is narrow and can be stated briefly: Has Congress authorized the Board to alter, without formal notice or hearing, a certificate of public convenience and necessity once that certificate has gone into effect? If not, should it make any difference that the Board has purported to reserve jurisdiction prior to certification to make summary modifications pursuant to petitions for reconsideration? We think that both these questions must be answered in the negative.
Whenever a question concerning administrative, or judicial, reconsideration arises, two opposing policies immediately demand recognition: the desirability of finality, on the one hand, and the public interest in reaching what, ultimately, appears to be the right result on the other.[5] Since these policies are in tension, it is necessary *322 to reach a compromise in each case and petitioners have argued at length that the Board's present procedure is a happy resolution of conflicting interests. However, the fact is that the Board is entirely a creature of Congress and the determinative question is not what the Board thinks it should do but what Congress has said it can do. See United States v. Seatrain Lines, 329 U.S. 424, 433. Cf. Delta Air Lines v. Summerfield, 347 U.S. 74, 79-80. This proposition becomes clear beyond question when it is noted that Congress has been anything but inattentive to this issue in the acts governing the various administrative agencies. A review of these statutes reveals a wide variety of detailed provisions concerning reconsideration, each one enacted in an attempt to tailor the agency's discretion to the particular problems in the area.[6] In this respect, the Federal Aviation Act is no exception since, in § 401 (f) and (g) of the Act, Congress has stated the limits of the Board's power to reconsider in unequivocal terms. Section 401 (f) provides that "Each certificate shall be effective from the date specified therein, and shall continue in effect until suspended or revoked as hereinafter *323 provided." The phrase "as hereinafter provided" refers to § 401 (g), which states:
"AUTHORITY TO MODIFY, SUSPEND, OR REVOKE
"(g) The Board upon petition or complaint or upon its own initiative, after notice and hearings, may alter, amend, modify, or suspend any such certificate, in whole or in part, if the public convenience and necessity so require, or may revoke any such certificate, in whole or in part, for intentional failure to comply with any provision of this title or any order, rule, or regulation issued hereunder or any term, condition, or limitation of such certificate: Provided, That no such certificate shall be revoked unless the holder thereof fails to comply, within a reasonable time to be fixed by the Board, with an order of the Board commanding obedience to the provision, or to the order (other than an order issued in accordance with this proviso), rule, regulation, term, condition, or limitation found by the Board to have been violated. Any interested person may file with the Board a protest or memorandum in support of or in opposition to the alteration, amendment, modification, suspension, or revocation of the certificate." (Emphasis added.)
This language represents to us an attempt by Congress to give the Board comprehensive instructions to meet all contingencies and the Board's duty is to follow these instructions,[7] particularly in light of the fact that obedience thereto raises no substantial obstacles. It is true, of course, that statutory language necessarily derives much of its meaning from the surrounding circumstances. However, we think that, while there is no legislative history *324 directly on point, the background of the Aviation Act strongly supports what we believe to be the plain meaning of § 401 (f) and (g). It is clear from the statements of the supporters of the predecessor of the Aviation Actthe Civil Aeronautics Act of 1938that Congress was vitally concerned with what has been called "security of route"i. e., providing assurance to the carrier that its investment in operations would be protected insofar as reasonably possible.[8] And there is no other explanation but that Congress delimited the Board's power to reconsider its awards with precisely this factor in mind; hence the language that a certificate "shall be effective . . . *325 until suspended or revoked as hereinafter provided" (emphasis supplied), language which is absent from several of the Acts to which reference has been made. Thus, the structure of the statute, when considered in light of the factor persuading Congress, indicates to us that the critical date in the mind of Congress was the date on which the carrier commenced operations, with the concomitant investment in facilities and personnel, not the date that abstract legal analysis might indicate as the "final" date. In other words, it seems clear to us that Congress was relatively indifferent to the fluctuations an award might undergo prior to the time it affected practical relationships, but that Congress was vitally concerned with its security after the wheels had been set in motion. In light of this, we think the result we reach follows naturally: to the extent there are uncertainties over the Board's power to alter effective certificates, there is an identifiable congressional intent that these uncertainties be resolved in favor of the certificated carrier and that the specific instructions set out in the statute should not be modified by resort to such generalities as "administrative flexibility" and "implied powers." We do not quarrel with those who would grant the Board great discretion to conjure with certificates prior to effectuation. But, we feel that we would be paying less than adequate deference to the intent of Congress were we not to hold that, after a certificate has gone into effect, the instructions set out in the statute are to be followed scrupulously.
However, petitioners argue that there is an implied exception to the statutory mandate when the Board, pursuant to a petition for reconsideration filed before the certificate's effective date, makes a statement that the certificate is subject to later amendment after further deliberation upon the petition. Petitioners admit that there is no express statutory authority for the Board to entertain *326 petitions for reconsideration even prior to the effective date of the certificate, but they assert, and we assume arguendo they are correct, that the Board has implied power to accept such petitions. This being the case, petitioners claim that the existence of an outstanding petition for reconsideration gives a double meaning to the term "effective" as used in the Act: certificates are "effective" on the date specified therein for the purpose of allowing the certificated carrier to commence operations, but they are not "effective" as the term is used in § 401 (f) so as to preclude modification outside the procedures specified in § 401 (g).
The appeal of this argument comes, in the main, from the general notion that an administrative order is not "final," for the purposes of judicial review, until outstanding petitions for reconsideration have been disposed of. See, e. g., Outland v. Civil Aeronautics Board, 109 U. S. App. D. C. 90, 284 F.2d 224; Braniff Airways, Inc., v. Civil Aeronautics Board, 79 U. S. App. D. C. 341, 147 F.2d 152. Once it is established that the certificate is not "final" for one purpose, the argument runs, then it is logical to assume that the certificate lacks "finality" for another. The difficulties with this line of reasoning, however, are many. First, insofar as it is bottomed on cases such as Outland and Braniff, the argument relies on holdings that were never made. The Courts of Appeals in these cases decided only that petitions for review were timely if filed in time from the date on which the Board disposed of pending petitions for reconsideration; the question whether the Board's action on the petitions for reconsideration should have been taken after notice and hearing did not arise. Furthermore, petitioners' argument skips an important logical step; it assumes, without explanation, that questions of administrative finality present the same problems, and therefore deserve the same solutions, as questions concerning the timeliness of an appeal. *327 In point of fact, this assertion is not only unsupported but erroneous. The pertinent statutory language is not similar in the two instances[9] and the other points under analysis are different. Thus, a court considering the timeliness of a litigant's appeal is concerned with the wisdom of exercising its own power to act, and the result depends on such factors as fairness to the appellant and the intent of Congress in passing a general statute § 10 (c) of the Administrative Procedure Act which applies equally to almost all administrative agencies. There is no call, as Outland and similar cases illustrate by their omissions, for considering either the sections of a particular act which are not concerned with appellate review or the problemwhich at that point is of historical interest onlywhether the petition for reconsideration should have been decided summarily or after notice and hearing. One might argue, of course, that the question is similar in both instances because, if the Board's action on the petition for reconsideration is too late, then an appeal which is timely only from the Board's action on reconsideration is also too late. However, this line of reasoning overlooks the confines of the result we are reaching in this case. We are not saying that the Board cannot entertain petitions for reconsideration after effective certification, nor are we holding that such petitions cannot be denied summarily; all we hold is that the petitions cannot be granted and the certificated carrier's operations curtailed without notice or hearing. Therefore, since the cases such as Outland concerned the denial of a petition for reconsideration, there is no conflict, express or implied, between those decisions and this one.[10] In this *328 connection, the statement of a leading commentator seems particularly pertinent:
"The tendency to assume that a word which appears in two or more legal rules, and so in connection with more than one purpose, has, and should have precisely the same scope in all of them runs all through legal discussions. It has all the tenacity of original sin and must constantly be guarded against." Cook, The Logical and Legal Bases of the Conflict of Laws, 159.[11]
Thirdly, were we to adopt the position urged by petitioners, we would have to hold that, in the words of a former chairman of the Board, the power to reconsider a case may be the lever for "nullify[ing] an express provision of the Act." Ryan, The Revocation of an Airline Certificate of Public Convenience and Necessity, 15 J. Air L. & Comm. 377, 384. As Commissioner Ryan indicated, the power the Board asks for in this case seems nothing more or less than the power to do indirectly what it cannot do directly. Parenthetically, it should be noted that, for purposes of this dispute, it is difficult to draw a distinction between a petition for reconsideration filed by a party and one initiated by the Board sua sponte. Sprague v. Woll, 122 F.2d 128. This being the case, it is all the more significant that the Court in United States v. Seatrain Lines, 329 U.S. 424, while overruling the Interstate *329 Commerce Commission's contention that it had inherent power to reconsider effective certificates, paid no attention to the fact that the Commission had made the original certificate effective, subject "to such terms, conditions, and limitations as are now, or may hereafter be, attached to the exercise of such authority by this Commission."
Although we feel that the language and background of the statute are sufficiently clear so that affirmance can rest solely on that basis, it seems appropriate, in light of petitioners' vigorous assertion that policy reasons compel their result, to discuss some of the ramifications of our decision. In the first place, it bears repetition that we are not deciding that the Board is barred from reconsidering its initial decision. All we hold is that, if the Board wishes to do so, it must proceed in the manner authorized by statute. Thus, for example, the Board may reconsider an effective certificate at any time if it affords the certificated carrier notice and hearing prior to decision; or, if it feels uncertain about the decision prior to its effective date, it may postpone the effective date until all differences have been resolved; and, if neither of these procedures seem practical in a given case, the Board may issue a temporary certificate set to expire on the date the Board prescribes for re-examination.[12]*330 Indeed, with all these weapons at its command, it is difficult to follow the argument that the Board should be allowed to improvise on the powers granted by Congress in order to preserve administrative flexibility.
Furthermore, it would seem that any realistic appraisal of the relative hardships involved in this case cuts in favor of the respondent. To be sure, the Board may be able to act quicker under the rule it espouses and, by eliminating the necessity of a new hearing, Lake Central will be spared the expense of preparing a new record. However, were the Board correct, respondent would be subjected to the loss of valuable routes, routes it had already begun to operate after considerable initial investment, without being heard in opposition. The Board points out that respondent had notice that the Board had reserved the right to amend the certificate. But it is not clear what comfort respondent could take from such notice; respondent could not hedge, since § 401 (f) of the Act provides that a certificated carrier may lose the right to conduct any service it does not initiate within 90 days of certification. Concededly, the fact of notice gives considerable surface appeal to petitioners' assertions; they can and do argue that respondent knew what it was getting into and should not be heard to complain when the gamble turns out unfavorably. However, it must be remembered that the problem is not presented to us in the abstract; we are dealing with it in the context of this *331 particular statute. And, as stated above, a major purpose behind the enactment of the Aviation Act was to eliminate the element of risk from a carrier's operations. With Congress on record as affirmatively desiring to eliminate the necessity of gambling, we do not feel that the "assumption of the risk" argument carries much weight. The Board also argues that respondent "in substance" enjoyed the hearing contemplated by § 401 (g) because the matters impelling the Board to change its mind were matters that had been thrashed out during the hearings on the original certificate. However, this contention assumes a fact that we do not have before usthat a hearing would not have disclosed any further evidence or, perhaps more importantly, any post-certification events weighty enough to alter the Board's thinking.[13]
In short, our conclusion is that Congress wanted certificated carriers to enjoy "security of route" so that they might invest the considerable sums required to support their operations; and, to this end, Congress provided certain minimum protections before a certificated operation could be cancelled. We do not think it too much to ask that the Board furnish these minimum protections as a matter of course, whether or not the Board in a given *332 case might think them meaningless. It might be added that some authorities have felt strongly enough about the practical significance of these protections to suggest that their presence may be required by the Fifth Amendment. See Seatrain Lines v. United States, 64 F. Supp. 156, 161; Handlon v. Town of Belleville, 4 N. J. 99, 71 A.2d 624; see also 63 Harv. L. Rev. 1437, 1439.
Petitioners' final argument is that their position is supported by consistent administrative construction and analogous case authority. The administrative construction argument appears less than substantial in light of the fact that, on the last and, it appears, only occasion when the present question was expressly considered, the Board said in dictum that it had "grave doubts" about proceeding in the manner followed in this case. Kansas City-Memphis-Florida Case, 9 C. A. B. 401;[14] cf. Smith Bros., Revocation of Certificate, 33 M. C. C. 465. See generally Ryan, supra, where Commissioner Ryan went to great lengths to expose what he felt were the fallacies in the contentions now advanced by petitioners. With respect to prior cases, petitioners again are unable to cite any holdings on point. Petitioners rely heavily on Frontier Airlines, Inc., v. Civil Aeronautics Board, 104 U. S. App. D. C. 78, 259 F.2d 808, but the dispute here involved was not raised in that case. The closest analogy in Frontier *333 is to the argument put forward by a party whose petition for reconsideration had been denied; and the Court of Appeals reported this argument and the reasons for overruling it as follows:
"[T]he order on reconsideration is a nullity because it was rendered after the petition for judicial review had been filed and after the certificates previously issued had become effective; and, if that order is a nullity, the basic order is also a nullity because it fails to cover certain points.
.....
"We do not find the order denying reconsideration invalid because rendered after this petition was filed. No harm was done. Had the Board been of a mind to grant reconsideration, it could have so indicated and a motion to remand would have been in order."
Perhaps more favorable to petitioners is this Court's decision in United States v. Rock Island Motor Transport Co., 340 U.S. 419, where it was held that the Interstate Commerce Commission could modify a motor carrier's effective certificate pursuant to a reservation in the initial order. However, two important distinctions between that case and this are apparent: (1) the Motor Carrier Act makes express provision for summary modifications after certification, 49 U.S. C. § 308, and (2) the Court in Rock Island was very careful to limit its holding to the particular modification made in that case. Finally, the decision which is analytically most relevant to this case, United States v. Seatrain Lines, supra, furnishes support for respondent, rather than petitioners. While Seatrain may be distinguishable on its facts,[15] the Court spoke in *334 general terms of the rule that supervising agencies desiring to change existing certificates must follow the procedures "specifically authorized" by Congress and cannot rely on their own notions of implied powers in the enabling act. In short, we do not find that prior authority clearly favors either side; however, to the extent that a broad observation is permissible, we think that both administrative and judicial feelings have been opposed to the proposition that the agencies may expand their powers of reconsideration without a solid foundation in the language of the statute. Therefore, since the language and background of the statute are against, rather than for, the Board, the judgment of the Court of Appeals must be
Affirmed.
MR. JUSTICE WHITTAKER, with whom MR. JUSTICE FRANKFURTER and MR. JUSTICE HARLAN join, dissenting.
This is an airline route proceeding brought before the Civil Aeronautics Board. The case involves the effect upon the proceeding, and hence upon a certificate of convenience and necessity ordered to be issued therein, of a timely motion for reconsideration.
*335 Specifically, the question presented is whether, in the light of the provisions of §§ 401 (f) and 401 (g) of the Federal Aviation Act,[1] the Board, by allowing its certificate to become "effective," notwithstanding a timely filed and unruled motion for reconsideration, lost all power to grant the motion and accordingly to modify its order and the resulting certificate.
This case is but a facet of a multi-party, highly complex and protracted route proceeding, known as the "Great Lakes-Southeast Service Case," commenced before the Civil Aeronautics Board in May 1955. It involved, "predominantly," the "long-haul" service needs of an area extending roughly between the Great Lakes and Florida. Numerous trunkline carriers sought new or additional operating rights in that area. The Board was also confronted with a number of petitions by local carriers for authority to provide new or improved short-haul service between certain intermediate cities in that area. *336 In an effort to keep the proceeding within manageable bounds, the Board declined to consolidate those short-haul petitions with this case, and, instead, directed the institution of a separate proceeding (Great Lakes Local Service Investigation) for their resolution, but it did announce that, to make sure that this separation would not deprive them of an opportunity to be heard in protection of their rights, the local service carriers would be permitted to intervene in this case.
As one of the many contending trunkline carriers, respondent, Delta Air Lines, Inc., petitioned for authority (1) to extend an existing route northwesterly to provide service from Miami to Detroit, and (2) to add Indianapolis and Louisville as intermediate points on its existing Chicago-to-Miami route. Petitioner, Lake Central Airlines, Inc., a local or short-haul carrier operating a line between Chicago and Indianapolis, and also serving Louisville, intervened to object to the Delta petition unless its proposed new service to Indianapolis and Louisville be restricted to northbound flights originating, and to southbound flights terminating, at or south of Atlanta. Upon this issue, Lake Central offered evidence that it would suffer injury and damage, through diversion of its local traffic, by the proposed new Delta service unless it be so restricted.
On September 30, 1958, the Board filed its opinion and order in which, among other things, it authorized Delta to add Indianapolis and Louisville as intermediate points on its Chicago-to-Miami route, without imposing the restrictions that Lake Central had asked. Consistently with its custom, the Board stated in its order that the certificate thereby authorized to Delta would become effective on the 60th day after entry of the order (November 29).
*337 Within the 30 days allowed by the Board's rule for the filing of a motion for reconsideration,[2] Lake Central filed with the Board on October 31, 1958, its motion for reconsideration, elaborating the grounds it had asserted and supported with evidence, in opposition to Delta's petition. It also asked in that motion that the effective date of the Delta certificate be stayed pending decision by the Board of the motion for reconsideration.
On November 28, 1958, one day prior to the date upon which, as stated in the Board's order of September 30, the Delta certificate would become effective, the Board filed a lengthy memorandum and order in which it denied Lake Central's request (and alsowith one exception not material herethe similar requests of others) for a stay of the effective date of the Delta certificate until after the Board had decided Lake Central's motion for reconsideration. In that order, the Board expressed its view that "the parties [had] not made a sufficient showing of probable *338 legal error or abuse of discretion" to warrant the issuance of a stay, and that, in view of the approaching peak winter season, the "new services to Florida [were] immediately required."
Then, turning to the motions for reconsideration, the Board said in that order that, "because of the detailed matters raised in the petitions for reconsideration, it [would] not be possible to finally dispose of them until after November 29," but the Board promptly would "address itself to the merits of the petitions for reconsideration, and [its] order dealing with [those] matters [would] issue at a later date." It thus and otherwise made clear that its denial of the stays was not intended to be "[in any] way prejudicial to the legal rights of those parties seeking reconsideration." It concluded: "Nothing in the present order forecloses the Board from full and complete consideration of the pending petitions for reconsideration on their merits."
Thereafter, on May 7, 1959, the Board granted Lake Central's petition for reconsideration and accordingly entered its final order restricting Delta's service of Indianapolis and Louisville to northbound flights originating, and to southbound flights terminating, at or south of Atlanta; but the Board did say in that order that "If, after deciding the issues presented in the Great Lakes Local Service case, we conclude that the long-haul restrictions are not required, we will have full freedom to remove them at that time." It is this order that gives rise to the present controversy.
On Delta's appeal from that order, the United States Court of Appeals for the Second Circuit reversed. 280 F.2d 43. It held that, notwithstanding the timely filed and unruled motion for reconsideration, "once [the Board allowed the] certificate [to] become effective," it lost all power thereafter to grant the motion and accordingly to modify its order and the resulting certificate, and that *339 "it is only in a [separate and plenary] proceeding satisfying the requirements of Section 401 (g) that an effective certificate authorizing unrestricted service may be modified by subsequently imposed restrictions." 280 F.2d, at 48. Because of the importance of the question involved to the proper administration of the Act, we brought the case here. 364 U.S. 917, 918.
The Court now affirms that judgment. It does so upon grounds which, I am bound to say, with all respect, seem to me to be spurious and legally indefensible, as I shall endeavor to show.
Although the Federal Aviation Act does not expressly provide for motions for reconsideration by the Board of its orders, it is clear, and indeed it is agreed by the parties, that the Board has power to provide for, and to entertain, such motions, for "[t]he power to reconsider is inherent in the power to decide." Albertson v. Federal Communications Comm'n, 87 U. S. App. D. C. 39, 41, 182 F.2d 397, 399. See also Braniff Airways v. Civil Aeronautics Board, 79 U. S. App. D. C. 341, 147 F.2d 152.
Pursuant to that power, the Board adopted its Rule of Practice prescribing, in pertinent part, that "a petition for reconsideration, rehearing or reargument may be filed by any party to a proceeding within thirty (30) days after the date of service of a final order by the Board in such proceeding . . . ."[3] It is admitted that Lake Central filed its motion for reconsideration within the 30 days allowed by that rule.
Under every relevant reported decision, save one to be later noted, a timely motion for reconsideration, being an authorized and appropriate step in the proceeding, "operate[s] to retain the Board's authority over the [original] order," Waterman S. S. Corp. v. Civil Aeronautics Board, 159 F.2d 828, 829 (C. A. 5th Cir.), *340 "reopen[s] the case," Black River Valley Broadcasts v. McNinch, 69 Ohio App. D. C. 311, 316, 101 F.2d 235, 240, and prevents the "proposed decision"which, at that stage, is all it is (Waterman case, supra, at 828)from becoming "final." Outland v. Civil Aeronautics Board, 109 U. S. App. D. C. 193, 284 F.2d 224, 227. The proceeding being thus held open by the motion, and the Board having both the power and the duty to decide it, it would seem to be fundamental that the Board has power to decide it either wayincluding, of course, the "power to grant [it]," Enterprise Co. v. Federal Communications Comm'n, 97 U. S. App. D. C. 374, 378, 231 F.2d 708, 712, as it did here.
It seems necessarily true, and is well settled by the cases, that "Where a motion for rehearing is in fact filed there is no final action until the rehearing is denied . . . [for] there is always a possibility that the order complained of will be modified in a way which renders judicial review unnecessary," Outland v. Civil Aeronautics Board, 109 U. S. App. D. C., at 93, 284 F.2d, at 227, and "although the [motion] did not . . . supersede or suspend the order, [it did operate] to retain the Board's authority over the order, so that the order overruling the motion should be taken as the final . . . [order] intended by the statute to start the running of the sixty-day period for judicial review." Waterman S. S. Corp. v. Civil Aeronautics Board, supra, at 829. It necessarily follows that, if a timely motion for reconsideration is pending before the Board, its "proposed decision" (id., at 828) has "not become final in the sense that it [is] no longer subject to change upon reconsideration," Enterprise Co. v. Federal Communications Comm'n, 97 U. S. App. D. C., at 378, 231 F.2d, at 712, and "jurisdiction over [that] order remains with the [Board] until the time for appeal has expired, and that time is tolled by an application for rehearing." (Ibid.) Hence, "no [final] rights accrued to [Delta] as a result of the order originally granting [its] permit," Black River Valley Broadcasts v. McNinch, 69 *341 App. D. C., at 316, 101 F.2d, at 240. See also, e. g., Braniff Airways v. Civil Aeronautics Board, supra; Albertson v. Federal Communications Comm'n, supra; Western Air Lines v. Civil Aeronautics Board, 194 F.2d 211 (C. A. 9th Cir.); and Butterfield Theatres v. Federal Communications Comm'n, 99 U. S. App. D. C. 71, 237 F.2d 552.
"There is no doubt under the decisions and practice in this Court that where a motion for a new trial in a court of law, or a petition for a rehearing in a court of equity, is duly and seasonably filed, it suspends the running of the time for taking . . . an appeal, and that the time within which [a] proceeding to review must be initiated begins from the date of the denial of . . . the motion. . . ," Morse v. United States, 270 U.S. 151, 153-154, and "[t]his is also true in administrative proceedings," Black River Valley Broadcasts v. McNinch, 69 Ohio App. D. C., at 316, 101 F.2d, at 240.[4]
The only reported decision to the contrary is Consolidated Flowers Shipments v. Civil Aeronautics Board, 205 F.2d 449 (C. A. 9th Cir.). It was there held that the time within which a petition for review must be filed runs from the date of the Board's decision, not from the date on which it overruled a timely motion for reconsideration; and, inasmuch as the petition for review had not been filed within the former period, the court dismissed the petition as untimely. Recognizing that this result was contrary to its prior decisions,[5] the Court thought it was *342 required to so hold because of the last sentence of § 10 (c) of the Administrative Procedure Act, 5 U.S. C. § 1009 (c), saying that, for the purposes of appeal, "agency action otherwise final shall be final for the purposes of this subsection whether or not there has been presented or determined any application . . . for any form of reconsideration. . . ." (Emphasis added.) The fallacy of that reasoning was completely exposed and soundly rejected in Outland v. Civil Aeronautics Board, supra.[6] *343 And on May 1, 1961, the Ninth Circuit itself specifically overruled that case. Samuel B. Franklin & Co. v. Securities Exchange Commission, 290 F.2d 719.
There is only one reported decision, involving procedures before the Civil Aeronautics Board, that has presented the precise question we have here. It is Frontier Airlines, Inc., v. Civil Aeronautics Board, 104 U. S. App. D. C. 78, 259 F.2d 808. There, just as here, after a Board certificate had been permitted to become "effective," the Board granted an earlier and timely filed motion for reconsideration and revised the certificate-accordingly. It was contended that the revision of the order and, hence, also of the certificate, so made, was "a nullity because it was rendered . . . after the certificate . . . had become effective." (104 U. S. App. D. C., at 80, 259 F.2d, at 810.) That contention was there soundly rejected.
It therefore seems quite clear to me that, under historic legal procedures and all, save one, of the numerous relevant decisions, the timely filing of the motion for reconsiderationbeing a legally authorized step in the proceedingkept the proceeding open and continuing; that having the power, as well as the duty, to decide that motion, the Board had power to grant it, as it did, and thus, necessarily, accordingly to revise its earlier decision which, until then, was only "a proposed decision" (Waterman case, supra, at 828)and that, inasmuch as the Board sustained that motion, the earlier "proposed decision" never did become the final decision in the proceeding.
Inasmuch as all of the reported cases, save the discredited and now overruled Consolidated Flowers case, supra, are against it, Delta is compelled to rely almost entirely on its claim that the "plain language" of § 401 (f) deprives the Board of power, once it has allowed a certificate to become "effective," to revise its initial decision and the *344 resulting certificate in pursuance of an earlier and timely filed motion for reconsideration; and that, once it has been so permitted to become "effective," the certificate may be modified or altered only by a separate and independent plenary proceeding under § 401 (g).
The obvious defects in that argument are that (1) under § 401 (f), the "proposed decision" (Waterman case, supra, at 228) remained subject to revision by the Board in response to the timely filed motion for reconsideration, and (2) the argument ignores the fact that § 401 (g) applies only to proceedings to alter, amend, suspend or revoke a certificate in existence after the authorization proceeding has been fully concluded and finally ended i. e., after all timely filed motions for reconsideration have been denied, and the time for appeal has expired without an appeal being taken or, if an appeal was taken, the Board's decision has been finally affirmed.
Surely it cannot be doubted that, if the Board, instead of granting it, had denied the motion for reconsideration, the Court of Appeals, on judicial review, or this Court on certiorari, could reverse the Board's decision and remand the case to the Board with directions to grant the motion for reconsideration. It is certain that such a judgment would operate not only on the Board's decision but, as well, on its "effective" certificate. If the Board has power, when thus directed by the judgment of a reviewing court, to revise, modify or vacate its erroneous decision and its resulting certificate, even though "effective," why should the result be different if the Board, without such judicial direction, notes its error, grants the timely filed and pending motion for reconsideration, and accordingly revises its decision and the resulting certificate?
Apart from the discredited and now overruled Ninth Circuit case of Consolidated Flowers Shipments v. Civil Aeronautics Board, supra, Delta cites no case that involves the effect upon a Board decision of a timely filed motion *345 for reconsideration, or of a Board-revised order made in pursuance of such a motion, or that in any way supports it. Its claim of support by United States v. Seatrain Lines, 329 U.S. 424; Watson Bros. Transportation Co. v. United States, 132 F. Supp. 905; and Smith Bros. Revocation of Certificate, 33 M. C. C. 465, is wholly unfounded. None of those cases involved or dealt with the question we have here. None of them involved or dealt with any question respecting the effect of a timely filed motion for reconsideration upon an administrative order. To the contrary, in each of them the administrative proceeding had long since finally endedi. e., all timely filed motions for reconsideration had been denied, the time for judicial review had expired, and the proceeding was in all respects closed.
The only relevant statement in the Seatrain case, supra, is squarely opposed to Delta's position, namely, "The certificate, when finally granted and the time fixed for rehearing it has passed, is not subject to revocation in whole or in part except as specifically authorized by Congress [i. e., in an independent plenary proceeding]." 329 U.S., at 432, 433. (Emphasis added.) Here, "the time fixed for rehearing [had not] passed," but, instead, an appropriate motion for reconsideration had been timely filed and was pending. Surely, the Board not only had power, but also a duty, to rule on that motion and, if it found it meritorious, to sustain it, and accordingly to revise its decision and resulting certificate.
The Watson case, supra, has no relevance whatever to this one. In the Smith case, supra, the Commission was careful to point out that ". . . the certificate marks the end of the proceedings, just as the entry of a final judgment or decree marks the end of a court proceeding.. . ." 33 M. C. C., at 472. (Emphasis added.) It is certain that "a proposed decision" (Waterman case, supra, at 228) of a court does not, while a timely filed *346 motion for new trial, rehearing or reconsideration is pending, end the proceeding, but it is the denial of the motion, and expiration of the time to appeal, that "marks the end of a court proceeding"; and "[t]his is also true in administrative proceedings." Black River Valley Broadcasts v. McNinch, 69 Ohio App. D. C., at 316, 101 F.2d, at 240.
Section 401 (f) contemplates that the Board may issue a certificate of convenience and necessity "for a limited period of time under subsection (d) (2) of [that] section." Although the Board did not expressly say, in its order of September 30, 1958, that the certificate thereby authorized to Delta would continue only "for a limited period of time," it did expressly point out in its order of November 28, 1958, denying Lake Central's motion for a stay and permitting the Delta certificate to become effective, that Lake Central's motion for reconsideration was still pending undetermined, and that it promptly would "address itself to the merits of [that] petition for reconsideration, and [that its] order dealing with [that] matter [would] issue at a later date." Hence, the Delta certificate, though thus allowed to become "effective," was, in the law's regard, as surely "issued for [the] limited period of time" expiring with the date of the possible grant of Lake Central's motion for reconsideration, as if that limitation had been expressed in the Board's authorizing order and certificate.
Here, as in Western Air Lines v. Civil Aeronautics Board, 194 F. 2d, 211, 214 (C. A. 9th Cir.), Delta "acted with its eyes open and at its own risk. It was aware that the proceedings before the Board had not become final, and would not until the expiration of the period of 30 days within which petitions for reconsideration might be filed."
Surely Lake Central's timely filed motion for reconsideration kept the whole proceeding open, including the Board's order and resulting certificate, until that motion *347 was denied. It was not denied. Instead, it was granted, as surely the Board had power to do. Therefore, the Board's originally "proposed decision" never did become the final decision in the proceeding. And when that "proposed decision" thus fell, the certificate which it authorized, and which had been permitted to become temporarily "effective," necessarily fell with it, as it was always subject to the results of that motion.
It is not to be gainsaid that the practice, sometimes, as here, followed by the Board, of permitting route certificates to become "effective" while nonfrivolous motions for rehearing or reconsideration are pending undetermined,[7] is perilous business and only rarely, if ever, is justified. But it does not follow that, once having permitted a route certificate to become "effective," the Board has lost all power to decide a pending motion for reconsideration, and, if found meritorious, to grant it, and thus itself to rectify the errors in its "proposed decision" and in the route certificate that was thereby erroneously authorized.
For these reasons, I think the Court has fallen into clear error in affirming the judgment of the court below, which, in my view, is contrary to the settled law and should be reversed.
NOTES
[*] Together with No. 493, Lake Central Airlines, Inc., v. Delta Air Lines, Inc., also on certiorari to the same Court.
[1] This section provides:
"Each certificate shall be effective from the date specified therein, and shall continue in effect until suspended or revoked as hereinafter provided, or until the Board shall certify that operation thereunder has ceased, or, if issued for a limited period of time under subsection (d) (2) of this section, shall continue in effect until the expiration thereof, unless, prior to the date of expiration, such certificate shall be suspended or revoked as provided herein, or the Board shall certify that operations thereunder have ceased: Provided, That if any service authorized by a certificate is not inaugurated within such period, not less than ninety days, after the date of the authorization as shall be fixed by the Board, or if, for a period of ninety days or such other period as may be designated by the Board any such service is not operated, the Board may by order, entered after notice and hearing, direct that such certificate shall thereupon cease to be effective to the extent of such service."
[2] The Board's regulations concerning petitions for reconsideration, 14 CFR § 302.37, provide in part that:
"Petition for reconsideration(a) Time for filing. A petition for reconsideration, rehearing or reargument may be filed by any party to a proceeding within thirty (30) days after the date of service of a final order by the Board in such proceeding unless the time is shortened or enlarged by the Board, except that such petition may not be filed with respect to an initial decision which has become final through failure to file exceptions thereto. However, neither the filing nor the granting of such a petition shall operate as a stay of such final order unless specifically so ordered by the Board. After the expiration of the period of filing a petition, a motion for leave to file such petition may be filed; but no such motion shall be granted except on a showing of unusual and exceptional circumstances, constituting good cause for failure to make timely filing. Within ten (10) days after a petition for reconsideration, rehearing, or reargument is filed, any party to the proceeding may file an answer in support of or in opposition to the petition."
[3] A temporary stay was granted from November 29 to December 5 to enable the Court of Appeals to consider a request by Eastern Air Lines for a judicial stay of certain awards made in the original proceeding. Eastern did not get its stay nor was its challenge on the merits upheld. Eastern Air Lines v. Civil Aeronautics Board, 271 F.2d 752.
[4] We are informed that this case has now been completed but no further action has been taken on Delta's restrictions.
[5] See Tobias, Administrative Reconsideration: Some Recent Developments in New York, 28 N. Y. U. L. Rev. 1262, where the author observed:
"Re-examination and reconsideration are among the normal processes of intelligent living. Admittedly no warranty of correctness or fitness attaches to a decision or an action simply because it is a thing of the past. Every-day experience teaches the contrary: while the choice first made may well remain the course ultimately followed, often enough it is found on further consideration to require revision. On the other hand, constant re-examination and endless vacillation may become ludicrous, self-defeating, and even oppressive. Whether for better or for worse so far as the merits of the chosen course are concerned, a point may be reached at which the die needs to be cast with some `finality.' An opposition may thus develop between the right result and the final one."
See also the statement of the Board in its original opinion in this case, denying a motion to reopen the record:
"Our general policy with respect to motions to reopen the record for receipt of data on the most recent operating experience has consistently reflected the requirement of the public interest that the record in major route cases be brought to a close as expeditiously as possible, consistent with the requirements of full hearings, so that final decision may be rendered promptly. Institution of needed new services could be endlessly delayed were we to permit the record to be reopened in the final procedural stages of a case for the submission of more recent operating data (and the attendant cross-examination and exchange of rebuttal evidence). Only in the cases where the situation under consideration has changed radically would such a course of action be justified."
[6] Generally speaking, the less interested Congress has been in what has been called "security of certificate," the wider the scope of reconsideration Congress has allowed to the supervising agency. See generally Davis, Res Judicata in Administrative Law, 25 Texas L. Rev. 199. It cannot be doubted that Congress was powerfully interested in "security of certificate" when it passed the Aviation Act. See 83 Cong. Rec. 6407.
[7] No one contends that the changes made upon reconsideration constituted the correction of inadvertent errors. See American Trucking Assns., Inc., v. Frisco Transportation Co., 358 U.S. 133.
[8] Speaking on behalf of the bill which became the predecessor of the Federal Aviation Actthe Civil Aeronautics Act of 1938 Congressman Lea, Chairman of the Committee on Interstate and Foreign Commerce which reported the bill, said:
"One hundred and twenty million dollars has already been invested in commercial aviation in the United States. It is the information of the committee that $60,000,000 of this sum has been wiped out. The fact that so much money has been put into commercial aviation shows the faith, the genius, and the courage of the American people in that they are willing to invest as they have in aviation up to this date. However, in the absence of legislation such as we have now before us these lines are going to find it very difficult if not impossible to finance their operations because of the lack of stability and assurance in their operations. You would not want to invest $200 or $2,000 a mile in a line that has no assurance of security of its route and no protection against cutthroat competition.
"Part of the proposal here is that the regulatory body created by the bill will have authority to issue certificates of convenience and necessity to the operators. This will give assurance of security of route. The authority will also exercise rate control, requiring that rates be reasonable and giving power to protect against cutthroat competition. In my judgment, those two things are the fundamental and essential needs of aviation at this time, security and stability in the route and protection against cutthroat competition.
"These are the two economic fundamentals presented and it is this necessity that the bill seeks to meet. We want to give financial stability to these companies so they can finance their operations and finance them to advantage." 83 Cong. Rec. 6406-6407.
[9] The "finality" of an order for purposes of judicial review depends on § 10 (c) of the Administrative Procedure Act, 60 Stat. 243, 5 U.S. C. § 1009 (c). See 6 Stan. L. Rev. 531.
[10] In addition to the reasons mentioned in the text, those cases involving orders, rather than certificatessee Western Air Lines v. Civil Aeronautics Board, 194 F.2d 211are distinguishable for the reasons stated in Seatrain, supra, at 432. Similarly, the cases involving certificates under the Federal Communications Act are distinguishable for the reasons stated by Commissioner Ryan. See Ryan, The Revocation of an Airline Certificate of Public Convenience and Necessity, 15 J. Air L. & Comm. 377, 384-385.
[11] See also Hancock, Fallacy of the Transplanted Category, 37 Can. B. Rev. 535. One might argue, of course, that judicial review and administrative reconsideration are the same since both threaten a reversal of the prior award. However, Congress has shown no intent to preclude reconsideration, either judicial or administrative, after notice and hearing.
[12] Although the Board did not purport to issue a temporary certificate as prescribed in § 401 (d) (2), petitioners now argue that the Board's action was "equivalent" to a temporary certification. However, we do not find this proposition persuasive. As stated in the text, supra, we think that the Board must bow to the statutory procedure and cannot take short cuts. See note 15, infra. Moreover, the most natural reading of § 401 (d) (2)which says that temporary certificates may be issued for "limited periods"is that Congress was authorizing the Board to issue certificates running until a specified date. One reason for this construction is obvious; if a temporary certificate had unlimited duration, only subject to immediate revocation when the Board got around to considering various objections, it might play havoc with the ability of the carrier to accept advance reservations. Just such a contention was made by Delta before the Board in its petition for a stay of the Board's May 7, 1959, order on reconsideration. Delta pointed out:
"It is a fact that schedules for May and June, and timetables showing this early morning Chicago-Indianapolis-Evansville and Evansville-Indianapolis-Chicago service, have been released to the public and many reservations have been booked for these months. Furthermore, pilot bidding procedures and problems involving equipment rotation prohibit the immediate cancellation of this flight on short notice."
[13] It appears clear, and the Board does not disagree, that the "hearing" specified in § 401 (g) means a "hearing" prior to decision. And, the Board does not contend that this requirement could have been satisfied by the allowance of a hearing after the decision on reconsideration was handed down. This course of action seems wise since (1) it is generally accepted on both principle and authority that a hearing after decision, although permissible in special circumstances, is not the equivalent of a predetermination hearing, see, e. g., Gelhorn and Byse, Administrative Law, 774; (2) it is not entirely clear that Delta could have procured a hearing after the Board's decision. Delta sought a stay of the Board's May 7 order until after the Great Lakes Local Service Investigation Case was decided, presumably with a view to introducing further evidence on the present point in that case; the request for a stay was denied.
[14] Since Kansas City, the Board has reconsidered an effective award on three occasions. United Western, Acquisition of Air Carrier Property, 11 C. A. B. 701; Service to Phoenix Case, Order E-12039 (1957); South Central Area Local Service Case, Order E-14219 (1959). United Western did not involve a certificate of public convenience and necessity and, thus, has no relevance. See note 10, supra. Service to Phoenix involved a denial of reconsideration except on one point, which might arguably be termed the correction of inadvertent error. See note 7, supra. South Central did involve the alteration of a certificated carrier's rights. As stated, the present point was not raised in any of these three cases.
[15] The potentially distinguishing feature about Seatrain is that the Court's holding may rest on an alternate groundviz.: that the Commission had no power to impose the conditions it did in the first instance. However, Seatrain cannot be distinguished on the grounds that the Court said "the certificate, when finally granted and the time fixed for rehearing has passed, is not subject to revocation in whole or in part except as specifically authorized . . . ." The point is that, under the Water Carrier Act, the Commission had express authority to entertain petitions for reconsideration at any time. See 49 U.S. C. § 916 (a), incorporating 49 U.S. C. § 17 (6) and (7). Therefore, it is clear that the Commission in Seatrain could have reached with impunity the result it wanted to reach by following the procedures set out by Congress. The force of the Seatrain decision is, then, that the commissions and boards must follow scrupulously the statutory procedures before they can alter existing operations and that arguments to the effect that "this is just another way of doing it" will not prevail.
[1] Section 401 (f) of the Federal Aviation Act (72 Stat. 755-756, 49 U.S. C. § 1371 (f) provides, in relevant part, as follows:
"(f) Each certificate shall be effective from the date specified therein, and shall continue in effect until suspended or revoked as hereafter provided, or until the Board shall certify that operation thereunder has ceased or, if issued for a limited period of time under subsection (d) (2) of this section, shall continue in effect until the expiration thereof, unless, prior to the date of expiration, such certificate shall be suspended or revoked as provided herein, or the Board shall certify that operations thereunder have ceased . . . ."
Section 401 (g) of the Act (72 Stat. 756, 49 U.S. C. § 1371 (g)) provides, in relevant part, as follows:
"(g) The Board upon petition or complaint or upon its own initiative, after notice and hearings, may alter, amend, modify, or suspend any such certificate, in whole or in part, if the public convenience and necessity so require, or may revoke any such certificate, in whole or in part, for intentional failure to comply with any provision of this title or any order, rule, or regulation issued hereunder or any term, condition, or limitation of such certificate . . . ."
[2] Section 302.37 (a) of the Rules of Practice of the Civil Aeronautics Board, 14 CFR § 302.37 (a) (1956 Rev. ed.), provides, in relevant part, as follows:
"Petition for reconsideration(a) Time for filing. A petition for reconsideration, rehearing or reargument may be filed by any party to a proceeding within thirty (30) days after the date of service of a final order by the Board in such proceeding unless the time is shortened or enlarged by the Board, except that such petition may not be filed with respect to an initial decision which has become final through failure to file exceptions thereto. However, neither the filing nor the granting of such a petition shall operate as a stay of such final order unless specifically so ordered by the Board. . . ."
In a recent revision of its Rules, the Board has reduced the time within which a petition for reconsideration may be filed from 30 to 20 days. See 14 CFR § 302.37 (1960 Supp.).
49 U.S. C. § 1486 (a) provides that decisions of the Board shall be subject to review by the Courts of Appeals upon petition "filed within sixty days after the entry of such order," by any person having a substantial interest in the order.
[3] See note 2.
[4] See Saginaw Broadcasting Co. v. Federal Communications Comm'n, 68 Ohio App. D. C. 282, 287, 96 F.2d 554, 559; Southland Industries, Inc., v. Federal Communications Comm'n, 69 Ohio App. D. C. 82, 99 F.2d 117; Woodmen of World Life Ins. Assn. v. Federal Communications Comm'n, 69 Ohio App. D. C. 87, 99 F.2d 122; Red River Broadcasting Co. v. Federal Communications Comm'n, 69 Ohio App. D. C. 1, 98 F.2d 282.
[5] See Western Air Lines v. Civil Aeronautics Board, 196 F.2d 933 (C. A. 9th Cir.); Southwest Airways Co. v. Civil Aeronautics Board, 196 F.2d 937; Western Air Lines v. Civil Aeronautics Board, 194 F.2d 211.
[6] In Outland v. Civil Aeronautics Board, supra, the United States Court of Appeals for the District of Columbia exposed the fallacy in, and soundly rejected the reasoning of, the Consolidated Flowers case, supra, in the following language:
"The legislative history of 5 U.S. C. A. § 1009 (c) indicates that it was adopted to achieve harmony with the holding in Levers v. Anderson, 1945, 326 U.S. 219, 66 S. Ct. 72, 90 L. Ed. 26 to the effect that a motion for rehearing was not necessary to exhaust administrative remedies. However, while making judicial review available without a motion for rehearing, that statute did not operate to repeal the law with respect to finality. Where a motion for rehearing is in fact filed there is no final action until the rehearing is denied, as we said in Braniff Airways, Inc. v. Civil Aeronautics Board, supra. Section 1009 (c) does not command a motion for rehearing in order to reach finality by exhaustion of administrative remedies; it leaves that to each litigant's choice. But when the party elects to seek a rehearing there is always a possibility that the order complained of will be modified in a way which renders judicial review unnecessary. Practical considerations, therefore, dictate that when a petition for rehearing is filed, review may properly be deferred until this has been acted upon. The contrary result reached by the Ninth Circuit has caused parties to file so called `protective' petitions for judicial review while petitions for rehearing before the Board were pending. A whole train of unnecessary consequences flowed from this: the Board and other parties may be called upon to respond and oppose the motion for review; when the Board acts, the petition for judicial review must be amended to bring the petition up to date.
"We hold that when a motion for rehearing is made, the time for filing a petition for judicial review does not begin to run until the motion for rehearing is acted upon by the Board." 109 U. S. App. D. C., at 92-93, 284 F.2d, at 227-228.
[7] In many instances, the Board has permitted certificates to become effective notwithstanding a motion or motions for reconsideration were pending undetermined. And in a number of such cases, as here, the Board has granted such motions and accordingly modified the "effective" certificate. See, e. g., North Central case, 8 C. A. B. 208; Cincinnati-New York Additional Service, 8 C. A. B. 603; United-Western, Acquisition of Air Carrier Property, 11 C. A. B. 701; Service to Phoenix case, Order E-12039 (1957); South Central Area Local Service case, Order E-14219 (1959). | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/2133600/ | 371 F.Supp. 86 (1974)
UNIVERSITY COMPUTING COMPANY, Plaintiff,
v.
The LEADER CORPORATION, Defendant.
Civ. A. No. CA-3-7397-D.
United States District Court, N. D. Texas, Dallas Division.
January 17, 1974.
Benjamin A. Mazow, Woodrow M. Bonesio, John L. Hauer, Akin, Gump, Strauss, Hauer & Feld, Dallas, Tex., for plaintiff.
John D. Crawford, Harriet Miers, Dallas, Tex., for defendant.
MEMORANDUM OPINION ORDER
ROBERT M. HILL, District Judge.
In this diversity action, University Computing Company (hereinafter "UCC") seeks to terminate a master contract and settlement agreement *87 contract[1] with the defendant, The Leader Corporation (hereinafter "Leader"). In the first count of UCC's complaint it is alleged that the contracts are ambiguous because they grant a license to Leader "for an indefinite period of time." UCC has filed a motion for summary judgment urging that this court declare the license terminated since as "a matter of law, a license `for an indefinite period of time' is one which either the licensor or the licensee may terminate at will, for any reason whatsoever or for no reason at all." Leader has also filed a motion for summary judgment urging that the contracts have not been terminated nor are terminable at will. The court has considered the motions and the briefs and is of the opinion that the motion for summary judgment filed by UCC should be overruled and that the motion for summary judgment filed by Leader should be sustained.
I. The Facts
Leader had entered into a master contract with Results, Inc., who had developed a unique set of fully-integrated computer software systems to perform the accounting functions of banks. By this master contract, Leader had acquired the non-exclusive right to use the Results computer software systems. UCC, a competitor of Leader, later acquired the assets of Results, Inc., and one of the assets was the master contract with Leader. Subsequently, UCC repudiated the master contract and Leader then filed suit in federal court to specifically enforce the master contract in order that it could pursue its facilities management activities for banks and other financial institutions. Leader sought and was granted an expedited trial setting for October 23, 1972. However on October 21, 1972, the suit was settled pursuant to a settlement agreement contract which recognized the master contract as a binding contract between Leader and UCC except as modified by the terms of the settlement agreement. Prior to the signing of the settlement agreement contract, the parties interlined in three separate places that Leader could use the Results' software systems "for an indefinite period of time."
On July 3, 1973, Leader ordered the Results software systems pursuant to the terms of the master contract and the settlement agreement contracts with UCC. On July 10, 1973, UCC informed Leader that it was terminating both of these contracts. UCC then filed the instant suit alleging that the contracts with Leader should be terminated as a result of Leader's breach of its fiduciary obligation not to disclose UCC's trade secrets. UCC then filed an amended complaint, one count of which embodied the terminable at will contention which is the subject of the present motions for summary judgment.
II. Performance for Definite Duration
UCC urges that since the settlement contract provides that Leader may use the Results' system for an indefinite period of time, the contracts in question are thus terminable at will. A plethora of cases has been cited by UCC for the proposition that a contract indefinite as to the time of its performance may be terminated by either party by giving notice of its intention to do so.[2] The ratio decidendi of these authorities is that if a contract is indefinite as to the time of performance then it is impossible to fix the liabilities of the parties to that agreement. Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940 (1944). Additionally, the courts are reluctant to enforce an obligation to perform for an indefinite period of time. In Ingram Freezers v. Atchison, T. & S. F. Ry. Co., 464 S.W.2d 915 (Tex.Civ.App. Dallas 1971, writ ref'd n.r.e.) the court refused to enforce a contract where the defendant *88 was to furnish rail service for as long as the plaintiff desired. The court in Allied Financing Co. v. Fowler, 358 S.W.2d 239 (Tex.Civ.App. Austin 1962, no writ) refused to enforce a contract in which the defendant had agreed to finance the plaintiff's business for an indefinite period of time. In Shaunty v. Burrus Mills, Inc., 349 S.W.2d 789 (Tex.Civ.App. Fort Worth 1961, no writ) the court held that a contract to furnish feed products to the plaintiff for "as long as it was a good business arrangement," was unenforceable and was terminable at the will of either of the parties. The significance of these authorities cited by UCC is that a party seeking termination had an affirmative obligation to perform a substantial portion of the contract for an indefinite period of time. It is this distinction that makes UCC's cases inapplicable to the facts of this suit.
The basic requirements of the agreements between Leader and UCC are that Leader must pay $445,000 over a period of five years for the use of the Results' system, Leader must also pay certain percentages of its annual gross revenue from the use of the Results systems for a period of eight years, and UCC is obligated to deliver the Results systems to Leader and provide on-site services of a service representative for a total of five full days. Leader is also entitled to additions and improvements to the Results systems without charge for a period of 12 months after a specific system is ordered from UCC.[3] After completing these obligations which are governed by definite periods of time, Leader's performance under the agreement are basically complete.[4] Under these circumstances this court is of the opinion that the agreement between Leader and UCC are definite enough in duration for a court to fix the contractual liabilities of the parties. Leader's non-exclusive right to the use of the Results' systems does not impose any obligations on UCC for an indefinite period of time. A contract is sufficiently definite and certain if it leaves no reasonable doubt as to the specific conduct a party is obligated to perform. Palmer v. Katz, 210 S.W.2d 451 (Tex.Civ.App. Eastland 1948).
Further, considering the contract as a whole and giving effect to its general purpose and the true intentions of the parties, it is clear that UCC and Leader did not intend to create an agreement terminable at the will of either party. The original lawsuit was settled two days before the trial date; Leader has marketed its services incidental to the Results system to various financial institutions; and, $109,681.00 has already been received and accepted by UCC from Leader. Further Leader clearly cannot be restored to the position it occupied before the execution of the settlement agreement. Under these circumstances, UCC cannot now escape the obligations of the contract by simply returning the partial consideration paid by Leader. Kennedy v. McMullen, 39 S.W. 2d 168 (Tex.Civ.App. Beaumont, 1931, writ ref'd).
For the foregoing reasons, this court is of the opinion that UCC may not terminate these contracts because of Leader's non-exclusive right to use the Results system "for an indefinite period of *89 time." There is nothing in the language of these contracts nor has there been any showing that the parties intended to limit the duration of Leader's use of the system. UCC's and Leader's obligations pursuant to the contracts are of a definite duration and they may not be terminated at the will of either party.
While Leader has taken the lead in its efforts to enforce its contract with UCC, there remains some universal computations to accompany the results of the motions for summary judgment. UCC's allegation that Leader has breached and violated its obligations under the settlement agreement contract and the master contract is an issue which can be only resolved by a trial on the merits. The determinations made in this opinion and order are without prejudice to the resolution to the remaining contested issues.
It is therefore ordered that:
(1) The motion for summary judgment filed by UCC is overruled;
(2) the motion for summary judgment filed by Leader is sustained;
(3) the unresolved issues in this case are set for trial on Monday, April 29, 1974.
NOTES
[1] The settlement agreement contract arose from the disposition of a prior lawsuit between Leader and UCC over the master contract.
[2] But cf. Sapphire Royalty Co. v. Davenport, 306 S.W.2d 202 (Tex.Civ.App. Houston 1957, writ ref'd n. r. e.); Smith v. Lane, 236 S.W.2d 214 (Tex.Civ.App. San Antonio 1950, no writ); Foster v. Wright, 217 S.W. 1090 (Tex.Civ.App. Fort Worth 1919, no writ).
[3] UCC must also make available all modifications of the Results system which are developed after this 12 month period. However this obligation is subject to the execution of a "mutually satisfactory separate agreement" between the parties.
[4] UCC is also obligated to provide certain consulting services if requested by Leader. The court construes this provision to require UCC to provide these consulting services for a reasonable time after a system is ordered by Leader. Smith v. Lane, 236 S.W.2d 214 (Tex.Civ.App. San Antonio 1950, no writ). Additionally, this court is of the opinion that the absence of a fixed period of time governing UCC's obligation to provide consulting services does not render the entire contract unenforcible. This provision is not a "material element" of the contract which would permit UCC to escape from its obligations under other provisions of the agreement. Scott v. Eastline & R.R.R.Co., 72 Tex. 70, 10 S.W. 99, 102 (1888). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/108164/ | 398 U.S. 323 (1970)
PRICE
v.
GEORGIA.
No. 269.
Supreme Court of United States.
Argued April 27, 1970
Decided June 15, 1970
CERTIORARI TO THE SUPREME COURT OF GEORGIA.
Allyn M. Wallace argued the cause and filed a brief for petitioner.
Mathew Robins, Assistant Attorney General of Georgia, argued the cause for respondent. With him on the brief *324 were Arthur K. Bolton, Attorney General, Harold N. Hill, Jr., Executive Assistant Attorney General, and Marion O. Gordon, Assistant Attorney General.
MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted the writ to consider the power of a State to retry an accused for murder after an earlier guilty verdict on the lesser included offense of voluntary manslaughter had been set aside because of a trial error.
Petitioner was charged with the killing of Johnnie Mae Dupree in an indictment for the offense of murder filed in the Superior Court of Effingham County, Georgia. He entered a plea of not guilty and was tried on October 17, 1962. The jury returned a verdict of guilty to the lesser included crime of voluntary manslaughter and fixed the sentence at 10 to 15 years in the state penitentiary. The jury's verdict made no reference to the charge of murder.
The Court of Appeals of Georgia reversed the conviction because of an erroneous jury instruction and ordered a new trial. Price v. State, 108 Ga. App. 581, 133 S.E.2d 916 (1963).
On October 20, 1967, petitioner was again placed on trial for murder under the original indictment. Before the commencement of the second trial petitioner entered a plea of autrefois acquit, claiming that to place him again on trial for the offense of murder would expose him to double jeopardy in view of the verdict of voluntary manslaughter at the initial trial. The trial judge rejected the plea and, at the close of the trial, included instructions on the offense of murder in his charge to the jury so that the jury could have rendered a verdict of guilty on that offense. That jury, like the first, found petitioner guilty of voluntary manslaughter, and then fixed the penalty at 10 years' imprisonment.
*325 Petitioner sought direct review of his second conviction in the Supreme Court of Georgia,[1] but that court transferred the case to the Court of Appeals of Georgia, declaring that "[o]nly questions as to the application of plain and unambiguous provisions of the Constitution of the United States being involved, . . . the case is one for the consideration of the Court of Appeals . . . ." Price v. State, 224 Ga. 306, 307, 161 S.E.2d 825, 826 (1968).
The Georgia Court of Appeals then heard the appeal and affirmed the second conviction, rejecting petitioner's argument, among others, that his retrial for murder constituted double jeopardy. Price v. State, 118 Ga. App. 207, 163 S.E.2d 243 (1968). The Court of Appeals held that in Brantley v. State, 132 Ga. 573, 64 S.E. 676 (1909), aff'd, 217 U.S. 284 (1910), the Georgia Supreme Court had decided this question adversely to petitioner. The Court of Appeals then quoted from the Brantley case's syllabus:
"When a person has been indicted for murder and convicted of voluntary manslaughter, if he voluntarily seeks and obtains a new trial, he is subject to another trial generally for the offense charged in the indictment, and upon such trial he cannot successfully interpose a plea of former acquittal of the crime of murder, or former jeopardy in regard thereto." 118 Ga. App., at 208, 163 S. E. 2d, at 244.
Petitioner sought a rehearing, contending, as he contends here, that Brantley was no longer controlling. He relied on Green v. United States, 355 U.S. 184 (1957), and *326 United States ex rel. Hetenyi v. Wilkins, 348 F.2d 844 (C. A. 2d Cir. 1965), cert. denied, 383 U.S. 913 (1966). His contention was rejected. In deciding that Brantley was still a binding precedent as to it, the Georgia Court of Appeals noted that the Georgia Supreme Court had transferred the case to it as involving the application of only "plain and unambiguous" constitutional provisions. The petitioner's motion was then denied. Thereafter the Georgia Supreme Court denied certiorari, and petitioner sought review in this Court. We granted the writ, 395 U.S. 975 (1969), and now reverse.
(1)
In United States v. Ball, 163 U.S. 662, 669 (1896), this Court observed: "The Constitution of the United States, in the Fifth Amendment, declares, 'nor shall any person be subject [for the same offense] to be twice put in jeopardy of life or limb.' The prohibition is not against being twice punished, but against being twice put in jeopardy . . . ." (Emphasis added.) The "twice put in jeopardy" language of the Constitution thus relates to a potential, i. e., the risk that an accused for a second time will be convicted of the "same offense" for which he was initially tried.
The circumstances that give rise to such a forbidden potential have been the subject of much discussion in this Court. In the Ball case, for example, the Court expressly rejected the view that the double jeopardy provision prevented a second trial when a conviction had been set aside. In so doing, it effectively formulated a concept of continuing jeopardy that has application where criminal proceedings against an accused have not run their full course. See Green v. United States, 355 U.S. 184, 189 (1957).
The continuing jeopardy principle necessarily is applicable to this case. Petitioner sought and obtained the *327 reversal of his initial conviction for voluntary manslaughter by taking an appeal. Accordingly, no aspect of the bar on double jeopardy prevented his retrial for that crime. However, the first verdict, limited as it was to the lesser included offense, required that the retrial be limited to that lesser offense. Such a result flows inescapably from the Constitution's emphasis on a risk of conviction and the Constitution's explication in prior decisions of this Court.
An early case to deal with restrictions on retrials was Kepner v. United States, 195 U.S. 100 (1904), where the Court held that the Fifth Amendment's double jeopardy prohibition barred the Government from appealing an acquittal in a criminal prosecution,[2] over a dissent by Mr. Justice Holmes that argued that there was only one continuing jeopardy until the proceedings against the accused had been finally resolved. He held to the view that even if an accused was retried after the Government had obtained reversal of an acquittal, the second trial was part of the original proceeding.
Similar double jeopardy issues did not fully claim the Court's attention until the Court heard argument in Green v. United States, 355 U.S. 184 (1957).[3] There *328 the petitioner had been tried and convicted of first-degree murder after an earlier guilty verdict on the lesser included offense of second-degree murder had been set aside on appeal. A majority of the Court rejected the argument that by appealing the conviction of second-degree murder the petitioner had "waived" his plea of former jeopardy with regard to the charge of first-degree murder.
The Court in the Green case reversed the first-degree murder conviction obtained at the retrial, holding that the petitioner's jeopardy for first-degree murder came to an end when the jury was discharged at the end of his first trial. This conclusion rested on two premises. First, the Court considered the first jury's verdict of guilty on the second-degree murder charge to be an "implicit acquittal" on the charge of first-degree murder. *329 Second, and more broadly, the Court reasoned that petitioner's jeopardy on the greater charge had ended when the first jury "was given a full opportunity to return a verdict" on that charge and instead reached a verdict on the lesser charge. 355 U.S., at 191. Under either of these premises, the holding in the Kepner casethat there could be no appeal from an acquittal because such a verdict ended an accused's jeopardywas applicable.
The rationale of the Green holding applies here. The concept of continuing jeopardy implicit in the Ball case[4] would allow petitioner's retrial for voluntary manslaughter after his first conviction for that offense had been reversed. But, as the Kepner and Green cases illustrate, this Court has consistently refused to rule that jeopardy for an offense continues after an acquittal, whether that acquittal is express or implied by a conviction on a lesser included offense when the jury was given a full opportunity[5] to return a verdict on the greater charge. There is no relevant factual distinction between this case and Green v. United States. Although the petitioner was not convicted of the greater charge on retrial, whereas Green was, the risk of conviction on the greater charge was the same in both cases, and the Double Jeopardy Clause of the Fifth Amendment is written in terms of potential or risk of trial and conviction, not punishment.
The Georgia courts nonetheless rejected Green as a persuasive authority in favor of reliance on Brantley v. State, 132 Ga. 573, 64 S.E. 676 (1909), aff'd, 217 U.S. 284 (1910). The Brantley case presented a situation where a defendant's appeal from a conviction for a *330 lesser included offense ultimately led to retrial and conviction on the greater offense. After the second conviction had been affirmed on appeal, the defendant sued out a writ of error to the Supreme Court of Georgia from this Court, contending "that the exemption from second jeopardy is one of the privileges and immunities of citizens of the United States, which the Fourteenth Amendment forbids a state to abridge",[6] that he had "been tried and acquitted by a jury of his country of the crime of murder",[7] and that "[h]e should never [sic] have been tried a second time only for the offense on which he obtained a new trial . . . ."[8] This Court tersely rejected these contentions as:
"absolutely without merit. It was not a case of twice in jeopardy under any view of the Constitution of the United States." 217 U.S., at 285.
The Brantley case was decided by this Court at a time when, although the Court was actively developing an explication of federal double jeopardy doctrines based on the Fifth Amendment, it took a very restricted approach in reviewing similar state court decisions. While the Brantley holding may have had some vitality at the time the Georgia courts rendered their decisions in this case, it is no longer a viable authority and must now be deemed to have been overruled by subsequent decisions of this Court.[9]
*331 (2)
One further consideration remains. Because the petitioner was convicted of the same crime at both the first and second trials, and because he suffered no greater punishment on the subsequent conviction, Georgia submits that the second jeopardy was harmless error when judged by the criteria of Chapman v. California, 386 U.S. 18 (1967), and Harrington v. California, 395 U.S. 250 (1969).
We must reject this contention. The Double Jeopardy Clause, as we have noted, is cast in terms of the risk or hazard of trial and conviction, not of the ultimate legal consequences of the verdict. To be charged and to be subjected to a second trial for first-degree murder is an ordeal not to be viewed lightly.[10] Further, and perhaps of more importance, we cannot determine whether or not the murder charge against petitioner induced the jury to find him guilty of the less serious offense of voluntary manslaughter rather than to continue to debated his innocence. See United States ex rel. Hetenyi v. *332 Wilkins, 348 F.2d 844 (C. A. 2d Cir. 1965), cert. denied, 383 U.S. 913 (1966).
(3)
We asked the parties to submit post-argument memoranda directed to the question of whether petitioner can now be re-indicted or retried for voluntary manslaughter under Georgia law. These memoranda have been filed and indicate that the answer to our question appears to depend upon the construction of several Georgia statues and on the power of Georgia courts to fashion remedial orders. Accordingly, although we reverse petitioner's conviction, we also remand the case to enable the Georgia courts to resolve the issues pertaining to petitioner's retrial, if any such retrial is to be had.
Reversed and remanded.
MR. JUSTICE BLACKMUN took no part in the consideration or decision of this case.
NOTES
[1] Georgia's Constitution provides for direct review in the Georgia Supreme Court of, among others, "all cases that involve the construction of the Constitution of the State of Georgia or of the United States . . . ." Ga. Const., Art. VI, § 2, ¶ 4.
[2] Kepner rested upon a portion of the Ball case that dealt with a criminal action that had been finally resolved. In Ball the Court had held that the Government could not re-indict an accused for an offense where a judgment of acquittal had been entered by a trial court with jurisdiction over the accused and the cause. 163 U.S., at 669-670. The Court relied partially on United States v. Sanges, 144 U.S. 310 (1892), where the Court had interpreted the Judiciary Act of 1891 to hold that the United States could not obtain review by a writ of error in a criminal case.
[3] Shortly after Kepner the Court was faced with a factual situation somewhat akin to that presented by the instant case. In Trono v. United States, 199 U.S. 521 (1905), the defendants had been charged in a Philippine court with murder, and had been found guilty of the lesser offense of assault. On their appeal of the conviction the Philippine Supreme Court set aside the trial court's judgment, found them guilty of murder, and increased their sentences. This Court affirmed. Four Justices took the position that by appealing the assault conviction, the defendants had waived any double jeopardy claim respecting the murder charge. Mr. Justice Holmes concurred in the result without stating his rationale. Kepner had been decided in the previous year, however, and his concurrence could have indicated that, for him, a waiver theory was too narrowinstead he considered that even an appeal by the Government was a continuing jeopardy, not a second jeopardy. Of the four dissenters, two, Justices McKenna and White, would have found a violation of the Constitution's double jeopardy provision.
Acceptance of either Trono's waiver theory or Mr. Justice Holmes' broad continuing jeopardy approach would indicate that Price could not complain of his retrial for the greater offense. But Trono has not survived unscathed to the present day. The "waiver theory" of four of the majority Justices in Trono was distinguished in Green as resting on "a statutory provision against double jeopardy pertaining to the Philippine Islandsa territory just recently conquered with long-established legal procedures that were alien to the common law." 355 U.S., at 197.
[4] After Kepner and Green, the continuing jeopardy principle appears to rest on an amalgam of interestse. g., fairness to society, lack of finality, and limited waiver, among others.
[5] See People v. Jackson, 20 N.Y. 2d 440, 231 N.E.2d 722 (1967).
[6] Brief for Plaintiff in Error, No. 692, O. T. 1909, p. 2.
[7] Id., 5.
[8] Ibid.
[9] In Palko v. Connecticut, 302 U.S. 319 (1937), this Court refused to overturn a first-degree murder conviction obtained after the State had successfully appealed from a conviction of second-degree murder which was the product of a trial on first-degree murder charges. The Court ruled that federal double jeopardy standards were not applicable to the States.
Palko was overruled in Benton v. Maryland, 395 U.S. 784 (1969), where this Court determined that the double jeopardy prohibition of the Fifth Amendment should be applied to the States through the Fourteenth Amendment. Brantley and Palko were of the same genre, and Brantley necessarily shared Palko's fate in Benton.
The last of the decisions of the Georgia courts affirming the petitioner's conviction was rendered on September 24, 1968, well before Benton was decided. But Benton has fully retroactive application, see Waller v. Florida, 397 U.S. 387, 391 n. 2 (1970), and the Georgia courts' reliance on the themes of Brantley, though understandable, now has no place.
[10] There is a significant difference to an accused whether he is being tried for murder or manslaughter. He has reason for concern as to the consequences in terms of stigma as well as penalty. He must be prepared to meet not only the evidence of the prosecution and the verdict of the jury but the verdict of the community as well. | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/2474471/ | 776 F. Supp. 2d 25 (2011)
Joseph ASKEW
v.
The TRUSTEES OF THE GENERAL ASSEMBLY OF THE CHURCH OF THE LORD JESUS CHRIST OF THE APOSTOLIC FAITH, INC., et al.
Civil Action No. 09-15.
United States District Court, E.D. Pennsylvania.
March 11, 2011.
Fincourt B. Shelton, Fincourt B. Shelton and Associates, P.C., Darby, PA, Willie Pollins, Pollins Law Firm LLC, Philadelphia, PA, for Plaintiff.
Caitlin E. Oberst, Danielle Banks, Andre L. Dennis, Robin E. Watkins, Stradley Ronon Stevens & Young, Michael K. Twersky, Montgomery McCracken Walker and Rhoads LLP, Philadelphia, PA, for Defendant.
MEMORANDUM
DALZELL, District Judge.
Plaintiff Joseph Askew here asserts various claims based on allegedly improper dealings in the management of The Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc. ("Corporation"), a Pennsylvania non-profit corporation that manages the business of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith ("Church"), an unincorporated association. The *26 church complex is located at 22nd and Bainbridge Streets in Philadelphia.
Defendants[1] jointly move under Fed. R.Civ.P. 12(b)(1) to dismiss this case for lack of subject matter jurisdiction.[2] For the reasons detailed below, we shall grant defendants' motion and close the case. Askew has also moved to appoint a receiver. Because we find below that he does not have standing, we will deny that motion as moot for lack of jurisdiction.
I. Factual Background
This case has a long and winding history that we recounted in our July 21, 2009 Memorandum, 644 F. Supp. 2d 584 (E.D.Pa. 2009), and which we will revisit briefly here.
Bishop Sherrod C. Johnson founded the Church in 1919. Compl. ¶ 22; Def.'s First Joint Motion to Dismiss filed March 30, 2009, Ex. B, Church of the Lord Jesus Christ of Apostolic Faith, Inc. v. Shelton, No. 376 C.D.2000 (Apr. 10, 2001) at 2. On December 10, 1947, Bishop Johnson and other Church elders created a Pennsylvania non-profit corporation to conduct business on behalf of the Church and hold its assets. Compl. ¶ 23(I).[3].
The By-Laws of the Church provide for an annual meeting, called the General Assembly. Def. Renewed Joint Motion to Dismiss Plaintiff's Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) ("MTD"), Ex. A to Ex. 1, Art. I, Sec. 1. The General Assembly has two officers, a General Overseer (also called the General Elder, Apostle, or Bishop), and a General Secretary. Id., Art I, Sec. 2. The General Overseer is elected to a lifetime appointment by the General Assembly. Compl. ¶ 25(II). The General Overseer nominates the General Secretary for terms of one year, and the General Assembly vote to ratify the choice. MTD, Ex. A to Ex. 1, Art. VII. The By-Laws of the Church also provide that the Corporation holds title to any assets the Church acquires. Compl. ¶ 23(II), MTD, Ex. A to Ex. 1, Art. II, Sec. 2. The General Overseer is also the President of the Corporation, and only those the General Overseer authorizes can stand for election as the Corporation's Trustees. Compl. ¶ 25(II), MTD, Ex. A to Ex. 1, Art. II, Sec. 1.
On February 22, 1961, Bishop Johnson died and then-General Secretary S. McDowell Shelton succeeded him. Compl. ¶ 26. Bishop Shelton died on October 13, 1991. Id. ¶ 27. A succession crisis ensued.
Kenneth Shelton, Roddy J. Shelton, and Anthonee Patterson each claimed he had rightful control over the Church and the Corporation. Shelton, No. 376 C.D.2000, *27 at 4. Roddy Shelton was the General Secretary at the time, and, according to the By-Laws of the Church, should have succeeded Bishop Shelton as interim General Overseer until the next General Assembly. Id. at 5-6, 14-15. But some of the other Trustees disputed Roddy Shelton's succession, and prevented him from taking office. Id. at 6-7. Askew alleges that Kenneth Shelton, through threats and the use of physical force, took de facto control of both the Church and the Corporation. Compl. ¶¶ 19, 29. He avers that Kenneth Shelton and his followers physically removed Askew and others in the Roddy Shelton faction from a Church meeting held on May 23, 1992. Id. ¶ 19. Although he was removed from the property, Askew maintains that he remains a member of the Church to this day. Id.
The continuing dispute over leadership led the factions to hold separate meetings, each styled as a General Assembly, and each electing a different General Overseer. Shelton, No. 376 C.D.2000, at 8. Protracted litigation then ensued. The Philadelphia Court of Common Pleas ultimately determined, and the Commonwealth Court later affirmed, that Kenneth Shelton had been duly elected the General Overseer at the September 9, 1992 General Assembly. Id. at 9, 25.
Askew alleges that since taking control of the Church and Corporation, Kenneth Shelton and the Trustees of the Corporation have misappropriated funds, wasted assets, paid themselves salaries and stipends that are contrary to the word and spirit of the Articles and By-Laws, funded private expenditures with Corporation assets, and violated state and federal law. Compl. ¶¶ 31-38.
In our July 21, 2009 Memorandum and Order, we dismissed Counts II (Breach of Fiduciary Duty to the Corporation), IV (Issuance of Financial Statements), and V (Appointment of a Custodian) of the Complaint because Askew is not a member of the Corporation and therefore did not have standing to bring derivative claims on behalf of the Corporation. We did not consider Counts VII (Civil Conspiracy) and VIII (Constructive Trust) because those claims are only viable if plaintiff establishes one of the other claims. We denied defendants' motion to dismiss with respect to the remaining three Counts because Askew had alleged that he was a member of the Church, and defendants had presented no evidence to the contrary.
On August 18, 2009, defendants filed a Rule 12(b)(1) motion to dismiss plaintiff's complaint. On September 14, 2009, we ordered the parties to conduct standing-related discovery and denied defendants' motion to dismiss without prejudice pending the completion of that discovery. Defendants elected to file an interlocutory appeal from that Order. On June 21, 2010, our Court of Appeals dismissed the appeal for lack of jurisdiction. Askew v. Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, No. 09-3695 & 09-3696, slip. op. at 2 (3d Cir. Jun. 21, 2010). Upon learning of the Court of Appeals's Order, we adjusted the discovery schedule and afforded plaintiff the opportunity to depose the Church's General Overseer, Kenneth Shelton. Kenneth Shelton testified that he had declared many times since 1992 that Askew was not a member of the Church. MTD, Ex. 2, Dep. of Kenneth Shelton ("Shelton Dep.") at 63. Bishop Shelton also confirmed in his Declaration to the Court that Askew is not a member of the Church. Id., Ex. 1, Declaration of Bishop Kenneth Shelton at ¶ 12.
Defendants now move to dismiss the remainder of plaintiff's Complaint pursuant to Rule 12(b)(1), arguing that because Bishop Shelton is the highest judicatory *28 body of the Church, and because he has declared that Askew is not a member of the Church, Askew does not have standing to bring the remaining claims.
We turn now to address plaintiff's standing.
II. Analysis
A court must dismiss a complaint if it lacks subject matter jurisdiction over the claims because without subject matter jurisdiction the court does not have the power to hear the case. Fed.R.Civ.P. 12(b)(1); Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977). Indeed, because subject matter jurisdiction is so central to a court's authority, a court can raise issues of subject matter jurisdiction sua sponte at any time. Fed.R.Civ.P. 12(h)(3).
Challenges to subject matter jurisdiction may be facial or factual. Mortensen, 549 F.2d at 891. The former proceeds like a motion under Rule 12(b)(6), where a court accepts the allegations in the complaint as true. Id. In the latter, a court is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id. It is well settled that standing cannot be "inferred argumentatively from averments in the pleadings," Grace v. Am. Cent. Ins. Co., 109 U.S. 278, 284, 3 S. Ct. 207, 27 L. Ed. 932 (1883), but rather must affirmatively appear in the record. Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S. Ct. 510, 28 L. Ed. 462 (1884). Here, we must determine whether there is affirmative evidence in the record that supports plaintiff's standing to sue these defendants. Because defendants present factual evidence of Askew's lack of standing, we will treat this motion accordingly.
As defendants' motion constitutes a factual challenge, the burden shifts to Askew to prove that subject matter jurisdiction exists. We will thus weigh the jurisdictional evidence. In reviewing a factual challenge to a Court's subject matter jurisdiction, the Court is not confined to the allegations in the Complaint. Instead, we may look beyond the Complaint to the evidence presented to determine whether we indeed have such jurisdiction. Gotha v. United States, 115 F.3d 176, 179 (3d Cir.1997) (noting that "the court [is] not confined to allegations in the plaintiff's complaint, but [can] consider affidavits, depositions, and testimony to resolve factual issues bearing on jurisdiction"); Turicentro, S.A. v. American Airlines Inc., 303 F.3d 293, 300 n. 4 (3d Cir.2002).
As we stated in our July 21, 2009 Order, the plaintiff's burden to show standing is a continuing one. "Each element of standing must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e. with the manner and degree of evidence required at the successive stages of litigation." Doe v. Nat'l Bd. of Med. Examiners, 199 F.3d 146, 152-53 (3d Cir.1999) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992)).
A party must establish the three elements of Article III standing at an "irreducible constitutional minimum." Lujan, 504 U.S. at 560, 112 S. Ct. 2130. First, the plaintiff must have suffered an "injury in fact," which is an invasion of a legally protected interest that is (a) concrete and particularized, and (b) "actual or imminent," not "conjectural" or "hypothetical." Id. (quoting Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S. Ct. 1717, 109 L. Ed. 2d 135 (1990)). Second, there must be a causal connection between the injury and the conduct complained ofthat is, the injury must be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third *29 party not before the court. Id. "Third, it must be `likely,' as opposed to merely `speculative,' that the injury will be `redressed by a favorable decision.'" Id. at 561, 112 S. Ct. 2130 (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 43, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976)).
"The party invoking federal jurisdiction bears the burden of establishing these elements." Id. (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990); Warth v. Seldin, 422 U.S. 490, 508, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975)). The elements of standing are essential to the plaintiff's case, and therefore must be proven in accordance with the standards required in each successive stage of the proceeding. Id. Additionally, when seeking injunctive relief the plaintiff's burden is not satisfied by proving the occurrence of prior illegal acts, but must include proof of continuing violations. Id. at 564, 112 S. Ct. 2130 (quoting Los Angeles v. Lyons, 461 U.S. 95, 102, 103 S. Ct. 1660, 75 L. Ed. 2d 675 (1983)).
Defendants contend that Askew cannot show that he suffered an injury-in-fact because he is not a member of the Church. As we noted in our July 21, 2009 Order, without Church membership Askew would not be part of the beneficiary class for which the Corporation holds its assets in trust, and thus could not suffer injury when the Corporation's assets are misused. Defendants also argue that the First Amendment bars us from questioning the internal process by which Bishop Shelton revoked Askew's membership. MTD at 31. Plaintiff claims that he is a member because he pays tithes and attends a branch of the Church. Pl. Resp. at 5.
A. The First Amendment
As we stated in our previous Memorandum, under the First Amendment civil courts may not entangle themselves in the internal workings and doctrines of religious organizations. This rule was first established in Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871). Watson held that civil courts are capable of resolving property disputes involving religious organizations or bodies within such organizations and "the rights of such bodies to the use of the property must be determined by the ordinary principles which govern voluntary associations; if the church had always governed itself by majority rule, for example, the majority faction would prevail." Scotts African Union Methodist Protestant Church v. Conference of African Union First Colored Methodist Protestant Church, 98 F.3d 78, 86-87 (3d Cir.1996) (quoting Watson, 80 U.S. at 725) (internal quotations omitted). But the courts' capacity to adjudicate such disputes has limits: "whenever the questions of discipline, or of faith, or ecclesiastical rule, custom, or law have been decided by the highest of these church judicatories... legal tribunals must accept such decisions as final, and as binding on them." Watson, 80 U.S. at 727.
As we noted before, that rule of deference has since gained explicit First Amendment footing. See, e.g., Gonzalez v. Roman Catholic Archbishop, 280 U.S. 1, 16, 50 S. Ct. 5, 74 L. Ed. 131 (1929) ("the decisions of the proper church tribunals on matters purely ecclesiastical, although affecting civil rights, are accepted in litigation before the secular courts as conclusive"); Kedroff v. Saint Nicholas Cathedral, 344 U.S. 94, 120-21, 73 S. Ct. 143, 97 L. Ed. 120 (1952) ("in those cases when the property right follows as an incident from decisions of the church custom or law on ecclesiastical issues, the church rule controls"); Serbian Eastern Orthodox Diocese for the United States and Canada v. Milivojevich, 426 U.S. 696, 709, 96 S.Ct. *30 2372, 49 L. Ed. 2d 151 (1976) ("where resolution of the disputes cannot be made without extensive inquiry by civil courts into religious law and polity, the First and Fourteenth Amendments mandate that civil courts shall not disturb the decisions of the highest ecclesiastical tribunal within a church of hierarchical polity").[4] In Milivojevich, the Supreme Court held that there was no "dispute that questions of church discipline and the composition of the church hierarchy are at the core of ecclesiastic concern." Id. at 717, 96 S. Ct. 2372. The Supreme Court also held in Milivojevich that the Free Exercise Clause "permit[ted] hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters... the Constitution requires that civil courts accept their decisions as binding upon them." Id. at 724-25, 96 S. Ct. 2372.
The Pennsylvania Supreme Court in The Presbytery of Beaver-Butler of the United Presbyterian Church in the United States v. Middlesex Presbyterian Church, 507 Pa. 255, 489 A.2d 1317 (1985), also accepted that when it came to questions about doctrine or internal church governance, Pennsylvania courts, like all American courts, must accept the determinations of the highest church tribunals as binding fact. Id. at 1320.
The Watson-Gonzalez-Milivojevich rule applies once the record establishes that the relevant factual disputes can only be resolved by doctrinal determinations. Then, the courts accept the factual determinations of the church and try to resolve the ultimate questions underlying the legal dispute with neutral principles of law, if possible. See, e.g., Poesnecker v. Ricchio, 158 Pa.Cmwlth. 459, 631 A.2d 1097 (1993), cert. denied 513 U.S. 1079, 115 S. Ct. 727, 130 L. Ed. 2d 632 (1995) (applying rules of religious fraternal organization to determine whether individuals had been duly elected, and deferring only to actual, valid determinations made by the organizations' authorities); Shelton, No. 376 C.D.2000 (determining when particular actions were valid church actions and accepting those actions as a factual finding). If the question at hand is a purely doctrinal one upon which the highest Church body has already decided, we cannot overturn that decision.
B. Church Membership is an Ecclesiastical Matter
Defendants argue that these First Amendment principles divest us of power to hear this case. They present evidence that Kenneth Shelton is the highest judicatory body in the Church and that he has ruled that Askew is not a member of the Church. Plaintiff contends that he is a member of the Church and has been since he was a child.
As our Brother Judge O'Neill has noted, a dispute over membership in a church constitutes a core ecclesiastical matter. Gundlach v. Swain, 1996 WL 24748, at *4 (E.D.Pa. Jan. 24, 1996), aff'd, 91 F.3d 123 (3d Cir.1996) ("like any other *31 controversy over internal ecclesiastical discipline, polity, authority or governance, a dispute over the propriety of a member's `expulsion from a religious society ... is not a harm for which courts can grant a remedy'"); Grunwald v. Bornfreund, 696 F. Supp. 838, 840-41 (E.D.N.Y.1988); see also Dowd v. Society of St. Columbans, 861 F.2d 761, 764 (1st Cir.1988); Burgess v. Rock Creek Baptist Church, 734 F. Supp. 30, 33 (D.D.C.1990); Nunn v. Black, 506 F. Supp. 444, 448 (W.D.Va.), aff'd, 661 F.2d 925 (4th Cir.1981), cert. denied, 454 U.S. 1146, 102 S. Ct. 1008, 71 L. Ed. 2d 299 (1982); Atterberry v. Smith, 104 Pa. Cmwlth. 550, 522 A.2d 683, 686 (1987); Canovaro v. Brothers of the Order of Hermits of St. Augustine, 326 Pa. 76, 191 A. 140, 145 (1937). The Supreme Court of Pennsylvania has also held that "[c]hurch membership is an ecclesiastical matter, not temporal. There is no property right in membership, and there could be no property rights in lay members except through their membership in the congregation." Canovaro, 191 A. at 145.
The Commonwealth Court of Pennsylvania affirmed on April 10, 2001 that a majority of those present and voting validly elected Kenneth Shelton as the Bishop and General Overseer of the Church at the General Assembly held in September of 1992. Shelton, 376 C.D.2000, at 25. Askew does not dispute this holding. Instead, he claims that he is a member of a minority faction of the Church that follows Roddy Shelton and that "a member of a faction of a church is no less a member than any other." Pl. Resp. at 7.
But the By-Laws of the Church specifically provide that the "General Overseer has the right to remove any ... member of The Church from ... membership without accusation or trial if he may deem it necessary for the good of the Church of the Lord Jesus Christ of the Apostolic Faith." MTD, Ex. A to Ex. 1, Art. V, Sec. 9. Kenneth Shelton testified during his deposition on September 29, 2010 that, "I declared Mr. Askew not to be a member after it was clear, in his own statement, as I recall, that he left and affiliated himself with Roddy Nelson, and for the good of the church, I deemed him not to be a member." Shelton Dep. at 63. Kenneth Shelton also testified that he had declared Askew not to be a member many times after 1992, and that once he declares someone to be a non-member there is no appeal from that decision. Id. at 27-28, 64.
Defendants also present evidence in the form of the deposition of Church member John R. Brown, who testified that Kenneth Shelton is the General Overseer of the Church and that he is the highest adjudicatory body of the Church. Deposition of John R. Brown ("Brown Dep.") at 81, 94, 98.
Askew presents no evidence to dispute the fact that Bishop Shelton "deemed it necessary" to revoke Askew's membership. And even if he did present such evidence, this is the very type of inquiry that is beyond the scope of our jurisdiction given the First Amendment's limitations on us. Instead, Askew argues that Kenneth Shelton did not declare him to be a non-member until after Askew filed his Complaint here in January of 2009. Pl. Resp. at 7-14. Askew intimates that the fact that he was declared a non-member after the start of this lawsuit is somehow illegal or not worthy of evidentiary weight, but he fails to cite any caselaw in support of this point. At worst, he claims that the August 18, 2009 Declaration of Kenneth Shelton is "highly suspect" and leaves it at that. Pl. Resp. at 10.
Askew contends that defendants' evidence of his lack of membership is inadequate, but here plaintiff confuses the burden of proof. Plaintiff's burden is to prove *32 through affirmative evidence that he is a member of the Church, and in this he fails. Defendants have presented proof that Kenneth Shelton is the General Overseer of the Church, that the General Overseer has the absolute power to declare someone a non-member, and that Kenneth Shelton has, in fact, declared Askew to be a non-member.
Askew claims that he pays tithesalthough those tithes go to a church in Glen Burnie, Maryland, not to the one at 22nd and Bainbridge Streets. Deposition of Joseph Askew ("Askew Dep.") at 29. He also asserts that he attends church, but he admits he has not been back to the Church at 22nd and Bainbridge Streets since 1992. Id. at 24. Instead, he attends different churches in Glen Burnie and Darby, Pennsylvania. Id. at 10. He also acknowledges that he is loyal to Roddy Nelson Shelton, not to Kenneth Shelton. Id. at 23.
To be sure, Askew has testified that he is a member of the Church. Askew Dep. at 24. But Pennsylvania courts have held that an individual may not confer standing upon himself through his mere subjective belief that he is a member of a church. See Croatian Roman Catholic Congregation v. Wuerl, 447 Pa.Super. 208, 668 A.2d 1151, 1152 (1995) (acknowledging the parishioners' devotion, but noting that "[t]hat devotion ... can neither confer upon the civil courts jurisdiction over an ecclesiastical matter nor cloak appellants in these cases with standing where none exists"). Ultimately, Askew presents no evidence that confirms that he is a member of the Church. And even if Askew was not declared a non-member until after this suit had been filed, he has not explained why he would continue to have standing in this lawsuit despite that fact.
Because Bishop Shelton has declared Askew not to be a member of the Church, and because we cannot delve into the internal, ecclesiastical decisions of the highest judicatory body of the Church, our inquiry must end here lest we traipse beyond where the First Amendment allows us to go. Askew is not a member of the Church and therefore does not have standing to pursue his claims.
III. Conclusion
Askew having failed to present evidence that confirms his standing in this matter, he does not have standing to pursue his claims in this Court. We will therefore grant defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1). Because Askew does not have standing, we will also deny as moot his motion for the appointment of a receiver.
ORDER
AND NOW, this 11th day of March, 2011, upon consideration of plaintiff's motion to appoint receiver (docket entry # 44), defendants' response (docket entry # 47), defendants' motion to dismiss for lack of jurisdiction pursuant to Fed. R.Civ.P. 12(b)(1) (docket entry # 49), plaintiff's response (docket entry # 50), defendants' motion for leave to file a joint reply (docket entry # 51), plaintiff's response to defendants' motion to file a joint reply (docket entry # 52), and in accordance with the foregoing Memorandum, it is hereby ORDERED that:
1. Defendants' motion to dismiss for lack of jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) (docket entry # 49) is GRANTED;
2. Defendants' motion to file a joint reply (docket entry # 51) is GRANTED;
3. The Clerk of Court shall DOCKET defendants' reply, which is attached to their motion at Exhibit A;
*33 4. Plaintiff's motion to appoint receiver (docket entry # 44) is DENIED AS MOOT; and
5. The Clerk of Court shall CLOSE this case statistically.
NOTES
[1] The defendants are (1) the Corporation, (2) Kenneth Shelton, the head of the Church and the Corporation's President, (3) John Carlton Thomas, the Corporation's Chief Administrator, Johnny Ray Brown, the Corporation's General Counsel and a trustee, (5)-(7) trustees Anthony Lamb, James Henry Brown, and Erik Shelton, and (8)-(10) Mary Thomas, Mrs. Johnny Ray Brown, and Donna Shelton, who the plaintiff describes as a "constructive trustee[s] by virtue of possession of property both real and personal that was acquired with misappropriated and stolen funds." Compl. ¶¶ 2-14.
[2] Plaintiff objects to what he deems the "late" filing of defendants' 12(b)(1) motion to dismiss. In our September 10, 2010 Order, we modified our September 14, 2009 Order and directed defendants to answer or otherwise respond to the Complaint by October 15, 2010. Defendants filed an Amended Answer on October 15, 2010, and sent the Court a letter indicating that they would file a 12(b)(1) motion to dismiss by October 25, 2010. Because a 12(b)(1) motion may be filed at any time, we will consider defendants' motion.
[3] The complaint is misnumbered, repeating ¶¶ 23-25. To differentiate this duplication, we put a(I) after the first instance of the paragraph and a(II) after the second.
[4] This is by no means the only strand in the Supreme Court's jurisprudence. Another line of cases establishes what is known as the "neutral principles" doctrine, i.e., that civil courts may resolve intrachurch property disputes that are amenable to the application of neutral principles of law. Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 449, 89 S. Ct. 601, 21 L. Ed. 2d 658 (1969). Since Mary Elizabeth Blue Hull, the Supreme Court has firmly established that the First Amendment does not prohibit civil courts from resolving property disputes to which only neutral principles of law apply. Jones v. Wolf, 443 U.S. 595, 603, 99 S. Ct. 3020, 61 L. Ed. 2d 775 (1979). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1433873/ | 557 F.3d 1049 (2009)
Bruce W. CHRISTENSEN, Petitioner,
v.
STEVEDORING SERVICES OF AMERICA; Homeport Insurance Company; and Director, Office of Workers' Compensation Programs, Respondents.
Arel Price, Petitioner,
v.
Stevedoring Services of America; Homeport Insurance Company; Eagle Pacific Insurance Company; and Director, Office of Workers' Compensation Programs, Respondents.
Nos. 07-70247, 07-70297.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted November 17, 2008.
Filed March 2, 2009.
*1051 Charles Robinowitz, Portland, OR; Joshua T. Gillelan II (argued), Longshore Claimants' National Law Center, Washington, D.C., for the petitioners-appellants.
John Dudrey, Williams Fredrickson, LLC, Portland, OR, for the respondents-appellees.
Before: W. FLETCHER and RAYMOND C. FISHER, Circuit Judges, and JOHN M. ROLL, Chief District Judge.[*]
ROLL, Chief District Judge:
This is a consolidated appeal from awards of attorney's fees by the Benefits Review Board of the United States Department of Labor ("BRB"). Petitioners Christensen and Price appeal the amount of attorney's fees awarded to them by the BRB under the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901-950. We have jurisdiction under 33 U.S.C. § 921(c), and we vacate and remand.
Background
Christensen, Appeal No. 07-70247
On February 12, 2004, with an appeal still pending, Petitioner Bruce W. Christensen's attorney, Charles Robinowitz, filed an affidavit of attorney's feesfor work done on the fee appeal to the BRB onlyrequesting an hourly rate of $250 per hour for his services. The BRB awarded Robinowitz his requested hourly rate.
Thereafter, on April 13, 2006, Robinowitz filed an "Amended Affidavit of Attorney Fees," requesting an increased rate of $350 per hour. On July 25, 2006, the BRB issued an order, stating that "an hourly rate of $250 remains appropriate in this geographic region and adequately compensates counsel for the delay in payment of the previously awarded attorney's fee."
Robinowitz then filed a Motion for Reconsideration, to which he attached a copy of the Morones Survey of 2004 showing the average hourly rates at that time for commercial litigation attorneys in Portland, Oregon; a copy of the Laffey Matrix,[1] which supported an hourly rate in the range of $405 to $425 per hour; and copies of federal personnel pay rates for Washington, D.C., and Portland, Oregon, to aid the BRB in interpreting the Laffey Matrix.
On November 17, 2006, the BRB issued an order denying Robinowitz's Motion for Reconsideration, rejecting counsel's assertions and finding that the fee awarded was in compliance with 20 C.F.R. § 802.203(d)(4).
Price, Appeal No. 07-70297
On May 30, 2002, Robinowitz, representing Petitioner Arel Price, filed an affidavit *1052 of attorney's fees with the BRB, requesting fees of $237.50 per hour. The BRB refrained from granting his fee petition because the case was, at that time, pending on appeal, but stated that Robinowitz could re-file a petition for fees if his appeal before the Ninth Circuit was successful.
On June 5, 2006, following a favorable result from the Ninth Circuit, Robinowitz filed a "Third Supplemental Affidavit of Attorney Fees" with the BRB. Therein, Robinowitz requested an increased rate of $350 per hour, citing much of the same support contained in his Christensen affidavits, including the Laffey matrix. The BRB's July 26, 2006 order on the requested fees stated that a rate of $250 was appropriate in the geographic region and adequately compensated counsel for the delay in payment of the attorney's fee. Robinowitz's motion for reconsideration was denied by the BRB on November 30, 2006.
Standard of Review
This court reviews the BRB's decisions for abuse of discretion. Welch v. Metro. Life Ins. Co., 480 F.3d 942, 945 (9th Cir.2007). The BRB "is not a policymaking agency," so "its interpretation of the LHWCA is not entitled to any special deference." McDonald v. Dir., OWCP, 897 F.2d 1510, 1512 (9th Cir.1990). Nevertheless, "the court must ... respect the Board's interpretation of the statute where such interpretation is reasonable and reflects the policy underlying the statute." Id.[2]
Discussion
This case involves application of § 928(a) of the LHWCA, which provides for a "reasonable attorney's fee," and 20 C.F.R. § 802.203, which implements § 928(a) in regard to services performed before the Benefits Review Board.[3] The definition of a "reasonable attorney's fee" pursuant to § 928(a) has evolved toward the definition of "reasonable" used in all federal fee-shifting statutes. See City of Burlington v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 120 L. Ed. 2d 449 (1992); Anderson v. Dir., OWCP, 91 F.3d 1322, 1324 (9th Cir.1996); Nelson v. Stevedoring Servs. of America, 29 B.R.B.S. 90, 97 (1995).
*1053 The "lodestar method" is the fundamental starting point in determining a "reasonable attorney's fee," see Dague, 505 U.S. at 562, 112 S. Ct. 2638 ("lodestar" is the "guiding light of [the Court's] fee-shifting jurisprudence"), and this is true as to computation of attorney's fees under § 928(a) of the LHWCA.[4]See Tahara v. Matson Terminals, Inc., 511 F.3d 950, 955 (9th Cir.2007). Various other factors have been held relevant to the setting of appropriate attorney's fees, including: (1) the time and labor required; (2) the novelty and difficulty of the issues; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) time limitations imposed by the client or the circumstances; (7) the amount involved and the results obtained; (8) the experience, reputation and ability of the attorneys; (9) the "undesirability" of the case; (10) the nature and length of the professional relationship with the client; and (11) awards in similar cases. Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 n. 2 (9th Cir.2000).
In Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984), the Supreme Court held that "reasonable fees" in 42 U.S.C. § 1988 claims "are to be calculated according to the prevailing market rates in the relevant community." Id. at 895, 104 S. Ct. 1541. The Court further held that "the burden is on the fee applicant to produce satisfactory evidencein addition to the attorney's own affidavits that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." 465 U.S. at 896 n. 11, 104 S. Ct. 1541; see also Bell v. Clackamas County, 341 F.3d 858, 868 (9th Cir.2003) ("A court awarding attorney fees must look to the prevailing market rates in the relevant community." (citing Blum, 465 U.S. at 895, 104 S. Ct. 1541)).
Relevant Community
Recently, in Camacho v. Bridgeport Financial, Inc., 523 F.3d 973 (9th Cir.2008), this Court vacated and remanded an award of attorney's fees in a Fair Debt Collection Practices Act ("FDCPA") action, because, among other reasons, the district court failed to make findings regarding what constituted the "relevant community" or the appropriate market rate. Id. at 979-80.
The relevant community is generally defined as "the forum in which the district court sits." Id. at 979 (citing Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir.1997)). In Newport News Shipbuilding & Dry Dock Co. v. Brown, 376 F.3d 245 (4th Cir.2004), the Fourth Circuit defined "relevant community," specifically for purposes of LHWCA cases, by looking solely to what other administrative law judges and the BRB awarded in other LHWCA cases in the same geographic region. See id. at 251. Such a limited definition of "relevant community" is problematic, however, in light of the fact that there is no private market for attorney's fees under the LHWCA. Indeed, LHWCA attorneys face criminal penalties for negotiating or entering into private fee agreements with their clients. See 33 U.S.C. § 928(e). We stated in Camacho that "`[i]n order to encourage able counsel to undertake FDCPA cases, as Congress intended, it is necessary that counsel be awarded fees commensurate with those which they could obtain by taking other types of cases.'" *1054 Camacho, 523 F.3d at 981 (quoting Tolentino v. Friedman, 46 F.3d 645, 652 (7th Cir.1995)). We believe the concern expressed in Camacho with respect to fees under the FDCPA is equally applicable to fees under the LHWCA.
Market Rate
Petitioners also argue that the BRB should not be allowed to define "prevailing market rate" in such a way as to define the "market" only in terms of what has been awarded by ALJs and the BRB under the LHWCA. This is a legitimate point. In Student Pub. Interest Research Group of N.J. v. AT & T Bell Laboratories, 842 F.2d 1436, 1446 (3d Cir.1988), in the context of public interest work fees, the Third Circuit appropriately articulated the flaw inherent in the attempt to define a "market" by simply looking to what other judges award:
Courts that try to establish public interest market rates by looking to the going rate for public interest work therefore do not examine an independently operating market governed by supply and demand, but rather recast fee awards made by previous courts into "market" rates. Courts adopting this micro-market approach, therefore, engage in a tautological, self-referential enterprise. They perpetuate a court-established rate as a "market" when that rate in fact bears no necessary relationship to the underlying purpose of relying on the marketplace: to calculate a reasonable fee sufficient to attract competent counsel.
Dague unambiguously states that the Supreme Court's caselaw concerning what constitutes a reasonable fee applies to all federal fee-shifting statutes, including the LHWCA. Blum requires the BRB to consider the relevant market rate when it awards attorney's fees.[5]
In Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir.2008), this court found unreasonable a district court's award of attorney's fees pursuant to 42 U.S.C. § 1988, because the district court had applied "what appear[ed] to be a de facto policy of awarding a rate of $250 per hour to civil rights cases," id. at 1115, stating that a de facto policy of "holding the line" at a flat rate does not constitute an appropriate determination of a "market rate."
Inadequacy of Basis for Review
The July 25, 2006 order issued by the BRB in Christensen simply states that "an hourly rate of $250 remains appropriate in this geographic region," citing 20 C.F.R. § 802.203(d)(4), and Anderson. The November 17, 2006 order on Christensen's Motion for Reconsideration similarly lacks elaboration, stating only that "the fee awarded by the Board is in compliance with the regulation at 20 C.F.R. § 802.203(d)(4)," citing Bell v. Clackamas County and Anderson.
Likewise, the July 26, 2006 order issued in Price makes only the conclusory assertions *1055 that "[b]oth carriers object to the requested hourly rate of $275," that the BRB "agree[s] that this rate is excessive in the geographic area in which the services were performed," and that it "find[s] that a current hourly rate of $250 is appropriate in this geographic region and adequately compensates counsel for the delay in payment of the attorney's fee." The BRB's order cites 20 C.F.R. § 802.203(d)(4) and Anderson, but fails to explain how this regulation and case support the BRB's conclusory findings. The November 30, 2006 order on Price's Motion for Reconsideration is equally conclusory, stating only that "this Circuit does not follow the legal standard set forth in the Laffey Matrix," and that a $250 hourly rate for Portland, Oregon is "appropriate" for the "geographic region." It is axiomatic that "the [BRB] must adequately justify those awards so as to allow for meaningful review." Finnegan v. Dir., OWCP, 69 F.3d 1039, 1041 (9th Cir.1995).
On the record presented in these two cases, the BRB has not adequately justified its award. To satisfy the concerns expressed in Student Public Interest Research Group, the BRB must define the relevant community more broadly than simply fee awards under the LHWCA, and it has not done so. We do not here attempt to dictate to the BRB either what that relevant community should be or what a reasonable hourly rate in that community should be. Nor do we insist that in every fee award decision the BRB must make new determinations of the relevant community and the reasonable hourly rate. But the BRB must make such determinations with sufficient frequency that it can be confidentand we can be confident in reviewing its decisionsthat its fee awards are based on current rather than merely historical market conditions.
Blum, of course, places the burden on the fee applicant to produce evidence of the relevant market and the rate charged in that market. In cases in which the applicant has failed to carry this burden, it may be reasonable for the BRB to look at what ALJs and the BRB had awarded in other LHWCA cases in order to ascertain a reasonable fee. See Brown, 376 F.3d at 251. But if the BRB believes that an applicant has failed to carry its burden, it should say why the applicant has failed to do so. Such an explanation will be useful in two ways. First, if the reasons given by the BRB would not have been anticipated by a reasonable fee applicant, it may be appropriate for the BRB to allow an applicant to cure its failure to carry the burden. Second, an explanation will enable this court properly to review the decision of the BRB.
Delay Enhancement
Petitioners also contend that the BRB was required to enhance the fee awards below based upon the delay in payment. Petitioners argue that the BRB erred in not enhancing the awards of attorney's fees to account for a two-year delay in payment. Respondents argue that the BRB properly considered delay in both claims, but that the delay was not enough to warrant augmenting the fees.
In Missouri v. Jenkins, 491 U.S. 274, 284, 109 S. Ct. 2463, 105 L. Ed. 2d 229 (1989), the Supreme Court held that, pursuant to the Civil Rights Act's[6] fee-shifting provisions, "[a]n adjustment for delay in payment is ... an appropriate factor in the determination of what constitutes a reasonable attorney's fee." In Anderson v. Director, OWCP, 91 F.3d 1322 (9th Cir. 1996), which reviewed an attorney's fee award granted by the BRB, this court *1056 articulated the standard regarding adjustments for delays in payment as follows:
[A]ttorney's fees `are to be based on market rates' and such rates are based on the assumption that bills will be paid reasonably promptly; delays in payment thus deprive successful litigants of the market rates. To make up the difference, losses from delay can be compensated `by the application of current rather than historic hourly rates or otherwise.' Thus ... there may be some adjustment for the delay, but the method of adjustment is somewhat discretionary; it does not necessarily call for payment of the lawyer's current hourly rate.
Id. at 1324 (citations omitted).
The BRB has recognized that "Jenkins and Dague ... changed the fee-shifting landscape ... so that LHWCA cases may not be given special treatment," and thus "a delay enhancement is ... appropriate under the Act." Anderson, 91 F.3d at 1324 (citing Nelson, 29 B.R.B.S. at 97). In Nelson, the BRB held that it was an abuse of discretion to fail to award a delay enhancement when there had been a delay of eleven years. In Anderson, which involved a fourteen year delay, this court found the delay was "even more egregious than in Nelson where the BRB approved an award of current rates," and ordered the OWCP to award Anderson "attorney fees at his current hourly rates." Id. at 1325.[7]
In Anderson, we stated that, "where the question of delay is timely raised, the body awarding the fee must consider this factor." Anderson, 91 F.3d at 1325 n. 2 (citing Nelson, 29 B.R.B.S. at 97) (emphasis added). The two-year delay complained of by Petitioners is not so egregious or extraordinary as to require a delay enhancement. Clearly the BRB in both casesconsidered the issue of delay, but declined to view the delay as long enough to merit augmentation. This was not an abuse of discretion.
CONCLUSION
On remand the BRB should re-evaluate its decisions and orders awarding attorney's fees in light of today's opinion. The BRB is directed to make appropriate findings regarding the relevant community and the prevailing market rate, but is not required to award a delay enhancement.
VACATED AND REMANDED.
NOTES
[*] The Honorable John M. Roll, Chief United States District Judge for the District of Arizona, sitting by designation.
[1] This matrix derives from the hourly rates allowed by the district court in Laffey v. Northwest Airlines, Inc., 572 F. Supp. 354 (D.D.C.1983), aff'd in part, rev'd in part on other grounds, 746 F.2d 4 (D.C.Cir.1984), cert. denied, 472 U.S. 1021, 105 S. Ct. 3488, 87 L. Ed. 2d 622 (1985).
[2] This is a different level of deference than that accorded to the OWCP Director. The OWCP Director's interpretation of the LHWCA is afforded "considerable weight" by this Court. McDonald, 897 F.2d at 1512.
[3] 20 C.F.R. § 802.203 states that the "rate awarded by the Board shall be based on what is reasonable and customary in the area where the services were rendered for a person of that particular professional status," and that the
fee approved shall be reasonably commensurate with the necessary work done and shall take into account the quality of the representation, the complexity of the legal issues involved, the amount of benefits awarded, and, when the fee is to be assessed against the claimant, shall also take into account the financial circumstances of the claimant. A fee shall not necessarily be computed by multiplying time devoted to work by an hourly rate.
20 C.F.R. § 802.203(d)-(e). The regulation further mandates that "[n]o contract pertaining to the amount of a fee shall be recognized." § 802.203(f). 20 C.F.R. § 802.203(e)-(f) is specific to the Benefits Review Board but mirrors, with one exception, 20 C.F.R. § 702.132(a), which pertains to all entities that award attorney's fees under the LHWCA. The difference between § 802.203(e)-(f) and § 702.132(a) is an additional sentence specific to § 802.203(e), which states that "[a] fee shall not necessarily be computed by multiplying time devoted to work by an hourly rate." Here, the BRB's decisions in both cases reveal that the BRB computed the reasonable fee by multiplying the hours submitted by an hourly rate, consistent with the so-called "lodestar method." See infra n.4.
[4] This method "requires the court to multiply the number of hours reasonably expended on the litigation by a reasonable hourly rate." Tahara v. Matson Terminals, Inc., 511 F.3d 950, 955 (9th Cir.2007).
[5] We need not reach the issue regarding the extent to which §§ 702.132 and 802.203 are entitled to Chevron deference by this panel. See United States v. Mead Corp., 533 U.S. 218, 227, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001) (acknowledging that when Congress expressly delegates authority to an agency, any "ensuing regulation is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute" (citing Chevron, USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984))). We note, however, that neither § 702.132(a) nor § 802.203(d)-(f) is inconsistent with the lodestar/multiplier methodology set forth in cases such as Van Gerwen. Sections 702.132(a) and 802.203(d)-(e) each specifically set forth at least four of the eleven factors listed in Van Gerwen, and nowhere in §§ 702.132(a) or 802.203(d)-(e) is an entity forbidden from considering other factors not explicitly listed within the text of these regulations.
[6] 42 U.S.C. § 1988.
[7] In contrast, the panel in Barjon v. Dalton, 132 F.3d 496 (9th Cir.1997), denied a delay enhancement for both a seventeen-month delay of $11,523.40 in fees and a fourteen-month delay of $8,154.97 in fees. Id. at 503. Barjon involved a civil rights complaint brought by federal employees against the Secretary of the Navy. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1483750/ | 508 F. Supp. 891 (1981)
Steven SHIELDS, Plaintiff,
v.
MI RYUNG CONSTRUCTION COMPANY, Suwaiket-Miryung Construction Co., Ltd., Bechtel International Incorporated and Bechtel-Arabia, Ltd., Defendants.
No. 79 Civ. 6128 (JMC).
United States District Court, S. D. New York.
February 24, 1981.
*892 Stults, Marshall & Gabler, New York City (S. Pitkin Marshall, Kathryn Gabler, New York City, of counsel), for plaintiff.
Coudert Brothers, New York City (Mark D. Lebow, Jerry L. Siegel, Lynne M. Barry, New York City, of counsel), for defendant Miryung Const. Co.
MEMORANDUM AND ORDER
CANNELLA, District Judge:
Motion by defendant Miryung Construction Co.[1] to dismiss the complaint on the ground of forum non conveniens is granted on the conditions stated in this Memorandum and Order.[2]
FACTS
Plaintiff, a resident of Arizona, brings this diversity action for breach of contract, breach of fiduciary duty and fraud against Miryung Construction Co. ["Miryung"], a South Korean corporation doing business in Saudi Arabia and New York, Suwaiket-Miryung Construction Co., Ltd. ["Suwaiket-Miryung"] and Bechtel-Arabia Ltd. ["Bechtel-Arabia"], both Saudi Arabian corporations, and Bechtel International Inc. ["Bechtel"], a Delaware corporation doing business in Saudi Arabia. Plaintiff alleges that Miryung was interested in bidding on certain government-sponsored construction *893 projects at Riyadh International Airport in the Kingdom of Saudi Arabia, and that to become qualified to make such a bid under Saudi law, Miryung formed a joint venture with A.M. Al Suwaiket, a citizen and resident of Saudi Arabia. The joint venture, in which plaintiff apparently had no ownership interest, was incorporated as Suwaiket-Miryung on April 2, 1978. Bechtel and Bechtel-Arabia served as construction managers at Riyadh Airport and in that capacity solicited bids and awarded construction contracts on behalf of the Government.
Plaintiff, who lived and worked in Saudi Arabia from 1973 to 1979, was an employee of and joint venturer with Mr. Al Suwaiket during his last two years there. Plaintiff claims to have used his personal contacts and specialized knowledge of Saudi bidding practices to secure for Suwaiket-Miryung the opportunity to bid on projects at the airport. He further alleges that, pursuant to an agreement entered into on March 10, 1978 between Miryung and Mr. Al Suwaiket, he had a participatory interest in the profits of Suwaiket-Miryung based on his and Mr. Al Suwaiket's efforts on behalf of the joint venture. The essence of plaintiff's claims for relief is that Miryung conspired with Bechtel, Bechtel-Arabia and a member of the Saudi Arabian royal family, who is not named as a defendant, to circumvent the March 10, 1978 agreement and deprive plaintiff and Mr. Al Suwaiket of compensation earned thereunder. Plaintiff contends that Miryung, which was not qualified to bid, fraudulently used the address of Suwaiket-Miryung to bid on certain projects at the airport. As a result, plaintiff claims that Bechtel and Bechtel-Arabia awarded three construction projects to Miryung, for which compensation was payable under the March 10 agreement, but that Miryung refused to make payment.
The parties do not dispute that all the events at issue took place in Saudi Arabia and that, except for plaintiff, all witnesses, documents and interested persons are located in Saudi Arabia. For that reason, Miryung has moved to dismiss on the ground of forum non conveniens. Plaintiff opposes that motion, essentially because an adequate alternative forum for this lawsuit purportedly does not exist elsewhere.
DISCUSSION
Under the common law doctrine of forum non conveniens, a court may dismiss an action, even though it has jurisdiction and venue is proper, if, in its discretion, the court determines that justice and convenience warrant dismissal. In Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S. Ct. 839, 843, 91 L. Ed. 1055 (1946), the Supreme Court set forth the factors a court must consider in deciding whether to invoke the doctrine. These factors require an evaluation of both the private interests of the litigants and the public interest in not burdening the limited judicial resources of a forum that has, at best, a tenuous connection to the controversy. In addition, the doctrine requires that there be an adequate alternative forum for suit, which presents obvious problems when the proposed alternative forum is a foreign country. Id. at 506-07, 67 S.Ct. at 842; Calavo Growers v. Generali Belgium, 632 F.2d 963, 968 (2d Cir. 1980).
The private interest factors include: (1) the ease of access to proof; (2) the availability of compulsory process; (3) the costs of obtaining attendance of willing witnesses; (4) the enforceability of a judgment if one is obtained; (5) evidence of an attempt by plaintiff to vex or harass defendant by his choice of forum; and (6) any other practical problems associated with pretrial and trial proceedings. In analyzing the public interest at stake, the court must consider: (1) the local interest in the controversy; (2) the administrative difficulties caused by congestion of local court dockets with foreign lawsuits; (3) the avoidance of unnecessary problems in choice of law and the application of foreign law; and (4) the imposition of jury duty on residents of a jurisdiction having little relation to the controversy. Gulf Oil Corp. v. Gilbert, supra, 330 U.S. at 508-09, 67 S.Ct. at 843; Manu International, S.A. v. Avon Products, Inc., 641 F.2d 62, 64-65 (2d Cir. 1981); Calavo *894 Growers v. Generali Belgium, supra, 632 F.2d at 966-68; Alcoa Steamship Co. v. M/V Nordic Regent, No. 78-7054, slip op. at 5945, 5953 (2d Cir. Feb. 25, 1980) (en banc), cert. denied, ___ U.S. ___, 101 S. Ct. 248, 66 L. Ed. 2d 116 (1980); Schertenleib v. Traum, 589 F.2d 1156, 1164-65 (2d Cir. 1978).
The Court recognizes that once the various factors and interests involved have been weighed, "unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum [will not] be disturbed." Gulf Oil Corp. v. Gilbert, supra, 330 U.S. at 508, 67 S.Ct. at 843; accord, Manu International, S.A. v. Avon Products, Inc., supra, 641 F.2d at 65. This burden on defendant is increased by the fact that travel and communications are far easier and more convenient in 1981 than they were in 1947 when the Supreme Court decided Gulf Oil. See id. Yet, if ever there was a case appropriate for transfer to a more convenient forum, this is it. Although two of the defendant corporations do business or are qualified to do business in this district,[3] their operations here had absolutely nothing to do with the events at issue in this litigation; all such events took place entirely within Saudi Arabia. The agreements at issue were negotiated, executed and performed there. The construction projects involved were to be built there. All of the probable witnesses, except plaintiff, reside in Saudi Arabia, and all of the relevant documents remain there. Thus, if the suit is maintained here, the sources of proof will be substantially inaccessible, defendants will be unable to compel the attendance of unwilling witnesses, and the costs to defendants of transporting willing witnesses will be much higher than plaintiff's costs in travelling to Saudi Arabia. In addition, Saudi Arabia possesses a sophisticated legal system capable of enforcing a judgment if one is obtained. Indeed, it appears to the Court that plaintiff may be seeking to extract a settlement by making defendants' litigation expenses so high that compromise would be preferable.
With respect to the public interest, initially there is no local interest in the controversy, especially since plaintiff is not a resident of New York. To impose jury duty on the residents of this district would thus be unfair. Moreover, the likely administrative burden on this Court will be great because of the entirely international nature of the litigation, and the choice of law and application of foreign law problems presented by litigation in this Court appear great. Under New York's choice of law rules, which the Court must apply in this diversity case, see Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941), the Court must choose "`the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.'" Loebig v. Larucci, 572 F.2d 81, 84 (2d Cir. 1978) (quoting Babcock v. Jackson, 12 N.Y.2d 473, 481, 240 N.Y.S.2d 743, 749, 191 N.E.2d 279, 283 (1963)). On the facts so far presented to the Court, there is no doubt that the law of Saudi Arabia would apply to all issues in the case. While this would not be an impossible burden for the Court to undertake, it would certainly be difficult. Determining the content of Saudi Arabian law and applying that law to the facts would be far easier at trial in Riyadh. See Schertenleib v. Traum, supra, 589 F.2d at 1163 & n.13, 1165. Farmanfarmaian v. Gulf Oil Corp., 437 F. Supp. 910, 924 (S.D.N.Y.1977), aff'd, 588 F.2d 880 (2d Cir. 1978).
Thus, the Court finds that the balance of convenience weighs strongly in favor of defendants, and that Saudi Arabia has a superior interest in the litigation, which compels the conclusion that the controversy should be litigated in Saudi Arabia.[4] Nevertheless, *895 there remains one important consideration which the Court must address.
As stated above, a dismissal on forum non conveniens grounds presupposes the existence and availability of an adequate alternative forum. See Calavo Growers v. Generali Belgium, supra, 632 F.2d at 968; Schertenleib v. Traum, supra, 589 F.2d at 1160. Plaintiff argues that none exists, relying on his own experience and knowledge of Saudi Arabian legal requirements, see Affidavit of Steven Shields (filed Mar. 28, 1980) ["Shields Affidavit"], and on the observations of a Saudi Arabian attorney, see Affidavit of Zaki Mustafa (filed May 29, 1980) ["Mustafa Affidavit"]. Defendant Miryung counters with the sworn statement of an American attorney who currently resides and practices law in Saudi Arabia, see Affidavit of Adam Fremantle (filed May 6, 1980) ["Fremantle Affidavit"]. When such a dispute among experts arises, the Court may dismiss if it "justifiably believes" that there is an adequate alternative forum, as long as the dismissal is made conditional on defendants' consenting to suit elsewhere and on the transferree court's accepting jurisdiction. Calavo Growers v. Generali Belgium, supra, 632 F.2d at 968 n.6; Schertenleib v. Traum, supra, 589 F.2d at 1163. Unfortunately, this Court has been unable to find a precise definition in the case law of what constitutes an "adequate alternative forum." It is apparent, however, that some inconvenience or the unavailability of beneficial litigation procedures similar to those available in the federal district courts does not render an alternative forum inadequate. See Calavo Growers v. Generali Belgium, supra, 632 F.2d at 968 n.6; Purser v. American Home Products Corp., No. 80 Civ. 710, slip op. at 8 (S.D.N.Y. Jan. 30, 1981).
Plaintiff argues that Saudi Arabia is not an adequate alternative forum for the following reasons: (1) that he cannot return to that country to pursue his claims; (2) that he cannot obtain counsel in Saudi Arabia; (3) that his personal safety would be endangered if he pursued litigation in Saudi Arabia involving a dispute with Saudi Arabians, especially since his claims involve allegations of wrongdoing on the part of a member of the royal family; (4) that under Saudi law he would be subject to detainment in Saudi Arabia pending resolution of the controversy; (5) that litigation in Saudi Arabia would be difficult and expensive; and (6) that Saudi courts are rife with corruption and religious prejudice.
The Court accepts as valid only plaintiff's claim that litigation in Saudi Arabia would be difficult and expensive, but finds that this is insufficient to permit the litigation to continue in New York. After all, plaintiff is a resident of Arizona, not New York, which indicates he anticipated this litigation would be somewhat costly and difficult. Moreover, the expense and difficulty defendants would incur if forced to litigate in New York would be far greater than that of plaintiff litigating in Saudi Arabia.
As to plaintiff's other arguments, a foreigner needs an entry visa to enter Saudi Arabia, which requires a letter of invitation from a Saudi citizen. Plaintiff claims that Saudi Arabia will not issue such visas to tourists but only to persons seeking to work or carry on a business. Shields Affidavit, ¶ 8. Defendant's expert contends to the contrary that such visas are regularly given, and that a letter of invitation could easily be obtained from a Saudi attorney retained by plaintiff or from any friend or acquaintance. Fremantle Affidavit, ¶ 3. Plaintiff's expert implicitly concedes that only a visitors visa is required, but contends that it will be difficult for plaintiff to find a sponsor because the sponsor would be financially responsible for plaintiff's misdeeds while there, that Saudi Arabia will *896 likely not permit the issuance of a visa for the purpose of instigating suit, and that the duration of a visano more than three or four monthswould be an insufficient time to prosecute a lawsuit. Mustafa Affidavit, ¶ 2. This expert nevertheless concedes that these obstacles are not insurmountable. Id. The Court accepts the opinion of defendant's expert that plaintiff will be able to enter Saudi Arabia to institute suit, especially since plaintiff lived there for several years and likely has friends or acquaintances who may be able to help. Moreover, he need only be there to commence suit and appear at trial. The Court also recognizes that Saudi Arabia, because of its position as a center of international commerce, is a cosmopolitan nation with large numbers of foreigners entering the country at all times. Thus, plaintiff's contention that that country is a provincial backwater with respect to visa requirements is unpersuasive.
Plaintiff contends that it would be extremely difficult to retain counsel in Saudi Arabia because no attorney would be willing to represent him in a dispute involving allegations of wrongdoing on the part of the Saudi royal family. Shields Affidavit, ¶¶ 12, 13. His expert's affidavit, however, makes no mention of this problem, and the contention is otherwise unsupported. Furthermore, it is flatly contradicted by defendant's expert. See Fremantle Affidavit, ¶ 5. The Court notes that Saudi Arabia has established a specific tribunal for litigation of claims against the Government. See id. This indicates that the Saudi royal family is not as sensitive to criticism as plaintiff claims. Moreover, plaintiff is entitled to proceed pro se in any action brought in Saudi Arabia. Id., ¶ 3.[5]
Plaintiff's other assertions that his safety would be endangered if he instituted suit in Saudi Arabia and that official corruption and religious discrimination would prevent him from receiving fair consideration of his claims, are entirely unsubstantiated speculation, see Shields Affidavit, ¶¶ 14, 15, 17, and unsupported by his expert. This Court cannot accept plaintiff's attempt to cast aspersions upon an entire legal system without some supporting evidence. Plaintiff provides none, and defendant's expert denies all such allegations. Fremantle Affidavit, ¶¶ 8, 10. Finally, plaintiff's expressed fear of detainment in Saudi Arabia pending resolution of the dispute is not supported by the sworn statement of his legal expert. Defendant's expert states to the contrary that detainment can only occur if a foreigner holds money that he might remove from the country and which is the subject of a pending dispute, or if it is anticipated that he will leave the country with a substantial sum of money owed to persons within Saudi Arabia. Id., ¶¶ 4, 6. This procedure is similar to the civil arrest provisions of former N.Y. C.P.L.R. Article 61, which was repealed in 1979.
There are two forums in Saudi Arabia available to a foreign plaintiff who wishes to pursue a claim arising from a commercial transaction in Saudi Arabia. The first is the "Committee for the Settlement of Commercial Disputes," composed of two judges and one legal advisor from the Ministry of Commerce, the decisions of which are subject to appellate review. The second forum is the "Arbitration Committee" under the jurisdiction of the Ministry of Commerce. Like arbitration in the United States, this forum is intended to speed the resolution of commercial disputes informally and without great expense. Each party appoints one arbitrator and a third is appointed by the Ministry of Commerce. The decisions of this body are also subject to appellate review. See Defendant's Second Reply Memorandum, Exhibit A (filed June 2, 1980) (letter from United States Department of State to counsel for defendant Miryung, dated May 5, 1980); Affidavit of Mark D. Lebow, ¶ 6, Exhibit A (filed May 6, 1980) (portion of an article entitled "Judicial Authority and the Court System of Saudi Arabia," *897 Middle Eastern Executive Report, September 1979).
In light of the foregoing, the Court believes that an adequate alternative forum is available to plaintiff in Saudi Arabia. The action is therefore dismissed on condition that the suit proceed in that country. Plaintiff is assured of an adequate forum, because if defendants refuse to submit to jurisdiction there[6] or the Saudi forum refuses to take jurisdiction, plaintiff may move to restore the action in this Court. See Calavo Growers v. Generali Belgium, supra, 632 F.2d at 968; Schertenleib v. Traum, supra, 589 F.2d at 1166.
CONCLUSION
Accordingly, defendant Miryung's motion to dismiss the complaint on the ground of forum non conveniens is granted, conditioned upon the following:
1. that defendants consent to suit and acceptance of process in the Kingdom of Saudi Arabia in any civil action timely filed by plaintiff on his claims;
2. that the appropriate forum in the Kingdom of Saudi Arabia to which such action is transferred accept jurisdiction to hear the case;
3. that defendants agree to waive any statute of limitations defense that may have arisen since the commencement of this action in this Court;
4. that defendants agree to make available, at their own expense, any documents or witnesses within their control that are needed for the fair adjudication of any action brought by plaintiff on his claims in the Kingdom of Saudi Arabia;
5. that defendants consent to pay any judgment or judgments, if any, which may be rendered against them in the Kingdom of Saudi Arabia in any civil action brought by plaintiff on his claims;
6. that defendants advise the Court of their consent to these conditions, and of their efforts to determine whether the appropriate forum of the Kingdom of Saudi Arabia will accept jurisdiction, within thirty days of the date of this Memorandum and Order.
SO ORDERED.
NOTES
[1] In the complaint, plaintiff apparently incorrectly named this defendant as Mi Ryung Construction Company.
[2] Since the Court is conditionally dismissing this action on the ground of forum non conveniens, it is not necessary to reach the alternate grounds for dismissal urged by defendant Miryung, namely, improper venue, Fed.R.Civ.P. 12(b)(3), and failure to join an indispensable party, Fed.R.Civ.P. 19.
[3] Miryung, which apparently maintains its headquarters in South Korea, also maintains a six-person office in New York. Bechtel is qualified to do business in New York.
[4] Plaintiff advances one additional argument that the Court finds to be frivolous. He contends that it would be unfair for this Court to require an American plaintiff to seek redress of his grievances in a foreign country. Not only has the Second Circuit recently stated explicitly that a uniform forum non conveniens standard is to be applied to suits brought by both American and non-American plaintiffs, see Alcoa Steamship Co. v. M/V Nordic Regent, supra, slip op. at 5956, 5973, but Saudi Arabia is hardly foreign to this plaintiff. He voluntarily involved himself in that country's construction industry for six years and claims to have specialized knowledge of industry practices and the country itself. The Court does not think it unfair therefore to require plaintiff to accept the risks along with the possible benefits of pursuing business opportunities in a foreign country.
[5] The Court notes further that plaintiff does not contend that he cannot afford counsel. If he should require assistance in retaining counsel, the United States State Department maintains listings of local counsel at consular offices in various locations in Saudi Arabia. See Defendant's Second Reply Memorandum, Exhibit A (filed June 2, 1980).
[6] This is unlikely, since Miryung has stated that it consents to be sued in Saudi Arabia and the other defendants are all either incorporated or doing business there. | 01-03-2023 | 10-30-2013 |
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