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https://www.courtlistener.com/api/rest/v3/opinions/4034692/ | STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
State of West Virginia
Plaintiff Below, Respondent FILED
September 16, 2016
vs) No. 15-0584 (Marion County 14-F-38) RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
John H. Knoll
Defendant Below, Petitioner
MEMORANDUM DECISION
Petitioner John H. Knoll, by counsel William L. Pennington and James B. Zimarowski,
appeals his March 25, 2015, conviction on three charges of uttering and one charge of fraudulent
schemes. Respondent State of West Virginia, by counsel Jonathan Porter, filed a summary
response in support of the circuit court’s order. Petitioner filed a reply. Petitioner argues that the
circuit court did not properly instruct the jury; erred in denying his motion for judgment of
acquittal; and erred in denying his motion for a new trial.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision affirming the circuit court’s order is appropriate under Rule 21
of the Rules of Appellate Procedure.
Petitioner is one of the five sons of Fred and Hazel Knoll of Marion County. Upon the
death of petitioner’s father in November of 1994, petitioner’s mother was appointed as the
administratrix of his estate.1 At the time of his death, petitioner’s father owned seven antique
cars.2 On May 11, 1999, petitioner’s mother recorded the appraisement of petitioner’s father’s
estate. None of the seven antique cars owned by petitioner’s father were included in the
appraisement. However, the cars remained in the possession of petitioner’s mother and were
often displayed in local parades and car shows.
As his mother aged, petitioner assumed the role of her caregiver. On November 3, 2006,
petitioner’s mother died intestate. One of petitioner’s brothers was appointed as administrator of
their mother’s estate. Like the appraisement of petitioner’s father’s estate, the appraisement of
1
Petitioner’s father died intestate.
2
Petitioner, like his father, enjoyed collecting and restoring antique cars.
1
petitioner’s mother’s estate did not include the antique vehicles which had been owned by
petitioner’s father at the time of his death.3
In May of 2007, the administrator of petitioner’s mother’s estate contacted the West
Virginia Department of Motor Vehicles (“DMV”) to obtain copies of the title documentation to
the four antique vehicles, that petitioner’s mother owned at the time of her death.4 The title
documentation showed that the titles to the four vehicles were transferred from petitioner’s father
to petitioner. Petitioner’s brothers alleged that petitioner forged title transfer papers to the four
vehicles using his father’s name, and presented the fraudulent paperwork to the DMV.5
On February 2, 2014, petitioner was indicted by the Marion County Grand Jury, in a
seven count indictment.6 A jury trial was completed, and, on March 26, 2015, petitioner was
convicted of three counts of uttering and one count of fraudulent scheme.7 Trial testimony
established that petitioner’s brothers knew that petitioner took possession of the vehicles at issue
after the death of their father and that the vehicles were housed in garages that petitioner
maintained. However, the brothers did not know that petitioner transferred or had transferred the
titles to these vehicles to himself.
On April 3, 2015, petitioner’s trial counsel filed a motion for judgment of acquittal in
which he argued that there was insufficient evidence to establish petitioner’s guilt on the charges
of uttering. Petitioner also argued that the indictment was defective and that the circuit court
gave an improper jury instruction. The trial court denied petitioner’s motion for judgment of
acquittal by order entered April 10, 2015. Thereafter, petitioner obtained new counsel and, on
May 20, 2015, a motion for new trial and a motion in arrest of judgment were filed on
3
Prior to her death, petitioner’s mother conveyed the titles of three of the seven antique
vehicles to new owners. Neither party argues that the transfer of the titles of these three vehicles
was fraudulent or improper.
4
These four vehicles included a 1920 Ford, 1930 Chevrolet, 1927 Ford, and a 1938
Chevrolet.
5
The titles to the four vehicles were transferred three and a half years after the death of
petitioner’s father, but prior to the death of petitioner’s mother. Evidence was presented at trial
that petitioner’s mother could not have signed petitioner’s father’s name to the title transfer
paperwork due to a physical disability. At trial, petitioner testified that he did not forge his
father’s name on the title transfer paperwork submitted to the DMV. Petitioner stated that he did
not know when his father’s name was signed or who signed his father’s name to the titles.
6
The indictment against petitioner charged him with three counts of forgery (in violation
of West Virginia Code § 61-4-5(a)), three counts of uttering (in violation of West Virginia Code
§ 61-4-5(a)), and one count of fraudulent schemes (in violation of West Virginia Code §§ 61-3
24d and 61-3-13(a)).
7
Petitioner was acquitted of the three counts of forgery.
2
petitioner’s behalf. On May 29, 2015, the trial court heard arguments on petitioner’s post-trial
motions. Said motions were denied by the trial court’s order entered June 2, 2015.
On May 29, 2015, petitioner was sentenced to one to ten years imprisonment for each of
the three counts of uttering and one count of fraudulent schemes, with the sentences to be served
concurrently. However, the trial court suspended petitioner’s sentences and placed him on
probation for not more than five years and ordered restitution (i.e., the court ordered the titles of
the four motor vehicles be transferred to the Estate of Fred Knoll). The trial court’s sentencing
order was entered June 2, 2015. This appeal follows.
On appeal, petitioner raises four assignment of error. First, petitioner argues that the trial
court erred in failing to properly instruct the jury on the elements of the offense of uttering.8 As
to jury instructions, we have held that
[j]ury instructions are reviewed by determining whether the charge, reviewed as a
whole, sufficiently instructed the jury so they understood the issues involved and
were not misled by the law. A jury instruction cannot be dissected on appeal;
instead, the entire instruction is looked at when determining its accuracy. The trial
court, therefore, has broad discretion in formulating its charge to the jury, so long
as the charge accurately reflects the law.
State v. Guthrie, 194 W.Va. 657, 671, 461 S.E.2d 163, 177 (1995).
Rule 30 of the West Virginia Rules of Criminal Procedure, provides, in part, that
No party may assign as error the giving or refusal of to give instruction . . . unless
that party objects thereto before the arguments to the jury are begun, stating
distinctly the matter to which that party objects and the grounds of the objection;
but the court or any appellate court may, in the interest of justice, notice plain
error in the giving or refusal to give an instruction, whether or not it has been
made the subject of objection.
In the case sub judice, petitioner acknowledges that his trial counsel made no objection to
the court’s instruction to the jury as to the elements of the charges of uttering, but argues that the
court’s incomplete instruction was plain error. See State v. Miller 194 W.Va. 3, 459 S.E.2d 114
8
As to the uttering charges, the jury was instructed (separately as to each of the three
charges) as follows:
Before the defendant, John H. Knoll, can be convicted of uttering as charged . . .
the State of West Virginia must overcome the presumption that the defendant,
John H. Knoll, is innocent and prove to the satisfaction of the jury, beyond a
reasonable doubt, that 1) The Defendant, John H. Knoll, 2) in Marion County,
West Virginia, 3) On or about the twenty-first day of March, 1997, 4) Did utter or
attempt to employ as true, 5) A forged writing, to wit: Assignment of title for . . . ,
6) Knowing it to be forged.
3
(1995).9 Respondent argues that the jury was properly instructed and that petitioner did not
establish that the allegedly improper jury instruction was plain error. We agree. Following our
review of the record herein, when considered as a whole, we find that the jury’s instructions were
sufficient and properly instructed the jury as to the elements of the offense of uttering under
West Virginia Code § 61-4-5(a).
In his second assignment of error petitioner alleges that the trial court erred in denying
petitioner’s post-trial motion for judgment of acquittal. Petitioner claims that the evidence
proffered at trial is insufficient to support his conviction; that the indictment returned against him
is insufficient and defective; and the jury’s verdict was inconsistent. When discussing a motion
for an acquittal, we have previously held that
[t]he trial court’s disposition of a motion for judgment of acquittal is subject to
our de novo review; therefore, this Court, like the trial court, must scrutinize the
evidence in the light most compatible with the verdict, resolve all credibility
disputes in the verdict’s favor, and then reach a judgment about whether a
rational jury could find guilt beyond a reasonable doubt.
State v. LaRock, 196 W.Va. 294, 304, 470 S.E.2d 613, 623 (1996). In addressing petitioner’s
claims that the evidence presented at trial was insufficient to support a conviction. We have held
that
[a] criminal defendant challenging the sufficiency of the evidence to
support a conviction takes on a heavy burden. An appellate court must review all
the evidence, whether direct or circumstantial, in the light most favorable to the
prosecution and must credit all inferences and credibility assessments that the jury
might have drawn in favor of the prosecution. The evidence need not be
inconsistent with every conclusion save that of guilt so long as the jury can find
guilt beyond a reasonable doubt. Credibility determinations are for a jury and not
an appellate court. Finally, a jury verdict should be set aside only when the record
contains no evidence, regardless of how it is weighed, from which the jury could
find guilt beyond a reasonable doubt. To the extent that our prior cases are
inconsistent, they are expressly overruled.
Syl. Pt. 3, State v. Guthrie, 194 W.Va. 657, 461 S.E.2d 163 (1995).
Petitioner contends that the State’s case was devoid of any evidence with respect to the
presentment (or employ) of the forged writings, a necessary element of the offense of uttering.
While petitioner acknowledged that the forged titles made their way to the DMV, he argues that
there was no evidence to establish that he was the person who submitted the forged titles to the
DMV. Respondent argues that there was sufficient evidence presented at trial to support a jury
9
See also Syl. Pt. 8, State v. Thompson, 220 W.Va. 398, 647 S.E.2d 834 (2004) (stating
that plain error should be exercised sparingly only to avoid a miscarriage of justice and should be
reserved for the correction of those few errors that affect the fairness, integrity, or public
reputation of the judicial proceedings).
4
verdict. We agree. Based upon our review of the record herein, the jury heard evidence that
petitioner had access to the vehicles and their titles and further that the titles were, in fact,
transferred to petitioner’s name.
As to the indictment returned against him, petitioner argues that the indictment charging
the offense of uttering included language similar to a charge of forgery and, thus, failed to allege
the act of uttering. As such, petitioner contends the indictment was insufficient. With respect to
indictments, we have held that “[g]enerally, the sufficiency of an indictment is reviewed de novo.
An indictment need only meet minimal constitutional standards, and the sufficiency of an
indictment is determined by practical rather than technical considerations.” Syl. Pt. 2, State v.
Miller, 197 W.Va. 588, 476 S.E.2d 535 (1996). Further, in syllabus point one, in part, of State v.
Mullins, 181 W.Va. 415, 383 S.E.2d 47 (1989), we held that “[a]n indictment for a statutory
offense is sufficient if, in charging the offense, it substantially follows the language of the
statute, fully informs the accused of the particular offense with which he is charged and enables
the court to determine the statute on which the charge is based.” (Citation omitted.)
In the instant case, the indictment returned against petitioner included the date, the
actions allegedly taken by petitioner, the vehicle, and referenced the code section allegedly
violated. Respondent argues, and we agree, that it is nonsensical for the petitioner to argue that
he did not know the offenses charged in the indictment since he presented a defense to these
charges. Clearly, the jurors understood the difference between the forgery and uttering charges
against petitioner as the jury convicted petitioner of uttering but not forgery. We further note that
petitioner made no objection to the indictment below and that any alleged defects to the
indictment do not rise to the level of plain error.
Petitioner also contends that the circuit court erred in denying his motion for judgment of
acquittal as the verdict returned by the jury herein was inconsistent. Petitioner was acquitted of
three counts of forgery, but convicted on three associated counts of uttering – which requires the
presentation of a document known to be forged. Thus, petitioner implies that the jury must have
ignored or misunderstood the instructions of the court concerning the elements of uttering.
Respondent argues that the jury verdict was not inconsistent, as it was possible for the jury to
have found that petitioner did not forge the titles at issue but nonetheless knew the documents
were forged and still uttered them. We agree and find that the jury’s verdict was not
inconsistent.10
In his third and fourth assignments of error, petitioner contends that the trial court erred
in denying his post-trial motion for a new trial based on ineffective assistance of counsel. We
have long held that
10
We further note our discussion of inconsistent verdicts in State v. Hall 174 W.Va. 599,
328 S.E.2d 506 (1985), wherein we referenced the United States Supreme Court’s ruling in
United States v. Powell, 469 U.S. 57, 105 S. Ct. 471 (1984), in which that court concluded that
appellate review of a claim of inconsistent verdicts is not generally available.
5
[i]t is the extremely rare case when this Court will find ineffective
assistance of counsel when such a charge is raised as an assignment of error on a
direct appeal. The prudent defense counsel first develops the record regarding
ineffective assistance of counsel in a habeas corpus proceeding before the lower
court, and may then appeal if such relief is denied. This Court may then have a
fully developed record on this issue upon which to more thoroughly review an
ineffective assistance of counsel claim.
Syl. Pt. 10, State v. Triplett, 187 W.Va. 760, 421 S.E.2d 511 (1992). We have further held that
[t]he very nature of an ineffective assistance of counsel claim demonstrates the
inappropriateness of review on direct appeal. To the extent that a defendant relies
on strategic and judgment calls of his or her trial counsel to prove an ineffective
assistance claim, the defendant is at a decided disadvantage. Lacking an adequate
record, an appellate court simply is unable to determine the egregiousness of
many of the claimed deficiencies.
Miller, 194 W.Va. at 15, 459 S.E.2d at 126. On appeal, petitioner contends that his trial counsel
was ineffective in three ways: (1) failing to effectively use or seek admission of the
appraisements of the Estates of Fred and Hazel Knoll; (2) failing to employ a handwriting expert;
and (3) failing to move for judgment of acquittal at the conclusion of the State’s case-in-chief.
Based upon our review of the same, we find that the record herein is insufficient to determine if
trial counsel’s decisions were strategic or ineffective. Thus, we decline to address petitioner’s
claims on direct appeal.
For the foregoing reasons, we affirm.
Affirmed.
ISSUED: September 16, 2016
CONCURRED IN BY:
Chief Justice Menis E. Ketchum
Justice Brent D. Benjamin
Justice Margaret L. Workman
Justice Allen H. Loughry II
DISSENTING:
Justice Robin Jean Davis
6 | 01-03-2023 | 09-17-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/4034693/ | STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
FILED
September 16, 2016
Dwayne Yatauro, Sheryl Stevens, Richard Parsons, RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
Blanche Marie King, Deb Goff, and Randy Harris, OF WEST VIRGINIA
Petitioners Below, Petitioners
vs) Nos. 15-0650, 15-0651, 15-0652, 15-0653, 15-0654 and 15-0922
(Kanawha County 15-AA-49, 15-AA-48, 15-AA-43, 15-AA-41, 15-AA-40 and 15-AA-46)
The Calhoun County Board of Education,
Respondent Below, Respondent
and
The Calhoun County Board of Education,
Respondent Below, Petitioner
vs) No. 15-0903 (Kanawha County 15-AA-44)
Tim Hickman
Petitioner Below, Respondent.
MEMORANDUM DECISION
These seven cases originate from the West Virginia Public Employees Grievance Board’s
(“Grievance Board”) denial of the consolidated grievances brought by employees of the Calhoun
County Board of Education (“BOE”). In their grievances, the employees challenged the BOE’s
reduction of the term of their contracts for employment without proper notification and
opportunity for a hearing, as required by West Virginia Code §§ 18A-2-6, 18A-4-8(m), and 18A
2-12a(b)(6).
In six of the consolidated appeals before this Court, BOE employees Dwayne Yatauro,
Sheryl Stevens, Richard Parsons, Blanche Marie King, Deb Goff, and Randy Harris, by counsel
John Everett Roush, appeal the final orders of the Circuit Court of Kanawha County affirming
the decision of the Grievance Board that denied their grievances against the BOE. In these six
cases, the BOE, by counsel Richard S. Boothby, responds in support of the circuit court’s orders.
With regard to the seventh case, filed by BOE employee Tim Hickman, the BOE, by
counsel Ricard S. Boothby, appeals the final order of the Circuit Court of Kanawha County
reversing the Grievance Board’s decision. In that case, Respondent Hickman, by counsel John
Everett Roush, responds in support of the circuit court’s order. Petitioner BOE filed a reply.
This Court has considered the parties’ briefs and record on appeal. The facts and legal
1
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds, as to the Yatauro, Stevens, Parsons, King, Goff, and Harris cases, no
substantial question of law and no prejudicial error. As to the Hickman case, we find that the
circuit court erred with respect to its reversal of the Grievance Board’s decision. For these
reasons, a memorandum decision affirming in part and reversing in part the circuit court’s orders
is appropriate in these cases under Rule 21 of the Rules of Appellate Procedure.
In April of 2014, the assistant state superintendent for the Division of Student Support
Services at the West Virginia Board of Education (“State Board of Education”) contacted the
BOE’s business office regarding concerns about the BOE’s financial deficit and the need to cut
expenses. In late May of 2014, the State Board of Education rejected the budget submitted by the
BOE.1 During the third week of June of 2014, the assistant superintendent of the State Board of
Education contacted the BOE’s superintendent and advised that the BOE had a serious budget
deficit. On June 30, 2014, the BOE received a letter from the superintendent of the State Board
of Education advising that the BOE’s submitted budget was “insufficient to maintain the
proposed education program as well as other financial obligations.” Citing West Virginia Code §
18-9B-8, the letter directed the BOE to cut $100,000 from its budget and further directed that the
cost reductions be accomplished by reducing the length of employee contracts which exceeded
200 days.
After receiving the June 30, 2014, letter, the BOE called an emergency meeting of its
board. Based upon the directive from the superintendent of the State Board of Education, the
BOE’s superintendent recommended that the board comply with the directed reductions.2 The
BOE voted three to two to accept the superintendent’s recommendation and to reduce employee
contracts exceeding two hundred days.3
1
Each year, county boards of education must submit their proposed school year budgets
to the State Board of Education for approval.
2
From the time he began his job on May 27, 2014, the BOE’s superintendent was aware
of the BOE’s dire financial condition. Prior to agreeing to reduce the terms of the employment of
the grievants, the BOE’s superintendent left “no stone unturned” in looking at ways in which the
BOE could save money, including: eliminating overtime, not filling vacant positions, adjusting
bus routes, and postponing the purchase of new school buses.
3
Petitioner Yatauro’s 240-day employment term (for school year 2013-14) was reduced
to 230 days (for school year 2014-15). Petitioner Stevens’s 240-day employment term was
reduced to 210 days. Petitioner Parsons’s 240-day employment term was reduced to 230 days.
Petitioner King’s 230-day employment term was reduced to 205 days. Petitioner Goff’s 240-day
employment term was reduced to 210 days. Petitioner Harris’s 230-day employment term was
reduced to 205 days. Respondent Hickman’s 230-day employment term was reduced to 205
days.
2
On July 11, 2014, fourteen of the effected employees filed a consolidated grievance
against the BOE seeking restoration of their employment term for the 2014-15, school year and
future school years, and compensation for lost wages with interest.4 The grievants asserted that
they were not properly notified of the reduction of employment terms and asserted a violation of
West Virginia §§ 18A-2-6, 18A-4-8(m), and 18A-2-12a(b)(6). On September 23, 2014, a level
three evidentiary hearing was held before an administrative law judge (“ALJ”).5
By decision dated March 10, 2015, the ALJ denied the portion of the grievance which
challenged the reduction of the days of employment term.6 Separately, seven of the grievants
appealed the Grievance Board’s decision to the Circuit Court of Kanawha County. The cases
were individually assigned to three different judges. The Grievance Board’s decision was
affirmed by the circuit court in six of the seven appeals including grievants Dwayne Yatauro,
Sheryl Stevens, Richard Parsons, Blanche Marie King, Deb Goff, and Randy Harris.7 However,
the Grievance Board’s decision was reversed by the circuit court in the appeal of employee Tim
Hickman.8 It is from the circuit court’s orders of May 29, 2015, August 18, 2015, and August 20,
2015, that the parties now appeal.
“When reviewing the appeal of a public employees’ grievance, this Court reviews
decisions of the circuit court under the same standard as that by which the circuit court reviews
the decision of the administrative law judge.” Syl. Pt. 1, Martin v. Barbour Cnty. Bd. of Educ.,
228 W.Va. 238, 719 S.E.2d 406 (2011). “A final order of the hearing examiner for the West
Virginia [Public] Employees Grievance Board, made pursuant to W.Va. Code, [6C-2-1], et seq. [
], and based upon findings of fact should not be reversed unless clearly wrong.” Syl. Pt. 1,
Randolph Cnty. Bd. of Educ. v. Scalia, 182 W.Va. 289, 387 S.E.2d 524 (1989). We have further
held that
[g]rievance rulings involve a combination of both deferential and plenary
4
The consolidated grievance was styled Deb Goff, et al v. Calhoun County Board of
Education, Docket No. 2015-0049-CONS and included fourteen grievants. Only seven of those
grievants are included in the consolidated appeal presently before this Court.
5
The employees waived levels one and two of the grievance proceedings.
6
The BOE also voted to eliminate a $600 annual supplement paid to various school
employees (including the employees herein). The elimination of this supplement was part of the
grievants’ underlying appeal. The supplement was reinstated by the ALJ. The
reduction/elimination of the annual supplement is not an issue in the present appeal.
7
The Grievance Board’s denial of Petitioners Yatauro, Stevens, Parsons, King, and Goff’s
appeals was affirmed by Judge Tod Kaufman on May 29, 2015. The Grievance Board’s denial of
Petitioner Harris’s appeal was affirmed by Judge James Stucky on August 20, 2015.
8
The Grievance Board’s denial of Respondent Hickman’s appeal was reversed by Judge
Louis Bloom on August 18, 2015.
3
review. Since a reviewing court is obligated to give deference to factual findings
rendered by an administrative law judge, a circuit court is not permitted to
substitute its judgment for that of the hearing examiner with regard to factual
determinations. Credibility determinations made by an administrative law judge
are similarly entitled to deference. Plenary review is conducted as to the
conclusions of law and application of law to the facts, which are reviewed de
novo.
Syl. Pt. 1, Cahill v. Mercer Cnty. Bd. of Educ., 208 W.Va. 177, 539 S.E.2d 437 (2000).
In their appeal, Petitioners Yatuaro, Stevens, Parsons, King, Goff, and Harris argue that
the circuit court erred in concluding that the BOE could reduce the employment term of a service
employee without compliance with the due process notice and hearing requirements found in
West Virginia Code §§ 18A-2-6, 9 18A-4-8(m),10 and 18A-2-12a(b)(6).11 In its appeal, regarding
grievant Tim Hickman, the BOE asserts five assignments of error which each address the circuit
court’s error in application of the “clear and unambiguous language” of West Virginia Code §
18-9B-8.
9
West Virginia Code § 18A-2-6 provides, in part, that,
[t]he continuing contract of any such employee shall remain in full force and
effect except as modified by mutual consent of the school board and the
employee, unless and until terminated with written notice, stating cause or causes,
to the employee, by a majority vote of the full membership of the board before
March 1 of the then current year, or by written resignation of the employee on or
before that date. The affected employee has the right of a hearing before the
board, if requested, before final action is taken by the board upon the termination
of such employment.
10
West Virginia Code § 18A-4-8(m) provides that,
[w]ithout his or her written consent, a service person may not be:
(1) Reclassified by class title; or
(2) Relegated to any condition of employment which would result in a reduction
of his or her salary, rate of pay, compensation or benefits earned during the
current fiscal year; or for which he or she would qualify by continuing in the
same job position and classification held during that fiscal year and
subsequent years.
11
West Virginia Code § 18A-2-12a(b)(6) provides, in part, that “[a]ll school personnel are
entitled to due process in matters affecting their employment, transfer, demotion or promotion;
4
We begin our analysis with a review of West Virginia Code § 18-9B-8, which provides
that
[i]f the board of finance12 finds that the proposed budget for a county will not
maintain the proposed educational program as well as other financial obligations
of their county board of education, it may require that the budget be revised, but
in no case shall permit the reduction of the instructional term pursuant to the
provisions contained in section fifteen [§ 15-5-15], article five of this chapter nor
the employment term below two hundred days. Any required revision in the
budget for this purpose may be made in the following order:
(1) Postpone expenditures for permanent improvements and capital outlays except
from the permanent improvement fund;
(2) Reduce the amount budgeted for maintenance exclusive of service personnel
so as to guarantee the payment of salaries for the employment term; or
(3) Adjust amounts budgeted in any other way so as to assure the required
employment term of two hundred days and the required instructional term of
one hundred eighty days under the applicable provisions of law.
We have previously held that “[i]nterpreting a statute or an administrative rule or
regulation presents a purely legal question subject to de novo review.” Syl. Pt. 1, Appalachian
Power Co. v. State Tax Dep’t, 195 W.Va. 573, 466 S.E.2d 424 (1995). Circuit Court Judges
Kaufman and Stucky, who adopted the ALJ’s findings, reasoned that the authority granted to the
State Board of Education by the West Virginia Legislature in West Virginia Code §§ 18-9B-1
through -21, is broad and contains no indication that its application is limited to only those
situations where notice and hearing opportunities have been provided to aggrieved employees.13
We agree.
We have previously found that “[t]o ascertain the Legislature’s intent, ‘[w]e look first to
the statute’s language. If the text, given its plain meaning, answers the interpretative question,
the language must prevail and further inquiry is foreclosed.’” Hammons v. W.Va. Office of Ins.
12
We note that while this statue references the West Virginia Board of Finance, West
Virginia Code § 18-9A-17, directs the State Board of Education, through its chief executive
officer, to direct and carry out all provisions of article 9B.
13
This Code provision further directs that a county board of education comply with the
instruction of the State Board of School Finance and perform “all duties required of them.” See
West Virginia Code § 18-9B-17. Further, this Code provision directs that “[t]he board of finance
may withhold payment of state aid from a county board that fails or refuses to comply with the
provisions of this article or the requirements of the state board made in accordance therewith.”
See West Virginia Code § 18-9B-19.
5
Comm’r, 235 W.Va. 577, 584, 775 S.E.2d 458, 465 (2015) (quoting Appalachian Power Co. v.
State Tax Dep’t of W.Va., 195 W.Va. [573,] at 587, 466 S.E.2d [424,] at 438 [1995]). In the case
sub judice, there is little doubt that the Legislature intended to confer broad fiscal powers to the
State Board of Education under West Virginia Code §§ 18-9B-1 through -21, which is
unambiguous. We have long held that “[w]here the language of a statute is clear and without
ambiguity the plain meaning is to be accepted without resorting to the rules of interpretation.”
Syl. Pt. 2, State v. Elder, 152 W.Va. 571, 165 S.E.2d 108 (1968). Accordingly, we agree with the
ALJ’s conclusion that the Legislature did not intend to limit the State Board of Education’s
authority under West Virginia Code §§ 18-9B-1 through -21. There is no provision in this
statutory provision which limits the State Board of Education’s authority to act only in situations
where the appropriate notice and hearing requirements for BOE employees are satisfied under
other statutory provisions (such as West Virginia Code § 18A-2-6).
Here, the State Board of Education ordered the BOE to reduce employee contract terms
in order to satisfy its budget insufficiency.14 Under the authority of West Virginia Code §§ 18
9B-1 through -21, the State Board of Education had the ability to require the BOE to revise its
proposed budget to reduce salary costs by reducing the number of extended employment days
beyond the minimum employment terms of 200 days for the 2014-15 school year.15 As such we
find no error with the ALJ’s decision.
14
We note that our examination of the record reveals that prior to reducing the
employment contracts of the effected employees, the BOE implemented other budget cuts
similar to those described in sections and one of two of West Virginia Code § 18-9B-8.
15
We further reject the employees’ arguments that the circuit court erred by finding that
West Virginia Code § 18-9B-8 must be read in pari materia with West Virginia Code § 18A-2-6.
See Smith v. Siders, 155 W.Va. 193, 183 S.E.2d 433 (1971). The employees argue that when
reading these two code section together, it is clear that West Virginia Code § 18-9B-8 discusses
what may be done to reduce expenditures and West Virginia Code § 18A-2-6, is the method for
making the reduction. Conversely, the BOE argues, and we agree, that under limited facts and
circumstances of these consolidated cases, the doctrine of in pari materia is not applicable as the
statutes do not have a common purpose or relate to the same subject.
We also note that the Summers County Educ. Assoc. v. Summers County Bd. of Educ.,
179 W.Va. 107, 365 S.E.2d 387 (1987), cited by the employees’ in support of their appeal is
distinguishable from the case sub judice. In Summers, this Court reasoned that West Virginia
Code § 18-9B-8 protects school personnel in a situation where a county BOE was considering
reducing the number of work days in order to save money. However, we note, that West Virginia
Code § 18-9B-8 was revised (in 1991– after Summers) and that those revisions (which take the
focus of West Virginia Code § 18-9B-8 to the educational program and instruction term as
opposed to the employment term of the school employee) render Summers inapplicable to the
unique facts and circumstances of the instant case.
6
For the foregoing reasons, we find no error in the circuit court’s May 29, 2015, and
August 20, 2015, orders affirming the decision of the grievance board in the Yatauro, Stevens,
Parsons, King, Goff, and Harris cases and hereby affirm the same.
Based on our reasoning above, we further find that the circuit court, in its August 18,
2015, order reversing the decision of the grievance board in the Hickman case, was clearly
wrong. According, we reverse the circuit court’s August 18, 2015, order.
Affirmed in part, reversed in part.
ISSUED: September 16, 2016
CONCURRED IN BY:
Chief Justice Menis E. Ketchum
Justice Brent D. Benjamin
Justice Allen H. Loughry II
DISSENTING:
Justice Robin Jean Davis
DISQUALIFIED:
Justice Margaret L. Workman
7 | 01-03-2023 | 09-17-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2457134/ | 132 F. Supp. 2d 255 (2001)
UNITED STATES of America
v.
Carlos Gustavo BARAHONA
No. 93 CR. 232(MGC).
United States District Court, S.D. New York.
February 26, 2001.
John M. Desmarais, Otto G. Obermaier, U.S. Attorney, New York City, for U.S.
MEMORANDUM OPINION AND ORDER
CEDARBAUM, District Judge.
Carlos Gustavo Barahona was sentenced to 124 months imprisonment on June 20, 1996 after a jury had found him guilty of conspiracy to possess and possession with intent to distribute large quantities of cocaine. The Court of Appeals affirmed the conviction and sentence on May 23, 1997. Barahona now moves for modification of his sentence pursuant to 18 U.S.C. § 3582(c)(2). He argues that his in-prison rehabilitation after conviction and sentence entitles him to a downward departure.
The general rule set forth in 18 U.S.C. § 3582(c) is that a "court may not modify a term of imprisonment once it has been imposed." One of the exceptions to that rule allows the court to modify a sentence when the sentencing range upon which the sentence was based "has subsequently been lowered by the Sentencing Commission pursuant to 28 U.S.C. § 994(o)." 18 U.S.C. § 3582(c)(2). In an effort to bring himself within that exception, Barahona contends that an amendment ("Amendment 585") to the Commentary following Section 5K2.0 of the Sentencing Commission Guidelines Manual "lowered" the sentencing range. Neither Amendment 585 nor any other language in the Commentary following Section 5K2.0 establishes or lowers a sentencing range. Amendment 585 merely incorporates language from the Supreme Court's decision in Koon v. United States, 518 U.S. 81, 116 S. Ct. 2035, 135 L. Ed. 2d 392 (1996), which reflects the prevailing law on downward departures. Accordingly, the general rule of 18 U.S.C. § 3582(c) applies, and post-sentence rehabilitation is not by itself a ground for modifying a sentence that has been lawfully imposed. See United States v. Santiago, 2000 WL 760743 (D.Me. Mar. 21, 2000).
Based on the foregoing, Barahona's motion for a downward departure pursuant to 18 U.S.C. § 3582(c)(2) is denied.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2687112/ | IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
CHARLES C. SANMANN, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Petitioner, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D14-2716
STATE OF FLORIDA,
Respondent.
___________________________/
Opinion filed July 24, 2014.
Petition for Writ of Prohibition -- Original Jurisdiction.
Charles C. Sanmann, pro se, Petitioner.
Pamela Jo Bondi, Attorney General, Tallahassee, for Respondent.
PER CURIAM.
DENIED.
VAN NORTWICK, CLARK, and SWANSON, JJ., CONCUR. | 01-03-2023 | 07-31-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2347292/ | 457 F. Supp. 858 (1978)
In re H. & C. TABLE CO., INC., Bankrupt.
UNITED STATES of America, Plaintiff,
v.
David S. KENNEDY, Trustee, Defendant.
No. 78-2043.
United States District Court, W. D. Tennessee, W. D.
September 22, 1978.
*859 Arthur S. Kahn, Asst. U. S. Atty., W. J. Michael Cody, U. S. Atty., Memphis, Tenn., for plaintiff.
David S. Kennedy, Memphis, Tenn., Joel S. Porter, Memphis, Tenn., Robert S. Wellman, Nashville, Tenn., for defendant and bankrupt.
ORDER
WELLFORD, District Judge.
This is a Bankruptcy appeal involving an attempted late filing of a claim by the United States on behalf of the Small Business Administration (SBA). The bankrupt borrowed money from the SBA on certain real property, which had an estimated market value in excess of the loan. When H & C was involved in bankruptcy proceedings, a notice of the first meeting of creditors was sent to the SBA, which was represented at the meeting by two attorneys from the Nashville Office. At the same time, however, no notice was sent to the United States Attorney as required by Rule 203(g), Rules of Bankruptcy Procedure.
Convinced by the SBA representatives that the debtor had no equity in the real estate, the Trustee, with the approval of the Court, disclaimed the property which was sold at foreclosure involving a deficiency of $10,269.37, which is at issue in this contest.
Notice of the final meeting of creditors was sent in November of 1977, approximately one year after the first meeting, and because some claims subject to objection involved the SBA, the Trustee notified both the SBA and the United States Attorney. The latter, maintaining that this was the first notice he had of these proceedings, then filed a proof of claim on behalf of the SBA which had previously neglected to follow this procedure.
The Referee in Bankruptcy disallowed the SBA claim because first, the time limit for filing claims is mandatory and may not be expanded beyond the six months' limit; and, second, because the claim filed could not be properly considered as an amendment because there was nothing in writing within the six months' period indicating the SBA claim. The Referee in Bankruptcy ruled that there was no equitable authority to excuse late filing and that the plaintiff did not come within the exceptions found in Rule 302(e), Rules of Bankruptcy Procedure.
It is apparent in this record that the representatives and lawyers of the SBA were negligent or guilty of serious oversight in failing to file a claim on behalf of the SBA as usually required. The United *860 States, however, is a monstrous government, involving many agencies, and it is apparent that one agency of the United States does not always know what another agency is doing. This, of course, is the basis for Rule 203(g), requiring that notice of a government agency's claim in a bankruptcy proceeding be given to the legal office of the United States, the United States Attorney. Section 58(e) of the Bankruptcy Act itself, however, requires only the notification of the agency concerned, and certainly the SBA was the real party in interest in this proceeding. 11 U.S.C. § 94(e).
The Court rules, however, that there is a substantial basis for the requirements of the Rule and that the United States Attorney should be notified in all instances where a government agency is a creditor, or apparent creditor, in a bankruptcy situation. Failure to notify the United States Attorney, even though the agency itself was notified, could well bring about a situation where the rights of the United States could or might be jeopardized. The law should be strictly observed with regard to time limitations for the filing of claims, but the Bankruptcy Court in the exercise of equitable jurisdiction may permit a claim to be filed and proved to prevent either fraud or injustice. Pepper v. Litton, 308 U.S. 295, 304-305 n. 11, 60 S. Ct. 238, 84 L. Ed. 281 (1939). The appropriate representative of the government was not notified in this case and notice to the agency, though appropriate, is not imputable to the United States Attorney. United States v. Omer, 232 F. Supp. 746 (D.Kan.1964); United States v. Golenburg, 175 F. Supp. 415 (N.D.Ohio 1959).
Under the circumstances, the Bankruptcy Court has the equitable power to allow late filed claims to prevent injustice. In re Comac Co., 402 F. Supp. 43 (E.D.Mich. 1975).
Under these circumstances, the matter is remanded to the Referee in Bankruptcy to determine whether he should exercise his equitable power to allow the late filed claim under these conditions, or whether the debt owed the SBA should be dischargeable otherwise. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2814496/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civil Action No. 13-1759 (EGS)
)
INTERNAL REVENUE SERVICE, )
)
Defendant. )
________________________________)
MEMORANDUM OPINION
Judicial Watch requested information from the Internal Revenue
Service (“IRS”) under the Freedom of Information Act (“FOIA”), 5
U.S.C. § 552. The IRS conducted what it considers to have been a
reasonable search in response to that request, but found no
responsive records. The IRS therefore moves for summary
judgment, arguing that it has discharged its FOIA
responsibilities. Judicial Watch opposes this motion and
proposes ways in which the IRS could have conducted a more
appropriate search. Upon consideration of the motion, the
response and reply thereto, the applicable law, and the entire
record, the Court GRANTS the motion for summary judgment.
I. Background
A. The May 22, 2013 FOIA Request and this Lawsuit.
On May 22, 2013, Judicial Watch submitted to the IRS a FOIA
request for:
Any and all records and communications concerning,
regarding, or related to the selection of individuals
for audit based on information contained in 501(c)(4)
tax exempt applications.
Compl., ECF No. 1 ¶ 5. “The time frame of the request was
identified as being ‘January 1, 2010 to the present.’” Id.
On June 25, 2013, the IRS acknowledged that it had received
the request and advised that it would be unable to finish
processing the request on time and therefore had “‘extended the
response date to August 16, 2013.’” Id. ¶ 6. An August 13, 2013
letter from the IRS indicated that the IRS required additional
time and would contact Judicial Watch by September 27, 2013 if
it remained unable to complete processing of the request. See
id. ¶ 7. Having received no further response, Judicial Watch
filed suit on November 8, 2013. See id. ¶ 8.
After the case was filed, the parties submitted a series of
status reports. See Meet and Confer Report, ECF No. 11; Status
Report, ECF No. 12. On August 6, 2014, they filed a joint status
report indicating that the IRS believed that “it had conducted a
reasonable search which did not locate any responsive records,”
while Judicial Watch felt that “there is a genuine issue of
material fact regarding whether the Service has satisfied its
obligations.” Status Report, ECF No. 18 at 1. At the parties’
request, the Court set a schedule for the briefing of a motion
for summary judgment. See Minute Order of August 6, 2014.
2
On September 22, 2014, the IRS filed its motion for summary
judgment. See Mot. for Summ. J. (“Mot.”), ECF No. 19. The IRS
also submitted a statement of facts in support of that motion.
See IRS Statement of Facts (“Def.’s SMF”), ECF No. 19-1. On
October 22, 2014, Judicial Watch filed its opposition to the
motion for summary judgment along with a response to the IRS’s
statement of facts. See Opp. to Mot. (“Opp.”), ECF No. 20;
Judicial Watch Statement of Facts (“Pl.’s SMF”), ECF No. 20-1.
On November 21, 2014, the IRS filed a reply brief, along with a
brief response to Judicial Watch’s statement of facts. See Reply
in Supp. of Mot. (“Reply”), ECF No. 23; IRS Reply SMF, ECF No.
23-1. The IRS’s motion is ripe for adjudication.
B. Organization of the IRS.
To understand the search conducted by the IRS in response to
Judicial Watch’s FOIA request, it is necessary to describe the
structure of the IRS. The IRS “is mainly organized around four
distinct operating divisions.” Def.’s SMF ¶ 2; Pl.’s SMF ¶ 2.
These divisions are: (1) the Wage and Investment Division, which
“serves individual taxpayers . . . with wage and investment
income only”; (2) the Small Business/Self-Employed Division,
which focuses on taxpayers that are either small businesses or
self-employed; (3) the Large & Mid-Size Business Division, which
works with “corporations with assets greater than $10 million”
as well as business and individuals with certain international
3
focuses; and (4) the Tax Exempt and Government Entities
Division, which “serves three distinct taxpayer segments:
Employee Plans, Exempt Organizations, and Government Entities.”
Def.’s SMF ¶¶ 3–7; Pl.’s SMF ¶¶ 3–7.
“All applications for tax exempt status” under Section
501(c)(4), “are processed by the Rulings and Agreements Office
within the Exempt Organizations Unit of [the Tax Exempt and
Government Entities Division].” Def.’s SMF ¶ 8; Pl.’s SMF ¶ 8.
The Tax Exempt and Government Entities Division does not conduct
any audits of individuals, however. See Def.’s SMF ¶ 9; Pl.’s
SMF ¶ 9. Individual audits are conducted by one of the three
other divisions. See Def.’s SMF ¶ 10; Pl.’s SMF ¶ 10. Naturally,
then, if information on a 501(c)(4) application caused the Tax
Exempt and Government Entities Division to think that an
individual audit was warranted, the Division would need to refer
the individual to another division for such an audit. See Def.’s
SMF ¶ 35, 50, 68, 86; Declaration of Dagoberto Gonzalez
(“Gonzalez Decl.”), ECF No. 19-3 ¶ 6; Declaration of David
Horton (“Horton Decl.”), ECF No. 19-4 ¶ 4; Declaration of Cheryl
Claybough (“Claybough Decl.”), ECF No. 19-5 ¶ 4; Declaration of
Karen Schiller (“Schiller Decl.”), ECF No. 19-6 ¶ 5.
C. The IRS’s Search for Records.
In keeping with Judicial Watch’s request for “[a]ny and all
records and communications concerning, regarding, or related to
4
the selection of individuals for audit based on information
contained in 501(c)(4) tax exempt applications,” Compl., ECF No.
1 ¶ 5, the IRS began its search by discerning whether any
individuals ever were selected for audit based upon information
in an application for tax-exempt status under Section 501(c)(4).
The IRS began with the Tax Exempt and Government Entities
Division—the recipient and reviewer of all applications under
Section 501(c)(4)—searching for records in “the recordkeeping
systems for examination referrals maintained by the Exempt
Organizations Unit,” which would contain all “referrals arising
from records of organizations that have applied for tax exempt
status.” Def.’ SMF ¶¶ 18-21; Declaration of Tamera Ripperda
(“Ripperda Decl.”), ECF No. 19-2 ¶ 7. The IRS retrieved from
this recordkeeping system “a list of all referrals arising out
of applications for tax-exempt status,” reviewed that list
manually “to identify all taxpayer names that were not clearly
organizations (creating a list of potential individuals),” and
finally obtained and reviewed the referral documentation for
these individuals “to determine if any referral arose from
information contained in an application . . . under [Section
501(c)(4)].” Def.’ SMF ¶¶ 21-24; Ripperda Decl. ¶ 7. No
referrals of any individual for an audit due to information
contained in such an application were found. See Def.’ SMF ¶¶
19, 25; Ripperda Decl. ¶ 7.
5
Having found that the Tax Exempt and Government Entities
Division had no record of ever referring an individual for audit
based upon information contained in a 501(c)(4) application, the
IRS then conducted searches of records within the other three
divisions. These searches confirmed the lack of records
regarding any such referral during the relevant time period. See
Def.’ SMF ¶¶ 42, 58, 75, 130; Gonzalez Decl. ¶ 7; Horton Decl. ¶
6; Claybough Decl. ¶ 6; Schiller Decl. ¶ 9.
Wage and Investment Division: Because the Wage and Investment
Division would not have received 501(c)(4) applications
directly, the IRS searched this division’s records for any
referrals from the Tax Exempt and Government Entities Division.
Such referrals would have been sent to the Wage and Investment
Division’s Compliance Office. See Def.’s SMF ¶ 36; Gonzalez
Decl. ¶ 6. The Wage and Investment Division records “[a]ll cases
of individual audits opened . . . based upon a referral from
another business unit” in the Audit Information Management
System. See Def.’s SMF ¶ 37; Gonzalez Decl. ¶ 7. A search of the
Audit Information Management System for any audits based upon
referrals during the relevant timeframe revealed only audits
that “concerned tip income received by casino employees.” Def.’s
SMF ¶ 41; Gonzalez Decl. ¶ 7.
Small Business/Self-Employed Division: Three offices within
this division may audit an individual: Campus Compliance
6
Services, Specialty Programs, and Examination Field. See Def.’s
SMF ¶ 87; Schiller Decl. ¶ 5. Because this division would not
receive 501(c)(4) applications directly, the IRS searched for
instances in which these offices received referrals of
individuals for audit from the Tax Exempt and Government
Entities Division. See Def.’s SMF ¶¶ 85–88; Schiller Decl. ¶ 5.
In the Campus Compliance Services office, all audit referrals
are recorded in the Audit Information Management System. See
Def.’s SMF ¶ 89; Schiller Decl. ¶ 6. A search of this system for
“any audit of an individual arising from a referral from [the
Tax Exempt and Government Entities Division]” during the
relevant period revealed that “[n]o project code specifically
identifying referrals from [that division] has been used in the
last 5 years” and that no open or closed cases “had project
codes indicating a connection to [that division’s] matters. See
Def.’s SMF ¶ 93; Schiller Decl. ¶ 6.
In the Specialty Programs office, different units record their
audit referrals in different ways (the Excise Tax Unit by
recording in the Specialist Referral System; the Estate and Gift
Tax Unit by tracking referrals in a spreadsheet; and the
Employment Tax Unit through a “computerized listing of open and
closed examinations”). See Def.’s SMF ¶¶ 97–98, 100, 105;
Schiller Decl. ¶ 7. A manual review of these systems revealed:
(1) that the Excise Tax Unit’s system contained no referrals of
7
individuals from the Tax Exempt and Government Entities
Division; (2) that the Estate and Gift Tax Unit’s spreadsheet
recorded 23 audits referred by the Tax Exempt and Government
Entities division, but the referrals all arose out of
information on the organization’s annual tax return, not a
501(c)(4) application; and (3) that the Employment Tax Unit’s
list included no open audits referred by the Tax Exempt and
Government Entities Division and that as many as 60 closed
audits were associated with a miscellaneous code that did not
identify which division referred them, but that obtaining more
information would require several months and a significant
amount of time to conduct a manual review. See Def.’s SMF ¶¶ 99,
101–04, 106-12; Schiller Decl. ¶ 7.1
In the Examination Field, audit referrals are processed in
seven different offices. See Def.’s SMF ¶ 116; Schiller Decl. ¶
8. One of these offices “maintains copies of all referrals sent
to it,” “conducted a manual review of all the referrals it
received” during the relevant time period, and found “no
1 The Employment Tax Unit also proffers that it is unlikely that
these closed audits were referred by the Tax Exempt and
Government Entities Division because the Unit rarely receives
referrals from that division, has no open audits that were
referred by that division, and “[t]he employee who receives and
reviews all referrals to Employment Tax, and who has been in
this position for 10 years . . . . had no recollection of ever
seeing a referral from [the Tax Exempt and Government Entities
Division] arising from information in [a 501(c)(4)
application].” Def.’s SMF ¶¶ 113–14; Schiller Decl. ¶ 7.
8
referrals of individuals received from [the Tax Exempt and
Government Entities Division] based on information contained in
[a 501(c)(4) application].” Def.’s SMF ¶¶ 117-19; Schiller Decl.
¶ 8. The other offices “maintain electronic spreadsheets” of all
referrals. See Def.’s SMF ¶ 120; Schiller Decl. ¶ 8. Two of
these spreadsheets record the source of the referral, and a
review of these spreadsheets identified no referrals from the
Tax Exempt and Government Entities Division based on information
in a 501(c)(4) application. See Def.’s SMF ¶ 121; Schiller Decl.
¶ 8. In the other four, each office “contacted the Exam Group
Manager responsible for each open examination that was based on
a referral and was pending as of February 2014” and asked
whether the referral came from the Tax Exempt and Government
Entities Division and, if so, whether it was based upon
information in a 501(c)(4) application. See Def.’s SMF ¶ 122;
Schiller Decl. ¶ 8. No such cases were identified. See Def.’s
SMF ¶ 122; Schiller Decl. ¶ 8.2
Large and Mid-Size Business Division: Outside of individual
audits based upon preexisting audits of corporations or
2 For closed audits in those four offices, the only way to obtain
information on the source of the referral would take months and
involve many hours of review, and would be unlikely to succeed
as no open audits exist that meet the same criteria, the offices
that track closed audits had none that meet the relevant
criteria, and group managers in the offices do not remember any
referrals that would meet the criteria. See Def.’s SMF ¶ 123–29;
Schiller Decl. ¶ 8.
9
partnerships, only two offices within this division have the
authority to commence an audit of an individual: the
International Individual Compliance Function and the Global High
Wealth Function. See Def.’s SMF ¶ 48; Horton Decl. ¶ 2 & n.1.
Because this division would not receive a 501(c)(4) application
directly, the IRS searched for instances in which either office
received referrals of individuals for audit from the Tax Exempt
and Government Entities Division. See Def.’s SMF ¶¶ 49–50, 67–
68; Horton Decl. ¶ 4; Claybough Decl. ¶ 4.
In the International Individual Compliance Function, the IRS
searched the audit-tracking database of the Planning and Special
Programs Office, which is the office to which all referrals
would have been sent. See Def.’s SMF ¶¶ 51–55; Horton Decl. ¶¶
4–5. That search revealed a list of all cases referred to the
office, and a manual review of the list and information
pertaining to each entity on the list “revealed that only one
referral came . . . from [the Tax Exempt and Government Entities
Division”—a referral that related “to a pension distribution.”
Def.’s SMF ¶¶ 56–57; Horton Decl. ¶ 5.
In the Global High Wealth Industry Group, all audit referrals
are recorded in a database. See Def.’s SMF ¶¶ 69–70; Claybough
Decl. ¶ 5. A search of that database revealed that only one
referral for audit had come in from the Tax Exempt and
Government Entities Division during the relevant time period,
10
and that “dealt with a defined retirement plan.” Def.’s SMF ¶¶
69–75; Claybough Decl. ¶¶ 5–6.
* * *
Based upon these searches, the IRS concluded that no audit
referrals of individuals had been made during the relevant time
period based upon any information contained in a 501(c)(4)
application.
D. The IRS’s Supplemental Searches.
In November 2014, in response to concerns raised in Judicial
Watch’s opposition to the IRS’s motion for summary judgment, the
IRS conducted a supplemental search “for internal directives and
guidelines regarding the selection of individuals for audit
based on 501(c)(4) applications.” Def.’s Reply SMF ¶ 5. The
Director of the Exempt Organizations Unit of the Tax Exempt and
Government Entities Division indicated that “[a]ny such
documents would generally be located on the IRS [Tax Exempt and
Government Entities] intranet website or in sections of the
Internal Revenue Manual applicable to [the Tax Exempt and
Government Entities Division].” Second Declaration of Tamera
Ripperda (“Second Ripperda Decl.”), ECF No. 23-2 ¶ 3. Ms.
Ripperda directed a review of “the guidance, resources, and
reference materials maintained on the . . . intranet website for
any material pertaining to referrals of individuals for audit
based on information in [501(c)(4)] applications.” Id. ¶ 4.
11
Although the search located documents related to “the referral
for audit of entities that have applied for recognition [under
Section 501(c)(4)],” it “located no documents relating to
referring individuals for audit based on information in
[501(c)(4)] applications.” Id. (emphasis in original). The
search also involved a review of sections of the Internal
Revenue Manual applicable to the division, but that review
located “no . . . provisions that specifically address referrals
of individuals based on information contained in [501(c)(4)]
applications.” Id. Finally, the IRS contacted “all senior
managers” in the unit that processes 501(c)(4) applications and
those with “oversight responsibilities for audit selection
and/or referrals” in an attempt to “determine if they have any
recollection of any internal directives or guidance” during the
relevant period. Id. None of these individuals had any memory
“of any internal directives or guidance related to referring
individuals for audit based in information contained in
[501(c)(4)] applications.” Id.
II. Summary Judgment in a FOIA Case
Summary judgment is granted when there is no genuine issue of
material fact and the movant is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986); Waterhouse v. District of Columbia, 298 F.3d
989, 991 (D.C. Cir. 2002). In determining whether a genuine
12
issue of fact exists, the court must view all facts in the light
most favorable to the non-moving party. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Under FOIA, all underlying facts and inferences are analyzed in
the light most favorable to the FOIA requester; as such, only
after an agency proves that it has fully discharged its FOIA
obligations is summary judgment appropriate. Moore v. Aspin, 916
F. Supp. 32, 35 (D.D.C. 1996) (citing Weisberg v. U.S. Dep't of
Justice, 705 F.2d 1344, 1350 (D.C. Cir. 1983)). “FOIA cases
typically and appropriately are decided on motions for summary
judgment.” Gold Anti-Trust Action Comm. v. Bd. of Governors of
Fed. Reserve Sys., 762 F. Supp. 2d 123, 130 (D.D.C. 2011)
(quotation marks omitted).
In considering a motion for summary judgment under FOIA, the
court must conduct a de novo review of the record. See 5 U.S.C.
§ 552(a)(4)(B). The court may award summary judgment on the
basis of information provided by the agency in affidavits. See
Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir.
1981); Vaughn v. Rosen, 484 F.2d 820, 826-28 (D.C. Cir. 1973).
Agency affidavits must be “relatively detailed and non-
conclusory.” SafeCard Servs. v. SEC, 926 F.2d 1197, 1200 (D.C.
Cir. 1991) (quotation marks omitted). Such affidavits are
“accorded a presumption of good faith, which cannot be rebutted
by purely speculative claims about the existence and
13
discoverability of other documents.” Id. (quotation marks
omitted).
III. Analysis
The IRS’s motion is based entirely upon its claim to have
conducted an adequate search in response to Judicial Watch’s
FOIA request. Because the IRS uncovered no responsive records
during that search, a finding that the search was adequate would
end this case.
A. Law Regarding the Adequacy of a Search.
The standard for assessing the adequacy of an agency’s search
in response to a FOIA request is a familiar one:
To prevail on a motion for summary judgment regarding
the adequacy of a search, an agency must show “beyond
material doubt . . . that it has conducted a search
reasonably calculated to uncover all relevant
documents.” “The issue is not whether any further
documents might conceivably exist but rather whether the
government’s search for responsive documents was
adequate.” The standard is one of reasonableness, and is
“dependent upon the circumstances of the case.” To
establish the adequacy of its search, an agency may rely
on affidavits and declarations which are “relatively
detailed and nonconclusory and . . . submitted in good
faith.”
Shurtleff v. U.S. Environmental Protection Agency, 991 F. Supp.
2d 1, 9 (D.D.C. 2013) (quoting Weisberg, 705 F.2d at 1351)
(alterations in original). “There is no requirement that an
agency search every record system,” but “the agency cannot limit
its search to only one record system if there are others that
are likely to turn up the information requested.” Oglesby v.
14
U.S. Dep’t of Army, 920 F.2d 57, 68 (D.C. Cir. 1990).
Additionally, “the ‘mere speculation that as yet uncovered
documents may exist does not undermine the finding that the
agency conducted a reasonable search for them.’” DeSilva v. U.S.
Dep’t of Hous. & Urb. Dev., 36 F. Supp. 3d 65, 71 (D.D.C. 2014)
(quoting SafeCard, 926 F.2d at 1201) (alteration omitted).
Consistent with the need for a “reasonable” search, the cost
or burden of a potential search is also a factor in evaluating
whether the search conducted was adequate. “FOIA ‘was not
intended to reduce government agencies to full-time
investigators on behalf of requesters.’” Cunningham v. U.S.
Dep’t of Justice, 40 F. Supp. 3d 71, 84 (D.D.C. 2014) (quoting
Judicial Watch v. Export-Import Bank, 108 F. Supp. 2d 19, 27
(D.D.C. 2000)). For that reason, “an agency is not required to
undertake a search that is so broad as to be unduly burdensome.”
Id. (citing Nation Magazine v. U.S. Customs Serv., 71 F.3d 885,
891 (D.C. Cir. 1995)); see also Freedom Watch v. CIA, 895 F.
Supp. 2d 221, 228 (D.D.C. 2012) (“An agency need not honor a
FOIA request that requires an unreasonably burdensome search.”)
(quotation marks and alteration omitted). A costly and time-
consuming search with minimal chance of revealing responsive
records may not be necessary. See, e.g., Ancient Coin Collectors
Guild v. U.S. Dep’t of State, 866 F. Supp. 2d 28, 33–34 (D.D.C.
2012) (search was adequate despite agency’s failure to search
15
backup recordings where the cost would be prohibitive and the
likelihood of uncovering responsive information was low);
Schrecker v. Dep’t of Justice, 217 F. Supp. 2d 29, 35 (D.D.C.
2002) (“[T]o require an agency to hand search through millions
of documents is not reasonable and therefore not necessary,” as
agency already had searched “the most likely place responsive
documents would be located.”), aff’d, 349 F.3d 657 (D.C. Cir.
2003).
B. Judicial Watch Largely Conceded that the IRS’s Initial
Search Was Sufficient to Show that No Referrals of
Individuals for Audits Took Place.
The IRS asserted in its motion that its various searches fully
discharged its responsibilities under FOIA because by
determining that the Tax Exempt and Government Entities Division
had not referred any individual for audit based upon information
contained in a 501(c)(4) application, the IRS could reasonably
conclude that no records exist that are responsive to Judicial
Watch’s request. See Mot. at 14-19. Judicial Watch did not
controvert these assertions directly; rather, it expressed
suspicion of this finding, implying that communications,
informal referrals, or guidelines must exist. This suspicion
raises three issues: (1) whether the IRS’s explanation of its
audit-referral process or its search of records regarding that
process may be inaccurate or incomplete; (2) whether the IRS
needed to search for “internal directives, memorandums, meeting
16
notes, agendas, etc” that might also be responsive, Opp. at 3;
and (3) whether the IRS was required to conduct searches to
obtain “communications or discussions about using 501(c)(4) tax
exempt applications for audit referrals generally.” Id.
As to the first issue, Judicial Watch bases its suspicion that
referrals nonetheless occurred on a handful of concerns.
Judicial Watch has allegedly learned in connection with a
different FOIA request that IRS officials communicated with the
Department of Justice “about criminally prosecuting signers of
applications for 501(c)(4) tax exempt status based on allegedly
false information contained in applications.” Pl.’s SMF at 18 ¶
1. How that bears on whether the IRS referred individuals
internally for audit based on information contained in a
501(c)(4) application is entirely unexplained. Judicial Watch
also claims that an IRS official “acknowledged that donor lists
generally were neither needed nor used in making determinations
on tax exempt status,” but “the IRS required certain applicants
for 501(c)(4) tax exempt status to submit lists of donors to
their organizations as part of the application process, and
nearly one in ten donors identified on such donor lists were
subject to audit.” Id. ¶¶ 2–3. The IRS asserts that even
assuming this evidence is admissible, proving that individuals
who happened to be listed on 501(c)(4) donor lists were selected
for an audit would not demonstrate that the IRS selected the
17
individual for audit based upon her presence on such a list. See
Reply at 5–6. Donor lists, moreover, are submitted to the IRS
for other purposes, so it is meaningless that they may have been
received by IRS officials. See id. at 6. Any correlation between
a name on a donor list and an audit cannot, without more,
overcome the presumption that the IRS’s detailed explanation of
its audit-referral processes and its search thereof was complete
and correct in determining that no responsive referrals occurred
during the relevant time period. Accordingly, Judicial Watch’s
indirect attack on the IRS search of all locations in which a
record of a referral of an individual for audit based upon
information gleaned from a 501(c)(4) application is rejected,
and Judicial Watch failed directly to challenge or cast doubt on
the adequacy of the search recounted in the IRS’s motion.
C. The IRS’s Supplemental Search for Guidance or Directives
Was Adequate.
The second issue raised by Judicial Watch is the possible
existence of internal guidance regarding the use of 501(c)(4)
application information to prompt individual audits. Although
the IRS may not have been required to search for such records
because its searches of the records of various divisions
concluded that no such referrals had been made, the Court need
not address this issue because the IRS conducted a search for
18
such documents.3 The Court accepts the good faith and detailed
declaration of the Director of the Exempt Organizations Unit of
the Tax Exempt and Government Entities Division, who stated that
any guidance or similar records would either be on the
Division’s “intranet website” or would be found in applicable
“sections of the Internal Revenue Manual.” Second Ripperda Decl.
¶ 3. Ms. Ripperda directed a review of the various materials on
that portion of the intranet website, as well as the relevant
sections of the Internal Revenue Manual, but the search
uncovered nothing regarding the referral of individuals. Id. ¶
4. Ms. Ripperda also oversaw a survey of senior managers in the
units that process 501(c)(4) applications and that oversee audit
selections and referrals. See id. No one could recall the
existence “of any internal directives or guidance related to
referring individuals for audit based on information contained
in [501(c)(4)] applications.” Id. The IRS therefore determined
that no such guidance materials exist. Absent any reason to
doubt the declaration—which is accorded a presumption of good
3 Judicial Watch has not challenged the IRS’s submission of
supplemental materials regarding an additional search conducted
while summary-judgment briefing was ongoing. The Court presumes
that Judicial Watch’s silence—neither seeking to file a surreply
nor otherwise asking the Court for relief—means that it has no
objection to the Court’s consideration of these supplemental
materials. See DeSilva, 36 F. Supp. 3d at 72 (citing Judicial
Watch v. FDA, 514 F. Supp. 2d 84, 89 n.1 (D.D.C. 2007); Vest v.
Dep’t of Air Force, 793 F. Supp. 2d 103, 121 (D.D.C. 2011)).
19
faith, see SafeCard, 926 F.2d at 1200—the Court finds that the
IRS identified all record-keeping systems that might contain the
guidance documents sought by Judicial Watch and searched them
thoroughly.
D. The IRS Need Not Search for Communications because it
Reasonably Concluded that No Relevant Referrals Had
Occurred and Further Searches Would Be Unduly Burdensome.
The IRS argues that its findings that there are neither
official directives nor guidance regarding the use of
information in a Section 501(c)(4) application and that no
individual audit referrals took place based upon information
gleaned from a Section 501(c)(4) application make it unnecessary
to search for further documents, including communications, on
the subject. See Reply at 8–9. The IRS has also indicated that
any search of the email accounts of its employees for
communications that might pertain to a decision to select or not
to select an individual for an audit based upon information in a
501(c)(4) application would require the search of approximately
16,000 employee email accounts (of individuals in 442 different
cities), between individuals who worked in offices that process
501(c)(4) applications, those who conduct individual audits, and
those who have policy-making authority over audit decisions. See
Declaration of Elise Hellmuth (“Hellmuth Decl.”), ECF No. 23-4 ¶
3. Judicial Watch is correct that the IRS has a central server
for the storage of employee emails, but that server has an
20
approximate limit of 6,000 emails per employee—any email over
that limit may be archived and saved locally. See Declaration of
Neguiel Hicks in Judicial Watch v. IRS, No. 14-1039, Ex. to
Pl.’s Opp. ¶¶ 6–7 (hereinafter “Hicks Decl.”). These archived
emails would be solely in control of the individual employee—
wherever he or she may be located. See id. ¶ 7. As the
declaration relied upon by Judicial Watch notes, there is no
method for the IRS to search these locally saved emails for
16,000 employees, so the IRS would need to collect files from
each employee individually. See id. ¶¶ 4–10. The declaration
relied upon by Judicial Watch was filed in a case in which
approximately 2,200 employees would have been implicated; there,
the estimate was that a few years would have been needed to
respond, using multiple full-time employees. See id. ¶¶ 26–27.
The burden here would be greater.
The IRS argues that this incredible burden is especially undue
because of the unlikelihood that anything responsive would be
uncovered. The IRS’s other searches establish—and Judicial
Watch’s evidence has not controverted—that no individuals were
referred for audit based upon information gleaned from a Section
501(c)(4) application. Therefore, it is speculation at best to
say that there exist communications discussing decisions to
audit an individual based upon 501(c)(4) applications. And it is
well-established that “an agency is not required to expend its
21
limited resources on searches for which it is clear at the
outset that no search would produce the records sought.”
Cunningham, 40 F. Supp. 3d at 83. Even if there were a small
likelihood of success, the Court, according the IRS’s affidavits
the appropriate presumption of good faith, finds that the IRS
has established a very significant burden that would render
Judicial Watch’s proposed search unreasonable. See, e.g., Wolf
v. CIA, 569 F. Supp. 2d 1, 9 (D.D.C. 2008) (search of microfilm
files that would take an estimated 3,675 hours and cost $147,000
was unreasonably burdensome, especially in light of the fact
that responsive films might not exist); People for the Am. Way
v. U.S. Dep’t of Justice, 451 F. Supp. 2d 6, 13–14 (D.D.C. 2006)
(searching 44,000 files manually and expending at least 25,000
hours of work to do so would be unduly burdensome).4
4 Judicial Watch also appeared to seek to broaden its initial
FOIA request so that it would uncover communications that may
pertain to decisions not to audit individuals based on
information contained in a 501(c)(4) application. See Opp. at 3–
5. The initial request was for “[a]ny and all records and
communications concerning, regarding, or related to the
selection of individuals for audit based on information
contained in 501(c)(4) tax exempt applications.” Compl., ECF No.
1 ¶ 5. The IRS correctly notes that the phrase “selection of
individuals for audit” most naturally reads as describing those
situations in which an individual was chosen to be audited; not
to include decisions not to audit a particular individual. See
Reply at 17. Nor does the use of the broadening words
“concerning, regarding, or related to” transform the request
into one for any records related in any way to information in a
501(c)(4) application and decisions not to audit a particular
individual. Such a reading, moreover, would begin to render
Judicial Watch’s request unduly vague. Cf. Sack v. CIA, 53 F.
22
IV. Conclusion
For the foregoing reasons, the Court GRANTS the IRS’s motion
for summary judgment. An appropriate Order accompanies this
Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
July 3, 2015
Supp. 3d 154, 164 (D.D.C. 2014) (use of the phrase “pertaining
in whole or in part” rendered a FOIA request unduly vague as “a
record may pertain to something without specifically mentioning
it,” making it impossible for the responding agency to know what
is actually sought).
23 | 01-03-2023 | 07-03-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2687110/ | IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
IOANNIS PAPADOPOULOS, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D14-2589
REEMPLOYMENT
ASSISTANCE APPEALS
COMMISSION AND
TRIANGLE HOUSE LLC, DBA
MOODHOOPS,
Appellees.
_____________________________/
Opinion filed July 9, 2014.
An appeal from an order of the Reemployment Assistance Appeals Commission.
Frank E. Brown, Chairman.
Ioannis Papadopoulos, pro se, Appellant.
Norman A. Blessing, General Counsel, Tallahassee (no appearance), for Appellee.
PER CURIAM.
DISMISSED. See Raysor v. Raysor, 706 So. 2d 400, 401 (Fla. 1st DCA
1998).
THOMAS, RAY, and OSTERHAUS, JJ., CONCUR. | 01-03-2023 | 07-31-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/3283345/ | The defendant was convicted of the crime of lewd and lascivious conduct with a child, his daughter, then of the age of nine years. This appeal is from the judgment and the order denying a new trial.
[1] At the trial the child positively denied that the defendant committed any of the acts charged. On the ground that he was taken by surprise by such denial, the district attorney was permitted to prove by the testimony of the girl and that of other witnesses that at other times she had stated that the defendant had committed such acts. In admitting this testimony the court stated that it was admitted for the purpose of contradicting the girl's testimony given at the trial to the effect that the defendant had *Page 434
not committed such acts, "to impeach and wipe out that testimony; and that is the only effect and purpose that this testimony can have, is to wipe out her previous testimony, if the jury so believe that it does, but it is not for the purpose of showing the fact itself." It is elementary, of course, that the girl's extrajudicial statements were inadmissible to prove any element of the crime charged. Appellant contends that there is no other evidence to support the verdict. At the oral argument counsel for the People confessed inability to find any such other evidence and a careful reading of the entire record fails to disclose any such evidence. The appellant, therefore, is entitled to a reversal.
The court instructed the jury that "testimony has been introduced by the prosecution tending to prove other acts of lewd and lascivious conduct of the defendant toward" the girl "prior to the acts relied upon for conviction," and that this evidence might be considered as tending to prove "the lewd and lascivious disposition and tendency of the defendant to commit lewd and lascivious acts." No evidence of such "other acts of lewd and lascivious conduct of the defendant" has been discovered in the record.
The judgment and the order are reversed.
Burroughs, J., pro tem., and Plummer, J., concurred.
A petition for a rehearing of this cause was denied by the district court of appeal on October 13, 1927, and a petition by respondent to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on November 10, 1927. *Page 435 | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2748010/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
___________________________________
)
LJUBICA RAJKOVIC, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-1808 (TSC)
)
FEDERAL BUREAU OF )
INVESTIGATION, et al., )
)
Defendants. )
___________________________________ )
MEMORANDUM OPINION
This matter is before the Court on Defendants’ Motion for Summary Judgment [ECF No.
16]. The motion is unopposed, and for the reasons stated below, the motion will be granted.
Plaintiff submitted a request under the Freedom of Information Act (“FOIA”), see 5
U.S.C. § 552, to the Federal Bureau of Investigation (“FBI”) for information about John
Kennedy, Jr., “son of the former president of the U.S.A. John F. Kennedy, who died in a plane
accident on July 19, 1999.” Compl. ¶ 4; see Statement of Material Facts As To Which There Is
No Genuine Issue [ECF No. 16-1] ¶ 1. Initially, the FBI directed plaintiff to “pre-processed
material . . . available in the FBI’s public website in order to speed the process and avoid
charging unnecessary duplication fees.” Defs.’ Mot. for Summ. J., Second Hardy Decl. ¶ 8; see
Statement of Material Facts As To Which There Is No Genuine Issue ¶ 2 (citing Second Hardy
Decl. ¶ 6). Plaintiff was not satisfied with this response, however, see Compl. ¶¶ 5-8, and opted
to litigate the matter instead, Statement of Material Facts As To Which There Is No Genuine
Issue ¶ 6.
1
A search of the FBI’s Central Records System using variations of John Kennedy Jr.’s
first and last names as search terms identified three main files plus another “104 potentially
responsive cross-reference files. Statement of Material Facts As To Which There Is No Genuine
Issue ¶ 10. After further review of these files, FBI staff determined that only two main files and
eight cross-references were responsive to plaintiff’s FOIA request. Id. Of 347 pages of records
deemed responsive, the FBI determined that 11 pages were duplicates, released 57 pages in full,
released 153 pages in part, and withheld 126 pages in full. Id. ¶ 11. It relied on FOIA
Exemptions 1, 3, 6, 7(C), 7(D), and 7(E). See id. ¶¶ 14-20 (citing Second Hardy Decl. ¶¶ 17-79).
The FBI has reviewed the responsive records “to achieve maximum disclosure consistent with
the access provisions of the FOIA,” id. ¶ 13, and to this end, it has “provided all reasonably
segregable material to [p]laintiff . . . and . . . the only information withheld . . . consists of
information that would trigger reasonably foreseeable harm to one or more interests protected by
the cited FOIA exemptions,” id. ¶ 22 (citing Second Hardy Decl. ¶¶ 80-81).
On August 26, 2014, the Court issued an Order [ECF No. 17] advising the plaintiff of her
obligations under the Federal Rules of Civil Procedure and the local rules of this Court to
respond to the motion. Specifically, the Court warned the plaintiff that, if she failed to file an
opposition to the motion by October 15, 2014, the motion would be treated as conceded. To
date, the plaintiff has neither filed an opposition to the motion nor requested an extension of
time. For purposes of this Memorandum Opinion, the above facts are deemed admitted. See
LCvR 7(h)(1) (“In determining a motion for summary judgment, the court may assume that facts
identified by the moving party in its statement of material facts are admitted, unless such a fact is
controverted in the statement of genuine issues.”).
2
Although the Court may treat the government’s unopposed motion as conceded, see
LCvR 7(b), summary judgment is warranted only if “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a); see Alexander v. FBI, 691 F. Supp. 2d 182, 193 (D.D.C. 2010) (“[E]ven where a
summary judgment motion is unopposed, it is only properly granted when the movant has met its
burden.”). Here, defendants have met their burden, and absent any opposition from the plaintiff,
the Court will grant summary judgment in the defendants’ favor.
An Order is issued separately.
/s/
TANYA S. CHUTKAN
DATE: November 4, 2014 United States District Judge
3 | 01-03-2023 | 11-04-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2746824/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BARRY R. SCHOTZ, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-1811 (BAH)
)
CHARLES E. SAMUELS, JR., )
)
Defendant. )
MEMORANDUM OPINION
This lawsuit, brought pro se by a federal prisoner, arises from the Bureau of Prisons’
(BOP) response to the plaintiff’s request under the Freedom of Information Act (FOIA) for
“documents within and outside his Inmate Central File.” Compl., Ex. A (FOIA Request) at 1, ECF
No. 1. Having released records to the plaintiff, the defendant moves to dismiss under Rule
12(b)(1) of the Federal Rules of Civil Procedure or for summary judgment under Rule 56. Def.’s
Mot. to Dismiss, or in the Alternative, Mot. for Summ. J., ECF No. 13. The plaintiff has opposed
the motion to the extent that BOP limited the search for responsive records to his central file.
He also requests “sanctions” on the basis that defendant’s disclosure of responsive records was
“a direct consequence” of this litigation. Pl.’s Request for Sanctions and Opp’n to Def.’s Mot. to
Dismiss, or in the Alternative, Mot. for Summ. J., ECF No. 15, at 2.
Since there is no genuine dispute regarding the defendant’s treatment of the released
records, and the defendant has demonstrated the adequacy of its search, the Court will grant
1
the defendant’s motion for summary judgment. In addition, the Court will deny the plaintiff’s
motion for sanctions, construed also as a motion for costs.
I. BACKGROUND
In a prolix request BOP received in January 2012, the plaintiff sought records pertaining
to his prison transfers. He requested generally “all . . . documents related to . . . non-voluntary
nearer home transfer consideration, recommendation, and approval within and outside my
Inmate Central File.” Decl. of Beth Ochoa, ECF No. 13-3, Attach. 1 (FOIA Request at 2). The
plaintiff stated: “Outside sources include, but are not limited to, any/all communications by and
between FCC-Tucson Warden Apker, Camp Administrator S.K. Beauchamp, Unit Manager Debra
Baker, Case Manager Arturo Moreno, Counselor Robert Wright, Theresa Talplacido,
Institutional Legal Counsel, Western Region Staff, DSCC, etc.” Id. BOP distilled from the
plaintiff’s narrative requests for: (1) a memorandum from FCC Tucson contained in plaintiff’s
central file regarding his ongoing legal activities, and (2) two categories of documents consisting
of transfer records between October 2005 and October 2011, and housing records pertaining to
the plaintiff’s placement in the Special Housing Unit (SHU) between November 21, 2011 and
December 1, 2011. Ochoa Decl. ¶ 4.
After searching the plaintiff’s central file, BOP assessed a fee of $27.60 to cover the cost
of copying 376 “pages responsive to your request for a copy of your central file.” Id., Attach. 3.
The plaintiff paid the fee on March 24, 2012, without revising the characterization of the
request as seeking documents from his central file. See id., Att. 4. By letter dated March 27,
2012, BOP acknowledged receipt of the payment and informed the plaintiff that it had located
444 responsive pages and was releasing 366 pages completely and 10 pages with redactions.
2
BOP withheld 68 pages in their entirety, 50 of which were the plaintiff’s Presentence
Investigation Report (PSR), Statement of Reasons (SOR), and visitor information. BOP invoked
FOIA exemptions 2, 7(C) and 7(F), see 5 U.S.C. § 552(b), as the bases for withholding that
information. Ochoa Decl., Att. 5.
The plaintiff appealed to the Office of Information Policy (OIP), which, by letter dated
September 19, 2012, affirmed BOP’s withholdings under exemptions 7(C) and 7(F), and
informed the plaintiff that he could not retain a copy of his PSR but could “access [the
document] locally by asking a staff member [at his facility] for an opportunity to review it.” OIP
remanded the plaintiff’s request to BOP “for further processing of certain responsive records”
and a determination of whether “additional records are releasable[.]” Id., Attach. 6. It
informed the plaintiff that he “may appeal any future adverse determination made by BOP,”
that any inquiry about the status of the remand should be addressed “directly” to BOP, and
that he could file a lawsuit if he was dissatisfied. Id.
The plaintiff alleges that he “communicated with BOP Western Regional Counsel” on
October 26, 2012, December 10, 2012, and January 2, 2013, about the status of the remanded
portion of his request, and informed counsel on April 25, 2013, about his intention to file a
lawsuit “if compliance with the OIP[’s] [remand] was not timely made” by May 25, 2013.
Compl. at 2.
The plaintiff filed this action on November 19, 2013. Thereafter, BOP released
additional pages by letters dated January 31, 2014, February 19, 2014, and March 5, 2014.
Ochoa Decl. ¶ 11. In total, BOP provided the plaintiff with 396 pages, 26 of which contained
redacted material; BOP withheld 48 pages completely. Id. ¶ 12 & Attach. 10 (Vaughn index).
3
II. LEGAL STANDARD
Federal courts are authorized under the FOIA “to enjoin the agency from withholding
agency records and to order the production of any agency records improperly withheld from
the complainant.” 5 U.S.C. § 552(a)(4)(B). An improper withholding occurs when an agency
withholds information that is not protected by nine exemptions set forth in the statute or fails
to conduct an adequate search for responsive material.
“ ‘FOIA cases typically and appropriately are decided on motions for summary
judgment.’ ” Georgacarakos v. FBI, 908 F. Supp. 2d 176, 180 (D.D.C. 2012) (quoting Defenders
of Wildlife v. U.S. Border Patrol, 623 F. Supp. 2d 83, 87 (D.D.C. 2009)). “With respect to the
applicability of exemptions and the adequacy of an agency's search efforts, summary judgment
may be based solely on information provided in the agency's supporting declarations.” Nat’l
Sec. Counselors v. CIA, 960 F. Supp. 2d 101, 133 (D.D.C. 2013) (citations omitted). When an
agency's response to a FOIA request is to withhold responsive records, either in whole or in
part, the agency “bears the burden of proving the applicability of claimed exemptions.” Am.
Civil Liberties Union v. U.S. Dep't of Def. (“ACLU/DOD ”), 628 F.3d 612, 619 (D.C. Cir. 2011). “The
government may satisfy its burden of establishing its right to withhold information from the
public by submitting appropriate declarations and, where necessary, an index of the
information withheld.” Am. Immigration Lawyers Ass'n v. U.S. Dep't of Homeland Sec., 852 F.
Supp. 2d 66, 72 (D.D.C. 2012) (citing Vaughn v. Rosen, 484 F.2d 820, 827-28 (D.C. Cir. 1973)). “If
an agency's affidavit describes the justifications for withholding the information with specific
detail, demonstrates that the information withheld logically falls within the claimed
exemption,” and “is not contradicted by contrary evidence in the record or by evidence of the
4
agency's bad faith, then summary judgment is warranted on the basis of the affidavit alone.”
ACLU/DOD, 628 F.3d at 619. “Ultimately, an agency's justification for invoking a FOIA
exemption is sufficient if it appears ‘logical’ or ‘plausible.’ ” Id. (internal quotation marks
omitted) (quoting Larson v. Dep't of State, 565 F.3d 857, 862 (D.C. Cir. 2009)).
When a requester challenges an agency's response based on the adequacy of the search
performed, “the defending ‘agency must show beyond material doubt . . . that it has conducted
a search reasonably calculated to uncover all relevant documents.’ ” Morley v. CIA, 508 F.3d
1108, 1114 (D.C. Cir. 2007) (quoting Weisberg v. U.S. Dep't of Justice, 705 F.2d 1344, 1351 (D.C.
Cir. 1983)). “In order to obtain summary judgment the agency must show that it made a good
faith effort to conduct a search for the requested records, using methods which can be
reasonably expected to produce the information requested.” Oglesby v. U.S. Dep't of Army,
920 F.2d 57, 68 (D.C. Cir. 1990). “Summary judgment may be based on affidavit, if the
declaration sets forth sufficiently detailed information ‘for a court to determine if the search
was adequate.’ ” Students Against Genocide v. Dep't of State, 257 F.3d 828, 838 (D.C. Cir. 2001)
(quoting Nation Magazine v. U.S. Customs Serv., 71 F.3d 885, 890 (D.C. Cir. 1995)). Although
“[t]here is no requirement that an agency search every record system[,] . . . the agency cannot
limit its search to only one record system if there are others that are likely to turn up the
information requested.” Oglesby, 920 F.2d at 68. An agency must “explain in its affidavit that
no other record system was likely to produce responsive documents.” Id. Since an adequate
search is established by the “appropriateness” of the search methods employed, not the “fruits
of the search,” the sole fact that documents were not located cannot support a finding of an
inadequate search. Scaff-Martinez v. Drug Enforcement Admin., 770 F. Supp. 2d 17, 21-22
5
(D.D.C. 2011) (quoting Iturralde v. Comptroller of Currency, 315 F.3d 311, 315 (D.C. Cir. 2003);
Boyd v. Criminal Div. of U.S. Dept. of Justice, 475 F.3d 381, 390-91 (D.C. Cir. 2007)).
In ruling generally on a motion for summary judgment, the Court must draw all
justifiable inferences in favor of the nonmoving party and shall accept the nonmoving party's
evidence as true. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The Court is only
required to consider the materials explicitly cited by the parties, but may on its own accord
consider “other materials in the record.” Fed. R. Civ. P. 56(c)(3). For a factual dispute to be
“genuine,” the nonmoving party must establish more than “[t]he mere existence of a scintilla of
evidence in support of [its] position,” Liberty Lobby, 477 U.S. at 252, and cannot rely on “mere
allegations” or conclusory statements, see Veitch v. England, 471 F.3d 124, 134 (D.C. Cir. 2006);
Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999); Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir.
1993); accord Fed.R.Civ.P. 56(e). Rather, the nonmoving party must present specific facts that
would enable a reasonable jury to find in its favor. See, e.g., Fed. R. Civ. P. 56(c)(1). “If the
evidence is merely colorable, or is not significantly probative, summary judgment may be
granted.” Liberty Lobby, 477 U.S. at 249-50 (citations omitted).
III. DISCUSSION
A. Subject Matter Jurisdiction
As an initial matter, the defendant argues that the complaint should be dismissed for
want of subject matter jurisdiction because the plaintiff has named the BOP Director as the
defendant instead of the agency. Def.’s Mem. of P. & A.at 8-9. While it is true that the FOIA
authorizes a cause of action against federal agencies only, Martinez v. Bureau of Prisons, 444
F.3d 620, 625 (D.C. Cir. 2006), “pleadings [in general] must be construed so as to do justice,”
6
Fed. R. Civ. P. 8(e), and pro se filings in particular must be construed liberally. Erickson v.
Pardus, 551 U.S. 89, 94 (2007); Richardson v. U.S., 193 F.3d 545, 548 (D.C. Cir. 1999). In
addition, “[t]he court may not dismiss an action for failure to prosecute in the name of the real
party in interest until, after an objection, a reasonable time has been allowed for the real party
in interest to . . . be substituted into the action.” Fed. R. Civ. P. 17(a)(3).
The Court hereby substitutes the Department of Justice, of which BOP is a component,
as the real party in interest and dismisses the complaint against BOP Director Samuels under
Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Consequently, the
defendant’s motion to dismiss under Rule 12(b)(1) is denied.
B. The Defendant’s Withholdings
The plaintiff contends that summary judgment is unwarranted because “the ONLY time
[BOP’s disclosure] obligation may have been met was AFTER one year of requests from Plaintiff
and this required instant litigation.” Pl.’s Opp’n at 4 (emphasis in original). Nevertheless,
“however fitful or delayed the release of information under the FOIA may be, once all
requested records are surrendered, federal courts have no further statutory function to
perform.” Perry v. Block, 684 F.2d 121, 125 (D.C. Cir. 1982); see Boyd v. Criminal Div. of U.S.
Dept. of Justice, 475 F.3d 381, 388 (D.C. Cir. 2007) (“[B]ecause the report was located in the
work file and subsequently disclosed, the issue is moot for purposes of this FOIA action.”)
(citing Perry); Ctr. for Auto Safety v. EPA, 731 F.2d 16, 19 (D.C. Cir. 1984) (“[O]nce the records
are produced in a FOIA case the substance of the controversy disappears and becomes moot
since the disclosure the suit seeks has already been made.” ) (alterations, internal quotation
marks and citations omitted.). Furthermore, the plaintiff has not questioned the bases of
7
BOP’s redactions, which the Court finds properly justified under FOIA exemptions 7(C) and 7(F).
See Ochoa Decl. ¶ 13-18 & Att. 10 (Vaughn index).
The Court must determine on its own, however, whether BOP has adequately justified
withholding 48 pages of responsive records in their entirety. See Trans-Pacific Policing
Agreement v. United States Customs Service, 177 F.3d 1022, 1027-28 (D.C. Cir. 1999) (requiring
the court to make a so-called segregability finding whether raised by the parties or not). An
agency may properly withhold entire records when the “‘exempt and nonexempt information
are ‘inextricably intertwined,’ such that the excision of exempt information would . . . produce
an edited document with little informational value.’ ” Mays v. DEA, 234 F.3d 1324, 1327 (D.C.
Cir. 2000) (quoting Neufeld v. IRS, 646 F.2d 661, 666 (D.C. Cir. 1981)).
The defendant’s declarant avers that “[a]ll reasonably segregable material located in
Plaintiff’s Central File has been produced.” Ochoa Decl. ¶ 19. The declarant refers to the
Vaughn index, which sets out the reasons why four pages were withheld in full under
exemptions 7(C) and 7(F), see Vaughn index (Docs. 2(h) and 5(b)), and why 44 pages comprising
the plaintiff’s PSR and SOR (Doc. 1) were withheld. For safety reasons, the plaintiff could not
retain his PSR and SOR but could access those documents by reviewing them in accordance
with BOP policy. See id., Doc. 1 (quoting Prog. Statement 1351.05) (citing U.S. Dep’t of Justice v.
Julian, 486 U.S. 1 (1988)). Hence, to the extent that the PSR and SOR are documents even
responsive to the plaintiff’s request, the Court finds that no improper withholding has occurred
with regard to those documents. See Martinez v. Bureau of Prisons, 444 F.3d 620, 625 (D.C. Cir.
2006) (“FOIA does not entitle [requester] to have copies of his PSRs” as long as he is “afforded a
meaningful opportunity to review his PSR and to take notes on them. . . . Moreover, the BOP
8
Program Statement 1351.05 p.15 . . . sets forth reasons, based on concerns about inmate safety
. . . that a court would be loath to second-guess.”) (citations omitted).
The Court further finds that BOP properly justified withholding a one-page injury
assessment of a third-party inmate involved in a physical altercation with plaintiff (Doc. 2(h))
under exemptions 7(C) and 7(F), and three pages of National Crime Information Center
Printouts containing third-party visitor information (Doc. 5(b)) under exemption 7(C). 1 “As a
result of [e]xemption 7(C), FOIA ordinarily does not require disclosure of law enforcement
documents (or portions thereof) that contain private information.” Blackwell v. FBI, 646 F.3d
37, 41 (D.C. Cir. 2011) (citing cases). Moreover, exemption 7(F) “affords broad protection to
the identities of individuals mentioned in law enforcement files . . ., including any individual
reasonably at risk of harm.” Quinto v. U.S. Dep’t of Justice, 711 F. Supp. 2d 1, 8 (D.D.C. 2010)
(citations and internal quotation marks omitted).
Because the plaintiff has completely failed to come forward with any evidence to rebut
the defendant’s properly supported justifications for withholding information, the Court will
grant summary judgment to the defendant on this aspect of the complaint.
C. The Defendant’s Search
Upon receiving the plaintiff’s FOIA request, BOP’s Central Office forwarded it to the
Western Regional Office for processing since the plaintiff was incarcerated at the Federal
Correctional Institution in Safford, Arizona. Ochoa Decl. ¶ 5. The regional office requested a
1
FOIA exemption 7 protects from disclosure records or information compiled for law
enforcement purposes to the extent that production could result in certain listed harms.
Exemption 7(C) exempts from disclosure such information that “could reasonably be expected
to constitute an unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(7)(C). Exemption
7(F) exempts from disclosure such information that “could reasonably be expected to endanger
the life or physical safety of any individual.” Id., § 552(b)(7)(F).
9
complete copy of the plaintiff’s central file from FCI Safford and, following a search, produced
responsive records. Id.
The plaintiff contends that his request “clearly and unambiguously identifies various
sources other than [his] Inmate Central” file and, thus, questions the reasonableness of the
defendant’s interpretation of his request as seeking documents only from his central file. See
Pl.’s Opp’n at 5, n.5A. The plaintiff states that he had identified the following other sources:
the Designation Sentence and Computation Center located in Grand Prairie, Texas; Special
Investigative Services at the Federal Correctional Complex in Tucson, Arizona; and BOP’s Central
Office. See Pl.’s Statement of Material Facts Not in Genuine Dispute ¶ 1. He has not cited,
however, where in the FOIA request--which is neither clear nor unambiguous--the list of
sources appears. In the request, the plaintiff states that “[o]utside sources include . . . any/all
communications by and between FCC-Tucson Warden Apker, Camp Administrator S.K.
Beauchamp, Unit Manager Debra Baker, Case Manager Arturo Moreno, Counselor Robert
Wright, Theresa Talplacido, Institutional Legal Counsel, Western Region Staff, DSCC, etc..” FOIA
Req. at 2 (emphasis supplied). This description is puzzling because any communications among
what appears to be BOP employees could not possibly constitute “outside sources.”
Regardless, the defendant’s declarant has reasonably explained that a search of the
plaintiff’s central file was likely “to locate and provide all [responsive] documents” because it is
the location where the requested documents are routinely maintained. Ochoa Decl. ¶ 6.
According to the declarant, the “[d]ocumentation of transfers and transfer requests is
maintained in Section Two of the Central File,” which staff members consult when considering
and effectuating an inmate’s transfer; records pertaining to the special housing unit are
10
maintained in Section Four of the Central File; and “the Copouts [inmate requests to staff
members] . . .are maintained in Section Six of the Central File.” Id.
The plaintiff’s “other sources” assertion is not supported by facts establishing the
existence of a “record system [beyond that of his central file] that [is] likely to turn up the
information requested.” Oglesby, 920 F.2d at 68. Indeed, “[a]n Inmate Central File contains,
among other things, an inmate's . . . custody classification form, and his security designation
form. . . . Custody classification is the review process to assign a custody level based on an
inmate's criminal history, instant offense, and institutional adjustment.” Jennings v. Fed.
Bureau of Prisons, 657 F. Supp. 2d 65, 67 (D.D.C. 2009) (citing BOP Program Statements
5800.11, 5100.08) (other citations, internal quotation marks, and alteration omitted).
Furthermore, the plaintiff has not identified any documents he believes exist (and where) that
were not produced. See Iturralde, 315 F.3d at 315-16 (examining “certain circumstances
[when] a court may place significant weight on the fact that a records search failed to turn up a
particular document in analyzing the adequacy of a records search”); Valencia-Lucena v. U.S.
Coast Guard, 180 F.3d 321, 327 (D.C. Cir. 1999) (finding genuine issue presented by the
agency’s “failure to search the center it had identified as a likely place where the requested
documents might be located[.]”)
The plaintiff has proffered no evidence to call into question the adequacy of the
defendant’s search for responsive records. Therefore, the Court will grant summary judgment
to the defendant on this aspect of the complaint as well.
11
D. The Plaintiff’s Motion for Sanctions
Courts have the inherent power to impose sanctions “to achieve the orderly and
expeditious disposition of cases.” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (internal
quotation marks omitted). “While other sanctioning mechanisms exist, such as Fed. R. Civ. P.
11 and 28 U.S.C. § 1927, their availability does not preclude the court from exercising its
inherent power.” Priority One Servs., Inc. v. W & T Travel Servs., LLC, 987 F. Supp. 2d 1, 4
(D.D.C. 2013) (citations and footnotes omitted). “Egregious misconduct may warrant the
extreme sanction of total dismissal, but for lesser wrongdoing a court may assess attorney's
fees and costs.” Id. (citations omitted). “To impose monetary sanctions against a party under
its inherent power,” a court must find that the moving party has shown by “clear and
convincing evidence” that the opposing party has “acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.” Id. (citations and internal quotation marks omitted). “[N]egligent,
even sloppy, performance” will not suffice. Id. at 4-5 (quoting United States v. Wallace, 964 F.
2d 1214, 1219 (D.C. Cir. 1992)) (internal quotation marks omitted).
Whether the plaintiff is requesting a favorable judgment, litigation costs or both as
sanctions is unclear, but the Court finds that he is entitled to neither. In support of his request
for sanctions, the plaintiff contends that the defendant does not dispute (1) that it “sat silent”
when he requested a status on OIP’s remand of his request to the agency for a further search,
(2) “that compliance to produce these records are . . . required [under the FOIA],” and (3) that
“on three occasions [while processing the request] the source of compliance failed to
reasonably comply with the otherwise detailed request, and other documents appeared to be
responsive.” Pl.’s Opp’n at 6. In addition, the plaintiff seems to contend that the defendant
12
was required to provide a Vaughn index during the administrative process. See Pl.’s Reply to
Defs.’ Opp’n to Pl.’s Mot. for Sanctions, ECF No. 19, at 1. This is incorrect. A Vaughn index,
created by judicial fiat (not the FOIA), is a suggested mechanism to assure “adequate adversary
testing” of the government’s claimed exemptions and to assist the court in assessing the
government’s position during litigation. Vaughn, 484 F.2d at 828. During the administrative
process, “[a]n agency is not required to produce a Vaughn index—which district courts typically
rely on in adjudicating summary judgment motions in FOIA cases.” Citizens for Responsibility &
Ethics in Washington v. Fed. Election Comm'n, 711 F.3d 180, 187, n.5 (D.C. Cir. 2013) (quoting
Schwarz v. U.S. Dep't of Treasury, 131 F. Supp. 2d 142, 147 (D.D.C. 2000) aff'd, No. 00-5453,
2001 WL 674636 (D.C. Cir. May 10, 2001) (other citations omitted); see also Judicial Watch, Inc.
v. Clinton, 880 F. Supp. 1, 11 (D.D.C. 1995) aff'd, 76 F.3d 1232 (D.C. Cir. 1996) (“Agencies need
not provide a Vaughn Index until ordered by a court after the plaintiff has exhausted the
administrative process”); Brown v. U.S. Dep’t of Justice, 734 F. Supp. 2d 99, 104 (D.D.C. 2010)
(“There is no requirement in [FOIA] that documents released by an agency in response to a . . .
request be bates-stamped or otherwise numbered”) (quoting 5 U.S.C. § 552 (a)(3)(A)).
The record shows that BOP processed and released the majority of responsive
documents in March 2012--three months after its receipt of the request. Although additional
records were released during the course of litigation, the plaintiff has pointed to nothing in the
record to support a finding that the defendant has acted in bad faith or for oppressive reasons.
To the contrary, OIP remanded the FOIA request for additional processing. The fact that the
agency did not respond to the plaintiff’s status requests prior to this lawsuit is immaterial to the
13
issue at hand. The foregoing reasoning applies equally to the extent that the plaintiff is seeking
sanctions directly under the FOIA, see 5 U.S.C. § 552(a)(4)(F).
E. The Plaintiff’s Motion for Costs
In a pro se action, the FOIA permits a district court to “assess against the United States .
. . litigation costs reasonably incurred in any case . . . in which the [pro se plaintiff] has
substantially prevailed.” 5 U.S.C. § 552(a)(4)(E)(i). A party substantially prevails if he “has
obtained relief through either . . . a judicial order . . . or . . . a voluntary or unilateral change in
position by the agency, if the complainant's claim is not insubstantial.” 5 U.S.C. §
552(a)(4)(E)(ii).
In exercising its discretion to award costs, a court considers: “(1) the public benefit
derived from the case; (2) the commercial benefit to the plaintiff; (3) the nature of the
plaintiff's interest in the records; and (4) the reasonableness of the agency's withholding of the
requested documents.” Davy v. CIA, 550 F.3d 1155, 1159 (D.C. Cir. 2008) (citations omitted).
“[A]lthough the Circuit has instructed that no particular factor should be given disproportionate
weight, in some circumstances the final factor may be dispositive. Specifically, the D.C. Circuit
has made clear that ‘[ i] f the Government's position is correct as a matter of law, that will be
dispositive. If the Government's position is founded on a colorable basis in law, that will be
weighed along with other relevant considerations in the entitlement calculus.’ ” Dorsen v.
United States Sec. & Exch. Comm'n, No. 13-0288, 2014 WL 576100, at *5 (D.D.C. Feb. 14, 2014)
(quoting Davy, 550 F.3d at 1162) (other citations omitted). Since the plaintiff has not contested
the defendant’s claimed exemptions and the Court has found them properly supported, any
request for litigation costs is denied.
14
IV. CONCLUSION
For the foregoing reasons, the defendant’s motion for summary judgment is granted
and the plaintiff’s motion for sanctions is denied. A separate Order accompanies this
Memorandum Opinion.
/s/Beryl A. Howell
UNITED STATES DISTRICT JUDGE
DATE: October 30, 2014
15 | 01-03-2023 | 10-31-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2580603/ | 60 F. Supp. 2d 456 (1999)
COUNTY COUNCIL OF NORTHAMPTON COUNTY, Plaintiff,
v.
SHL SYSTEMHOUSE CORP., Defendant,
v.
Northampton County, Third Party Defendant.
Civil Action No. 98-0088.
United States District Court, E.D. Pennsylvania.
September 22, 1999.
*457 *458 Karl F. Longenbach, Bethlehem, PA, for Plaintiff.
Ronald P. Schiller, Joseph Kernen, Elizabeth J. Feeney, Piper & Marbury L.L.P., Philadelphia, PA, for Defendant SHL Systemhouse, Corp.
Daniel B. Huyett, Matthew W. Rappleye, Stevens & Lee, Reading, PA, for Third Party Defendant, Northampton County.
MEMORANDUM AND ORDER
JOYNER, District Judge.
This is a breach of contract action brought by Plaintiff, County Council of Northampton County ("County Council") against Defendant, SHL Systemhouse Corporation ("Systemhouse") and expanded by Systemhouse to include its suit against Third Party Defendant, Northampton County ("County"). Presently before the court are Systemhouse's and the County's Cross-Motions for Partial Summary Judgment pursuant to Federal Rule 56 of Civil Procedure of the County's First, Second, Third, Sixth, Seventh and Eighth Counterclaims and Fifth, Sixth and Seventh Affirmative Defenses. Systemhouse also moves for summary judgment of the County's Eleventh Counterclaim. For the following reasons, Systemhouse's motion will be granted in part and denied in part and the County's motion will be denied.
BACKGROUND
In January 1994 Dr. A. Landis Brackbill ("Dr.Brackbill") took office as County Executive of Northampton County having campaigned for the office on a promise to provide a county-wide 911 system. (County's Br.[1] Ex. A at 30-35). A task force was formed in 1994 to devise a plan for providing E9-1-1 services in Northampton County pursuant to Pennsylvania's Public Safety Emergency Telephone Act of 1990, Act No. 78, 1990 P.L. 340, as amended, 35 P.S. §§ 7011 et seq. ("Act 78").
During the first few months of 1995, vendors including Systemhouse made proposals to prepare a E9-1-1 plan that could be filed with the Commonwealth for Act 78 approval. On April 6, 1995 the County Council passed a resolution to approve Systemhouse's proposal to produce an E9-1-1 plan. (Systemhouse's Mem.[2] Ex. F at 9). On April 17, 1995 the County contracted with Systemhouse to design the countywide E9-1-1 plan and to present it in a form suitable for Act 78 approval. (County's Br. Ex. O). At the County Council meeting on October 5, 1995 Dr. Brackbill stated that the implementation of the E9-1-1 plan required professional and specialized service and therefore permitted him, as County Executive, to contract with a vendor to provide this service. (Systemhouse's Mem. Ex. N at 4). On October 19, 1995 Systemhouse submitted its E9-1-1 plan to the County Council.
The E9-1-1 plan included a computer aided dispatch ("CAD") system with an associated database containing all County addresses. (Systemhouse's Mem. Ex. G § 3.2.2.3). When a member of the public placed a 911 emergency call, the CAD system was supposed to automatically display for the call taker information such as the caller's telephone number, name, address, and the appropriate dispatch point *459 of origin for various emergency services. The call taker would then confirm the origin and nature of the call, determine the nature of the emergency service required, and enter the required information into the CAD system for routing to a dispatcher. (Systemhouse's Mem. Ex. G § 3.2.2.). Finally, the dispatcher would effect the actual dispatch of the appropriate emergency service from an appropriate point of origin. (County's Br. Ex. B at 51-52). Under the E9-1-1 plan, the party implementing the plan would be primarily responsible for processing the initial telephone or radio call and hand it off to the responding agency. (County's Br. Ex. C, Volume II at 30). Other responsibilities included the generation and storage of information that could be used for evidentiary purposes in the event of criminal investigations. (County's Br. Ex. C, Volume II at 30).
On October 19, 1995 the County Council approved the E9-1-1 plan and authorized its submission to the Pennsylvania Department of Community Affairs for Act 78 approval. At this time, Systemhouse submitted a separate proposal to implement the E9-1-1 plan and Dr. Brackbill announced his intention to negotiate with Systemhouse a contract to implement the E9-1-1 plan. (Systemhouse Mem. Ex. I at 13). By letter dated October 19, 1995 Dr. Brackbill notified Systemhouse of the County's intent to move forward to negotiate with Systemhouse the terms of a "Professional Services Agreement ...." (Systemhouse's Mem. Ex. J).
Before the Services Agreement between Systemhouse and the County ("Agreement") was executed, County Solicitor Preston W. Moritz ("Moritz") gave Systemhouse a copy of a contract previously entered into by the County with Systems & Computer Technology Corporation ("SCT"). He discussed several times with Systemhouse personnel and attorneys the development of the Agreement. (Systemhouse's Mem. Ex. L). Systemhouse representatives and Moritz exchanged several drafts of the Agreement. (Systemhouse's Mem. Ex. K at 110-11, 114-21, 127-28). A final red-lined draft of the Agreement was approved by Moritz on December 11, 1995. (Systemhouse's Mem. Ex. K at 131-32).
County Council member, Diane V. Elliott ("Elliott") reviewed the Agreement several times before Brackbill signed it and was present at the signing of the Agreement. (Systemhouse's Mem. Ex. K at 213; County's Br. Ex. D at 198-202). The Agreement was entered into on December 12, 1995.
Pursuant to the Agreement, Systemhouse was duty-bound to "design, develop, operate, and support the infrastructure for the receipt and dispatch of emergency calls initiated throughout the County ... in a centralized communications operation." (Agreement at A-1). Systemhouse's obligations included: 1) consolidating seven existing independent dispatch centers into one County communication center; 2) operating it; 3) implementing the E9-1-1 plan by incorporating in part Computer Aided Dispatch ("CAD"), Automatic Number Identification ("ANI") and Automatic Location Identification ("ALI"); and 4) maintaining the county wide public safety radio system. (Agreement at A-1).
The implementation of the E9-1-1 plan was to be accomplished in part by the incorporation of the CAD system. This system would "serve primarily as the heart of the County wide E911 answering center and emergency resource allocation system enabling Northampton County dispatchers to prioritize calls for service and allocate available law enforcement, fire, or EMS units based on incident/workload priorities provided by the County." (Agreement at A-2). More specifically, the CAD system would provide units responding to 911 calls with information about the location of the calls, the previous history of the location and the residents, and the existence of hazardous materials at the location. (Agreement at A-3).
In the spring of 1996 the County Council held three hearings for the purpose of reviewing the Agreement "line-by-line." (Systemhouse's Mem. Ex. K at 144-46). *460 On June 5, 1996 the entire County Council sent a letter to Dr. Brackbill to seek to renegotiate the Agreement. (Systemhouse's Mem. Ex. V). On April 18, 1996 the County Council refused to enact an ordinance levying the authorized Act 78 contribution rate of $1.25 per telephone line. (County's Br. Ex. J at 32-33). The County Council passed a resolution proposing an alternative E9-1-1 service plan that would require renegotiating the Agreement. (Systemhouse's Mem. Ex. W). Systemhouse agreed to renegotiate the Agreement. (Systemhouse's Mem. Ex. X).
After the changes requested by the County Council were made to the Agreement, the County Council voted 8-1 on August 1, 1996 to authorize the collection of a $1.25 fee from every County resident to help fund the Agreement. (Systemhouse's Mem. Supp. Mot. Partial Summ. J. Exs. Y, Z). Dr. Brackbill notified Systemhouse to proceed with the implementation of the E9-1-1 plan. (Systemhouse's Mem. Supp. Mot. Partial Summ. J. Ex. AA). He and three members of the County Council, Diane V. Elliott, Wayne Grube and Margaret Ferraro signed the formal written instruction for Systemhouse to begin the implementation of the E9-1-1 plan.
On August 15, 1996 the County Council unanimously passed a resolution to introduce an ordinance amending the County's Administrative Code. (County's Br. Ex. L. at 4-8). On September 5, 1996 the County Council unanimously voted to adopt the ordinance. (County's Br. Ex. M). The amendments to the County's Administrative Code included the addition of sections 13.10(c)(2)(b) and 13.10(c)(5)(a). (County's Br. Ex. M at 4-8). Section 13.10(c)(2)(b) provides that:
All contracts shall contain an express written provision which clearly provides that in the event of non-appropriation of funds, at any time during the term of the contract, which would prevent the County from making payment under the terms and conditions of the contract, the County may terminate the contract, without the assessment of any termination charges or financial penalties against the County, by providing written notice of intent to terminate to the contracting party. Said provision shall also state that if the County terminates a contract due to the non-appropriation of funds, the County will pay the contractor for work currently in progress, and that the vendor shall not begin any additional work on the effected contract upon receipt of notification of intent to terminate by the County.
(County's Br. Ex. M at 8). Section 13.10(c)(5)(a) states that:
Before the County Executive signs any prospective contract, obligating the County to any of the provisions contained therein, the County Executive shall provide written notification to County Council of the contract if the contract consideration exceeds $200,000, regardless of whether the contract term spans more that [sic] one fiscal year or exceeds twelve months.
(County's Br. Ex. M at 4-8).
Schedule D of the Agreement stated in pertinent part that it "will be amended to include a schedule for the Early Termination Charges described in Section 9 after the financing has been obtained." (Agreement, Schedule D at D-4). In November 1996 Systemhouse sent Dr. Brackbill a proposed Early Termination Charge schedule pursuant to Schedule D of the Agreement. Dr. Brackbill approved of the schedule.
On November 4, 1997, Dr. Brackbill lost his bid for reelection to Glenn Reibman who until then had been the President of the County Council. On December 31, 1997 the County Council filed suit against Systemhouse in the Court of Common Pleas of Northampton County. Systemhouse removed the case to federal court on January 8, 1998 and filed a third party complaint against the County on January 16, 1998. On March 6, 1998 the County filed its Answer and New Matter, asserting the counterclaims and affirmative defenses which are now the subject of Systemhouse's *461 motion for partial summary judgment and the County's cross-motion for partial summary judgment.
DISCUSSION
I. Summary Judgment Standard
Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, reveal 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). Our responsibility is not to resolve disputed issues of fact, but to determine whether there exist any factual issues to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-49, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The presence of "a mere scintilla of evidence" in the nonmovant's favor will not avoid summary judgment. Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir.1989)(citing Anderson, 477 U.S. at 249, 106 S. Ct. 2505). Rather, we will grant summary judgment unless "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.
In making this determination, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Id. at 256, 106 S. Ct. 2505. Once the moving party has met the initial burden of demonstrating the absence of a genuine issue of material fact, the non-moving party must establish the existence of each element of its case. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir.1990)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). The nonmovant must go beyond the pleadings and come forward with "specific facts, by affidavits, depositions, answers to interrogatories or admissions on file 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(c)).
If there is a "disagreement about material facts or the conflicting inferences to be drawn from them, a trial is required to resolve the conflicting versions." Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir.1982). "The court may not weigh the evidence, determine the credibility of witnesses, or substitute its version of the facts for the jury's version." In re Bell Atlantic Corp. Securities Litigation, Nos. 91-0514, 91-0673, 93-999, 91-0518, 91-0737, 91-0531, 91-7048, 1997 WL 205709 at *2 (E.D.Pa. April 17, 1997) (citing McDaniels v. Flick, 59 F.3d 446, 453 (3d Cir.1995)).
II. County Executive's Contracting Authority
Systemhouse and the County move for summary judgment of the allegations that Dr. Brackbill lacked the authority to contract with Systemhouse (County's First Counterclaim and Sixth Affirmative Defense). The County's bases for its argument that Dr. Brackbill acted without authority in contracting with Systemhouse include: 1) the Agreement was not a contract for professional services, 2) Dr. Brackbill did not follow the procedures for professional service contracts and 3) the Agreement improperly called for the performance of an essential governmental function.
A. Professional Service Contract
The first issue is whether the Agreement was a contract for professional services. County contracts, in general, are required to be awarded by competitive bidding. (County's Admin. Code § 13.04). Contracts for "professional services," however, are exempted from the competitive bidding requirement. (County's Admin. Code § 13.03(b)(6)). The County Executive has authority to contract for professional services. (County's Admin. Code § 13.07(a)). The Code does not define "professional services," but it does provide the following list of examples: "architectural, construction, data processing, engineering, financial, financially related and maintenance services; the services of *462 members of the medical or legal profession; certified public accountants, or other personal services involving professional expert advice." (County's Admin. Code § 13.03(b)(6)).
To establish guidelines for defining professional service exemptions to public contract bidding for all instances where competitive bidding is required, the Pennsylvania Supreme Court in In re 1983 Audit Report of Belcastro, 528 Pa. 29, 595 A.2d 15, 20-21 (1991) defined "other personal services involving professional expert advice" to include "such services which involve quality as the paramount concern and require a recognized professional and special expertise." Belcastro, 595 A.2d at 20-21. "[W]here quality is of little concern, perhaps because the product or service varies little from company to company, competitive bidding should be required." Id. It should not be required "where quality of the service is the paramount concern[.]" Id. In determining whether a public contract is one for professional service and, therefore, exempt from the competitive bidding requirement, the court should remain mindful of the underlying public policy rationale for competitive bidding to guard against favoritism, improvidence, fraud, and corruption in the awarding of public contracts. See Id.
In Belcastro, two contracts were found to be professional service agreements and, thus, exempt from competitive bidding. For the first contract, college graduates with expertise in testing and counseling were employed to test and evaluate individuals for characteristics as intelligence, educational skills, and physical ability to create profiles in an effort to find the individuals suitable training and/or employment. See Id. at 21. The second contract involved the purchase of data processing software and equipment that required the submission of monthly reports to the County which included information such as the cost, the department making the phone call, and the trunk line that was used. See Id. at 21. With these reports, the County could monitor the telephone lines of the various county departments and identify the number of personal calls being made by the employees and permitted each department to be billed for the actual number of calls made. See Id. at 21-22.
Like the two contracts in Belcastro, the Agreement required special skill, technology and training. Systemhouse was duty-bound to "design, develop, operate, and support the infrastructure for the receipt and dispatch of emergency calls initiated throughout the County ... in a centralized communications operation." (Agreement at A-1). Systemhouse's obligations included: 1) consolidating seven existing independent dispatch centers into one County communication center; 2) operating it; 3) implementing the E9-1-1 plan by incorporating in part Computer Aided Dispatch ("CAD"), Automatic Number Identification ("ANI") and Automatic Location Identification ("ALI"); and 4) maintaining the county wide public safety radio system. (Agreement at A-1).
The implementation of the E9-1-1 plan was to be accomplished in part by the incorporation of the CAD system. This system would "serve primarily as the heart of the County wide E911 answering center and emergency resource allocation system enabling Northampton County dispatchers to prioritize calls for service and allocate available law enforcement, fire, or EMS units based on incident/workload priorities provided by the County." (Agreement at A-2). More specifically, the CAD system would provide units responding to 911 calls with information about the location of the calls, the previous history of the location and the residents, and the existence of hazardous materials at the location. (Agreement at A-3). The implementation of a plan that includes a system as sophisticated as the CAD system clearly requires specialized business and technical judgment and professional skill.
The County, nevertheless, argues that the Agreement requires the mere physical implementation of the E9-1-1 plan and *463 implies that any number of appropriately qualified companies could implement the plan. The County contends that the only services Systemhouse provided which might qualify as "professional" were provided in Systemhouse's performance of the April 1995 Contract which spelled out the E9-1-1 plan. Although it is true that the Agreement required the physical implementation of generic products like telephones, the characterization of the entire Agreement as requiring a mere physical implementation is dubious. As previously mentioned, the Agreement requires that Systemhouse "design, develop, operate, and support the infrastructure for the receipt and dispatch of emergency calls initiated throughout the County ... in a centralized communications operation." (Agreement at A-1). The County does not show that the E9-1-1 plan with the CAD system is readily capable of being implemented by any other vendors. The Agreement is focused less on the provision of property like telephones and radios and more on Systemhouse's use of this property to provide comprehensive county wide E9-1-1 services. These duties are not of the nature that quality is of little concern.
The County also argues that Systemhouse's contractual right under the Agreement to delegate performance of any of its duties, obligations and responsibilities to any of Systemhouse's affiliates or to any Systemhouse-selected independent contractor purportedly shows that quality was not required as being of paramount concern. Systemhouse's right to subcontract does not evidence that quality was not of paramount concern in the Agreement because the right did not relieve Systemhouse "of any of its duties, obligations or responsibilities...." (Agreement at E-16).
The County analogizes the instant case to the Pennsylvania Supreme Court decision in In re 1985 Washington County Annual Financial Report Surcharge, 529 Pa. 81, 601 A.2d 1223, 1224-26 (1992) in which an agreement for the installation of an integrated management information system and the relocation of the existing system to a home facility was found to be not exempt from competitive bidding. The Washington County decision is inapposite since it dealt not with the applicability of the professional service exemption but that of the exemption for patented and manufactured or copyrighted products. Therefore, the Agreement is a professional service contract.[3]
B. Compliance with Procedures
Whether Dr. Brackbill complied with the procedures for professional service contracts is the second issue in determining if Dr. Brackbill contracted without authority. The County claims that Dr. Brackbill failed to satisfy the procedures of Section 13.07(b)(2) of the County's Administrative Code. Section 13.07(b)(2) of the Administrative Code provides as follows:
No ... agreement for professional services ... shall be entered into by the County Executive, the Northampton County Council, or any other independently elected official, without:
(a) giving written notification to the Office of the County Council; and
(b) receiving the approval of the agreement by County Council resolution, if the contract involves the retention *464 of professionals pursuant to the authority of the Council under Section 202 of the Home Rule Charter to incur indebtedness ... and acquire property.
(Admin.Code 13.07(b)(2)). Dr. Brackbill failed to give written notice to the County Council or receive approval of the Agreement by County Council resolution before executing the Agreement. Systemhouse, however, argues that since the County had notice and passed a resolution authorizing funding for the Agreement after Dr. Brackbill signed it, Brackbill complied with the requisite procedure.
The County contends that Dr. Brackbill's failure to give the County Council written notice and to seek a County Council resolution approving of the Agreement before he signed it violated the procedures mandated under Section 13.07(b)(2). Brackbill's noncompliance with these procedures allegedly voided the Agreement. The County argues that a failure to comply with the procedures for professional service contracts is fatal because a failure to follow the procedures for competitively bid contracts is fatal. See, e.g., Belcastro, 595 A.2d at 21; Albert Gallatin Area School Dist. v. Penn Transp. Services, Inc., 704 A.2d 184, 185-86 (1997); Philadelphia Warehousing & Cold Storage v. Hallowell, 88 Pa.Cmwlth. 574, 490 A.2d 955, 956-57 (1985).
The instant case, however, is distinguishable from these cases precisely because it involves a professional service contract and not a competitively bid one. In light of the sound policy reasons for competitive bidding which include guarding the public against favoritism, improvidence, extravagance, fraud and corruption, see Belcastro, 595 A.2d at 21; Philadelphia Warehousing, 490 A.2d at 956-57, it makes sense to strictly enforce the procedural requirements for competitive bidding. It does not follow that the same strictness should be applied to the procedural requirements for the professional services exemption to competitive bidding. After all, contracts for professional service involve the arms-length negotiations present in everyday contracting. Such negotiations are anathemas to competitive bidding.
The County aptly stated that these requirements "were specifically designed to prevent ... the award of an expensive ... contract without the oversight, input, or approval of County Council." (County's Br. at 45). It therefore would seem fair to say that the procedural requirements of Section 13.07(b)(2) are satisfied so long as the County Council had oversight, input and approval of the Agreement. The record indicates that the County Council did have oversight, input and approval of the Agreement. The County Council certainly had notice of Dr. Brackbill's negotiations with Systemhouse. As early as October 5, 1995, Brackbill announced to the County Council that "if he determine[d] that the SHL plan was satisfactory, he could sign a contract for them to provide 911 service in Northampton County." (County Council October 5, 1995 Minutes at 4). On October 19, 1995 Dr. Brackbill told members of the County Council that he would be negotiating with Systemhouse.
Moreover, on October 19, 1995 the County Council received and reviewed the E9-1-1 plan. It expressly stated that the E9-1-1 services would be provided over a ten year period at a cost of $47 million and "[i]t is the stated intent of the County to establish a contractual association with the SHL Systemhouse which will provide enhanced 9-1-1 service to all residents of Northampton County." (Systemhouse's Mem. Ex. G, Executive Summary). At the County Council meeting of October 19, 1995 Systemhouse representatives stated that Systemhouse wanted to implement the E9-1-1 plan. Additionally, County Council member, Diane V. Elliott reviewed drafts of the Agreement and the Agreement itself before witnessing the signing of the Agreement by Dr. Brackbill on December 12, 1995.
On the day after Brackbill signed the Agreement, County Council members discussed at great lengths his execution of *465 the Agreement. (Systemhouse's Reply Br.[4] Ex. 19). They expressly acknowledged that County Council Solicitor Karl Longenbach had received a copy of the Agreement. (Systemhouse's Reply Br. Ex. 19). In the spring of 1996 the County Council held three hearings for the purpose of reviewing the Agreement "line-by-line." (Systemhouse's Mem. Ex. K at 144-46). On June 5, 1996 the entire County Council sent a letter to Dr. Brackbill to seek to renegotiate the Agreement. (Systemhouse's Mem. Ex. V). After the changes requested by the County Council were made to the Agreement, the County Council voted 8-1 on August 1, 1996 to authorize the collection of a $1.25 fee from every County resident to help fund the Agreement. (Systemhouse's Mem. Supp. Mot. Partial Summ. J. Exs. Y, Z). Dr. Brackbill notified Systemhouse to proceed with the implementation of the E9-1-1 plan. (Systemhouse's Mem. Supp. Mot. Partial Summ. J. Ex. AA). He and three members of the County Council, Diane V. Elliott, Wayne Grube and Margaret Ferraro signed the formal written instruction for Systemhouse to begin the implementation of the E9-1-1 plan. The record plainly indicates that the County Council had oversight, input and approval of the Agreement. Therefore, there is no genuine issue of material fact that the procedures for professional service contracts were satisfied.
C. Governmental versus Proprietary Functions
The third issue in determining if Dr. Brackbill lacked the authority to contract the Agreement is whether it called for the performance of an essential governmental function. In Pennsylvania, if a governmental official or entity purports to commit its successors in office to a long-term agreement which binds those successors in the exercise of a "governmental" as opposed to a "proprietary" function, the agreement is wholly invalid and unenforceable. See State Street Bank & Trust Co. v. Commonwealth, 712 A.2d 811, 815 (1998) ("It is a mistake to suppose that, because a public official ... has power to make a contract, he is authorized thereby to make one for an indefinite or long extended term"); County of Butler v. Local 585, 158 Pa.Cmwlth. 519, 631 A.2d 1389, 1392 (1993) (stating that contract purported to bind successor governments in performance of governmental functions is "void and unenforceable in its entirety"); Falls Township v. McManamon, 113 Pa.Cmwlth. 504, 537 A.2d 946, 947-48 (1988) (providing that contract purported to bind successor municipal government in exercise of governmental functions void as against public policy).
In general, proprietary functions have been characterized as those that a legislative board is not statutorily required to perform, may be carried on by private enterprise or are undertaken as a means to raise revenue. See County of Butler, 631 A.2d at 1392-93. On the other hand, governmental functions include those that a legislative board is statutorily entrusted with performing, are indispensable to the proper functioning of government and, because they implicate the policy making function, demand that current officeholders be able to control, free of restrictions imposed by predecessors. See State Street, 712 A.2d at 813-14. The State Street court rejected the factors enumerated in County of Butler in the context of government contracts that involve the statutory powers of an officer of the executive branch of the state government but did not in the context of government contracts at the local government level. See State Street, 712 A.2d at 813-14 n. 9; but see Lobolito, Inc. v. North Pocono School District, 722 A.2d 249, 252-53 n. 5 (1998) (noting that County of Butler factors were rejected in State Street without recognizing that State Street court differentiated *466 government contracts that involve statutory powers of officer of executive branch of state government from government contracts at the local government level). In any case, the essential inquiry is whether the enforcement of the contract would impair, to any significant degree, the new body's exercise of its policy making role. See Lobolito, 722 A.2d at 252-53.
In County of Butler, Butler County sued to void a contract entered into between the previous board of county commissioners and the private operator of a minimum security rehabilitation center. Butler County alleged that the contract required the performance of a governmental function as opposed to a proprietary function so that the previous board could not act to bind the successive board. Relying in large part on the fact that the County was under no statutory obligation to operate a drug and alcohol treatment facility, the County of Butler court upheld the prior board's award of the contract as the fulfillment of a proprietary and not an essential governmental function.
Similarly, although Act 78 encourages each county to adopt a 9-1-1 plan, Act 78 does not require the county to be the actual party implementing the plan. There is, therefore, no legislative or constitutional command that a specified government official must perform the services. Act 78 permits such services to be provided by private entities. The County opted to adopt a county-wide E9-1-1 plan. If the plan was Act 78 approved, the County then only had statutory authority to levy a surcharge on all telephone lines. This authority does not translate into a statutory requirement to implement a E9-1-1 plan.
The County, however, contends that the performance of governmental functions is required under the Agreement because the E9-1-1 services to be provided fall under the police power of the County and its political subdivisions to provide for the public health, safety and welfare. Several courts have determined that provision of emergency ambulance or medical services is a governmental function for the purposes of sovereign, governmental or statutory immunity. See, e.g., Overman v. Occoquan, Woodbridge, Lorton Volunteer Fire Dept., Inc., 948 F.2d 1282, 1991 U.S.App.LEXIS 28678 at *5-8 (4th Cir. 1991); Poole v. Inlow, 80 Ohio App. 3d 379, 609 N.E.2d 238, 239-40 (1992); Pawlak v. Redox Corp., 182 Mich.App. 758, 453 N.W.2d 304, 307 (1990); Edwards v. City of Portsmouth, 237 Va. 167, 375 S.E.2d 747, 749 (1989); Saathoff v. City of San Diego, 35 Cal. App. 4th 697, 706, 41 Cal. Rptr. 2d 352 (1995); Brunton v. Porter Memorial Hosp. Ambulance Service, 647 N.E.2d 636, 639-40 (1994). Although providing emergency ambulance or medical services may be indispensable to the proper functioning of government, providing services to "design, develop, operate, and support the infrastructure for the receipt and dispatch of emergency calls initiated throughout the County ... in a centralized communications operation[,]" is not. (Agreement at A-1). The collection and transmission of specific information on the residences from which telephone calls are made to personnel in route to the residences in a relatively short period of time are functions not performed by a governmental body that a private party would perform for generating profits.
Therefore, the enforcement of the Agreement will not impair the governing body's exercise of policy-making role. The court notes that it seems a bit disingenuous of the County to contend as much. The relevant governing body here is the County Executive. The record indicates that the present County Executive, Reibman voted to authorize funds for the Agreement when he was County Council president in 1996. In light of this implicit approval of the Agreement, his policy-making role certainly has not been hindered in any way.
III. Separation of Powers
The parties also move for summary judgment of the Second Counterclaim and Sixth Affirmative Defense in which the *467 County alleges the Agreement is void due to Dr. Brackbill's alleged invasion of the legislative province of the County Council. Dr. Brackbill purportedly committed this invasion by binding the County to a longterm contract implicating the police power and requiring significant and increasing budget appropriations over a ten year period. The County's Administrative Code, however, did not limit the County Executive's power to contract at the time of the Agreement's execution. Nevertheless, the County cites to the decision of Shapp v. Sloan, 480 Pa. 449, 391 A.2d 595, 604-05 (1978) for the precedential authority to void the Agreement based on this separation of powers argument. The Pennsylvania Supreme Court in Shapp interpreted Article 3, Section 24 of the Pennsylvania Constitution[5] to mean that officials in the executive branch of state government may not expend funds specifically appropriated by the state legislature for one purpose to carry out another program. See Shapp, 480 Pa. 449, 391 A.2d 595, 604-05 (1978). The County fails to show how the instant case is in any way analogous to the Shapp decision. It is astonishing that the County would make such an argument when the record plainly indicates that the legislative branch of the County, the County Council had notice of Dr. Brackbill's actions and even decided to approve the funding for the Agreement.
IV. Amended Schedule D
Both parties move for summary judgment of the portions of the Third and Eighth Counterclaims that include allegations of Dr. Brackbill's failure to follow procedures in approving the Early Termination Charge of Amended Schedule D in November 1996. The parties apparently agree that if a new contractual obligation was created by Dr. Brackbill's approval, sections 13.10(c)(2)(b)[6], 13.10(c)(5)(a)[7] and 13.10(a)[8] of the Administrative Code would have needed to have been satisfied. Dr. Brackbill was not in compliance with these sections. The record reveals sufficient factual disputes as to whether a new contractual obligation was created here to warrant the denial of both parties' motions for summary judgment.
V. Contingency Clause
Systemhouse and the County move for summary judgment of the portion of the Third Counterclaim that alleges the Agreement is void because it lacks a required contingency clause concerning non-appropriation of County funds. Section 13.10(c)(2)(a) of the County Administrative Code provides that "[e]very contract shall specifically state that it is contingent upon the availability of appropriated funds from which payment can be made." Systemhouse argues that Section 7.2 of the Agreement is proof of compliance with *468 § 13.10(c)(2)(a). Section 7.2 of the Agreement provides in pertinent part that:
In the event no funds or insufficient funds are appropriated and budgeted, the Customer will immediately notify SHL of such occurrence, and SHL and Customer will negotiate in good faith to amend this Agreement by: (a) reducing staffing and level of services in proportion to the amount so budgeted at the same gross profit percentage, and (b) preparing a revised scope of Services (Schedule A), and a revised Pricing Schedule (Exhibit D), to replace Exhibit A and Exhibit D of this Agreement. If SHL and Customer do not mutually agree to amend this Agreement, after good faith negotiation as stated above, then SHL shall have the right to terminate this Agreement for convenience, within thirty (60)[sic] days notice of such occurrence as stated above. In the event of such termination, SHL shall be obligated to provide Transition Assistance and the County shall be obligated to pay to SHL the Early Termination charge specified in Schedule D in addition to any other amounts due under this Agreement.
(Agreement § 7.2). The County contends that this provision does not comply with Section 13.10(c)(2)(a) because the County's duty to pay the Early Termination Charge in Schedule D in the event good faith negotiations to amend the Agreement fail is an improper qualification of this section of the Code which was designed to protect the public.
Section 7.2 of the Agreement certainly addresses Section 13.10(c)(2)(a) of the Administrative Code. Although Section 7.2 does not mirror the language of Section 13.10(c)(2)(a), it is clear that Section 13.10(c)(2)(a) does not bar the purported qualification. The County fails to show how the absence of a contingency clause that tracks the language of Section 13.10(c)(2)(a) voids the Agreement. In addition, the County never explained from what this section is protecting the public.
VI. Illusory Promise
Both parties move for summary judgment of the allegations that the Agreement imposed only illusory obligations on Systemhouse (Sixth Counterclaim and Fifth Affirmative Defense). Where the promise in a contract is merely optional with the promisor, it is illusory and unenforceable. See Geisinger Clinic v. Di Cuccio, 414 Pa.Super. 85, 606 A.2d 509, 512 (1992), appeal denied, 536 Pa. 625, 637 A.2d 285 (1993). Claimed by the County as examples of illusoriness in the Agreement are the following: (1) the "performance standards and service levels" prescribed by Schedule B of the Agreement the purportedly only quality control criteria included in the contract are rendered meaningless by the provision at Section 9.1 that the failure to achieve those service levels is not a material breach of the contract; and (2) Systemhouse's total potential liability under the $47 million contract is limited to a mere $500,000 by Section 6 of Schedule E.
Even a casual glance at the Agreement reveals the many obligations that it places on Systemhouse. For example, Section 3.3 of the Agreement alone provides that "[Systemhouse]" shall use commercially reasonable efforts to ensure that its performance of the Services will meet or exceed the applicable Service Levels described in Schedule B. (Agreement § 3.3). Additionally, the County's examples fail to evidence illusoriness. Section 9.1(b)(iii) of the Agreement states that "[f]or the purposes of this Section 9.1, [Systemhouse] shall be deemed not to have materially breached or defaulted its material obligations hereunder if ... the breach or default consisted of failure to meet Service Levels." (Agreement § 9.1(b)(iii)). As Section 3.3 of the Agreement shows, the performance standards and service levels of Schedule B are not rendered meaningless because promises to use commercially reasonable standards to meet certain standards are not illusory. See, e.g., Jamison v. Concepts Plus, Inc., 380 Pa.Super. 431, *469 552 A.2d 265, 269-70 (1988) (recognizing an implied duty to use best efforts to satisfy condition to contract). Additionally, limitation of liability clauses have been routinely upheld in Pennsylvania. See Valhal Corp. v. Sullivan Associates,, Inc., 44 F.3d 195, 203 (3d Cir.1995). Moreover, the County has failed to show that the mere disparity between the amount of the limitation of liability clause and the value of the Agreement warrants voiding the entire Agreement or even just the clause itself.
VII. Unjust Enrichment
Systemhouse also moves for summary judgment of the Eleventh Counterclaim arguing that the doctrine of unjust enrichment does not apply if the Agreement is found to be valid. "Under Pennsylvania law, the quasi-contractual doctrine of unjust enrichment is inapplicable when the relationship between the parties is founded on a written agreement or express contract." Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d Cir. 1987). Since the relationship between Systemhouse and the County is founded on a valid written agreement, this doctrine indeed is inapplicable.
CONCLUSION
An appropriate Order follows.[9]
ORDER
AND NOW, this 22nd day of September, 1999, upon consideration of the Motions of Defendant, SHL Systemhouse Corp. ("Systemhouse") and Third Party Defendant, Northampton County ("County") for Partial Summary Judgment and their responses thereto as well as their many supplemental responses, it is hereby ORDERED that Systemhouse's Motion is GRANTED in part and DENIED in part and the County's Motion is DENIED. It is further ORDERED that:
1. Systemhouse's Motion is GRANTED as to the County's First Counterclaim and Sixth Affirmative Defense and the County's First Counterclaim and Sixth Affirmative Defense are hereby DISMISSED WITH PREJUDICE.
2. Systemhouse's Motion is GRANTED as to the County's Second Counterclaim and the County's Second Counterclaim is hereby DISMISSED WITH PREJUDICE.
3. Systemhouse's Motion is DENIED as to the portions of the County's Third and Eighth Counterclaims that allege the consequences for Dr. Brackbill's failure to follow procedures in approving the Early Termination Charge of Amended Schedule D.
4. Systemhouse's Motion is GRANTED as to the portions of the County's Third Counterclaim that alleges the Agreement is void because it lacks a contingency clause pursuant to Section 13.10(c)(2)(a) of the County's Administrative Code and these portions of the County's Third Counterclaim are DISMISSED WITH PREJUDICE.
5. Systemhouse's Motion is GRANTED as to the County's Seventh Counterclaim and the County's Seventh Counterclaim is hereby DISMISSED WITH PREJUDICE.
6. Systemhouse's Motion is GRANTED as to the County's Sixth Counterclaim and Fifth Affirmative Defense and the County's Sixth Counterclaim and Fifth Affirmative Defense are hereby DISMISSED WITH PREJUDICE.
7. Systemhouse's Motion is GRANTED as to the County's Eleventh Counterclaim and the County's Eleventh Counterclaim is hereby DISMISSED WITH PREJUDICE.
*470 8. Systemhouse's Motion is GRANTED as to the County's Seventh Affirmative Defense and the County's Seventh Affirmative Defense is hereby DISMISSED WITH PREJUDICE.
NOTES
[1] "County's Br." hereinafter refers to "Third-Party Defendant Northampton County's Brief in Opposition to Defendant SHL Systemhouse Corporation's Motion for Partial Summary Judgment and in Support of Its Cross-Motion for Partial Summary Judgment."
[2] "Systemhouse's Mem." hereinafter refers to "Memorandum of Law in Support of Defendant SHL Systemhouse Corp.'s Motion for Partial Summary Judgment."
[3] Since the Agreement is a professional service agreement, the court does not need to determine whether Brackbill satisfied Subsections (b) and (d) of § 13.04 of the Administrative Code to otherwise avoid the competitive bidding requirement. Section 13.04(b) of the Administrative Code provides that "[p]rocurement and disposition of County property shall be by competitive sealed bidding, the County Executive shall, by Executive Order, determine that this method is not practical and state therein the specific reasons to County Council for that determination." (County's Admin. Code § 13.04(b)). Section 13.04(d) provides that "[a] contract may be awarded by noncompetitive negotiation when the County Executive determines that competition is not in the best interest of the County." (County's Admin. Code § 13.04(d)). The County's Seventh Counterclaim dealt with these sections and therefore shall be dismissed.
[4] "Systemhouse's Reply Br." hereinafter refers to "SHL Systemhouse Corp.'s Reply Brief in Support of its Motion for Partial Summary Judgment and in Opposition to Northampton County's Cross-Motion for Partial Summary Judgment."
[5] Article 3, Section 24 of the Pennsylvania Constitution provides that "[n]o money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers; ...."
[6] Section 13.10(c)(2)(b) provides that:
All contracts shall contain an express written provision which clearly provides that in the event of non-appropriation of funds, at any time during the term of the contract, which would prevent the County from making payment under the terms and conditions of the contract, the County may terminate the contract, without the assessment of any termination charges or financial penalties against the County, by providing written notice of intent to terminate to the contracting party.
(County's Admin. Code § 13.10(c)(2)(b)).
[7] Section 13.10(c)(5)(a) states that:
Before the County Executive signs any prospective contract, obligating the County to any of the provisions contained therein, the County Executive shall provide written notification to County Council of the contract if the contract consideration exceeds $200,000, regardless of whether the contract term spans more that[sic] one fiscal year or exceeds twelve months.
(County's Admin. Code § 13.10(c)(5)(a)).
[8] Section 13.10(a) states that "[a]ll contracts and agreements shall be prepared and executed by the Director of the ordering department as directed by the County Executive by way of the Executive Order. All contract formats shall be approved by the County Solicitor prior to use." (County's Admin. Code § 13.10(a)).
[9] Systemhouse also moved for summary judgment alleging that a contractually imposed one year statute of limitations for bringing claims of contract formation improprieties has passed and the County is equitably estopped from raising issues on contract formation. The court will not consider these bases for Systemhouse's motion since the Agreement is found to be valid. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2844798/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-03-021-CV
CYNTHIA GAIL MCGILL APPELLANT
V.
NEWELL DEAN MCGILL APPELLEE
----------
FROM THE 78
TH
DISTRICT COURT OF WICHITA COUNTY
----------
CORRECTED
MEMORANDUM
OPINION
(footnote: 1)
AND JUDGMENT
----------
We have considered “Appellant’s Motion To Dismiss.” It is the court's opinion that the motion should be granted; therefore, we dismiss the appeal.
See
T
EX.
R. A
PP.
P. 42.1(a)(1), 43.2(f).
Appellant shall pay all costs of this appeal, for which let execution issue.
See
Tex. R. App. P
. 42.1(d).
PER CURIAM
PANEL D: LIVINGSTON, DAUPHINOT, and HOLMAN, JJ.
DELIVERED: July 8, 2003
FOOTNOTES
1:See
Tex. R. App. P. 47.4. | 01-03-2023 | 09-03-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2748005/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted November 4, 2014
Decided November 4, 2014
Before
RICHARD D. CUDAHY, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
Nos. 14-1287 & 14-1291
UNITED STATES OF AMERICA, Appeals from the United States District
Plaintiff–Appellee, Court for the Central District of Illinois.
v. Nos. 1:05-cr-10084-001 & 13-10018-001
ANTQUINT L. COX, Joe Billy McDade,
Defendant–Appellant. Judge.
ORDER
After serving time for a series of drug convictions, Antquint Cox violated the
terms of his supervised release by using and dealing cocaine. Cox admitted to each of
those violations. The district court revoked his supervision and imposed a 12-month
term of reimprisonment. Based on the same criminal conduct, Cox also pleaded guilty
to possession of cocaine base with intent to distribute, see 21 U.S.C. § 841(b)(1)(B), and
possession of a firearm during a drug trafficking crime, see 18 U.S.C. § 924(c). The
district court imposed sentences of 262 months’ and 60 months’ imprisonment,
respectively, to run consecutively to each other and to the term of reimprisonment. Cox
filed a notice of appeal in each case, but his appointed attorney asserts that all possible
claims in these consolidated appeals are frivolous and moves to withdraw under Anders
v. California, 386 U.S. 738 (1967). Cox has not accepted our invitation to comment on
Nos. 14-1287 & 14-1291 Page 2
counsel’s motion. See CIR. R. 51(b). Counsel submitted a brief that explains the nature of
these cases and addresses the issues that appeals of this kind might be expected to
involve. Because the analysis in the brief appears to be thorough, we limit our review to
the subjects counsel discusses. See United States v. Bey, 748 F.3d 774, 776 (7th Cir. 2014);
United States v. Wagner, 103 F.3d 551, 553 (7th Cir. 1996).
Counsel tells us that Cox does not wish to have his guilty plea set aside, and thus
counsel appropriately forgoes discussing the voluntariness of the plea or the adequacy
of Cox’s plea colloquy. See United States v. Konczak, 683 F.3d 348, 349 (7th Cir. 2012);
United States v. Knox, 287 F.3d 667, 670–71 (7th Cir. 2002). Counsel does not say whether
Cox wants to dispute the revocation of his supervised release, but nonetheless such an
argument would be frivolous because Cox admitted violating conditions of his release,
see 18 U.S.C. § 3583(e)(3), and revocation and reimprisonment were mandatory because
one of those conditions prohibits unlawful possession of controlled substances, see id.
§ 3583(g)(1); United States v. Hondras, 296 F.3d 601, 602 (7th Cir. 2002).
Counsel next considers whether Cox could challenge the reasonableness of his
prison sentence, and we agree with him that such a challenge would be frivolous. First,
the district court properly designated Cox a career offender based on his two prior
felony convictions for controlled-substance offenses, see U.S.S.G. § 4B1.1(a). Second,
Cox’s 262-month sentence was at the bottom of his calculated guidelines range (262–327
months, based on a total offense level of 34 and criminal-history category of VI).
Counsel gives no reason to disregard the presumption that this within-guidelines
sentence is reasonable, see Rita v. United States, 551 U.S. 338, 347 (2007); United States v.
Womack, 732 F.3d 745, 747 (7th Cir. 2013), and we see none. The court considered the
relevant 18 U.S.C. § 3553(a) factors—including the nature and circumstances of his
offense (especially the way he moved up the ladder to become a major cocaine
supplier), his history and characteristics (particularly his repeat offenses in spite of his
intelligence, leadership skills, and potential), and the need to protect the community
from similar crimes. Furthermore, Cox received the statutory-minimum sentence of 60
months’ imprisonment for the firearm conviction, so a challenge to its reasonableness
necessarily would be frivolous. See United States v. Johnson, 580 F.3d 666, 673 (7th Cir.
2009).
Regarding the period of reimprisonment for the supervised-release violation,
counsel did not identify a basis for challenging the guidelines range of 51 to 63
months—statutorily capped at 60 months, see 18 U.S.C. § 3583(e)(3)—based on a
criminal-history category of VI and his “Grade A” controlled-substance violations.
Nos. 14-1287 & 14-1291 Page 3
See U.S.S.G. §§ 7B1.1(a)(1), 7B1.4(a); United States v. Snyder, 635 F.3d 956, 960 (7th Cir.
2011). Given the court’s discussion of relevant § 3553(a) factors, as noted above, we
would not conclude that a below-guidelines sentence of 12 months was plainly
unreasonable. See United States v. Berry, 583 F.3d 1032, 1034 (7th Cir. 2009); United States
v. Neal, 512 F.3d 427, 438–39 (7th Cir. 2008).
Counsel’s motion to withdraw is GRANTED, and the appeal is DISMISSED. | 01-03-2023 | 11-04-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2347017/ | 479 F.Supp.2d 247 (2007)
CONCILIO DE SALUD INTEGRAL DE LOIZA, Plaintiff
v.
Hon. ROSA PÉREZ PERDOMO, Secretary of Health of the Commonwealth of Puerto Rico in her official capacity, Defendant.
Civil No. 03-1640 (GAG).
United States District Court, D. Puerto Rico.
March 27, 2007.
*248 PHV James L. Feldesman, PHV Robert A. Graham, Feldesman, Tucker, Leifer, Fidell LLP, Washington, DC, Ignacio Fernandez-De-Lahongr, Fernandez & Alcaraz, PSC, San Juan, PR, for Plaintiff.
Eduardo A. Vera-Ramirez, Eileen Landron-Guardiola, Arlene R. Perez-Borrero, Landron & Vera LLP, Guaynabo, PR, Elfrick Mendez-Morales, Mendez & Mendez, Urb. Roosevelt, Patricia Lorenzi, Delgado & Fernandez, Fernandez Juncos Station, San Juan, PR, for Defendant.
OPINION AND ORDER
GELPI, United States Magistrate Judge.
The parties to this action have cross-moved to have the court, on the one hand, convert its preliminary injunction (see Docket Nos. 48, 63, 82) to a permanent one, and, on the other hand, vacate the same. Plaintiff sustains that the Commonwealth continues to violate the directives of the Medicaid statute pertaining to wraparound payments. The Commonwealth, however, posits that it has established an office within its health department which permits it to fully comply with said federal law. On December 7, 2006 the court held an evidentiary hearing on the matter (see Docket No. 476-transcript). Following the hearing, the parties submitted memoranda (Docket Nos. 474, 486 & 495).
I. The Medicaid Wraparound Statute and its Applicability to Puerto Rico
In order to analyze the controversy at hand it is essential to once again provide some background on the Medicaid wraparound statute as it pertains to the Commonwealth.
The Medicaid program, 42 U.S.C. § 1396 et seq., begun in 1965, is jointly supported with federal and state funds and directly administered by state governments. Its purpose, is to provide medical assistance to indigent families with dependent children, as well as indigent disabled blind, and aged individuals. Rio Grande Community Health Center, Inc. v. Rullan, 397 F.3d 56, 61 (1st Cir.2005). The Commonwealth of Puerto Rico is a "state" for purposes of the Medicaid statute, 42 U.S.C. § 1301; Rio Grande, 397 F.3d at 61.
A state need not participate in the Medicaid program. However, once it opts to do so, it must comply with all federal requirements. Puerto Rico opted to participate in the Medicaid program. Rio Grande, 397 F.3d at 61-62.
One requirement of the Medicaid program, relevant here, is that participating jurisdictions must provide federally-qualified health center services. 42 U.S.C. §§ 1396a(a)(10)(A); 1396d(a)(2)(C); Rio Grande, 397 F.3d at 61. Plaintiff Loiza is one of the several "federally-qualified health centers" ("FQHCs") in Puerto Rico. It receives grants under Section 330 of the Public Health Service Act and serves a medically underserved area. 42 U.S.C. § 254b; Rio Grande, 397 F.3d at 61.
Federal law regulates how FQHCs receive payment of services provided to Medicaid patients. Rio Grande, 397 F.3d at 61. Effective January 1, 2001, Congress established a new payment system known as the "Prospective Payment System" ("PPS"). 42 U.S.C. § 1396a(bb)(2)(3); Rio Grande, 397 F.3d at 61. Applying a mathematical formula set by the statute, each participating jurisdiction was required to make a baseline calculation for Medicaid reimbursement to FQHCs. This *249 initial calculation took into account FQHC data from 1999, 2000 and 2001. Each subsequent year each jurisdiction has to prospectively revise its data for that particular year's FQHC Medicaid reimbursements. Rio Grande, 397 F.3d at 61-62.
In Puerto Rico, as in some other jurisdictions, FQHC reimbursement is greatly complicated. This is so because the Commonwealth employs a managed case approach for the operations of its Medicaid system. Id. at 62. The Commonwealth contracts with managed case organizations (MCOs) to arrange for providing of medical services to Medicaid patients. Id. It then pays a monthly fee to each MCO. However, if a MCO does not own hospitals or clinics it must subcontract with FQHCs in order to provide Medicaid services. Id.
The underlying problem leading to the filing of this action arises in the following manner. When the MCO contract with a FQHC gives the FQHC less amount of compensation that it is supposed to receive under the PPS system, the Commonwealth must make a supplemental "wraparound" payment to the FQHC. This wraparound payment will make up for the difference the FQHC is owed. 42 U.S.C. § 1396a(bb)(5); Rio Grande, 397 F.3d at 62. Federal law requires that wraparound.. payments be made at least three times a year. Rio Grande, 397 F.3d at 62, 74.
II. The Commonwealth's Non-Compliance with the Wraparound Statute
Subsequent to the wraparound statute's date of effectiveness January 1, 2001, the Commonwealth failed to establish a PPS system. Rio Grande, 397 F.3d at 62. No wraparound payments were thus made by the Commonwealth to any FQHC from January 1, 2001 until March 31, 2004. On the latter date, this court entered a preliminary injunction (Docket No. 48) ordering the Commonwealth Secretary of Health to make such payments to Loiza. This injunction was upheld on appeal Id. at 56-77. The court's preliminary injunction order established the PPS baseline calculations to be used in computing wraparound payments to Loiza (see Docket No. 48 at page 3); Rio Grande, 397 F.3d at 66. In other words, the court, at the time, had to step in and remedy the Commonwealth's noncompliance with the Medicaid statute.
III. Does the Establishment of the Health Department's PPS Office Require the Court to Dissolve its Preliminary Injunction?
Following the entry of the preliminary injunction and the appellate ruling upholding the same (issued on February 14, 2005) the Commonwealth failed to establish a PPS system. The court thus had to again step in and continue calculating the wraparound payments owed to Loiza (see, e.g., Docket Nos. 53, 64, 71, 224, 311, 313, 315).
In March 2006, the new Secretary of Health, Dr. Rosa Perez Perdomo, finally took steps to establish a PPS office within the Health Department (Tr. at 9-10). A finance director, supervisor coordinator and administrative assistant were appointed, while a position for an accountant was created (Tr. 168-169). A PPS employee manual was completed (Tr. 53-54); see Exhibit UU.
The PPS office further issued a detailed instruction manual to FQHCs which states the required documents, terms, due dates to submit information, and objection procedure (Tr. 113-115); see Exhibit WW. This manual was provided to plaintiff. Id. Said manual, in accordance with 42 U.S.C. § 1396a(bb)(5)(B), indicates that any due payments must be calculated on a quarterly basis (Exhibit WW at page 2).
The PPS office is taking necessary steps to more rapidly process wraparound information *250 (Tr. 58-59). Presently, all information, is obtained form FQHCs. In the future, the information will be obtained directly from the Commonwealth Health Service Administration and insurance companies. Id.
In its post-hearing memorandum, plaintiff does not contest the above facts of record pertaining to the PPS office. Notwithstanding, plaintiff makes a general assertion that the "PPS office is not equipped to enforce Medicaid statute-required FQHC related rights" (Docket No. 474 at page 2). Further, plaintiff points to the fact that Department of Health officials admitted PPS payments to FQHCs cannot be assured because they are controlled by another government body. Id. Finally, plaintiff posits that the Commonwealth has incurred in a plethora of other Medicaid statutory violations Id. at 5-18.
At the outset, the court notes that only one Medicaid claim of plaintiff is properly before it. This claim is exclusively limited to the wraparound payment requisite of the Medicaid statute. See Rio Grande, 397 F.3d at 74. No other claims are properly before this court at this time. Accordingly, the court will limit itself to the controversy at bar. This is not to say that plaintiff is in any way impeded from pursuing other Medicaid claims in a separate and future proceeding.
Plaintiff does not contest the Health Department PPS office's ability to readily and properly calculate Loiza's wraparound due payments. Instead, the thrust of plaintiffs argument, as evidenced during witness cross-examination at the December 7, 2006 evidentiary hearing, is as follows. Assuming that the PPS office properly performs its function, there is no future guarantee that Commonwealth monies will be available to pay the wraparound sums due. As recognized by Madam Secretary, contrary to the States, Puerto Rico receives but a fraction of Medicaid monies from the federal government. (Tr. 15, 47-48). Notwithstanding, the Commonwealth is required by federal law to comply with the wraparound scheme just as if it were a state. Id. The result is that in the case of Puerto Rico the additional monies granted to states by the federal government for wraparound payments are unavailable. These extra sums, in the millions of dollars, must then necessarily come from the Commonwealth fisc and be approved by the legislature. For example, in a state, Medicaid matching occurs on a fifty-fifty (50-50) basis. In Puerto Rico it is on a twelve-eighty eight (12-88) basis, the Commonwealth having to provide the much larger amount (Tr. 180-182).
Plaintiff is concerned that there may come a point in time when Loiza, due to the above predicament, is unable to receive wraparound payments. Such speculative fear, in and of itself, however, is legally insufficient for the court at this time to continue issuing injunctive relief. See Grupo Mexican de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 340, 119 S.Ct. 1961, 144 L.Ed.2d 319 (1999) (citing Wright, Miller & Kane) ("speculative' injury is not sufficient [to demonstrate irreparable injury]"); Matrix Group Ltd., Inc. v. Rawlings Sporting Goods Co., Inc., 378 F.3d 29, 35 (1st Cir.2004) ("speculation on unsubstantiated fears of what may happen in the future cannot provide the basis for a preliminary injunction"). More so, insofar as Loiza (the only plaintiff now in this federal suit) is concerned, the Secretary of Health has always fully complied with this court's orders to make wraparound payments to plaintiffs Loiza and Belaval.
There being no other specific challenges to the PPS office itself, the court finds that *251 the Secretary of Health is in present compliance with the wraparound payment statute. A permanent PPS office is now in place. Plaintiff does not challenge the contents of its employee and FQHC manuals (see Exhibits UU and WW); nor does plaintiff challenge the qualifications of the PPS office staff. More significant, the Department of Health has in fact issued noncourt-ordered wraparound payments, as a result of direct request of other FQHCs (see Tr. 86-88; see also Exhibit ZZ), as well as when ordered by this court. There is no evidence of record to the effect that, since the creation of the PPS office, the Department of Health has in fact been unable to make a specific wraparound payment because of lack of funds. Madame Secretary further indicated that in the event this were to occur, she would request the governor and legislature for additional emergency funds in order to comply with the Medicaid statute (Tr. 22-23).
IV. CONCLUSION
In light of the above, the Court hereby vacates its preliminary injunction (Docket Nos. 48, 63 & 82) directing the Secretary of Health to issue wraparound payments to plaintiff Loiza. This order is effective immediately and applies prospectively. Hence, Loiza's requests for an order directing wraparound payment for the third and fourth quarters of 2006 (Docket 464) are still properly under the court's consideration.
The Secretary of Health is free to calculate 2007 and future wraparound payments for Loiza using its current data. See Rio Grande, 397 F.3d at 62, 63. Notwithstanding, the Secretary shall continue to apply to Loiza the same baseline calculation data used by the court. See Order of March 31, 2004 at page 3 (Docket No. 48); Rio Grande, 397 F.3d at 66. It has been two (2) years since the Court of Appeals affirmed the order of this court calculating Loiza's wraparound baseline. To revisit this issue now would unfairly warp Loiza back in time to early 2004, when this issue first surfaced. This would unnecessarily prolong this case which is now about to conclude. It would further require the court to again involve itself in burdensome and time-consuming matters and analysis, likely requiring a further evidentiary hearing. For example, if the court were to now revisit the issue, defendant will contend that the baseline rate is actually much lower than that adopted in its March 31, 2004 order (Docket No. 48). If so, this would require the court to vacate all of its orders directing payment to Loiza, and possibly, direct Loiza to now reimburse the Department of Health.
The court is unwilling to engage in such an exercise now. It is simply too late for this. If an error in calculation was made by the court, the government will simply have to live with it, and can only blame itself for the consequence of its laches. This would not have happened if in 2001 the Commonwealth had complied with the Medicaid statute, or, if shortly after the First Circuit's February 2005 ruling it had provided to the court corrected baseline calculations for Loiza. Equity aids the vigilant, not those who slumber on their rights.
Final Judgment shall be entered once the court rules on the pending 2006 wraparound payment petitions.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2804570/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-3644
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MICHAEL RAMER,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 2:10-cr-00012-LA-2 — Lynn Adelman, Judge.
____________________
SUBMITTED MAY 15, 2015 * — DECIDED MAY 29, 2015
____________________
Before WOOD, Chief Judge, and CUDAHY and RIPPLE,
Circuit Judges.
PER CURIAM. Michael Ramer was convicted after a bench
trial of conspiracy to commit wire fraud. See 18 U.S.C.
§§ 1343, 1349. The conviction stemmed from a sham
* After examining the briefs and record, we have concluded that oral
argument is unnecessary. Thus the appeal is submitted on the briefs and
record. See FED. R. APP. P. 34(a)(2)(A).
2 No. 13-3644
investment scheme in which Mr. Ramer and a codefendant
solicited more than $1 million from individuals, but did not
invest the money as they had promised. 1 For his role in the
operation, the district court sentenced Mr. Ramer to 42
months’ imprisonment and ordered him to pay $1,077,500 in
restitution. The court also imposed a 3-year term of
supervised release and, as a special condition, directed that
Mr. Ramer make restitution payments “at a rate of not less
than $100 per month.” Mr. Ramer filed this appeal, and in
his brief he argues solely that the district court erred by not
conditioning the restitution payments on his ability to pay.
Before the Government filed its brief, however, the
district court had amended the judgment to state that
Mr. Ramer’s obligation to pay $100 each month as part of his
supervised release is “conditioned on” his ability to pay.
That modification was made in response to the parties’ joint
request, and thus the Government argues in its brief that
Mr. Ramer’s appeal is moot. Mr. Ramer, inexplicably, has
not moved to dismiss his appeal. See FED. R. APP. P. 42(b).
Nor has he filed a reply brief commenting on the
Government’s contention that the appeal is moot.
We begin by addressing whether the district court
retained subject-matter jurisdiction to revise the judgment
after Mr. Ramer had filed a notice of appeal. Ordinarily,
filing a notice of appeal divests a district court of
jurisdiction. See United States v. Brown, 732 F.3d 781, 787 (7th
The judgment identifies the offense of conviction as wire fraud, 18
1
U.S.C. § 1343, when in fact the indictment and the district court’s verdict
were for conspiracy to commit wire fraud, id. §§ 1343, 1349. The district
court can correct this clerical error at any time. See FED. R. CRIM. P. 36.
No. 13-3644 3
Cir. 2013); United States v. McHugh, 528 F.3d 538, 540 (7th Cir.
2008). But there are exceptions to this general rule. See, e.g.,
Brown, 732 F.3d at 787 (stating that district court may
address ancillary issues such as attorneys’ fees and clerical
mistakes after notice of appeal is filed); United States v.
Centracchio, 236 F.3d 812, 813 (7th Cir. 2001) (explaining that
district court retains jurisdiction despite Government’s
interlocutory appeal under 18 U.S.C. § 3731 from order
suppressing evidence); United States v. Byrski, 854 F.2d 955,
956 n.1 (7th Cir. 1988) (stating that appeal from frivolous
motion to dismiss indictment on ground of double jeopardy
does not divest district court of jurisdiction); United States v.
Cannon, 715 F.2d 1228, 1231 (7th Cir. 1983) (explaining that
notice of appeal challenging nonappealable order does not
divest district court of jurisdiction); Terket v. Lund, 623 F.2d
29, 33 (7th Cir. 1980) (noting that general rule divesting
district court of jurisdiction upon filing notice of appeal is
judge-made doctrine, not statutory or mandatory rule).
Under 18 U.S.C. § 3583(e)(2) district courts may “modify,
reduce, or enlarge the conditions of supervised release, at
any time prior to the expiration or termination of the term of
supervised release.” We have not yet considered this
statutory provision in a published decision, but the First
Circuit has. That court concluded that § 3583(e)(2) authorizes
a district court to modify conditions of supervised release
even while a direct appeal from the conviction and sentence
is pending. See United States v. D’Amario, 412 F.3d 253, 255
(1st Cir. 2005). We agree with the First Circuit’s conclusion
and hold that the district court retained jurisdiction to
modify the conditions of Mr. Ramer’s supervised release
while this appeal was pending.
4 No. 13-3644
In his brief Mr. Ramer asks only that we remand with
instructions to modify his obligation to pay restitution while
on supervised release to reflect that it is dependent on his
ability to pay. The district court already has properly
granted that relief. Accordingly, we agree with the
Government that the appeal is moot because we cannot give
Mr. Ramer any effective relief. See Calderon v. Moore, 518 U.S.
149, 150 (1996); A.M. v. Butler, 360 F.3d 787, 790 (7th Cir.
2004).
DISMISSED. | 01-03-2023 | 05-29-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2519851/ | 335 F. Supp. 2d 126 (2004)
In re NEW MOTOR VEHICLES CANADIAN EXPORT ANTITRUST LITIGATION
MDL No. 1532.
United States District Court, D. Maine.
September 7, 2004.
*127 Robert S. Frank, Harvey & Frank, Portland, ME, for Plaintiffs.
William J. Kayatta, Jr., Pierce Atwood, Portland, ME, for Defendants.
ORDER ON CERTAIN DEFENDANTS' MOTION TO DECLINE SUPPLEMENTAL SUBJECT-MATTER JURISDICTION AND TO DISMISS FOR LACK OF PERSONAL JURISDICTION OVER STATE CLAIMS
HORNBY, District Judge.
I ruled previously in this lawsuit that retail purchasers and lessees can pursue a federal antitrust claim against motor vehicle manufacturers for injunctive relief, but not damages. In re New Motor Vehicles Canadian Exp. Antitrust Litig., 307 F. Supp. 2d 136, 137 (D.Me.2004).[1] The plaintiffs then amended their complaint to add various state law claims that would allow a monetary recovery. Some, but not all, of the defendant manufacturers[2] moved to dismiss the state law claims for lack of personal jurisdiction, or on the basis that I should decline supplemental subject matter jurisdiction over the state law claims. After hearing oral argument on August 25, 2004, I conclude, first, that existing personal jurisdiction arising from the federal claim gives me jurisdiction to *128 hear the state law claims (so-called pendent personal jurisdiction). I conclude, second, that I should not decline supplemental subject matter jurisdiction over the state law claims although I have the statutory discretion to do so. The motion to dismiss is therefore DENIED.
I. ANALYSIS
(A) Pendent Personal Jurisdiction
When a federal court has jurisdiction over a defendant for a federal claim, pendent personal jurisdiction allows the court to exercise personal jurisdiction as to state law claims based on the same operative facts as the federal claim, even if the state law claims do not themselves provide a basis for personal jurisdiction. Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir.2004) (citations omitted). The Second, Third, Fourth, Seventh, Ninth, Tenth, and D.C. Circuits have all recognized pendent personal jurisdiction explicitly. See IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1056-57 (2d Cir.1993); Robinson v. Penn Cent. Co., 484 F.2d 553, 555-56 (3d Cir.1973); ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 628-29 (4th Cir.1997); Robinson Eng'g Co. Pension Plan and Trust v. George, 223 F.3d 445, 449-50 (7th Cir.2000); Action Embroidery, 368 F.3d at 1181; United States v. Botefuhr, 309 F.3d 1263, 1272-75 (10th Cir.2002); Oetiker v. Jurid Werke, G.m.b.H., 556 F.2d 1, 5 (D.C.Cir.1977). Quoting the Tenth Circuit, the Ninth Circuit observed in 2004 that "every circuit court of appeals to address the question [has] upheld the application of pendent personal jurisdiction." Action Embroidery, 368 F.3d at 1181 (quoting Botefuhr, 309 F.3d at 1273). I recognized pendent personal jurisdiction in this District in 2000. Andrews v. Emerald Green Pension Fund, 2000 WL 1473376, at *7-8, 2000 U.S. Dist. LEXIS 14545, at *23-24 (D.Me. Sept. 27, 2000). Once again, I conclude that the First Circuit will recognize pendent personal jurisdiction, agreeing with the other seven Circuits that have addressed the issue.
In an earlier ruling, I found personal jurisdiction over certain Canadian defendants on the federal antitrust claim that motor vehicle manufacturers had conspired to avoid price competition by keeping Canadian motor vehicles out of the American market, In re New Motor Vehicles Canadian Exp. Antitrust Litig., 307 F. Supp. 2d 145, 147 (D.Me.2004). In a Second Amended Complaint, the plaintiffs have added state law claims under state antitrust statutes, consumer protection statutes and the common law of unjust enrichment. The new claims arise out of the same underlying facts (the asserted conspiracy to avoid price competition) as those supporting the federal claim. (In adding the state claims the plaintiffs did not significantly alter the factual allegations of their complaint.) Therefore, pendent personal jurisdiction provides jurisdiction over these same defendants for the state law claims, because they arise out of the same nucleus of operative facts. Action Embroidery, 368 F.3d at 1180.
To be sure, Circuits that recognize pendent personal jurisdiction also say that the district court has discretion not to assert the jurisdiction. See, e.g., Action Embroidery, 368 F.3d at 1181 (quoting Oetiker, 556 F.2d at 5 ("[T]he district court may have discretion to dismiss the pendent claims where `considerations of judicial economy, convenience and fairness to the litigants' so dictate.")). For the reasons I articulate below in discussing the discretionary decision over supplemental subject matter jurisdiction, I conclude that asserting jurisdiction here is a proper exercise of discretion. "[I]t is often reasonable to compel [a] defendant to answer other claims in the same suit arising out of a *129 common nucleus of operative facts." Action Embroidery, 368 F.3d at 1181. Here, it is in the interest of "judicial economy, avoidance of piecemeal litigation, and overall convenience of the parties." Id.
Contrary to the defendants' argument, I conclude that the existence of personal jurisdiction as to the federal antitrust claim satisfies constitutional due process requirements for personal jurisdiction as to the state law claims as well. See id.; ESAB, 126 F.3d at 628-29. Where the federal and state law claims arise out of the same nucleus of operative facts, "according to the weight of authority, due process would not prevent obliging the defendant to defend against the state claim along with the federal claim under the doctrine of pendent personal jurisdiction." 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 1069.7 at 228-29 (3d ed.2002).[3] The defendants argue that their case is unique: that for the state law claims, the plaintiffs can obtain personal jurisdiction over these defendants in no state forum in the United States[4] and therefore should not be permitted to pursue their state claims in this federal court. I do not understand why that argument should succeed.[5] As the Fourth Circuit said in ESAB,
Once a court has a constitutional case, in the Article III sense, properly before it, service by a court sufficient to assert personal jurisdiction over a defendant by any authorized mechanism consistent with due process may be held to apply to the entire constitutional case.... Since the court has personal jurisdiction over the defendants..., we can find no constitutional bar to requiring the defendants to defend the entire constitutional case, which includes both federal and state claims arising from the same nucleus of facts, so long as the federal claim is not wholly immaterial or insubstantial.
126 F.3d at 628-29.
Nevertheless, certain defendants argue that the First Circuit will not accept pendent personal jurisdiction because of its holding in Moreno v. United States, 120 F.2d 128 (1st Cir.1941). In Moreno, a widow sued the government in federal court in Massachusetts, seeking benefits under a war risk insurance policy insuring her deceased husband. Id. at 129. Section 19 of the World War Veterans' Act, 1924, permitted the United States to implead into such a lawsuit anyone else claiming an interest in the insurance policy, regardless of where he or she lived. Accordingly, the government impleaded the policy's named beneficiary, a woman who lived in New Jersey. Subsequently, the plaintiff widow tried to add a direct claim for damages against the New Jersey resident for alienation of affections. Both *130 the district court and the First Circuit held that she could not. Id. at 130.
The pendent state claim the plaintiff sought to raise in Moreno (alienation of affections) was not related to the underlying federal claim (entitlement to benefits under a government insurance policy). Pendent personal jurisdiction exists when the state claims for which there is no independent basis for jurisdiction and the federal claim for which there is personal jurisdiction do "arise[ ] out of a common nucleus of operative facts." See Action Embroidery, 368 F.3d at 1180 (citations omitted). Thus, the 1941 Moreno decision is not inconsistent with the later recognized doctrine of pendent personal jurisdiction. Accord Amtrol, Inc. v. Vent-Rite Valve Corp., 646 F. Supp. 1168, 1174 n. 4 (D.Mass.1986) (distinguishing Moreno and applying doctrine of pendent personal jurisdiction); Bertozzi v. King Louie Int'l, Inc., 420 F. Supp. 1166, 1172 n. 3 (D.R.I.1976) (adopting narrow interpretation of Moreno). But see Wilensky v. Standard Beryllium Corp., 228 F. Supp. 703, 706 (D.Mass.1964).
Therefore, pendent personal jurisdiction permits jurisdiction over the Canadian defendants on the state law claims.
(B) Supplemental Subject Matter Jurisdiction
Because there is subject matter jurisdiction over the federal antitrust claim, 28 U.S.C. § 1367 also grants supplemental jurisdiction over "all other claims that are so related to [the federal claim] that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a) (1993). The state law claims meet that standard. Certain defendants argue, however, that I should decline supplemental subject matter jurisdiction over the state law claims. The statute provides: "[D]istrict courts may decline to exercise supplemental jurisdiction over a claim ... if ... the claim substantially predominates over the claim or claims over which the district court has original jurisdiction...." 28 U.S.C. § 1367(c)(2). According to the First Circuit, this language accords a district court "`broad discretion.'" Che v. Mass. Bay Transp. Auth., 342 F.3d 31, 37 (1st Cir.2003) (quoting Vera-Lozano v. Int'l Broad., 50 F.3d 67, 70 (1st Cir.1995)). The focus is on "the totality of the circumstances" and consideration of issues such as "comity, judicial economy, convenience, fairness and the like." Che, 342 F.3d at 37 (citing Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 257 (1st Cir.1996); Rodriguez v. Doral Mortg. Corp., 57 F.3d 1168, 1177 (1st Cir.1995)).[6]
The defendants focus primarily on convenience and judicial economy. They argue that accepting jurisdiction will vastly complicate discovery, class certification issues and trial. They point out the need for proof of in-state effects for some state laws, but highlight especially the damage difficulties, asserting that my Illinois Brick ruling removed the damage remedy from the case as it was then structured, and that the new state law claims will *131 restore damage issues, with difficult variations from state to state.
First, I conclude that the projected discovery difficulties will be manageable. State law discovery will go forward, at least as to some states, regardless of what I do on this motion, because there are parallel lawsuits pending in a number of state courts. Fortunately, the parties have been cooperating in efforts to coordinate discovery in this federal multidistrict lawsuit with that in the state court lawsuits. Already, a number of the state jurisdictions have entered orders coordinating their discovery procedures with the federal action. The addition of some discovery issues to this multidistrict litigation is not enough to reject the state law claims.
Second, I will deal with class certification issues when the case reaches that stage.[7]
Third, I do not find the asserted trial difficulties to be especially significant. Moreover, under current Supreme Court precedent, Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35, 118 S. Ct. 956, 140 L. Ed. 2d 62 (1998), these cases will all return to the districts where they originated once pretrial proceedings are complete. Some of the state law variations, therefore, will be handled by judges familiar with local law.
Two additional observations. First, this is a multidistrict lawsuit. Such lawsuits are expected to be complex. The Judicial Panel on Multidistrict Litigation gathers lawsuits from around the country and transfers them to a district with time and resources to deal with that complexity. It would be unhelpful in such a context to reject claims on the basis of complexity. Second, it is true that my earlier Illinois Brick ruling eliminated damages as the lawsuit was then structured. I never expected damages to go away entirely, however. The plaintiffs' lawyers assured me at oral argument on that earlier motion that they would add parties to avoid Illinois Brick if I ruled against them (as I did); I recognized that prediction in the decision itself. In re New Motor Vehicles Canadian Exp. Antitrust Litig., 307 F.Supp.2d at 138-41. Although the plaintiffs have chosen not to follow their predicted course, but to add state claims instead, I have always expected that this multidistrict lawsuit, if it proceeded, would have to deal with damages. I am surprised if any of the lawyers thought otherwise. Moreover, even if I had the unexpected luxury of dealing only with liability and injunctive relief, I am sure that in discovery and at trial the parties would be discussing numbers related to damages. After all, the whole premise of this lawsuit is that the defendants' conduct resulted in illegal price differentials between Canadian and American cars, and that American consumers had to pay extra. Even to secure injunctive relief, the plaintiffs presumably will be required to prove such facts, and the defendants presumably will be arguing that any price differentials would have existed regardless. Argument over the scope of any injunction could also lead to consideration of such issues.
Yes, it would be easier for this individual federal judge not to have to address a variety of state laws in resolving the recently *132 filed motion to dismiss or, if the claims survive the motion to dismiss, in the inevitable summary judgment practice to come. But accepting a multidistrict case means recognizing the likelihood of dealing with other laws. After all, not all multidistrict cases are premised on federal question jurisdiction. (Indeed, one might expect that if these state law claims were individually filed in other districts or were filed in state court and removed to federal court on the basis of diversity of citizenship, the Multidistrict Panel would send them to this District in any event.)
In this case, all the claims, state and federal, derive from the same underlying factual assertions. The heart of the case is still the alleged antitrust violation. The state issues are not "more important, more complex, more time consuming to resolve, or in any other way more significant than their federal counterparts." Borough of West Mifflin v. Lancaster, 45 F.3d 780, 790 (3d Cir.1995), even though they make possible a wider remedy. See In re Stat-Tech Secs. Litig., 905 F. Supp. 1416, 1426 (D.Colo.1995) (asserting supplemental jurisdiction because "[w]hile state law may predominate in terms of the comprehensiveness of remedies sought on the remaining state law claims, all of the Trust's claims stem from the same alleged misconduct of defendants").
I conclude that this single coordinated and consolidated pretrial proceeding in the District of Maine best furthers convenience, fairness, judicial economy, and reduction of cost and expense for the parties. Federal-state comity has not been argued, but I observe that a number of the state courts with parallel lawsuits are joining the Consolidation Order that California Superior Court Judge Richard Kramer and I entered at the parties' joint request. I see no negative comity factors. In short, dealing with all the claims in the District of Maine furthers both the administration of justice and the goals of multidistrict litigation.[8]
In light of these considerations, I choose to exercise both supplemental jurisdiction over the newly-raised state-law claims and pendent personal jurisdiction over the moving defendants as to all state claims in the Second Amended Complaint.
III. CONCLUSION
The Motion to Decline Supplemental Subject-Matter Jurisdiction and to Dismiss for Lack of Personal Jurisdiction Over State-Law Claims is DENIED.
SO ORDERED.
NOTES
[1] Illinois Brick Co. v. Illinois, 431 U.S. 720, 746-47, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), forecloses a federal antitrust damage remedy to indirect purchasers.
[2] Honda Canada, Inc.; DaimlerChrysler Canada, Inc.; Mercedes-Benz Canada, Inc.; and the Canadian Automobile Dealers' Association ("CADA") ask that I require an independent state-law basis (not present here) for asserting personal jurisdiction on the state-law claims. DaimlerChrysler Canada, Inc.; Mercedes-Benz Canada, Inc.; and CADA substantively challenge the adoption of pendent personal jurisdiction. American Honda Motor Co., Inc.; Honda Canada, Inc.; DaimlerChrysler Corporation; DaimlerChrysler Motors Co., LLC; DaimlerChrysler Canada, Inc.; Mercedes-Benz USA, LLC; and Mercedes-Benz Canada, Inc. all argue that even if personal jurisdiction exists, I should decline supplemental jurisdiction over the state-law claims. The following defendants support this Court's jurisdiction: General Motors Corporation; General Motors of Canada, Ltd.; Ford Motor Company; Ford Motor Company of Canada, Ltd.; Toyota Motor Sales, USA, Inc.; Nissan North America, Inc.; and BMW of North America, LLC.
[3] "Thus, a defendant who already is before the district court to defend a federal claim is unlikely to be severely inconvenienced by being forced to defend a state claim whose issues are nearly identical or substantially overlap. Notions of fairness simply are not offended in this circumstance." 4B Wright & Miller, supra, § 1117 at 189. To the degree that there is a need to consider the fairness of the forum, see generally 4 Wright & Miller, supra, § 1068.1, I observe that the Judicial Panel on Multidistrict Litigation's action in consolidating all the lawsuits and transferring them to Maine, a jurisdiction immediately adjacent to Canada, operated to reduce the burden on the Canadian defendants.
[4] It became apparent at oral argument that the plaintiffs do not agree with this assertion.
[5] For example, a plaintiff may obtain personal jurisdiction over a defendant in Mississippi state court to assert a claim based upon Arkansas law, even though he could not obtain personal jurisdiction in Arkansas. I do not see why it should matter that the personal jurisdiction is obtained in a federal court instead of a state court.
[6] The Third Circuit is arguably stricter in limiting district judges' discretion to decline supplemental jurisdiction. It holds that the "substantially predominate" standard is "a limited exception to the operation of the doctrine of pendent jurisdiction a doctrine that seeks to promote judicial economy, convenience, and fairness to litigants by litigating in one case all claims that arise out of the same nucleus of operative fact." Borough of West Mifflin v. Lancaster, 45 F.3d 780, 789 (3d Cir.1995). Jurisdiction should be declined "only where there is an important countervailing interest to be served by relegating state claims to state court," "normally ... the case only where `a state claim constitutes the real body of a case, to which the federal claim is only an appendage.'" Id. (citation omitted).
[7] I am puzzled by the defendants' reliance upon Jones v. Ford Motor Credit Co., 358 F.3d 205 (2d Cir.2004) in their Reply Mem. at 6 n. 3. Jones stated that before a class has been certified "district courts should normally not dismiss the claims based solely on the problems that could arise if the class is eventually certified." Id. at 215 n. 9 (emphasis added) (citation omitted). No class has yet been certified in this case. Moreover, Jones counseled the district judge to craft the class certification order to avoid the supplemental jurisdiction issue. Id. at 216.
[8] The moving defendants claim that acceptance of jurisdiction over the state law claims that allow indirect purchasers to sue for damages violates federal policy against indirect purchaser suits and will lead to re-litigation of issues decided in my earlier order, In re New Motor Vehicles Canadian Exp. Antitrust Litig., 307 F.Supp.2d at 144. I disagree. The exercise of supplemental jurisdiction over the state claims does not violate federal policy against indirect purchaser suits for federal antitrust law or re-litigate issues decided in my previous order. See California v. ARC Am. Corp., 490 U.S. 93, 103-05, 109 S. Ct. 1661, 104 L. Ed. 2d 86 (1989) (finding that state statutes allowing recovery for indirect purchasers do not interfere with federal policy or remedies and that federal courts may accept or decline supplemental jurisdiction over state law indirect purchaser claims); In re Relafen Antitrust Litig., 221 F.R.D. 260, 275 (D.Mass.2004). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580175/ | 390 F. Supp. 2d 1059 (2005)
UNITED STATES of America, Plaintiff,
v.
ONE 1991 CHEVROLET CORVETTE, and $22,522.00, More or Less, in United States Currency Defendants.
No. CIV.A. 03-0488-CG-M.
United States District Court, S.D. Alabama, Southern Division.
August 3, 2005.
*1060 *1061 Alex F. Lankford, IV, U.S. Attorney's Office, Mobile, AL, for Plaintiff.
Christ N. Coumanis, Donald M. Briskman, Christopher Alan Akins, Briskman & Binion, P.C., Mobile, AL, for Defendants.
AMENDED ORDER
GRANADE, Chief Judge.
It has been brought to the court's attention that this court's previous order of August 1, 2005, granting summary judgment in favor of plaintiff (Doc. 56), confused the applicable standard for forfeiture.[1] After reviewing the order, the court agrees and hereby RESCINDS the August 1, 2005 order (Doc. 56) and the corresponding final judgment of forfeiture (Doc. 57) and enters the following amended order.
This matter is before the court on the motion for summary judgment and brief in support of plaintiff, the United States of America (Docs. 39,40), the response thereto *1062 of claimant, James E. Body (Doc. 48), claimant's motion to strike (Doc. 49), the response of the United States (Doc. 50), the United States' motion to strike (Doc. 51), and the United States' response to claimant's motion to strike (Doc. 52). The court finds that claimant's motion to strike is due to be denied and the United States' motion to strike is due to be granted. The court also finds that the United States has demonstrated that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. Therefore, the motion to the United States for summary judgment is due to be granted.
BACKGROUND
On March 5, 2003, the Mobile County Sheriff's Office, Narcotics Division, executed a search warrant at claimant's residence. When the deputies arrived, they found approximately 15 individuals outside the residence, including claimant (Cuthkelvin Affid. p. 3). Claimant had a paper bag in his front pants pocket that contained $2,527.00 in U.S. currency. (Cuthkelvin Affid. p. 3). The currency was separated by denomination, folded and bundled together with rubber bands. (Walker Affid. p. 3). Claimant waived his Miranda rights and agreed to cooperate. (Cuthkelvin Affid. p. 3, Walker Affid. p. 3). One of the officers, Deputy Walker, had investigated and arrested claimant in 1994 for distribution of a controlled substance, for which claimant was sentenced to serve 20 years in state prison. (Walker Affid. pp. 2, 4; Doc. 40 Ex. K). Claimant had been released from prison on parole in April 2000. (Doc. 40, Ex. K). Claimant also has a 1986 drug-related conviction.
In a safe located in claimant's residence, the officers found a plastic shopping bag tied at the top which contained two brown paper bags that held a total of $19,995.00 in U.S. currency separated by denomination, folded and bundled together with rubber bands. (Walker Affid. p. 3, Cuthkelvin Affid. p. 4). Deputy Walker asked claimant if he was still selling narcotics, and claimant responded that he did from time-to-time because there was nothing else for him when he got out of prison. (Walker Affid. p. 4). Deputy Walker asked claimant if there were any narcotics in his residence, and claimant responded "No. It all been turned to cash." (Walker Affid. p. 4). When asked if he had any dealings with Larry Collins, a person of interest to the Narcotics Division concerning cocaine distribution, claimant stated that at least three times he had bought "halves" and "quarters." (Walker Affid. pp. 4-5). When asked whether "halves" and "quarters" meant half-kilos and quarter-kilos of cocaine, claimant responded affirmatively. (Walker Affid. p. 5). Claimant stated that he had paid $11,000 each for the "halves." (Walker Affid. p. 5).
Officers also found a .45 caliber Taurus revolver in claimant's bedroom closet which claimant said he had for safekeeping for a family member, Ashley Snowden. (Walker Affid. p. 5). Deputy Houseknecht's canine partner, Otter, alerted to a white 1991 Chevrolet Corvette, Vin 1G1YY2385M5108771, which was parked in claimant's garage, but the officers found no physical presence of narcotics in the Corvette. (Cuthkelvin Affid. p. 6; Houseknecht Affid. p. 4). According to claimant, he bought the car for $6,500 cash in December 2002. (Walker Affid. p. 5-6; Doc. 40 Ex. O). When asked where he got the money to buy the Corvette, claimant told Deputy Walker "You know where it came from." (Walker Affid. pp. 5-6). A search of the garage yielded drug paraphernalia and substances later determined to be cocaine. (Goolsby Affid. pp. 2-3, Warren Affid. pp. 4-5).
Twenty-six pounds of marijuana and $2,500.00 in cash were also found in another *1063 car parked at claimant's residence and $1,8533.00 in cash was found on one of the people standing outside claimant's house. (Cuthkelvin Affid. pp. 4-5). These items were forfeited administratively after no one filed a claim for them. (Doc. 40 Ex. M). Two of the people outside claimant's residence, Ashley Snowden and Darnell Watkins, have prior drug-related convictions. (Doc. 40, Ex. L, M). One of claimant's sons, Antonio Law, testified that Watkins would deliver 1 or 2 kilos of cocaine to claimant every week or every other week and that claimant would front Law 50% of the cocaine. (Law Affid. p. 2). According to Law, claimant would sell the remaining cocaine to others. (Law Affid. p. 2). After Law sold the cocaine fronted to him by claimant, he would pay claimant about $22,000.00 cash per kilo of cocaine. (Law Affid. p. 2). According to Law, these transactions took place regularly and frequently between 2000 and October to November 2002. (Law Affid. p. 2). Law estimated that he earned a profit of about $2,500 per kilo of cocaine and that claimant would have earned about the same. (Law Affid. p. 2).
There is no federal criminal case against claimant. Claimant's State of Alabama parole was revoked on May 14, 2003, and his parole review date is not until April 2007. (Doc. 40 Ex. K).
DISCUSSION
A. Claimant's Motion to Strike
Claimant moves to strike the portion of the Government's narrative summary of facts which relates to individuals other than himself who were at his residence during the execution of the warrant, namely Snowden and Watkins, and property seized during the execution of the warrant. According to claimant, such facts have no relationship or relevancy to claimant. However, there is evidence that Watkins was claimant's source of cocaine. The court finds that the fact that known drug traffickers, drugs and drug paraphernalia were present at claimant's residence at the time of the seizure is strong circumstantial evidence that the vehicle and cash are proceeds of an exchange for a controlled substance. Moreover, the court finds that summary judgment is due to be granted even without consideration of the evidence claimant seeks to strike. Therefore, claimant's motion to strike is due to be denied.
B. United States' Motion to Strike
The United States moves to strike evidence submitted by claimant that he generated legitimate income from his paving work. When asked to provide information regarding his earnings and income, claimant invoked his Fifth Amendment privilege. Claimant refused to produce his federal, state, or local tax returns from 1990 to 2003 or to authorize the IRS to release copies of his tax returns. (Doc. 48, Ex. C pp. 5-6). Claimant refused to allow the Social Security Administration to release information concerning his earnings and refused to execute any other releases concerning his employment or earnings. (Doc. 48, Ex. C, pp. 6-7). Claimant now wants to offer evidence of alleged legitimate income.
Claimant had a right to assert his Fifth Amendment privilege when asked to produce documents concerning his income. United States v. Two Parcels of Real Property Located in Russell County, Ala., 92 F.3d 1123, 1129 (11th Cir.1996) (citations omitted). However, the court finds that the information claimant now wishes to offer in his defense concerning his alleged legitimate income should be stricken. "It is well-accepted that a witness' direct testimony can be stricken if she [or he] invokes the fifth amendment on cross-examination to shield *1064 that testimony from scrutiny." U.S. v. Two Parcels Property Located at 2730 Highway 31 Jemison, Chilton County, Ala., 909 F. Supp. 1450, 1456 (M.D.Ala.1995) (citations omitted). The court finds it would clearly be prejudicial to the United States to allow claimant to offer evidence after the close of discovery on issues that he refused to provide information on during discovery. Although claimant provided some information about his income, including handwritten contracts purporting to be paving proposals or contracts, he refused to provide the necessary releases and other information to allow the United States to discover the accuracy of the information provided. "A party who asserts the privilege may not `convert [it] from the shield against compulsory self-incrimination which it was intended to be into a sword ...'" Arango v. U.S. Dept. of the Treasury, 115 F.3d 922, 926 (11th Cir.1997) (quoting United States v. Rylander, 460 U.S. 752, 758-59, 103 S. Ct. 1548, 1553, 75 L. Ed. 2d 521 (1983)); see also U.S. v. $110.873.00 in U.S. Currency, 2004 WL 2359726, *4 (N.D.Ohio Oct. 6, 2004) ("Once invoked in response to a discovery request, a forfeiture claimant cannot testify at trial or oppose the government's motion for summary judgment through affidavits." citation omitted); Pedrina v. Chun, 906 F. Supp. 1377, 1398 (D.Hawai'i 1995), aff'd. 97 F.3d 1296 (9th Cir.1996), cert. denied, 520 U.S. 1268, 117 S. Ct. 2441, 138 L. Ed. 2d 201 (1997) ("Defendants may not rely on their own testimony or affidavits to support their version of a disputed issue where they have asserted their Fifth Amendment right not to answer questions concerning that very same issue." citation omitted); U.S. v. Sixty Thousand Dollars ($60,000.00) in U.S. Currency, 763 F. Supp. 909, 914 (E.D.Mich.1991) ("A defendant may not use the fifth amendment to shield herself from the opposition's inquiries during discovery only to impale her accusers with surprise testimony at trial." citation omitted). Thus, the motion of the United States to strike claimant's discovery responses submitted to support his claim that he generated legitimate income from his paving work is due to be granted.
C. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted: "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The trial court's function is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). "The mere existence of some evidence to support the non-moving party is not sufficient for denial of summary judgment; there must be `sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.'" Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir.2002) (quoting Anderson, 477 U.S. at 249, 106 S. Ct. 2505). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, at 249, 106 S. Ct. 2505. (internal citations omitted).
The basic issue before the court on 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." See Anderson, 477 U.S. at 251-252, 106 S. Ct. 2505. The moving party bears the burden of proving that no genuine issue of material fact exists. O'Ferrell v. United *1065 States, 253 F.3d 1257, 1265 (11th Cir.2001). In evaluating the argument of the moving party, the court must view all evidence in the light most favorable to the non-moving party, and resolve all reasonable doubts about the facts in its favor. Burton v. City of Belle Glade, 178 F.3d 1175, 1187 (11th Cir.1999). "If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir.1992) (citing Mercantile Bank & Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir.1985)).
Once the movant satisfies his initial burden under Rule 56(c), the non-movant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). The non-moving party "may not rest on the mere allegations or denials of the [non-moving] party's pleading, but ... must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e) "A mere `scintilla' of evidence supporting the [non-moving] party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990) (citation omitted). "[T]he nonmoving party may avail itself of all facts and justifiable inferences in the record taken as a whole." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir.1992). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574 at 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (internal quotation and citation omitted).
D. Forfeiture Standard
This forfeiture proceeding was initiated after the April 2000 effective date of the Civil Asset Forfeiture Reform Act (CAFRA). Therefore the procedures set forth in 18 US.C. § 983 apply. Under CAFRA the burden of proof is on the United States to establish by a preponderance of the evidence that the property is subject to forfeiture. 18 U.S.C. § 983(c)(1).[2]
The United States alleges that the property seized is subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6), which provides for forfeiture of:
All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter.
The United States contends in this case that the defendant property constitutes proceeds traceable to an exchange for a controlled substance. The court notes that the United States is no longer permitted to use hearsay evidence. U.S. v. Certain Real Property Located at 263 Weatherbrook *1066 Lane, Anniston, Alabama, known as "The Platinum Club", 202 F. Supp. 2d 1275, 1276 (N.D.Ala.2002) (citation omitted).
E. Evidence of Proceeds
After a review of the evidence in this case, the court finds that the United States has met its burden of establishing by a preponderance of the evidence that the defendant property constitutes proceeds from an exchange for a controlled substance. Claimant admitted to Deputy Walker that he had continued to sell narcotics since being paroled from prison in April 2000. Claimant admitted to purchasing half or quarter kilos of cocaine at least three times. There is also testimony that 1 or 2 kilos were delivered to claimant every to every other week at a price of $11,000 per half kilo. Claimant also admitted to turning the drugs into cash. The testimony indicates that each kilo would have brought claimant approximately $2,500 profit. Claimant happened to have $2,527.00 in cash on him when he was searched. The $19,995 in the safe was separated folded and bundled with rubber bands the way narcotics dealers commonly maintain cash. (Walker Affid. p. 4); see United States v. $242,484.00, 389 F.3d 1149, 1161-62 (11th Cir.2004) (A drug agent's observation that cash bundled with rubber bands is indicative of drug proceeds is to be given weight.)
As to the Corvette, claimant's statement that Deputy Walker knew where the money to purchase it came from, in the context it was given, is a tacit admission that it was purchased with drug money. Claimant was aware that the deputy not only knew of, but had been actively involved in, convicting claimant for a previous drug conviction. Additionally, the drug detection dog's alert to the vehicle has some probative value that there is a connection to drugs. United States v. $22,991.00, 227 F. Supp. 2d 1220, 1233-34 (S.D.Ala.2002) (citation omitted).
Claimant's narcotics-related criminal history is another factor that supports the United States' allegations. See United States v. Carrell, 252 F.3d 1193, 1201-02 (11th Cir.2001).
Claimant contends that the cash and money used to purchase the car were derived from legitimate income from paving work. However, claimant invoked his right not to incriminate himself under the Fifth Amendment upon being asked to produce documents to verify the amount of income he received from paving work and, as a result, the court has determined that all evidence supporting claimant's contention that he had legitimate income from paving work should be stricken. In addition, the court can infer from the fact that claimant refused to provide the information that the information would be adverse to claimant.[3]United States v. Two Parcels of Real Property Located in Russell County, Ala., 92 F.3d at 1129. As previously stated, claimant may not survive summary judgment by resting "on the mere allegations or denials of the [non-moving] party's pleading, but .... must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). As such, the court finds that the *1067 United States has met its burden of establishing that the defendant property constitutes proceeds. Therefore, the court finds that summary judgment is due to be granted in favor of the United States.
CONCLUSION
For the reasons stated above, claimant's motion to strike (Doc. 49) is DENIED; the United States' motion to strike (Doc. 51) is GRANTED; and the motion of the United States for summary judgment (Doc. 39) is GRANTED.
NOTES
[1] Congress amended 18 U.S.C.A. § 983 with the passage of the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"). The amendments changed the allocation of the burden of proof Previously, the burden was on the government to establish "probable cause." The claimant then had to prove by a preponderance of the evidence that the property was not subject to forfeiture. Under 18 U.S.C. § 983(c), "Congress now requires that the Government meet a stiffer burden to show by a preponderance of the evidence that the property is subject to forfeiture." U.S. v. Certain Real Property Located at 263 Weatherbrook Lane. Anniston, Alabama, known as "The Platinum Club", 202 F. Supp. 2d 1275, 1276 (N.D.Ala.2002).
[2] In an action for the civil forfeiture of property, where the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government must establish by a preponderance of the evidence that the property is subject to forfeiture and must establish "that there was a substantial connection between the property and the offense." 18 U.S.C.A. § 983(c)(3); see also United States v. $22,991.00, more or less, in United States Currency, 227 F. Supp. 2d 1220, 1231 (S.D.Ala.2002). However, in this case the United States asserts that the defendant property is proceeds from an exchange for a controlled substance and does not claim the property facilitated the offense.
[3] "There is an exception to this rule when a claimant in the civil case is also a defendant in the criminal case and is forced to choose between waiving the privilege and losing the case on summary judgment." United States v. Two Parcels of Real Property Located in Russell County, Ala., 92 F.3d 1123 at 1129 (citation omitted). However, there is no criminal case against the claimant here. "[T]he Fifth Amendment does not forbid adverse inferences against civil litigants, including claimants in civil for feature proceedings, who assert the privilege against self-incrimination." Arango v. U.S. Dept. of the Treasury, 115 F.3d 922, 926 (11th Cir.1997) (citations omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2542360/ | 719 F. Supp. 2d 189 (2010)
Vidalina SOTO, Plaintiff
v.
STATE CHEMICAL SALES COMPANY INTERNATIONAL, INC., et al., Defendants.
Civil No. 09-1270 (JP).
United States District Court, D. Puerto Rico.
March 26, 2010.
*190 Carlos R. Paula, Labor Counsels, San Juan, PR, Melissa Figueroa-Del Valle, Labor Counsels, Hato Rey, PR, for Plaintiff.
Jeffrey M. Williams-English, Seth Erbe, Indiano & Williams, PSC, San Juan, PR, for Defendants.
OPINION AND ORDER
JAIME PIERAS, JR., Senior District Judge.
Before the Court is a motion to dismiss and compel arbitration filed by Defendants State Chemical Sales Company, International, Inc. ("State Chemical"), Carlos Javier Concepción, and his conjugal partnership (No. 7). Also before the Court is Plaintiff Vidalina Soto's ("Soto") response in opposition (No. 11) to the motion, and Defendants' reply (No. 15). Plaintiff Soto filed the instant complaint alleging claims pursuant to the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. ("ADA"), as well as several provisions of Puerto Rico law and the Puerto Rico Constitution. Defendants move for dismissal of the complaint on the basis that the parties entered into an arbitration agreement, and Plaintiff has not pursued the arbitration process established in said *191 agreement. For the reasons stated herein, Defendants' motion to dismiss and compel arbitration is hereby GRANTED.
I. FACTUAL ALLEGATIONS
Plaintiff Soto alleges that she began working for Defendant State Chemical and Defendant State Industrial Products Corp. ("State Industrial") as a salesperson on March 2, 1992. Since 1997, Plaintiff alleges that she has suffered from disabling health conditions including lumbar herniation, cervical herniation, carpal tunnel syndrome, and rheumatoid arthritis. Despite the limitations caused by her disabilities, Plaintiff is capable of performing her essential job junctions.
Plaintiff alleges that she has been subjected to discrimination by Defendants on the basis of her disabilities. In particular, Plaintiff alleges that Defendants have discontinued paying her commissions, subjected her to mocking by managers and warehouse personnel, stopped providing the employer contribution to Plaintiff's health plan, and given Plaintiff low priority in the dispatch of products of merchandise, among other actions. In addition, Plaintiff alleges that certain managers have provided false information to Defendants' corporate offices in order to make her employer unjustifiably upset with her.
II. LEGAL STANDARD FOR ORDER COMPELLING ARBITRATION
The Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"), establishes the validity and enforceability of written arbitration agreements. The FAA provides that a written arbitration agreement is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA expresses a congressional policy in favor of arbitration, and places arbitration agreements on an equal footing with other contracts. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006). The FAA mandates the district court to compel arbitration when the parties have signed a valid arbitration agreement governing the issues in dispute, removing the district court's discretion over whether to compel arbitration or provide a judicial remedy to the parties. 9 U.S.C. § 4; Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985). The existence of a valid arbitration agreement is premised on the consent of the parties to arbitrate at least some of their claims and thereby forego a judicial remedy for those claims. McCarthy v. Azure, 22 F.3d 351, 354-55 (1st Cir.1994) (citing AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986)).
Based on the above principles, the United States Court of Appeals for the First Circuit has set forth four requirements that must be satisfied for a court to grant a motion to compel arbitration: (1) a valid arbitration agreement must exist; (2) the moving party must be entitled to invoke the arbitration clause; (3) the other party must be bound by the clause; and (4) the claim must fall within the scope of the arbitration clause. InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir.2003).
As to the first prong of the InterGen N.V. test, supra, state contract law principles govern the validity of an arbitration agreement. Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 551 (1st Cir.2005); see 9 U.S.C. § 2. Under Puerto Rico law, the elements of a valid contract are the following: (1) the consent of the contracting parties; (2) a definite object of the contract; and (3) the cause for the obligation. P.R. Laws Ann. tit. 31, § 3391. Under Puerto Rico law, consent *192 of a party is invalid only if "given by error, under violence, by intimidation, or deceit." P.R. Laws Ann. tit. 31, § 3404; Sanchez-Santiago v. Guess, Inc., 512 F. Supp. 2d 75, 79 (D.P.R.2007).
III. ANALYSIS
A. Existence of Arbitration Agreement
Defendants argue that Plaintiff should be compelled to pursue arbitration prior to bringing an action in court for her discrimination claims. In support of this argument, Defendants allege that on June 15, 1996, Plaintiff Soto signed a written acknowledgment of her understanding and consent to the State Industrial alternative dispute resolution program. Said acknowledgment stated:
I have received and read the alternative dispute resolution program of State Industrial Products ("ADR Program").
I understand that it is a three-step program consisting of:
1. Internal negotiation;
2. Mediation conducted by an independent, neutral third party; and;
3. Arbitration before an independent, neutral third party.
I understand that if I am employed by State Industrial Products prior to January 1, 1996, I will retain all my rights to go to court if I so desire at the conclusion of the ADR program.
In addition, Defendants allege that on the same date Plaintiff signed a written acknowledgment of having attended a meeting regarding the alternative dispute resolution program. Said acknowledgment stated:
I acknowledge that on June 15, 1996, I attended a meeting in which State Industrial Product's [sic] Dispute Resolution Program was described. I also acknowledge that on this date I received a copy of the State Industrial Products Dispute Resolution Program.
Finally, Plaintiff also signed an Employment Agreement on March 1, 2001, which included a provision stating:
I understand that the Company has a three-step Alternative Dispute Resolution Program for its employees consisting of 1. negotiation, 2. mediation, and 3. final and binding arbitration. In consideration for my employment or continued employment by the Company, I agree that this will be my exclusive means of making any employment-related claim against the Company, as set forth in more detail in the State Industrial Products Dispute Resolution Program, a copy of which I have been provided.
Plaintiff Soto does not dispute that she signed each of the agreements referenced by Defendants. Instead, Plaintiff argues that the arbitration agreement is invalid. The Court will now proceed to consider Plaintiff's arguments regarding the validity of the arbitration agreement.
B. Validity of Arbitration Agreement
Plaintiff argues that the agreements to arbitrate are invalid because: (1) she was coerced into signing them with a threat that she would lose her job if she did not sign; (2) she did not fully understand the agreements because they were prepared in English; and (3) she did not receive any consideration in exchange for waiver of her legal rights.
1. Coercion
Plaintiff Soto contends that her consent to the arbitration agreement is invalid because she was coerced into signing them under threat of losing her job. Under Puerto Rico law, consent of a party is invalid only if "given by error, under violence, by intimidation, or deceit." P.R. Laws Ann. tit. 31, § 3404; Sanchez-Santiago *193 v. Guess, Inc., 512 F. Supp. 2d 75, 79 (D.P.R.2007). Intimidation exists when one of the contracting parties is inspired with a reasonable and well-grounded fear of suffering an imminent and serious injury to his person or property, or to the person or property of the spouse, descendants, or ascendants. P.R. Laws Ann. tit. 31, § 3406.
Plaintiff argues that in the instant case she gave her consent to arbitrate as a result of intimidation. Specifically, Plaintiff argues that she was subjected to intimidation because she was told that she had to sign the documents in order to keep her job. Defendants acknowledge that signing the arbitration agreement was a condition of continued employment. Therefore, the only issue is whether imposing such a condition may be construed as inspiring a reasonable and well-grounded fear of suffering an imminent and serious injury to Plaintiff's person or property.
The Court cannot accept Plaintiff's attempt to fit her circumstances into this definition. Certainly Plaintiff had no reason to fear injury to her person. As to an injury to her property, her employer was not threatening to take any of Plaintiff's tangible property. Even if the Court were to assume that Plaintiff's interest in her job was a form of property, she was given numerous opportunities to consider, free from intimidation, whether she wanted to continue working and accept the arbitration agreement. Plaintiff's employer held meetings to educate employees regarding the agreement, and provided copies of the agreement to Plaintiff for her consideration. These circumstances could not have created a well-grounded fear of suffering an imminent and serious injury. Rather, Plaintiff was given the resources to calmly consider her options and decide the best course of action.[1] As such, the Court finds that the arbitration agreement cannot be invalidated on the basis of alleged lack of consent due to intimidation.
2. Validity of English Language Agreement
Plaintiff also argues that her consent to the arbitration agreement was invalid because said agreement was written in English, a language Plaintiff alleges she does not fully comprehend. As discussed above, Puerto Rico law states that consent to a contract is invalid only if "given by error, under violence, by intimidation, or deceit." P.R. Laws Ann. tit. 31, § 3404. That a document is written in a different language certainly does not constitute violence or intimidation. Nor do such circumstances constitute deceit. Plaintiff was aware of her own language abilities and could have requested clarification of anything that she did not understand fully. As such, no one deceived Plaintiff to obtain her consent to the arbitration agreement.
With regard to error, Plaintiff signed documents regarding the arbitration program on at least three separate occasions. She also attended a meeting regarding the program and acknowledged in writing having attended said meeting and received a copy of the arbitration program. On the basis of these undisputed facts, the Court cannot find that Plaintiff's consent was given in error. See Sanchez-Santiago v. Guess, Inc., 512 F. Supp. 2d 75, 80 (D.P.R. 2007) (finding employee's consent to arbitration agreement valid and rejecting argument that alleged lack of familiarity with English negated consent).
*194 3. Lack of Consideration
Plaintiff argues that the arbitration agreement is not a valid contract because she did not receive any consideration in exchange for waiver of her recourse to litigation. Under Puerto Rico law, one of the requirements for a valid contract is a "cause for the obligation." P.R. Laws Ann. tit. 31, § 3391. Here, there are two potential forms of consideration that Plaintiff received in exchange for her agreement to arbitrate. First, as Plaintiff has emphasized, she received continued employment in exchange for signing the arbitration agreement. The parties have cited conflicting case law regarding whether or not a promise of continued employment constitutes adequate consideration. This dispute is not determinative, however, because Plaintiff also received consideration in the form of her employer's promise to give up its own legal recourse to litigation. See Betancourt v. Ace Ins. Co. of Puerto Rico, 313 F. Supp. 2d 32, 34-35 (D.P.R. 2004) (adopting Magistrate Judge's report and recommendation finding that mutual promises to arbitrate employment disputes constitute adequate consideration for each party).
C. Additional Requirements for Motion to Compel Arbitration
In addition to the existence of a valid arbitration agreement, a motion to compel arbitration is subject to the following requirements: (1) the moving party must be entitled to invoke the arbitration clause; (2) the other party must be bound by the clause; and (3) the claim must fall within the scope of the arbitration clause. InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir.2003).
In the instant case, the parties do not dispute these additional requirements, and they are easily met. First, Defendants are entitled to invoke the arbitration clause because State Industrial is a party to the agreement, and the agreement specifically applies to disagreements relating to employment at State Industrial and its affiliated companies, including State Chemical. Second, Plaintiff is bound by the clause because she signed the valid arbitration agreement. Finally, Plaintiff's claims of employment discrimination fall within the scope of the arbitration clause, which applies to any claim, question, or disagreement arising out of Plaintiff's employment with Defendants.
IV. CONCLUSION
In conclusion, the Court hereby GRANTS Defendants' motion to dismiss and compel arbitration. The Court will enter a separate judgment dismissing Plaintiff's complaint without prejudice.
IT IS SO ORDERED.
NOTES
[1] See Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1 (1st Cir. 1999) (finding that although employer acknowledged that it would not employ individuals who refused to sign arbitration agreement, said agreement was enforceable and not unconscionable). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2807103/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted May 26, 2015*
Decided June 10, 2015
Before
RICHARD A. POSNER, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
No. 14-3405
LAVELL C. HERBERT, Appeal from the United States District
Plaintiff-Appellant, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 13 C 6122
ELSWORTH SMITH, JR., et al.,
Defendants-Appellees. Matthew F. Kennelly,
Judge.
ORDER
Lavell Herbert appeals a final judgment entered upon a jury verdict for two
Chicago police officers and the City of Chicago in a suit filed under 42 U.S.C. § 1983
asserting claims of false arrest, excessive force, and malicious prosecution. Herbert
contends that he was denied a fair trial because the defendants lied on the stand and
fabricated evidence, but we cannot begin to assess that contention because Herbert has
not supplied a transcript of the trial. See FED. R. APP. P. 10(b); Hicks v. Avery Drei, LLC, 654
*After examining the briefs and record, we have concluded that oral argument is
unnecessary. Thus the appeal is submitted on the briefs and record. See FED. R. APP. P.
34(a)(2)(C).
No. 14-3405 Page 2
F.3d 739, 743–44 (7th Cir. 2011); Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d
714, 731 n.10 (7th Cir. 2003); Woods v. Thieret, 5 F.3d 244, 245 (7th Cir. 1993). He asked the
district court for a copy of the transcript at public expense, but the district court
determined that Herbert had not satisfied his obligation to identify a colorable issue to
present on appeal. See 28 U.S.C. § 753(f) (indigent defendant entitled to free transcript if
judge certifies that appeal is not frivolous). And in any event Herbert does not point to
any specific evidence or statements produced at trial that he believes were improper.
Herbert also asserts that his lawyer in his § 1983 suit was constitutionally
ineffective and that the defendants withheld a video of his arrest that, he believes, they
were obligated to produce. But in this civil suit Herbert does not have a constitutional
right to effective assistance of counsel. See Stanciel v. Gramley, 267 F.3d 575, 581 (7th Cir.
2001). And as a civil plaintiff he is not entitled to the video, particularly because he does
not assert that he ever requested it or that the defendants relied on it. See FED. R. CIV. P.
26(a); cf. Brady v. Maryland, 373 U.S. 83 (1963) (recognizing criminal defendant’s
constitutional right to receive exculpatory evidence from prosecutor).
We have considered Herbert’s remaining arguments and none has merit.
AFFIRMED. | 01-03-2023 | 06-10-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4567932/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 20-1396
BRIAN DAVID HILL,
Plaintiff - Appellant,
v.
GLEN ANDREW HALL, ESQ., in his official capacity, Commonwealth Attorney
of Martinsville, Virginia; GILES CARTER GREER, ESQ., Judge of Martinsville
Circuit Court, in his official capacity; MATTHEW SCOTT THOMAS CLARK,
ESQ., Attorney, in his official capacity; LAUREN MCGARRY, ESQ., Martinsville
Public Defender Office, in her official capacity,
Defendants - Appellees.
Appeal from the United States District Court for the Western District of Virginia, at
Danville. Jackson L. Kiser, Senior District Judge. (4:20-cv-00017-JLK)
Submitted: June 18, 2020 Decided: June 23, 2020
Before FLOYD, THACKER, and RUSHING, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Brian David Hill, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Brian David Hill appeals the district court’s order dismissing his civil action. We
have reviewed the record and find no reversible error. Accordingly, we affirm for the
reasons stated by the district court. Hill v. Hall, No. 4:20-cv-00017-JLK (W.D. Va.
Mar. 30, 2020). We dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before this court and argument would not aid the
decisional process.
AFFIRMED
2 | 01-03-2023 | 09-22-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/2261072/ | 223 F. Supp. 126 (1963)
BRITT TECH CORPORATION, Plaintiff,
v.
L & A PRODUCTS, INC., a Minnesota corporation, and James F. Lindsay, an individual and Dennis F. Warta, an individual, Defendants.
No. 4-63-Civ-176.
United States District Court D. Minnesota, Fourth Division.
November 7, 1963.
Kenneth D. Siegfried, Schroeder & Siegfried, Minneapolis, Minn., for plaintiff.
Joseph M. Finley, Doherty, Rumble & Butler, St. Paul, Minn., for defendants.
DEVITT, Chief Judge.
In this action for patent infringement, unfair competition, false marking in advertising and anti-trust violation, plaintiff moves for discovery and production of documents under Rule 34, F.R.Civ.P.
The issue for decision now is whether defendants should be required to produce and permit plaintiff to inspect and copy defendants' patent application, No. 245123 dated December 17, 1962 filed in the United States Patent Office, and whether defendants should be required to produce and permit plaintiff to inspect and copy cost comparison figures of defendants for its L & A washer products.
The court has read the pleadings, motions, affidavits and briefs of the parties, and concludes that plaintiff's motion in each respect should be granted.
Defendants are particularly concerned about maintaining the secrecy of the patent application, citing the statute, 35 U.S.C.A. § 122. But the statute enjoins only the patent office to maintain the confidence. Filed income tax returns are enveloped with more stringent secrecy provisions, but we have required their production. Karlsson v. Wolfson, 18 F.R.D. 474 (D.C.Minn.1956).
*127 There are plausible arguments in support of defendants' position, but on balance plaintiff's arguments make more sense, and the logic of the cases cited by plaintiff is more persuasive.
Plaintiff's motions are granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2347297/ | 457 F. Supp. 939 (1978)
The WESSEL COMPANY, INC., Plaintiff,
v.
YOFFEE AND BEITMAN MANAGEMENT CORP., Defendant.
No. 78 C 2034.
United States District Court, N. D. Illinois, E. D.
September 29, 1978.
Lieberman, Levy, Baron & Stone, Ltd., Chicago, Ill., for plaintiff.
Karla Wright, Chicago, Ill., for defendant.
MEMORANDUM
LEIGHTON, District Judge.
Plaintiff brings this suit to recover monies allegedly owed on a contract for printing and sale of brochures. Jurisdiction is invoked under 28 U.S.C. § 1332. The cause is before the court on defendant's motion to dismiss under Rule 12(b)(2), Fed.R.Civ.P., for lack of in personam jurisdiction. For the following reasons, the motion is granted.
I.
The parties agree on the relevant jurisdictional facts. Plaintiff is an Illinois corporation *940 with its principal place of business in Chicago. Defendant is a Pennsylvania corporation and was served with process at its principal place of business in Harrisburg, Pennsylvania. The contract at issue was negotiated by defendant with plaintiff's regional salesman for the eastern United States, Richard Nussey, a New Jersey resident, who submitted a bid for web offset printing of the brochures to defendant's sales manager, Murray Beitman. Nussey avers that he met with Beitman at defendant's Harrisburg offices in May, 1977. At that time, Beitman told him that plaintiff's bid had been accepted. Nussey accepted the order and advised Beitman that all details regarding production were to be handled by plaintiff's production personnel in Chicago. Thereafter, defendant corresponded by letter and telephone with Leonard Levine, plaintiff's executive vice-president in Elk Grove, Illinois, until completion of the order in August, 1977. Levine avers that he received five letters in July and August from Wendy Hepler, defendant's employee, regarding details of production and that he conversed at least six times with her by long distance telephone, although he does not recall who initiated the calls. The brochures were printed in Illinois and shipped to Pennsylvania. Defendant mailed its payments to plaintiff's Illinois offices.
II.
Section 17 of the Illinois Civil Practice Act (the Illinois "long-arm" statute) provides in pertinent part
(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person . . . to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:
(a) The transaction of any business within this State . . .. Ill.Rev.Stat. ch. 110, § 17(1)(a) (1975).
It is well-settled that in enacting this statute, the Illinois legislature intended to provide the means by which jurisdiction can be asserted over non-residents to the extent permitted under the due process clause. McBreen v. Beech Aircraft Corp., 543 F.2d 26 (7th Cir. 1976); Nelson v. Miller, 11 Ill. 2d 378, 143 N.E.2d 673 (1967). Sufficient "minimum contacts" with the forum state must exist so that exercise of jurisdiction over a non-resident defendant is reasonable and just according to traditional notions of fair play and substantial justice. Hanson v. Denckla, 357 U.S. 235, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958); International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). The issue of minimum contacts cannot be reduced to a rigid formula; "[t]he test . . . is a flexible one which emphasizes the reasonableness of subjecting a defendant to suit; and the proper inquiry is whether a non-resident defendant can be said to have invoked, by act or conduct, the benefits and protection of the laws of the forum." Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137, 1144 (7th Cir. 1975); see also Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d 432, 441-42, 176 N.E.2d 761 (1961).
The burden of proof rests on the party asserting jurisdiction; however, this burden is met by a prima facie showing that jurisdiction is conferred by the longarm statute. O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971). In considering a challenge to its personal jurisdiction, a court may receive and weigh affidavits. Id. And such conflicts as do exist in the affidavits and pleadings must be resolved in plaintiff's favor for purposes of determining whether a prima facie case for in personam jurisdiction has been established. United States Ry. Equip. Co. v. Port Huron & Detroit R. Co., 495 F.2d 1127, 1128 (7th Cir. 1974). Thus, where defendant's affidavits have varied from plaintiff's, this court has credited plaintiff's affidavits. However, even accepting plaintiff's version of the facts, the minimum contacts essential to personal jurisdiction are not present in this case.
In Geneva Industries, Inc. v. Copeland Construction Corp., 312 F. Supp. 186 (N.D. *941 Ill. 1970), defendant, a Pennsylvania general contractor, accepted a bid for cabinet construction from plaintiff's Pennsylvania agent. After further negotiations directly by telephone and letter between defendant and plaintiff, an Illinois company, the parties executed a contract; the plaintiff manufactured the cabinets in Illinois, shipped them to Pennsylvania, and brought suit on the contract. In holding personal jurisdiction lacking, Judge Will stated:
Quite simply [defendant] . . . was no more than a customer for a single sale by [plaintiff] which was negotiated through the mails and by telephone. . . A citizen of a foreign jurisdiction does not submit to in personam jurisdiction of the forum state when a seller based in the forum state, through its agent in the foreign jurisdiction, initiates a contractual relationship between his principal in the forum state and the customer in the foreign state. The fact that the seller accepts the contract in the forum state does not alter this result. Nor is it determinative . . . that communications relating to that contract passed between Illinois and the foreign jurisdiction.
312 F.Supp. at 188.
See also Desert Palace, Inc. v. Salisbury, 401 F.2d 320 (7th Cir. 1968); Geldermann & Co., Inc. v. Dussault, 384 F. Supp. 566, 571-73 (N.D.Ill. 1974). The facts in this case, like those in Geneva Industries, are insufficient to permit the exercise of personal jurisdiction. Here, defendant was merely a customer for a single sale by plaintiff which was negotiated by plaintiff's out-of-state agent who submitted the bid and accepted the brochure printing order from defendant. The few contacts by letter and telephone during plaintiff's execution of the order are not, in and of themselves, sufficiently meaningful contacts to submit defendant to the jurisdiction of courts in Illinois. To label these telephone calls and letters concerning the details of the order significant contacts with Illinois would be to destroy the distinction between the transaction of business in Illinois and the transaction of business with an Illinois corporation. Only the former constitutes grounds for exercising in personam jurisdiction over a foreign defendant, but only the latter is involved here.
Plaintiff relies on cases holding that, under certain circumstances, a single telephone call made by a foreign defendant to a forum plaintiff may form the basis for the exercise of in personam jurisdiction. Colony Press, Inc. v. Fleeman, 17 Ill.App.3d 14, 308 N.E.2d 78 (1st Dist. 1974); Cook Associates, Inc. v. Colonial Broach & Mach. Co., 14 Ill.App.3d 965, 304 N.E.2d 27 (1st Dist. 1973). But these cases differ in two significant respects from the instant case. First, the defendants in the Colony Press and Cook Associates cases initiated the business transactions at issue by contacting the plaintiff in Illinois, whereas in this case, defendant dealt with plaintiff's out-of-state salesman. Second, the plaintiffs in the Colony Press and Cook Associates cases accepted the contract in Illinois, whereas in this case, Nussey accepted the order in Harrisburg. More generally, in the cases cited by plaintiff, the foreign defendants initiated the contracts and dealt solely and deliberately with the forum plaintiffs. Where, as in those cases, a foreign defendant invokes the benefits and protection of the forum by initiating a substantial business transaction in the forum, he is undoubtedly subject to the forum state's jurisdiction. Equally clearly, this defendant did not invoke those benefits and protections by placing an order with a New Jersey salesman whose Illinois principal filled it, following occasional directions from defendant by letter and telephone, and hence it is not subject to this court's jurisdiction.
For these reasons, defendant's motion under Rule 12(b)(2), Fed.R.Civ.P., to dismiss for lack of in personam jurisdiction is granted. This suit is dismissed.
So ordered | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2852977/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-164-CV
IN THE INTEREST OF S.W.
AND S.W., CHILDREN
------------
FROM THE 323RD DISTRICT COURT OF TARRANT COUNTY
------------
MEMORANDUM OPINION 1
------------
Introduction
Appellant S.B. appeals the trial court’s order terminating her parental
rights to her children, S.W. and S.W.2 In two issues, appellant contends that
the trial court abused its discretion by denying her motion for continuance, and
that the evidence presented at trial was factually insufficient to prove that
1
… See Tex. R. App. P. 47.4.
2
… The names of the parent and children subject to this appeal have been
replaced with initials in accordance with Texas Rule of Appellate Procedure 9.8.
Tex. R. App. P. 9.8.
termination of the parent-child relationship was in her childrens’ best interests.
We affirm.
Background Facts
On April 27, 2007, appellant gave birth to twin daughters (the twins).
The twins were born prematurely, weighing approximately four pounds each
when delivered, and both had heart murmurs which required them to be closely
monitored during an extensive hospital stay. On May 29, 2007, upon their
release from the hospital, the Texas Department of Family and Protective
Services (the Department) removed the twins from appellant’s custody and
placed them with foster parents. The next day, the Department filed a petition
to gain conservatorship of the twins and to terminate the twins’ relationship
with appellant. The trial court granted the Department temporary
conservatorship and scheduled an adversary hearing under the Texas Family
Code. See Tex. Fam. Code Ann. § 262.201 (Vernon Supp. 2008). Appellant
received a copy of a “Family Service Plan” (service plan) from a Department
caseworker in June 2007, which required her to participate in drug
assessments, parenting classes, psychological evaluations, and counseling
sessions, among other tasks. The trial court ordered that appellant comply with
the service plan in July 2007. However, at the time of trial in April 2008,
appellant had not completed any of the required services.
2
Appellant visited the twins twice in June 2007, and then left alone for
Atlanta, Georgia in July 2007. Appellant returned to Texas around
Thanksgiving of that year and visited the twins twice more before traveling
back to Atlanta. Finally, appellant returned again to Texas and had two visits
with the twins in March and April 2008. In total, from their removal from her
custody in May 2007 until the termination trial in April 2008 (a period spanning
almost eleven months), appellant saw the twins six times, for an hour on each
occasion. During the visits, the twins often became agitated and began crying
when separated from their foster mother.
On April 10, 2008, based in part on information received from appellant,
the Department amended its petition for termination to name a new father of
the twins. On April 15, 2008 (the trial date), the Department filed a motion to
sever the alleged father from appellant’s case, so that appellant’s case could
proceed to trial. That day, appellant moved for a continuance to allow her more
time to complete her service plan, and she argued against the Department’s
severance motion. The trial court granted the severance, denied the
continuance, and heard testimony from appellant and two Department
employees on the termination petition.
The evidence established that appellant has given birth to a total of seven
children, including most recently the twins. Appellant does not have custody
3
of any of her previous five children, and her parental rights have been
terminated with respect to three of these children. During her pregnancy with
the twins, appellant smoked marijuana, and she tested positive for marijuana
at their birth. Appellant also testified that she smoked marijuana each of the
two days preceding her termination trial, that she has had problems with drugs
for eight years, and that she has never entered any drug rehabilitation program.
Upon giving birth to her fifth child, appellant tested positive for marijuana and
cocaine.
The evidence further indicated that appellant was unemployed but was
looking for a job at fast food restaurants and grocery stores and was receiving
$308 per month in social security insurance payments. Appellant said that
upon finding employment, a sister (who has a theft conviction) had agreed that
she would watch the twins while appellant worked. Testimony demonstrated
that the twins had no place to permanently reside, had no options for
placement with relatives, and had no medical insurance (though appellant
testified that she would apply for benefits from Medicaid or the Children’s
Health Insurance Program). Also, appellant had no cribs or other supplies for
the twins and had no stable transportation.
After the evidence was closed and counsel argued, the trial court
terminated appellant’s parental relationship with the twins. Specifically, the
4
trial court found that appellant (1) knowingly placed or knowingly allowed the
twins to remain in conditions or surroundings which endangered their physical
or emotional well-being, (2) engaged in conduct or knowingly placed the twins
with persons who engaged in conduct which endangered their physical or
emotional well-being, and (3) had previously had her parent-child relationship
terminated with respect to another child based on an adverse finding regarding
these previous two standards. See Tex. Fam. Code Ann. § 161.001(1)(D), (E),
(M) (Vernon Supp. 2008). The court also found that termination of appellant’s
parental relationship with the twins was in their best interests.
Id. § 161.001(2). Appellant timely filed this appeal.
Denial of the Motion for Continuance
In her first issue, appellant contends that the trial court erred in denying
her motion for continuance. We review a trial court’s ruling granting or denying
a motion for continuance for an abuse of discretion. See BMC Software Belg.,
N.V. v. Marchand, 83 S.W.3d 789, 800 (Tex. 2002). We do not substitute our
discretion for that of the trial court. In re Nitla S.A. de C.V., 92 S.W.3d 419,
422 (Tex. 2002) (orig. proceeding). Instead, we must determine whether the
trial court’s action was so arbitrary and unreasonable as to amount to a clear
and prejudicial error of law. Marchand, 83 S.W.3d at 800. The focus is on
whether the trial court acted without reference to guiding rules or principles.
5
Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997). A motion for
continuance shall not be granted except for sufficient cause supported by an
affidavit, consent of the parties, or by operation of law. Tex. R. Civ. P. 251;
see also In re E.L.T., 93 S.W.3d 372, 374 (Tex. App.—Houston [14th Dist.]
2002, no pet.) (noting that “to grant or deny a motion for continuance is within
the trial court’s sound discretion”).
Appellant contends that a continuance should have been granted because
she needed more time to complete her service plan and the twins’ father’s
termination case was still pending; therefore, a delay in the proceedings would
not have harmed the twins by delaying their permanent placement.
We have held that when a parent, through his or her own choices, fails
to comply with a service plan and then at the time of the termination trial
requests a continuance in order to complete the plan, the trial court does not
abuse its discretion by denying the continuance. See In re L.D.K., No.
02-07-00288-CV, 2008 WL 2930570, at *2–3 (Tex. App.—Fort Worth July
31, 2008, no pet.) (mem. op.); see generally E.L.T., 93 S.W.3d at 374
(explaining that to be reversible, a denial of a continuance must be “so arbitrary
as to exceed the bounds of reasonable discretion”). The record demonstrates
that appellant received her service plan in June 2007, that the Department filed
the service plan in July 2007, and that the trial court ordered appellant to
6
comply with the service plan’s provisions later that same month. However, at
the time of trial in April 2008, appellant had not completed any of the service
plan’s requirements.
Instead, appellant spent much of the time between June 2007 and April
2008 in Georgia for a temporary visit to “get away from trouble” and give her
“peace of mind.” Though acknowledging that she understood the service plan,
appellant testified that she chose to travel to Georgia voluntarily and to neglect
her service plan during her trip. In the time appellant was away, three
documents were filed which indicated appellant was noncompliant with her
service plan. Appellant similarly failed to complete her service plans during prior
cases involving her other children.
Under these facts, we cannot conclude that the trial court abused its
discretion by denying appellant’s continuance for more time to complete her
service plan.
Likewise, we are unpersuaded that a continuance should have been
granted because the twins’ father’s case remained unresolved. The record
indicates that the Department was proceeding with exploring permanent options
for the twins. For instance, a Department caseworker testified that within a
couple weeks of appellant’s termination trial, she planned on beginning to study
the placement options related to four families who had already submitted
7
adoption applications. Once a prospective adoptive family was chosen, the
Department planned to begin scheduling interaction between that family and the
twins. Further, appellant testified that the twins’ father planned on continuing
to reside in Georgia (making it unlikely that he would contest the termination
proceedings against him).
Finally, we note that even if appellant had been granted more time to
complete her service plan, she cannot demonstrate that the result of these
proceedings would have changed because appellant’s relationship with the
twins was not terminated for failing to complete her service plan, but was
instead terminated for other statutory reasons. For this reason as well, the trial
court did not abuse its discretion by denying her motion for continuance.3 See
In re H.B., No. 02-06-00102-CV, 2006 WL 3438193, at *2 n.6 (Tex.
App.—Fort Worth Nov. 30, 2006, no pet.) (op. on reh’g) (mem. op.).
Therefore, we hold that the trial court did not abuse its discretion by
denying appellant’s motion for continuance. Accordingly, we overrule
appellant’s first issue.
3
… We are reviewing here evidence relative to the termination only for
purposes of evaluating the trial court’s discretion in granting or denying the
continuance.
8
Factual Insufficiency
In her second issue, appellant contends that the evidence was factually
insufficient to show that termination of her parental relationship with the twins
was in their best interests.
Standard of Review
In reviewing the evidence for factual sufficiency in a termination case, we
must give due deference to the fact-finder’s findings and not supplant the
judgment with our own. In re H.R.M., 209 S.W.3d 105, 108 (Tex. 2006). We
must determine whether, on the entire record, a fact-finder could reasonably
form a firm conviction or belief that termination of appellant’s parental rights
was in the best interest of the twins. In re C.H., 89 S.W.3d 17, 28 (Tex.
2002). If, in light of the entire record, the disputed evidence that a reasonable
fact-finder could not have credited in favor of the finding is so significant that
a fact-finder could not reasonably have formed a firm belief or conviction in the
truth of its finding, then the evidence is factually insufficient. H.R.M., 209
S.W.3d at 108. If we reverse on factual sufficiency grounds, then we must
detail in our opinion why we have concluded that a reasonable fact-finder could
not have credited disputed evidence in favor of its finding. In re J.F.C., 96
S.W.3d 256, 266–67 (Tex. 2002).
9
Applicable Law
A parent’s rights to “the companionship, care, custody, and
management” of his or her children are constitutional interests “far more
precious than any property right.” Santosky v. Kramer, 455 U.S. 745,
758–59, 102 S. Ct. 1388, 1397 (1982); In re M.S., 115 S.W.3d 534, 547
(Tex. 2003). “While parental rights are of constitutional magnitude, they are
not absolute. Just as it is imperative for courts to recognize the constitutional
underpinnings of the parent-child relationship, it is also essential that emotional
and physical interests of the child not be sacrificed merely to preserve that
right.” C.H., 89 S.W.3d at 26. In a termination case, the State seeks not just
to limit parental rights but to end them permanently—to divest the parent and
child of all legal rights, privileges, duties, and powers normally existing between
them, except for the child’s right to inherit. Tex. Fam. Code Ann. § 161.206(b)
(Vernon Supp. 2008); Holick v. Smith, 685 S.W.2d 18, 20 (Tex. 1985). We
strictly scrutinize termination proceedings and strictly construe involuntary
termination statutes in favor of the parent. Holick, 685 S.W.2d at 20–21; In
re E.M.N., 221 S.W.3d 815, 820 (Tex. App.—Fort Worth 2007, no pet.).
In proceedings to terminate the parent-child relationship brought under
section 161.001 of the family code, the petitioner must prove that termination
10
is in the best interest of the child. 4 Tex. Fam. Code Ann. § 161.001 (Vernon
Supp. 2008); In re J.L., 163 S.W.3d 79, 84 (Tex. 2005). Termination of
parental rights is a drastic remedy and is of such weight and gravity that due
process requires the petitioner to justify termination by clear and convincing
evidence. Tex. Fam. Code Ann. §§ 161.001, 161.206(a); J.F.C., 96 S.W.3d
at 263. This intermediate standard falls between the preponderance standard
of ordinary civil proceedings and the reasonable doubt standard of criminal
proceedings. In re G.M., 596 S.W.2d 846, 847 (Tex. 1980); In re C.S., 208
S.W.3d 77, 83 (Tex. App.—Fort Worth 2006, pet. denied). It is defined as the
“measure or degree of proof that will produce in the mind of the trier of fact a
firm belief or conviction as to the truth of the allegations sought to be
established.” Tex. Fam. Code Ann. § 101.007.
Prompt and permanent placement of the child in a safe environment is
presumed to be in the child’s best interest. Tex. Fam. Code Ann. §
263.307(a). There is also a strong presumption that keeping a child with a
parent is in the child’s best interest. In re R.R., 209 S.W .3d 112, 116 (Tex.
4
… A petitioner must also prove that the parent has violated one of the
several statutory provisions contained in the family code. Tex. Fam. Code Ann.
§ 161.001(1). However, appellant has agreed that a violation of at least one
of these provisions was established at trial, and we will therefore limit our
analysis to whether termination was in the twins’ best interests. See id.
§ 161.001(2).
11
2006). Nonexclusive factors that the trier of fact in a termination case may use
in determining the best interest of the child include:
(1) the desires of the child;
(2) the emotional and physical needs of the child now and in the
future;
(3) the emotional and physical danger to the child now and in the
future;
(4) the parental abilities of the individuals seeking custody;
(5) the programs available to assist these individuals to promote
the best interest of the child;
(6) the plans for the child by these individuals or by the agency
seeking custody;
(7) the stability of the home or proposed placement;
(8) the acts or omissions of the parent which may indicate that
the existing parent-child relationship is not a proper one; and
(9) any excuse for the acts or omissions of the parent.
Holley v. Adams, 544 S.W.2d 367, 371–72 (Tex. 1976).
Undisputed evidence of just one factor may be sufficient in a particular
case to support a finding that termination is in the best interest of the child.
C.H., 89 S.W.3d at 27. On the other hand, the presence of scant evidence
relevant to each factor will not support such a finding. Id. These factors are
not exhaustive; some listed factors may be inapplicable to some cases; other
12
factors not on the list may also be considered when appropriate. Id. For this
reason, we will only discuss the factors which were made relevant by the
evidence submitted at trial and will combine our analysis of factors where the
evidence may concurrently apply.
Analysis
The desires of the twins and the parental abilities of appellant
While the twins were less than a year old at the time of the termination
trial and could not therefore specifically express their desires, testimony at trial
indicated that the twins were emotionally attached to their foster parents and
had not bonded emotionally with appellant. However, permanent placement
with the twins’ foster parents was not an option, and a Department caseworker
testified that the twins would need to develop a bond with any permanent
placement, whether appellant or adopting parents. To that end, the evidence
showed that appellant was loving, patient, and appropriate with the twins in her
limited visits with them after removal. However, appellant chose to visit
Georgia while her termination case was pending rather than complete her
service plan, which may indicate that she was not motivated in developing her
parental abilities.
13
The present and future physical and emotional needs of the twins
The evidence submitted at trial indicated that appellant was unprepared
to care for the twins’ physical needs. For instance, though testimony
demonstrated that the twins would continue to have minor medical issues,
including the possible need for outpatient surgery, appellant had not applied for
insurance for the twins at the time of trial. The evidence also showed that
appellant may not have been aware of the twins’ medical needs. For instance,
though the twins had heart murmurs which required them to be closely
monitored at the hospital for more than a month following their birth, when
asked about whether the twins had medical problems at birth, appellant
responded that they were “just premature.”
The evidence also established that appellant did not have a job (though
she was looking for work, she had not maintained employment since 1998),
was receiving only $308 per month in social security insurance, had little formal
education (she dropped out of school in the ninth grade), had no place set up
for the children to reside (though she was on the waiting list for Section 8
housing), had no means of transporting the twins (other than possible public
transportation), and had no cribs or other supplies needed by infants. Finally,
though appellant had given birth to five previous children, she did not raise any
of these children.
14
The present and future potential emotional and physical danger to the
twins, the acts or omissions of the appellant which may indicate that the
existing parent-child relationship is not a proper one, and any excuse for
appellant’s acts or omissions
Extensive testimony at trial indicated that appellant had a long-standing,
persistent drug problem. For instance, appellant had been smoking marijuana
for eight years, used marijuana while pregnant with the twins, used cocaine
while pregnant with a previous child, and had never attempted to enter a drug
rehabilitation program. Further, though appellant recognized that the twins
should not be around drugs and offered to seek counseling for her drug issues,
she admitted to smoking marijuana on each of the two days preceding the
termination trial and indicated that marijuana was her “drug of choice.”
The plans for the twins by the Department and the stability of their
proposed placement
As noted, at the time of trial, four families had already expressed interest
in adopting the twins together. The Department was ready to proceed with
studying those options and was confident that a loving home could be found
for the twins. Prompt and permanent placement for the twins therefore seemed
to be a very attainable goal. In contrast, appellant indicated at trial that she
was requesting that the court give her more time to complete her service plan
and that the issue of permanent placement could be decided at a later date.
15
We hold that these facts, applied cumulatively to the Holley factors,
enabled the trial court to reasonably form a firm conviction or belief that
termination of appellants’s parental rights was in the twins’ best interests.
C.H., 89 S.W.3d at 28. We therefore overrule appellant’s second issue.
Conclusion
Having overruled both of appellant’s issues, we affirm the trial court’s
order terminating appellant’s parental rights to S.W. and S.W.
TERRIE LIVINGSTON
JUSTICE
PANEL: CAYCE, C.J.; LIVINGSTON, AND MCCOY, JJ.
CAYCE, C.J. dissents without opinion.
DELIVERED: October 9, 2008
16 | 01-03-2023 | 09-04-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2986292/ | Order filed August 1, 2013
In The
Fourteenth Court of Appeals
____________
NO. 14-13-00264-CR
____________
TERRY LEE BAGLEY, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 230th District Court
Harris County, Texas
Trial Court Cause No. 1364009
ORDER
Appellant’s court-appointed counsel filed a brief in which he concludes the
appeal is wholly frivolous and without merit. Appellant has made known to this
Court his desire to review the record and file a pro se brief. See Anders v.
California, 386 U.S. 738 (1967); Gainous v. State, 436 S.W.2d 137 (Tex. Crim.
App. 1969).
Accordingly, we hereby direct the Judge of the 230th District Court to afford
appellant an opportunity to view the trial record in accordance with local
procedure; that the clerk of that court furnish the record to appellant on or before
August 16, 2013, that the clerk of that court certify to this court the date on which
delivery of the record to appellant is made; and that appellant file his pro se brief
with this court within thirty days of that date.
PER CURIAM | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1591289/ | 563 F.Supp. 805 (1983)
UNITED STATES of America, Plaintiff,
v.
Donna Lee WALKER, Defendant.
Crim. No. 83-8.
United States District Court, S.D. Iowa.
May 27, 1983.
*806 Raymond Rosenberg and Linda R. Reade, Rosenberg & Margulies, Des Moines, Iowa, for plaintiff.
Richard C. Turner, U.S. Atty., S.D. Iowa, Joseph S. Beck, Asst. U.S. Atty., Des Moines, Iowa, for defendant.
MEMORANDUM OPINION AND ORDER
STUART, Chief Judge.
This case involves a five-count indictment charging Donna Lee Walker with violating 18 U.S.C. § 641 by making five separate withdrawals from the bank account of her deceased parents, Basil J. and Helen Ryan, of Social Security benefits which had been paid to Basil Ryan via automatic deposit after his death because the Social Security *807 Administration (SSA) had not been informed of his death. Defendant waived her right to a jury trial and the case was tried to the Court on May 4 and 5, 1983.
Section 641 states in pertinent part: "Whoever embezzles ... or knowingly converts to his use or the use of another ... any ... money, or thing of value of the United States or of any department or agency thereof ..." shall be guilty of an offense against the United States. A greater penalty is imposed by § 641 if the property exceeds $100 in value.
In each count, the government must prove beyond a reasonable doubt that: (1) the money or property described in the indictment belonged to the United States and had a value in excess of $100 at the time alleged; (2) the defendant embezzled, stole or converted such money or property to her own use or the use of another; and (3) the defendant did so knowingly and willfully with the intent to deprive the owner of the use or benefit of the money or property so taken.
The evidence establishes the last two elements and value in excess of $100 beyond a reasonable doubt as to each count. The issue is whether, under the facts of this case, the "money or property" converted by the defendant belonged to the United States.
FINDINGS OF FACT
On December 4, 1975, Basil Ryan executed a form authorizing the automatic deposit of his monthly Social Security benefits in a joint account with his wife in the Iowa-Des Moines National Bank, account No. 335361.
Basil Ryan died May 8, 1977, his wife having died less than two months earlier. The defendant was appointed executrix of her father's estate. On May 31, 1977, defendant instructed the Iowa-Des Moines National Bank to open an account for the estate, to transfer the balance in account No. 335361 to the new estate account, and to close account No. 335361. The bank transferred the funds as instructed, leaving account No. 335361 with a zero balance; however, the bank failed to take the internal steps necessary to formally close the account. As a result, the account was reactivated by the computer when the SSA made an automatic deposit of Social Security benefits to the account on June 2, 1977. Because it had not been informed of Basil Ryan's death, the SSA continued making such deposits each month through March 1982, when the SSA learned of Mr. Ryan's death as a result of its own investigatory procedures. The Social Security deposits were the only deposits made to account No. 335361 after May 31, 1977.
After Basil Ryan's death, William Wheatcraft, attorney for Basil Ryan's estate, received bank statements until late 1978 for both the Basil J. Ryan personal bank account and the estate bank account. The bank statements were forwarded by him to the defendant in November 1978, along with a note instructing defendant to close both accounts and distribute the proceeds to the estate beneficiaries (herself and her brothers). The bank statements for Basil Ryan's personal account clearly indicated that each deposit to that account was an automatic deposit of Social Security benefits. Beginning in early 1979, statements for both bank accounts were mailed directly to defendant.
After receiving attorney Wheatcraft's instructions and the bank statements in November 1978, defendant again instructed the bank to close the personal Ryan account, No. 335361, and transfer the balance to the estate account. The bank did transfer the balance $5,270.40 to the estate account on November 30, 1978, but once again failed to formally close the zero-balanced account. Consequently, the personal account was again reactivated by an automatic Social Security deposit on December 1, 1978, and monthly automatic deposits continued thereafter. Subsequently, defendant transferred $2,000 from the personal account to the estate account on August 20, 1979; $1,200 on December 7, 1979; $1,000 on February 27, 1980; and $800 on March 28, 1980. These five transfers, totaling *808 $10,270.40, were the only deposits to the estate account after November 29, 1978, on which date the estate account had had a balance of only $74.84. Between December 1, 1978, and April 30, 1980, defendant made five wire transfers from the estate account to her own personal bank account in New York, which is now closed, in addition to other withdrawals from the estate account. Defendant was the sole signatory on the estate account. The total amount withdrawn by the defendant from the estate account during that period was $10,242.36. The Court finds that the defendant either spent that money or distributed part of it to other persons and spent the remainder.
The Iowa-Des Moines National Bank was notified of the death of Basil J. Ryan on at least three occasions: (1) by defendant and attorney Wheatcraft on May 31, 1977, when they attempted to close the personal Ryan account and opened the estate account; (2) on December 22, 1977, when Basil Ryan's safety deposit box was drilled because the key could not be found; and (3) on November 28, 1978, when copies of the petition and inventory for the probate estates of Helen and Basil Ryan were sent to Monica Sinclair of the Iowa-Des Moines National Bank at her request.
The system by which Social Security benefits are automatically deposited to recipients' bank accounts involves electronic transfer of funds by means of computer tapes. The United States Treasury, at the direction of the Social Security Administration, delivers a tape to the Federal Reserve Bank system, which acts as Treasury's agent in completing the automatic deposits to recipients' bank accounts. The Federal Reserve system sends the appropriate tape to the particular bank through the local automatic clearing house, and the local bank makes the deposit to the individual's account by running the tape on the appropriate date.
CONCLUSIONS OF LAW
The governing statute and the elements which the government was required to prove beyond a reasonable doubt as to each count were set out near the beginning of this opinion. As also stated earlier, the Court concludes that the government has met its burden of proving with respect to each count that:
(1) the property described in that count of the indictment had a value in excess of $100.00 at the time alleged;
(2) that Donna Walker converted that property to her own use or the use of another; and
(3) that Donna Walker did so knowingly and willfully with the intent to deprive the owner of the use or benefit of the money or property so taken.
During closing arguments at trial, defense counsel asserted that the indictment charged that defendant had taken "money" belonging to the United States, and that the government had not proven defendant had taken what could properly be termed "money". See Black's Law Dictionary (5th ed. 1979) at 906 (defining "money" as coins and paper currency, and excluding evidences of debt). Had the indictment actually been worded in such a limiting fashion, the Court would have had to give serious consideration to defendant's argument. However, the indictment actually charges that Donna Walker took "Social Security benefits, paid to Basil J. Ryan, deceased". The government did prove that the defendant took, and converted to her own use, Social Security benefits. The subsequent reference in the indictment to those benefits as "said monies" does not, in this Court's opinion, require the government to prove that the benefits were in the form of currency or coin at the time of the taking.
The remaining issue, then, is whether the Social Security benefits which had been automatically deposited in Basil Ryan's personal bank account were the property of the United States at the time the defendant took them.
An essential element under § 641 is that the United States suffer some actual property loss. United States v. Fleetwood, 489 F.Supp. 129, 132 (D.Or.1980). The question is whether the funds automatically deposited *809 by the government in a deceased person's bank account "were possessed of sufficient indicia of federal ownership to satisfy that element of the offense". Ibid. As observed by the court in United States v. Evans, 572 F.2d 455, 471 (5th Cir.1978), cert. denied, 439 U.S. 870, 99 S.Ct. 200, 58 L.Ed.2d 182 (1978), the cases that have upheld findings of a sufficient federal interest in the property at issue have generally involved tangible objects over which the government had either title, possession or control. However, where intangible assets are involved, as in this case, "the critical factor in determining the sufficiency of the federal interest ... is the basic philosophy of ownership reflected in relevant statutes and regulations." Id. at 472. See also United States v. Rowen, 594 F.2d 98, 99-100 (5th Cir.1979), cert. denied, 444 U.S. 834, 100 S.Ct. 67, 62 L.Ed.2d 44 (1979); United States v. Maxwell, 588 F.2d 568, 571-74 (7th Cir.1978), cert. denied, 444 U.S. 877, 100 S.Ct. 163, 62 L.Ed.2d 106 (1979).
In United States v. Miller, 520 F.2d 1208, 1210 (9th Cir.1975), a conviction under § 641 was affirmed on alternative grounds, one of which was that the check which the defendant had embezzled was erroneously issued by the government. Because the government had mistakenly issued a duplicate check, the court said, the government was entitled to have the money returned. The court concluded: "In these circumstances ... the government, at all times, retained a property interest in the money, and, accordingly, suffered an actual property loss." Ibid.
Defendant argues that Miller is in-apposite because in this case the government's deposits of funds in Mr. Ryan's account was not erroneous. Defendant apparently contends the Miller rationale is limited to clerical or ministerial errors. The Court cannot agree. The deposits to Mr. Ryan's account were erroneous because they were made after his death, at which point entitlement to those funds ceased under applicable Social Security regulations. See 20 C.F.R. § 404.311. The government would not have made those deposits had it been aware of Mr. Ryan's death, i.e., if defendant and/or the bank had informed the government of his death as they were required to do by law.
Moreover, the "philosophy of ownership reflected in relevant statutes and regulations," Evans, supra, confirms that the government retained a property interest in the deposits erroneously made to Mr. Ryan's account after his death. Under 20 C.F.R. § 404.501 et seq., the Social Security Administration is entitled to recover overpayments of Social Security benefits from the recipient or his estate. These regulations demonstrate that the government does assert a strong proprietary interest in overpayments such as those involved in this case.
Defendant argues that the result should be different in this case because the funds were automatically deposited via electronic funds transfer, thereby becoming the property of the bank rather than the government. Defendant relies heavily on the banking regulations which govern automatic deposits of recurring government payments at participating financial institutions. See 31 C.F.R. Part 210. Under those regulations, which govern the relationship between the government and the participating financial institutions, if the institution credits an automatic deposit to the account of a deceased person, the financial institution is liable to the government for the total amount of the deposits thus erroneously made unless certain criteria, not present here, are met by the bank. Because of the bank's liability, defendant argues, the government has suffered no actual property loss.
The Court holds that the regulations which govern the relationship between the government and the financial institutions which agree to make automatic deposits of government payments (31 C.F.R. Part 210) do not extinguish the government's proprietary interest in overpayments of Social Security benefits which is asserted in 20 C.F.R. § 404.501 et seq. Under the latter regulations, the government retained a sufficient property interest in and control over *810 the deposits erroneously made to Mr. Ryan's account after his death to satisfy the government ownership element of § 641. In addition, the Court is of the opinion that the bank merely acted as a conduit for the Social Security payments to be deposited in the recipient's account. It acquired no interest in those funds.
Accordingly, the Court finds and concludes that the government has met its burden of proving beyond a reasonable doubt each element of the offenses charged in each count of the indictment, including the element of government ownership.
The defendant, in open court and on the record, waived her right to be present at the time the Court filed its written decision in this criminal case.
IT IS THEREFORE ORDERED, adjudged and decreed by the Court that the defendant Donna Lee Walker is guilty as charged in Counts 1, 2, 3, 4 and 5 of the Indictment.
IT IS FURTHER ORDERED that the defendant shall come before the Court for sentencing at the United States Courthouse in Des Moines, Iowa, at 1:00 o'clock p.m. on the 30th day of June, 1983.
IT IS FURTHER ORDERED that the appearance bond shall be continued in its present form and amount. The defendant is advised that failure to appear at the time and place as ordered could result, not only in forfeiture of the bond, but in further criminal charges.
A presentence report is ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1591178/ | 563 F.Supp. 484 (1983)
Sidney STERN and Vera Stern, Plaintiffs,
v.
UNITED STATES of America, Defendant.
No. CV-R-81-253-ECR.
United States District Court, D. Nevada.
April 26, 1983.
*485 *486 Lionel, Sawyer & Colling, Reno, Nev., and Randall G. Dick, San Francisco, Cal., for plaintiffs.
Barry Lieberman, Trial Atty., Tax Div., Dept. of Justice, Washington, D.C., for defendant.
MEMORANDUM DECISION AND ORDER
EDWARD C. REED, Jr., District Judge.
Cross-motions for summary judgment are before the Court. Supporting memoranda of points and authorities and exhibits have been filed. A hearing was held March 7, 1983, Randall G. Dick, Esq., arguing for the plaintiffs and Barry Lieberman, Esq., presenting the arguments on behalf of the defendant.
The plaintiffs each paid the excise tax on the transfer of one hundred shares of stock to two foreign trusts. Altogether they had transferred approximately two hundred eighty thousand shares of the stock to the trusts. Defendant had assessed the excise tax, pursuant to 26 U.S.C. §§ 1491-1494, on the transfer of the entire two hundred eighty thousand shares. The plaintiffs' claims for refund of the amounts they had paid and their requests for abatement of the balances of the assessments were denied by defendant Government. This lawsuit followed. The prayer is for refund of the amounts paid and abatement of the balances. The Government has counterclaimed for the unpaid balances, plus penalties and interest.
The transfers of stock occurred in 1971 and 1972. They were part of a financial plan suggested by an attorney retained by the plaintiffs. In essence, the plaintiffs contended that the stock was transferred to the trusts as consideration for lifetime annuities to be paid to the plaintiffs by the trusts. The Government, on the other hand, contended that the transactions constituted transfers in trust whereunder the plaintiffs merely retained rights to annual payments. When the Government found an income tax deficiency based on transfers in trust, the plaintiffs sought relief in Tax Court. By opinion filed September 21, 1981, the Tax Court ruled in favor of the Government. It held that the plaintiffs were properly subjected to the income taxes imposed pursuant to the income for the benefit of the grantor provisions of 26 U.S.C. § 677(a). Stern v. C.I.R., 77 T.C. 614. The plaintiffs have appealed to the Ninth Circuit from the Tax Court decision.
A basic position of the Government is that collateral estoppel applies against the plaintiffs as to those factual issues litigated and decided in the Tax Court. A central theme of the plaintiffs is that if they are liable for income taxes, they cannot be held liable also for excise taxes based on the same transactions.
The doctrine of collateral estoppel does apply in tax cases, Starker v. United States, 602 F.2d 1341, 1350 (9th Cir.1979), including Tax Court decisions, United States v. Abatti, 463 F.Supp. 596, 598 (S.D. Cal.1978). Under the doctrine, once an issue *487 is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in any subsequent suit based on either the same or a different claim for relief involving a party to the first action. In re Cenco Inc. Securities Litigation, 529 F.Supp. 411, 414 (N.D. Ill.1982). The issue to be foreclosed in the subsequent action must have been litigated and decided in the first case. Starker v. United States, supra at 1344. It is not necessary that all the issues in the second suit have been decided in the first case. Considine v. United States, 683 F.2d 1285, 1287 (9th Cir.1982). The parties are free to litigate points which were not at issue in the first proceeding. Commissioner v. Sunnen, 333 U.S. 591, 598, 68 S.Ct. 715, 719, 92 L.Ed. 898 (1948).
The plaintiffs have emphasized that collateral estoppel has no application where the issues sought to be litigated were outside of the jurisdiction of the first court. See Morse v. United States, 494 F.2d 876, 879 (9th Cir.1974). This is important here because they wish to litigate the validity of the imposition of an excise tax on their stock transfers, and the Tax Court has no jurisdiction over excise tax cases. See Flora v. United States, 362 U.S. 145, 175 n. 38, 80 S.Ct. 630, 646 n. 38, 4 L.Ed.2d 623 (1960); Lucia v. United States, 474 F.2d 565, 576 (5th Cir.1973); 26 U.S.C. §§ 6212 and 6512.
It appears that the Tax Court decision against the plaintiffs is not yet final, because it has been appealed. See 26 U.S.C. § 7481(a)(1). However, the federal rule is that the pendency of an appeal does not suspend the operation of a judgment as collateral estoppel unless the appeal removes the entire case to the appellate court and constitutes a proceeding de novo. 1B Moore's Fed.Prac. ¶ 0.416[3]. The Ninth Circuit's review of a Tax Court decision follows the same standard as a case appealed from a district court, i.e., clearly erroneous for findings of fact; not bound by interpretations of law. Wien Consol. Airlines, Inc. v. C.I.R., 528 F.2d 735, n. 1 (9th Cir.1976); Erickson v. C.I.R., 598 F.2d 525, 528 (9th Cir.1979). It does not constitute a proceeding de novo. Jantzer v. C.I.R., 284 F.2d 348, 355 (9th Cir.1960). Therefore, the Tax Court decision is entitled to collateral estoppel effect until reversed, vacated or modified; it is conclusive in favor of the winning party as to all material issues that were there litigated and adjudicated. Moore's, supra; see also United States v. Abatti, 463 F.Supp. 596, 599 (S.D.Cal.1978).
In Starker v. United States, 602 F.2d 1341, 1344 (9th Cir.1979), the Ninth Circuit approved consideration of the following four factors in deciding what issues were decided in the first action:
(1) The amount of overlap between the evidence or argument advanced in the second proceeding and that used in the first;
(2) Whether the same rule of law was applicable in both proceedings;
(3) Whether pretrial preparation and discovery in the first case embraced the matters presented in the second; and
(4) Whether the claims in the two cases were closely related.
Utilizing these factors, the Tax Court opinion is found to have decided the following:
(a) The plan followed by the plaintiffs was devised for them by their retained attorney;
(b) No payments were received by the plaintiffs from the Florcken Trust during the years 1972 and 1973;
(c) The transactions constituted transfers in trust whereunder the plaintiffs retained the right to annual payments;
(d) The plaintiffs are the settlors of the Hylton and Florcken Trusts;
(e) The annuity agreements entered into by the plaintiffs were not shams;
(f) The trusts are not mere conduits for the income to be derived from the transferred properties; and
(g) The entire income of the trusts, including the gain from the April 16, 1973, sale of the stock transferred, is taxable to the plaintiffs.
26 U.S.C. § 6512 provides that the filing of a petition with the Tax Court precludes a suit for refund in a district *488 court before the Tax Court decision has become final. However, the statute applies only to income, estate and gift taxes and to certain excise taxes not here involved. Therefore, the instant action (involving an excise tax on the transfer of stock to a foreign trust) is within this Court's subject matter jurisdiction, despite the ongoing appeal of the Tax Court's decision to the Ninth Circuit.
It has been held that a taxpayer must pay the full amount of an income tax deficiency before he may challenge its correctness by an action for refund. Flora v. United States, 362 U.S. 145, 151-167, 80 S.Ct. 630, 633-641, 4 L.Ed.2d 623 (1960). The rule is not inflexible where an excise tax is involved, however. Excise tax assessments are often divisible into a tax on each transaction or event, so that the full-payment rule may be satisfied by the payment of only a small amount. Id. at n. 38, Boynton v. United States, 566 F.2d 50, n. 5 (9th Cir.1977). For examples, payment of the tax on a single wager suffices for a suit for refund of the excise tax on wagers, Higginbotham v. United States, 556 F.2d 1173, n. 1 (4th Cir.1977) and Lucia v. United States, 474 F.2d 565, 576 (5th Cir.1973), payment of the penalty applicable to the failure to pay over the tax withheld from a single employee satisfies the rule as to penalties assessed against an employer for failure to pay over to the Internal Revenue Service income taxes withheld from all employees, Steele v. United States, 280 F.2d 89, 91 (8th Cir.1960), and payment of the cabaret tax on one day's or one month's receipts meets the requirement for a refund suit, Christie v. United States, 179 F.Supp. 709, 714 (D.Ore.1959).
The plaintiffs' lawsuit herein asks for refund of the excise taxes they each have paid, based on the amount allegedly due for a 100-share transfer of stock, although a total of about two hundred eighty thousand shares were actually transferred in the course of three transactions. The plaintiffs explain that stocks ordinarily are traded in round lots of one hundred shares each. This seems to comply with the spirit of the rule as applied to excise taxes.
26 U.S.C. § 1491, which is the statutory basis for the tax sought to be imposed upon the plaintiffs, is not applicable if the transfer is not in pursuance of a plan having as one of its principal purposes the avoidance of income taxes. House Report No. 94-658, 1976 U.S.Code Cong. & Admin. News 3108; see also 1939-1 Cum.Bull. 494. This intent issue was not an essential element of the 1981 Tax Court decision against the plaintiffs.
The legislative history of the Tax Reform Act of 1976, as it relates to the § 1491 excise tax, indicates that prior to that Act (it applies to transfers of property after October 2, 1975) a taxpayer could transfer appreciated stock to a trust established by him and receive in return from the trust a private annuity contract without being subject to the excise tax. 1976 U.S.Code Cong. & Admin.News supra, at 3103 and 3647-8. Further, prior to said Act, § 1491 was felt not to apply where the foreign trust provided some consideration (such as a private annuity contract) to the transferor. Id. at 3647.
The purpose of the § 1491 excise tax is to prevent U.S. taxpayers from transferring appreciated property to foreign trusts without payment of a capital gains tax. Id. at 3102 and 3647; Kanter and Horwood, Section 1491 Tax and Private Annuity/Foreign Situs Trust Transaction, Taxes, Vol. 52, No. 7, 388, 397 (July 1974); 1939-1 Cum.Bull. 494. The tax becomes due at the time of the transfer. Ibid.
The defendant has cited revenue rulings which seem to contradict the foregoing discussion as to the inapplicability of § 1491 to the plaintiffs' transfers. In any event, material issues remain as to whether a principal purpose of the transfers was to avoid income taxes and as to whether the liability of the plaintiffs for income taxes on the transactions (as found by the Tax Court) would preclude excise tax liabilities for the same transactions.
In addition to refunds, the plaintiffs have asked the Court to abate the *489 deficiencies assessed against them. The Court is prohibited from entertaining a request to abate a tax deficiency, by reason of the Anti-Injunction statute, 26 U.S.C. § 7421, which prohibits suits for the purpose of restraining assessment or collection of a tax, and the Declaratory Judgment Act, 28 U.S.C. § 2201, which denies district courts the authority to grant declaratory relief as to federal taxes. Ardalan v. United States, 534 F.Supp. 721, 722 (D.Col.1982); see also Stonecipher v. Bray, 653 F.2d 398, 401 (9th Cir.1981). Nevertheless, the identical issues have been raised in this action by the Government's counterclaims for the balance of the assessments against the plaintiffs. See Boynton v. United States, 566 F.2d 50, 55 (9th Cir.1977); Freeman v. United States, 265 F.2d 66, 69 (9th Cir.1959). The resolution of those counterclaims will determine the validity of the claimed deficiencies.
The instant proceedings and the pending appeal by the plaintiffs to the Ninth Circuit from the Tax Court's decision and orders are parallel, if not duplicative. The outcome of the appeal could have a profound effect on the within litigation. Further, the recent case of Lafargue v. C.I.R., 689 F.2d 845 (9th Cir.1982) could be construed as lending some support to the plaintiffs' contention that the Tax Court has mischaracterized the stock transfer transactions.
Every court has the inherent power to stay causes on its docket with a view to avoiding duplicative litigation, inconsistent results, and waste of time and effort by itself, the litigants and counsel. See Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 165, 81 L.Ed. 153 (1936); Colorado River Water Cons. Dist. v. U.S., 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976); Amer. Life Ins. Co. v. Stewart, 300 U.S. 203, 215, 57 S.Ct. 377, 380, 81 L.Ed. 605 (1937). A stay seems appropriate here.
IT IS, THEREFORE, HEREBY ORDERED that the cross-motions of the plaintiffs and the defendant for summary judgment both be, and the same hereby are, DENIED.
IT IS FURTHER ORDERED that all further proceedings herein be, and the same hereby are, STAYED pending the Ninth Circuit's determination of the plaintiffs' appeal of the Tax Court decision filed September 21, 1981, and the Tax Court's orders based thereon. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2579964/ | 131 F. Supp. 2d 659 (2001)
TRANSPORT WORKERS UNION OF PHILADELPHIA, LOCAL 234,
v.
TRANSPORT WORKERS UNION OF AMERICA, AFL-CIO
No. CIV.A.00-4815.
United States District Court, E.D. Pennsylvania.
January 11, 2001.
*660 *661 Howard J. Kaufman, Peter J. Leyh, Kaufman, Coren, Ress, Weidman and Silverang, Philadelphia, PA, for Transport Workers Union of Philadelphia, Local 234.
Neal Goldstein, Gail Lopez-Henriquez, Freedman and Lorry, P.C., Philadelphia, PA, Betty Grdina, Yablonski Both & Edelman, Washington, DC, Susan Davis, Cohen Weiss and Simon LLP, New York, NY, Joseph J. Vitale, Cohen Weiss and Simon LLP, New York, NY, for Transport Workers Union of America, AFL-CIO.
Peter J. Leyh, Kaufman, Coren, Ress, Weidman and Silverang, Philadelphia, PA, for Steve Brookens, Bruce Bodner, Jeffrey Brooks, Sr., Willie Beckton, Charles Clancy, Craig Holmes, Brian Pollitt, Abe Tisdale, Darren Moore.
MEMORANDUM AND ORDER
BECHTLE, District Judge.
Presently before the court are plaintiff Transport Workers Union of Philadelphia, Local 234's ("Local 234") and defendant Transport Workers Union of America, AFL-CIO's ("TWU" or the "International") cross motions for preliminary injunctive relief. For the reasons set forth below, the court will grant TWU's motion.
I. BACKGROUND
TWU and Local 234 are unincorporated labor organizations. In June 2000, TWU President Sonny Hall sent a fact finding team to investigate reports of misconduct by members of Local 234's Executive Board and staff.[1]
On August 25, 2000, Hall filed a Notice of Trusteeship containing twenty-four charges against Local 234's Executive Board. (Joseph J. Vitale Decl. dated Dec. 1, 2000, ("Vitale Decl.") Ex. 1 at 1.) The charges alleged financial malpractice, subversion of union democracy and discord among the members of Local 234's Executive Board.[2] On August 28, 2000, TWU appointed a Subcommittee of the International Executive Council to hear the charges.[3]Id. at 2.
*662 On September 22, 2000, Local 234 filed a Complaint, seeking to enjoin the hearing scheduled before the Subcommittee by asserting that it would not be "fair" under 29 U.S.C. § 464.[4] By Order dated September 29, 2000, United States District Judge Bruce W. Kauffman denied Local 234's motion to enjoin the hearing.[5]
The Subcommittee's hearing on the charges began on October 3, 2000 and ended November 3, 2000, continuing for 18 days. (Vitale Decl. Ex. 1 at 3.) Hearing sessions were scheduled to accommodate the medical condition of Brookens and were open to the membership. Id. Ex. 1 at 3-4. TWU, represented by Bakalo, presented 11 witnesses and 87 exhibits in support of the charges. Id. Ex. 1 at 3. Local 234, represented by Vice President Bruce Bodner, who also happens to be an attorney, presented 15 witnesses and 150 exhibits in defense. Id. Ex. 1 at 3-4.
On November 21, 2000, the Subcommittee issued Findings of Fact, Conclusions and Recommendations to the International Executive Council, finding Local 234 guilty of 15 of the charges against it.[6] On November 30, 2000, the International Executive Council convened to discuss and deliberate on the Subcommittee's report, issued a Resolution unanimously adopting it in its entirety, and imposed an immediate trusteeship over the affairs of Local 234.[7] On December 1, 2000, Harry Lombardo, who was appointed as Trustee, appeared at Local 234's offices to begin carrying out his duties.[8] However, Local 234 informed him that it was refusing to comply with the trusteeship and that it would comply only if Lombardo secured a court order.
On December 1, 2000, TWU filed a counterclaim to Local 234's Complaint and requested a temporary restraining order and preliminary injunction to enforce the trusteeship. On the same date, Local 234 filed a Second Complaint, alleging that TWU imposed the trusteeship in violation of the LMRDA. On December 4, 2000, Judge Kauffman heard oral argument on TWU's request for a temporary restraining order and denied relief. Before the court are cross-motions for preliminary injunctive *663 relief: TWU seeks an injunction enforcing the trusteeship and Local 234 seeks an injunction to prevent it. This court held a status conference on the matter on December 18, 2000 and preliminary injunction hearings on December 27, 2000, December 28, 2000 and January 5, 2001.
II. DISCUSSION
To obtain a preliminary injunction, "plaintiffs must show both (1) that they are likely to experience irreparable harm without an injunction and (2) that they are reasonably likely to succeed on the merits." Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir.2000). If relevant, the court should also consider the likelihood of irreparable harm to the nonmoving party and whether the injunction serves the public interest. Id. However, the statutory scheme permitting trusteeships in the labor organization context "clearly evidences an expectation that disputes over trusteeships would be litigated with the trusteeship in effect" and "if this burden were rigidly imposed on a parent union seeking to enforce a trusteeship against one of its resisting locals, the local, by failing to comply with its obligation under the union constitution to accept a trusteeship lawfully imposed, could turn the statutory scheme for handling the trusteeship problem on its head." Nat'l Ass'n of Letter Carriers v. Sombrotto, 449 F.2d 915, 920-21 (2d Cir.1971); Int'l Bhd. of Boilermakers v. Local Lodge D238, 678 F. Supp. 1575, 1583 (M.D.Ga.1988) (stating that "applying this standard to the trusteeship situation places the burden upon the parent international when the statutory scheme clearly provides that the local affiliate must by clear and convincing evidence show the invalidity of the trusteeship").
Thus, in keeping with the intent of Congress, a preliminary injunction is presumptively valid to impose a trusteeship if: (1) the trusteeship was established in accordance with the provisions of the union's constitution and bylaws; (2) the trusteeship was authorized or ratified after a fair hearing; and (3) the trusteeship was installed for a permissible purpose.[9] 29 U.S.C. §§ 462 & 464; Regan v. Williams, Civ.A.No.86-643, 1986 WL 8413, at *2 (W.D.Pa. May 16, 1986) (citations omitted); Int'l Bhd. of Boilermakers v. Local Lodge D31, 694 F. Supp. 1203, 1207-08 (D.Md. 1988) (citations omitted); Local Lodge D238, 678 F.Supp. at 1580 (same). Enforcement of trusteeships "by way of preliminary relief not merely does not violate equitable principles but is the resolution most consistent with the legislative scheme here at stake." Sombrotto, 449 F.2d at 921. The "parent is entitled to a preliminary injunction imposing a trusteeship on application unless the local comes forward with adequate proof that the trusteeship is not being sought in good faith." Id.
In this case, it is not contested that the trusteeship was established in accordance with the provisions of the union's constitution and bylaws.[10] However, Local *664 234 asserts that it did not receive a "fair hearing" and that the trusteeship was not installed for a permissible purpose. (Compl. dated Dec. 1, 2000 ("Compl.II") ¶¶ 15-17.) Local 234 alleges that it did not receive a fair hearing because it was: denied the right to have outside counsel; denied pre-hearing discovery; denied more than one continuance; and denied an adequate opportunity to cross examine witnesses. Id. ¶ 16. Local 234 also asserts that the hearing was not fair because relevant evidence was excluded and because Bakalo, who was initially appointed to serve as a member of the Subcommittee, instead served as prosecutor. Id. In the Order dated September 29, 2000, which the court incorporates herein by reference, the court addressed Local 234's objections regarding the presence of outside counsel, discovery and time to prepare for the hearing. Local 234 v. TWU, No.Civ.A.00-4815, 2000 WL 1521507, at *1-2 (E.D.Pa. Sept.29, 2000). Further, as the court has already recognized, the LMRDA "does not require formal quasi-trial procedures at a trusteeship hearing." Id. at *2. Under 29 U.S.C. § 464, the minimum requirements for a fair hearing are: notice of the charges; presentation of evidence and witnesses; and an opportunity for cross examination. Int'l Bhd. of Boilermakers v. Local Lodge D461, 663 F. Supp. 1031, 1034 (M.D.Ga.1987).
Local 234 does not contest that it received notice of the charges or that evidence and witnesses were presented at the hearing before the Subcommittee. The record shows that written notice identified the charges; that Local 234 was notified of the date, time and location of the hearings; that the hearings were open to Local 234's membership; and that evidence was presented supporting the imposition of the trusteeship. There is no evidence in this record to suggest, as Local 234 asserts, that the proceedings before the Subcommittee were a mere "formality." Although Local 234 alleges that it did not have an "adequate" opportunity to cross-examine witnesses, the record shows that it had ample opportunity to do so. For example, TWU's first witness, John Kerrigan, produced approximately 39 pages of transcript on his direct testimony and 109 pages on cross-examination; likewise, Harry Knittel produced 126 pages of direct testimony and 313 on cross; Al Miller produced 50 pages of direct testimony and 174 on cross; and Sabin Rich produced 30 pages of direct testimony and 211 on cross. (Joint Exs. 2, 3, 4 & 5.) Although Local 234 argues that TWU's prosecutor attempted to limit its cross-examination of witnesses, Bruce Bodner, Local 234's advocate at the hearing, stated that Bakalo "didn't succeed" in "interfering with my right to cross-examine his witnesses." See Vitale Decl. dated Dec. 19, 2000 ("Vitale Decl. II"), Ex. 1 at 135-36 (attaching deposition). The court finds that Local 234 had an opportunity for cross-examination and that the elements of a fair hearing under 29 U.S.C. § 464 were satisfied.
Local 234's contention that the trusteeship was not installed for a permissible purpose is unavailing. Legitimate reasons for imposing a trusteeship that benefits a union's membership include: correcting corruption or financial malpractice; assuring the performance of collective bargaining agreements or other bargaining duties; and restoring democratic procedures. 29 U.S.C. § 462. In the instant case, the International Executive Council's Resolution imposed the trusteeship for financial malpractice, subversion of union democracy, and discord among Local 234's Executive Board. (Vitale Decl. Ex. 2 at 2.)
*665 The International Executive Council stated that the "most serious" of the charged violations was the subversion of union democracy.[11]Id. For example, it found that Local 234's Executive Board, directed by its president, pressured and threatened political opponents to induce them to resign; prevented opponents from performing official duties; and retaliated against and suppressed speech. Id. Ex. 1 at 62-67 & Ex. 2 at 2. As a specific example, TWU found that Local 234 interfered with the Secretary-Treasurer from carrying out his duties by: reducing his salary; humiliating him before the membership and management; changing the locks to his office; assigning him to a small table in the bookkeeper's office; not taking his phone calls; and refusing to give him materials that were necessary to perform his job. Id. Ex. 1 at 22-24 & 41. Local 234 also threatened to suspend twelve officers because they filed charges against the president and other members of the Executive Board. Id. Ex. 1 at 47. TWU concluded that immediate action by the International was required to restore democratic procedures to Local 234. Id. Ex. 1 at 67 & 74.
The International Executive Council also found a pattern of "serious financial malpractice" by Local 234's Executive Board.[12]Id. Ex. 2 at 2. For example, Local 234 was 7 months in arrears in its per capita payments when charges were filed; it maintained no checks and balances on its spending; it failed to file monthly financial reports; and it failed to require documentation in support of union credit card expenses which resulted, in one instance, in 171 questionable expenditures. Id. TWU recognized that, after charges were filed against Local 234, it took belated steps to correct some of these problems, but found that it was "unlikely that the Local could be restored to financial and administrative stability without action by the International." Id.
It is undisputed that both correcting financial malpractice and restoring democratic procedures are valid purposes for the establishment of a trusteeship under 29 U.S.C. § 462.[13] Thus, the court *666 finds that the trusteeship was properly established under TWU's Constitution and bylaws and for a permissible purpose under 29 U.S.C. § 462. As these elements have been established, the trusteeship is presumptively valid. 29 U.S.C. § 464(c). Accordingly, the burden shifts to Local 234, which must overcome the presumption with "clear and convincing proof" that the imposition of the trusteeship was not in good faith. 29 U.S.C. § 464(c); Local Union No. 810, 19 F.3d at 790 (same); Sombrotto, 449 F.2d at 922 (same); Crane, 848 F.2d at 712 (same).
Here, there is no proof that TWU acted in bad faith in establishing the trusteeship. Local 234 attempts to demonstrate TWU's bad faith not by introducing direct evidence of illegitimate motives but by arguing that the reasons offered by TWU do not justify its decision. The court finds that Local 234 has fallen short in its effort to satisfy its statutory burden of proof. The court can only speculate as to Local 234's proffer of potential political motives lurking behind TWU's decision to impose the trusteeship.[14] TWU, however, "did not just pull allegations of mismanagement out of the air." Crane, 848 F.2d at 714-15. There is no evidence that the Subcommittee or the International Executive Council was motivated by bad faith. To the contrary, the court finds that TWU had more than an adequate basis to conclude in good faith that political factionalism, subversion of democracy and financial malpractice were deeply entrenched, protected practices and were of such magnitude as to warrant the imposition of a trusteeship. Local 234 has failed to meet its burden of showing by clear and convincing evidence that TWU's decision to impose a trusteeship was not made in good faith.[15]
The evidence shows that TWU is likely to succeed on the merits of its claim of right to impose the trusteeship. It has shown that the trusteeship was established in accordance with the provisions of its constitution and that it was authorized after a fair hearing for a permissible purpose.
Further, TWU would suffer irreparable harm should the preliminary injunction *667 permitting a trusteeship not be granted. TWU asserts that the reputation of the union is at stake and that it and Local 234 would be harmed if it is not able to enforce its constitutional provisions, to which Local 234 is contractually bound, and deal immediately and forcefully with the allegations of financial malpractice and the lack of democratic procedures. (TWU's Reply Mem. of Law in Further Supp. of its Mot. for Prelim. Inj. Enforcing Trusteeship of Local 234 at 57-59.) Courts have found that harm to a union's reputation constitutes irreparable injury warranting a preliminary injunction. See Local 810, 19 F.3d at 794 (stating that "allegations of financial malpractice and undemocratic procedures severely test the allegiance of union members"); Int'l Bhd. of Teamsters v. Local Union 705, 827 F. Supp. 513, 516 (N.D.Ill.1993), appeal dismissed, No.93-2789 (7th Cir.1993) (finding irreparable harm to union's reputation where local operates under allegations of financial wrongdoing).
TWU also asserts that a preliminary injunction enforcing the trusteeship is necessary to correct financial malpractice. There is no dispute that Local 234 has been in arrears in its per capita taxes. Presently, it is $150,000.00 in debt. There is no dispute that for most of the year 2000, Local 234 did not file any monthly financial reports. (Vitale Decl. Ex. 1 at 69.) TWU found that there are virtually no checks and balances to monitor spending, no procedures requiring documentation for reimbursing union credit card expenses, and that the possibilities for credit card misuse was demonstrated by one case in which there were 171 questionable expenditures. Id. Ex. 1 at 68 & 70. Financial mismanagement is clearly disruptive. See Rauscher v. Bakery, Confectionery & Tobacco Workers Int'l Union, No.Civ. A.93-5629, 1993 WL 409192, at *2 (E.D.Pa. Oct.8, 1993) (recognizing potential disruption caused by financial mismanagement). As the Subcommittee and International Executive Council found:
There is no assurance that systems and procedures are in place to properly administer the Local in the future. There is no guarantee that the problems of conflict, mismanagement, blindness, negligence and/or incompetence which have plagued the Local have been permanently solved. There is no evidence that these longstanding problems in the Local are capable of being resolved without intervention by the International.
(Vitale Decl. Ex. 1 at 71.)
Further, a preliminary injunction enforcing the trusteeship is necessary to restore democratic procedures. TWU found that, without intervention, "Local 234 is likely to continue its course of anti-democratic behavior toward those members whom its officers perceive as political opponents." (Vitale Decl. Ex. 1 at 67.) There was no dispute that Local 234 interfered with the Secretary-Treasurer in the performance of his duties, and, on the issue of irreparability, the charges found by the Subcommittee in Section II.4 of its Findings and Conclusions, which were adopted by TWU's Executive Council, are especially pertinent.
On June 27, 2000, 12 elected Section officers filed charges against President Brookens, Vice President Bodner and other members of Local 234's Executive Board. Id. Ex. 1 at 46. The Section officers alleged, inter alia, that the Executive Board mistreated certain officers, in violation of Article XIX of the TWU Constitution. Id. On July 24, 2000, the Executive Board summarily dismissed the charges against it without a hearing. Id. On July 28, 2000, Vice President Bodner moved to suspend the 12 officers for filing the charges. Id. Bodner simultaneously tabled the motion, to give the complaining officers "an opportunity to retract" their statements and the facts in the charges. Id. Several days later, Bodner sent letters to the 12 officers, warning them that the motion to suspend them would be pursued if they did not rescind their charges. Id. Ex. 1 at 46-47.
*668 The Subcommittee found that before Vice President Bodner sent the letters, he discussed the matter with a TWU official who told him that such letters would violate TWU's Constitution and was an improper attempt to punish the complaining officers for exercising free speech. (Joint. Ex. 10, Tab 2 at 59.) Despite this notice, Local 234 sent the letters.
The motion to remove the Section officers remained in its suspended, "tabled" status throughout the period when charges against Local 234's Executive Board were filed, during the Subcommittee's hearings on the charges, when the Executive Council unanimously approved the Subcommittee's findings, and while the proceedings began here in the United States District Court. The chilling, serious impact of Local 234's conduct, suppressing speech rights and threatening to remove officers, persisted for months while the trusteeship proceedings went forward and the proceedings in this court began. In fact, Local 234 did not inform the court until January 5, 2001, that it sent certified letters to the officers, finally withdrawing the motion to suspend them. See Bodner Aff. dated Jan. 8, 2001 at 1 & Ex. A (attaching letter mailed December 22, 2000).
Local 234 did not withdraw its motion to suspend the officers until its continuing pendency became an issue in the preliminary injunction proceeding before this court, evidencing the doggedness with which Local 234's leadership persisted in its conduct. Letters rescinding the motion to suspend the officers could have been sent at any time, yet the motion remained pending for 5 months long after the Subcommittee and International Executive Council found that the threat to suspend the officers was very real and continuing. (Vitale Decl. Ex. 1 at 66-67.) The pendency of the motion sent a message not only to the officers who were the subject of it, but also to the rest of Local 234's membership. The pendency of the motion shows the Executive Board's inclination to suppress the free speech rights of those who disagree with it, and the maintenance of the threats over time can only be seen as a message to Local 234's membership as to how the Executive Board will address dissident voices concerning important union affairs. On this issue, little more need be said as to finding of irreparability.[16]
*669 Additionally, the court finds that the denial of injunctive relief might give the local union officials an opportunity to move or destroy records. See United Ass'n of Journeymen v. Local 90, No.88-0349, 1988 WL 146609, at *5 (M.D.Pa. March 16, 1988) (enforcing trusteeship); Local Lodge D238, 678 F.Supp. at 1583 (stating that "[g]ranting injunctive relief will result in no irreparable harm to [the Local] because the trustee is legally obligated to hold the property and assets of the local affiliates in trust ... [h]owever, records, funds and other assets could be dissipated or lost if the injunction is not granted").
Local 234 asserts that it will be irreparably harmed by a preliminary injunction imposing the trusteeship because Lombardo, rather than the members of the current Executive Board, would negotiate a new contract with SEPTA. In support of this assertion, Local 234 cites Regan, wherein the court found irreparable harm to the local where the trustee, rather than the local's elected officers, was to conduct collective bargaining negotiations. Regan, 1986 WL 8413, at *3. That case, however, is inapposite. In Regan, there was a history of political turmoil between two factions within the local. Id. at *1. The parent union favored the Unity Slate faction; however, the other faction, the Unified Slate, won the presidency. Id. After the installation of the new officers, an "emergency" trusteeship was imposed without a hearing or investigation. Id. The evidence before the Regan court showed that the appointed trustee, who was a member of the Unity Slate faction, the parent-aligned faction that lost the election, had "very different" views about the upcoming contract negotiations than the newly elected officers, who were members of the Unified Slate. Id. at *1-3. In contrast, unlike Regan, the instant trusteeship was imposed after an investigation and a hearing, and there has been no showing that Lombardo's positions regarding the upcoming negotiations with SEPTA are "very different" from the Executive Board's.
The court also finds that preliminary injunctive relief is not adverse to the public interest. "[F]ederal labor statutes make it clear that a policy of judicial non-interference in internal union affairs fosters the public interest." Pile Drivers, Divers, Carpenters, Bridge, Wharf and Dock Builders Local Union 34 v. N. Cal. Carpenters Reg'l Council, 992 F. Supp. 1138, 1148 n. 11 (N.D.Cal.1997) (finding local not entitled to preliminary injunction to prevent trusteeship). Local 234 failed to comply with the constitutional provisions at issue, "conduct[ing] its affairs in a manner which is detrimental to the interests of the Union." (Vitale Decl. Ex. 1 at 61.) An injunction will give the Trustee no greater authority than that conferred in the parties' constitution. See Local Lodge D461, 663 F.Supp. at 1035 (recognizing same). Rather than violating any public interest, upholding such contractual provisions contributes to the stability of labor organizations. Local Lodge D238, 678 F.Supp. at 1583.
Finally, Rule 65(c) mandates that the court require posting of security, in an amount the court deems proper, for costs and damages that may be incurred or suffered by any party wrongfully restrained or enjoined. Fed.R.Civ.P. 65(c). Upon consideration of the record, the court will require TWU to post a bond in the amount of $1,000.00.
III. CONCLUSION
For the reasons set forth above, TWU's motion for a preliminary injunction will be granted.
An appropriate Order follows.
*670 ORDER
AND NOW, TO WIT, this 11th day of January, 2001, upon consideration of defendant Transport Workers Union of America, AFL-CIO's ("TWU") motion for a preliminary injunction, and plaintiff Transport Workers Union of Philadelphia, Local 234's ("Local 234") opposition thereto, IT IS ORDERED that said motion is GRANTED as follows:
Upon TWU's posting of security in the amount of one thousand dollars ($1,000.00), Local 234 and its officers, agents, representatives, employees and attorneys are PRELIMINARILY ENJOINED and RESTRAINED from:
(1) Refusing to deliver all property, funds, books, records and assets of any kind in their possession to Harry Lombardo as Trustee of Local 234, or his designee;
(2) Representing themselves as the authorized officers and/or representatives of Local 234, unless so authorized by the Trustee or his designee;
(3) Interfering in any manner with the conduct of the trusteeship by Lombardo or his designee;
(4) Refusing to provide a complete accounting of the financial condition of Local 234 and its funds to Lombardo or his designee, and refusing to provide any and all financial records and explanation for all receipts, disbursements and financial transactions of any kind by Local 234 or related to Local 234;
(5) Destroying, removing, secreting or altering the financial records of Local 234 or any financial records relating to Local 234.
SO ORDERED.
NOTES
[1] Steve Brookens is the President of Local 234; Bruce Bodner, Jean Alexander and Charles Grugan are Vice Presidents; Jeffrey Brooks, Sr. is the Recording Secretary; and Harry Knittel is the Secretary-Treasurer. These six elected officers, together with staff members appointed by Brookens, comprise Local 234's Executive Board.
[2] Hall supplemented and amended those charges on September 18, 2000. Id.
[3] On August 29, 2000, Local 234 objected to International Vice President Michael Bakalo serving on the Subcommittee on the grounds of his prior involvement in conduct which was at issue in the charges. The next day, Bakalo was taken off the Subcommittee and was ultimately replaced by International Vice President Larry Martin. (Vitale Decl. at 2; Joint Ex. 8.) Bakalo was appointed to act as prosecutor. (Vitale Decl. at 2 n. 3.) Local 234 did not object.
[4] Title III of the Labor-Management Reporting and Disclosure Act of 1959 ("LMRDA"), 29 U.S.C. §§ 461-466, governs the imposition of trusteeships. Section 464 provides that a trusteeship imposed "in conformity with the procedural requirements of [the labor organization's] constitution and bylaws and authorized or ratified after a fair hearing" is presumed valid for a period of eighteen months. 29 U.S.C. § 464(c). This court has jurisdiction under section 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185; 29 U.S.C. §§ 462, 464(a); and 28 U.S.C. § 1331.
[5] By Order dated December 14, 2000, this case was transferred to the undersigned in accordance with the court's procedure for random reassignment of cases.
[6] The Subcommittee found that Local 234's Executive Board: (1) failed to submit timely per capita payments to TWU; (2) failed to timely establish a pension plan for its clerical employees; (3) failed to meet their fiduciary responsibility by completely ignoring serious financial issues; (4) failed to submit timely financial reports; (5) interfered with the Secretary-Treasurer carrying out his duties; (6) routinely reimbursed its officers and staff without requiring written documentation or explanation of the reasons for the expenses; (7) failed to take any steps to control its spending and incurred unwarranted expenditures; (8) pressured two elected officers into resigning their positions; (9) interfered with a prospective job offer to a member; (10) threatened twelve officers with removal for having engaged in free speech; (11) disrupted a membership meeting in an attempt to prevent free speech; (12) enlisted an employer's assistance in an attempt to evict a member engaged in free speech; (13) prevented an elected section officer from handling grievances; (14) failed to call Joint Executive Committee meetings; and (15) engaged in in-fighting and factionalism to the detriment of Local 234's operations.
[7] Hall, Bakalo, George Roberts, John Bland and Harry Lombardo did not vote, although they were entitled to do so.
[8] Lombardo is an International Vice President of the TWU and a past president of Local 234.
[9] Under the LMRDA:
Trusteeships shall be established and administered by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of such labor organization.
29 U.S.C. § 462.
[10] Under the TWU Constitution:
In the event the International President shall have reason to believe that any Local Union is failing to comply with any provision of the Constitution or conducts its affairs in a manner which is detrimental to the interests of the Union, he/she may institute proceedings against the Local Union, with due notice of hearing in writing delivered to the Local President and to the Local Financial Secretary-Treasurer, specifying the section or sections of the Constitution violated or the nature of the conduct, before the International Executive Council, or a subcommittee thereof, designated either by the Council or by the Internal Administrative Committee. Upon the basis of the hearing the International Executive Council is authorized to render a decision, dismissing the charges, suspending or revoking the charter of any such Local Union, or directing such other action as may be necessary to secure compliance with the Constitution, or otherwise to protect and preserve the effectiveness and the best interests of the Union. The decision of the International Executive Council shall be subject to review by the International Convention.
TWU Const., Art. V, sec. 4.
[11] Case law does not support Local 234's crabbed assertion that restoring "democratic procedures" under 29 U.S.C. § 462, only pertains to cases involving election disputes. See C.A.P.E. Local Union 1983 v. Int'l Bhd. of Painters and Allied Trades, 598 F. Supp. 1056, 1073 (D.N.J.1984) (finding that spending funds without membership's approval "seriously compromised the ... democratic right ... to determine the Local's direction").
[12] "Malpractice" has been defined as "an injurious, negligent, or improper practice." Donatello v. McKenzie, 826 F. Supp. 780, 782 (S.D.N.Y.1993) (citations omitted). Contrary to Local 234's assertion, it "does not imply corruption." Id.
[13] Local 234 argues that the TWU's decision to impose a trusteeship to correct these problems was "draconian" and that its conduct does not meet "the high standard of misconduct necessary to warrant the imposition of a trusteeship." (Compl. II ¶¶ 1, 9 & 13.) However, Congress intended that decisions by international officials to impose trusteeships be upheld and not rejected on the basis of disputes over the judgment or necessity of their imposition. See Teamsters Local Union No. 406 v. Crane, 848 F.2d 709, 714-15 (6th Cir. 1988) (stating that "it would unreasonably impair the independence of labor unions to allow much scope at this point for the Government to review the judgment of union officials upon the needs of the organization or the best means of effectuating them") (internal quotations and citation omitted). There is, in fact, a well-established policy of avoiding judicial interference in union self-governance and internal affairs. Int'l Bhd. of Teamsters v. Local Union No. 810, 19 F.3d 786, 790 (2d Cir.1994) (recognizing purpose of presumption of validity is "to prevent federal courts from intervening in internal union affairs"). Congress' purpose in enacting the LMRDA was "to ensure that local affairs are governed by local members under democratic processes, with a minimum of outside interference." Morris v. Hoffa, No.Civ.A. 99-5749, 1999 WL 1285820, at *7 (E.D.Pa. Dec.28, 1999) (citations omitted). As stated by the Second Circuit:
Courts have no special expertise in the operation of unions which would justify a broad power to interfere. The internal operations of unions are to be left to the officials chosen by the members to manage those operations except in the very limited instances expressly provided by the [LMRDA].... 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.
Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964) (quoted in Felton v. Ullman, 629 F. Supp. 251, 254-55 (S.D.N.Y.1986)); see also Local Union No. 810, 19 F.3d at 793 (federal courts should not "busy themselves with the internal affairs of unions, a task for which they are ill-equipped"). The role of this court, then, is "to ensure that the instant politically-charged controversy is resolved in accordance with the ... [union's] democratic process as mandated by Congress and by [its constitution]." Morris, 1999 WL 1285820, at *7.
[14] Local 234 asserts that the trusteeship was imposed because Lombardo did not want Local 234's Executive Board to negotiate future contracts with the Southeastern Pennsylvania Transportation Authority ("SEPTA"). Even if the court assumes, arguendo, that this is true, there is no evidence whatsoever showing that the Subcommittee or International Executive Council did not act in good faith. Likewise, the court perceives no "bad faith" in the fact that TWU appointed Lombardo as trustee. First, there is no evidence in the record that the financial problems during Lombardo's tenure were as severe as they are under the current Executive Board's leadership: for example, a two or three month delinquency in per capita payments is not as egregious as a seven month delinquency. Similarly, there is no evidence that Lombardo's administration reimbursed expenses without requiring documentation or explanations. (Vitale Decl. Ex. 1 at 25-26.) Finally, the Subcommittee and Executive Council found that Local 234's current leadership engaged in a host of anti-democratic practices. The record is barren of similar misconduct by Lombardo's administration.
[15] Local 234 fails to meet its burden even under the lower standard espoused by the Ninth Circuit, whereby a local may rebut the presumption of validity with only a "good faith doubt" as to whether the trusteeship was established for an improper purpose. Benda v. Grand Lodge of Int'l Assoc. of Machinists & Aerospace Workers, 584 F.2d 308, 316 (9th Cir.1978).
[16] Likewise, throughout the hearings before this court, Local 234 has repeatedly asserted that all the problems confronting it the lack of democratic procedures, the financial malpractice, and discord "have been dealt with" and that there is nothing left to fix. (Local 234's Proposed Findings of Fact and Conclusions of Law ¶ 618.) However, as the International Executive Council found, it "took the threat of trusteeship to light a fire" and force Local 234 to begin their attempt to correct the problems facing it. (Vitale Decl. Ex. 1 at 71.) For example, at the time trusteeship charges were filed against it, Local 234 was 7 months behind in its per capita payments. Id. Ex. 1 at 69 & Ex. 2 at 2. Not until TWU filed charges did Local 234 pay down four months of the arrears. Id. Ex. 1 at 69 & Ex. 2 at 2. Similarly, there was no dispute that for most of the year 2000, Local 234 did not file any monthly financial reports. In late September 2000, days before the hearings before the Subcommittee began, Local 234 filed 8 months of delinquent reports. Id. Ex. 1 at 69.
The court will not go through each of the 15 charges that the Subcommittee and International Executive Council found against Local 234, or Local 234's belated attempts to correct some of them. Although the court agrees with Local 234 that the LMRDA sets forth remedial rather than punitive purposes for which trusteeships may be imposed, it does not agree that the problems facing Local 234 have all been "corrected." The allegations against Local 234 are serious. After 18 days of hearings, hundreds of documents and more than 25 witnesses, the Subcommittee and International Executive Committee found that 15 charges had been proven against Local 234 and:
regretfully came to the conclusion that a trusteeship is the only option available ... which can meaningfully resolve the problems described here, restore democratic processes to the Local, correct the financial mismanagement issues, and return the Local to functioning as a collective bargaining representative in the best interest of the members.
(Vitale Decl. Ex. 1 at 74 & Ex. 2 at 1-2.) It is not the court's role to second guess TWU's conclusion, rather, the statute sets forth an 18 month period during which the trusteeship is presumed valid. 29 U.S.C. § 464(c). Local 234 has failed to rebut this presumption. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580248/ | 115 F. Supp. 2d 1172 (2000)
Casimer LEBEAU and Vernon Ashley, on behalf of themselves and all other persons similarly situated, Plaintiffs,
v.
UNITED STATES of America, Defendant.
No. Civ. 99-4106.
United States District Court, D. South Dakota, Southern Division.
September 29, 2000.
*1173 John M. Grossenburg, Winner, SD, Charles Rick Johnson, Johnson, Eklund, Nicholson, Peterson & Fox, Gregory, SD, for plaintiff.
Jan L. Holmgren, United States Attorney's Office, Sioux Falls, SD, for defendant.
James E. McMahon, Boyce, Murphy, McDowell & Greenfield, Sioux Falls, SD, Bertram E. Hirsch, Great Neck, NY, for interested party, Sisseton-Wahpeton Sioux Tribe, Spirit Lake Tribe, and Sisseton-Wahpeton Sioux Counsel of the Assiniboine and Sioux Tribes.
MEMORANDUM OPINION AND ORDER ON MOTIONS
PIERSOL, Chief Judge.
Pending before the Court are motions to intervene and to dismiss filed by The Sisseton-Wahpeton Sioux Tribe, the Spirit Lake Tribe and the Sisseton-Wahpeton Sioux Council of the Assiniboine and Sioux Tribes (collectively referred to herein as "the Tribes"). (Docs.11, 12.) Plaintiffs and the defendant filed briefs in response to the motions to intervene and dismiss and the Tribes filed a reply brief. For the reasons set forth below, the Court will grant the Tribes' motion to intervene for the sole purpose of seeking dismissal of this action under Fed.R.Civ.P. 19 and will deny the Tribes' motion to dismiss. This action will proceed among the plaintiffs and the defendant.
I. Background
This action was filed by the plaintiffs to challenge the constitutionality of a recently enacted law which has the effect of diminishing by at least 28.3995% the funds appropriated by Congress in 1968, plus accumulated interest, and apportioned in 1972 for the benefit of plaintiffs and others similarly situated to satisfy a final judgment entered by the Indian Claims Commission[1] relating to the United States' breach of two treaties[2] involving approximately 27 million acres of land ceded to the United States by the Sisseton and Wahpeton Sioux Tribes in the 19th century. See Pub.L. No. 105-387, 112 Stat. 3471 (codified at 25 U.S.C. § 1300d-21 et seq.). Pursuant to the Act of June 19, 1968 Congress appropriated nearly $6 million to satisfy the judgment entered by the Indian Claims Commission (hereinafter referred to as "the Judgment Fund"). Pub.L. No. 90-352, 82 Stat. 239. In the Act of October 25, 1972 ("the 1972 Act"), Congress apportioned 25.0225% of the nearly $6 million Judgment Fund for distribution to Sisseton and Wahpeton Mississippi Sioux Tribe lineal descendants (hereinafter referred to as "lineal descendants") who were not members of the tribes listed in the 1972 Act but could trace lineal ancestry to tribal members listed on rolls acceptable to the Secretary of the Interior. Pub.L. No. 92-555, 86 Stat. 1168 (codified at 25 U.S.C. § 1300d, et seq.). Plaintiffs are lineal descendants who have been determined to be eligible to share in the distribution pursuant to the 1972 Act, but who to this day have not received any distribution of funds under the 1972 Act. The lineal descendants' share was originally $1,469,831.50 and was estimated in October 1998 to be approximately $15.2 million. S.Rep. No. 105-379 (1998).
*1174 In an action filed in the Montana district court in 1987, the Tribes challenged the validity of the portion of the 1972 Act which apportions 25.0225% of the Judgment Fund to the lineal descendants. Sisseton-Wahpeton Sioux Tribe v. United States, 686 F. Supp. 831 (D.Mont.1988) ("Sisseton-Wahpeton I") (subsequent history omitted). The Montana District Court held that the plaintiff Tribes' claims were barred by the statute of limitations, finding that the Tribes had waited nearly fifteen years to challenge Congress' apportionment of the Judgment Fund. Id. at 834, 837-38. The Ninth Circuit Court of Appeals agreed the Tribes' claims regarding the lineal descendants' share of the Judgment Fund were time-barred. Sisseton-Wahpeton Sioux Tribe v. United States, 895 F.2d 588, 597 (9th Cir.), cert. denied, 498 U.S. 824, 111 S. Ct. 75, 112 L. Ed. 2d 48 (1990) ("Sisseton-Wahpeton II"). On remand for consideration of the possibility of amending the complaint, the Montana District Court granted summary judgment to the United States and the Ninth Circuit again affirmed the denial of relief to the Tribes. Sisseton-Wahpeton Sioux Tribe v. United States, 90 F.3d 351, 356 (9th Cir.), cert. denied, 519 U.S. 1011, 117 S. Ct. 516, 136 L. Ed. 2d 405 (1996) ("Sisseton-Wahpeton III"). During the pendency of the Tribes' claims in the federal court system, the lineal descendants did not receive any of the funds apportioned to them by the 1972 Act. In 1994, individuals claiming to be lineal descendants eligible to share in the Judgment Fund brought an action contending they were not given notice of the Judgment Fund and seeking to share in the 25.0225% apportioned to the lineal descendants pursuant to the 1972 Act. See Loudner v. United States, 108 F.3d 896 (8th Cir.1997). The Eighth Circuit ruled that the plaintiffs' claims in Loudner were not time-barred, id. at 903-04, and the Secretary of the Interior is currently in the process of determining how many additional lineal descendants will share in the Judgment Fund apportioned to the lineal descendants, see Loudner v. United States, 108 F.3d 896 (D.S.D.1995) (on remand).
In 1998, Congress enacted the Mississippi Sioux Tribes Judgment Fund Distribution Act of 1998 ("the 1998 Act"), which is the subject of the present action. Pub.L. No. 105-387, 112 Stat. 3471 (codified at 25 U.S.C. § 1300d-21 et seq.). Pursuant to the 1998 Act, the Tribes will receive at least 28.3995% of the lineal descendants' share of the Judgment Fund apportioned to the lineal descendants in the 1972 Act if a final judgment is not entered in favor of one or more lineal descendants in this action. 25 U.S.C. §§ 1300d-23(a)(1), 1300d-26, and 1300d-27. If a final judgment is entered in favor of one or more lineal descendants in this action, the Tribes will not receive a distribution under the 1998 Act, and the lineal descendants will receive the share of the Judgment Fund apportioned to them in the 1972 Act. 25 U.S.C. § 1300d-27(e).
The Tribes seek to intervene in this action for the limited purpose of filing a motion to dismiss for failure to join necessary and indispensable parties pursuant to Rule 19 of the Federal Rules of Civil Procedure. The Tribes contend they are necessary parties pursuant to Rule 19(a) and they cannot be joined as parties herein because of their sovereign immunity. The Tribes contend the United States cannot adequately represent their interests in this action in light of the government's dual trust obligations to the Tribes and the plaintiffs and in light of the past opposition to the Tribes' claims in Sisseton I, Sisseton II, and Sisseton III, supra. The Tribes contend they are indispensable parties under Rule 19(b) and this action must, therefore, be dismissed.
The plaintiffs contend that the Court should allow the Tribes to intervene only for the limited purpose of defending the validity of the 1998 Act and should deny the Tribes' motion to dismiss under Rule 19. Plaintiffs assert that if the constitutional attack as to the validity of the 1998 Act is dismissed pursuant to Rule 19, the *1175 plaintiffs should be allowed to proceed with a cause of action for damages against the United States based on the United States' breach of its trust obligations to the lineal descendants under the 1972 Act.
The United States does not oppose the Tribes' motion to intervene, but the United States contends granting the Tribes' motion to dismiss would deprive plaintiffs of any opportunity to challenge the validity of the 1998 Act even though Congress sought to assure that right to the lineal descendants. The United States contends it adequately represents the interest of the absent Tribes in this action and that the Tribes are, therefore, not necessary and indispensable parties in this action. Citing Babbitt v. Youpee, 519 U.S. 234, 117 S. Ct. 727, 136 L. Ed. 2d 696 (1997) and Hodel v. Irving, 481 U.S. 704, 107 S. Ct. 2076, 95 L. Ed. 2d 668 (1987), the United States asserts that lawsuits in which individuals allege Congress has acted in violation of their constitutional rights commonly proceed in the absence of tribes who have an interest in the litigation. Both the Tribes and the United States have the same interest in defending the constitutionality of the 1998 Act, according to the United States, which is the primary reason asserted by the United States for denying the Tribes' motion to dismiss pursuant to Rule 19.
II. Decision
The Tribes seek to intervene in this action for the sole purpose of filing a motion to dismiss for failure to join necessary and indispensable parties. Joinder of necessary and indispensable parties is governed by Rule 19 of the Federal Rules of Civil Procedure, which states in part:
Joinder of Persons Needed for Just Adjudication
(a) Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.....
(b) Determination by Court Whenever Joinder not Feasible. If a person as described in subdivision (a)(1)-(2) hereof cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable. The factors to be considered by the court include: first, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
The Court must first inquire whether an absent person is a "necessary" party pursuant to Rule 19(a). If the absent person is not necessary as defined in Rule 19(a), the Court ends the inquiry, denies the motion to dismiss for failure to join an absent person and proceeds with the action. Gwartz v. Jefferson Memorial Hosp. Ass'n, 23 F.3d 1426, 1428 (8th Cir.1994). However, if the Court determines an absent person is a necessary party and the absent person may not be joined pursuant to Rule 19(a), then the Court must determine, pursuant to Rule 19(b), whether the action should proceed among the parties before it, or should be dismissed. Rochester Methodist Hosp. v. Travelers Ins. Co., 728 F.2d 1006, 1016 (8th Cir.1984).
*1176 The first inquiry is whether the Tribes are "necessary" parties pursuant to Rule 19(a). The Court concludes complete relief could be granted as between plaintiffs and the defendant herein. Plaintiffs seek a declaration that the 1998 Act is unconstitutional. The 1998 Act specifically provides that if a judgment is entered in favor of one or more lineal descendants in an action challenging the constitutionality or validity of distributions under the 1998 Act, then the provisions allowing distribution to the Tribes of at least 28.3995% of the lineal descendants' share of the Judgment Fund do not apply and the 1972 Act governs. See 25 U.S.C. § 1300d-27(e)(1). Therefore, if the Court were to enter a judgment in favor of the plaintiffs in this case, the matter would be settled and, contrary to the Tribes' assertion, the Tribes would not have a valid claim to share in the lineal descendants' portion of the Judgment Fund. Conversely, if the Court were to enter a judgment in favor of the defendant in this case, the Tribes would be entitled to distribution as set forth in the 1998 Act. See 25 U.S.C. § 1300d-23. The Court concludes, therefore, that the Tribes are not necessary parties under Rule 19(a)(1) because complete relief can be accorded among the plaintiffs and the defendant in the absence of the Tribes. Fed.R.Civ.P. 19(a)(1); see, e.g., Shermoen v. United States, 982 F.2d 1312, 1317 (9th Cir.1992), cert. denied, 509 U.S. 903, 113 S. Ct. 2993, 125 L. Ed. 2d 688 (1993) (holding that complete relief could be accorded among the parties absent the Tribes at issue because if the challenged act was found to be unconstitutional, the individual Indian plaintiffs would receive all the relief for which they prayed).
Although the Tribes are not necessary parties pursuant to Rule 19(a)(1), the Court must consider whether the Tribes are necessary parties pursuant to Rule 19(a)(2). The Tribes claim an interest relating to the subject of this action because they will receive a significant portion of the lineal descendants' share of the Judgment Fund if a final judgment is not entered in favor of one or more lineal descendants in this action. The Tribes further contend they have an interest in preserving their sovereign immunity.
Even if an absent person claims an interest relating to the subject of the action, the person is not a necessary party under Rule 19(a)(2) unless such person is so situated that disposing of the action in the person's absence may "(i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of [the absent person's] claimed interest." Fed.R.Civ.P. 19(a). As to the inquiry under Rule 19(a)(2)(i), the Court does not conclude that disposition of this action in the absence of the Tribes will, as a practical matter, impair or impede the Tribes' abilities to protect their interests in this action. The United States is currently defending the validity of the 1998 Act in this action. (See Answer by United States, Doc. 7.) Although the United States may not advance every argument the Tribes would like to make, the United States has expressed the willingness to advance all legitimate arguments to defend the validity of the 1998 Act despite any past arguments asserted by the United States that the Tribes were not entitled to any portion of the lineal descendants' share of the Judgment Fund.
The Tribes contend that because the United States owes a trust obligation to the plaintiffs, the United States will not adequately represent the interests of the Tribes. The Court disagrees that the existence of a trust obligation to the plaintiffs would prevent the United States from adequately representing the interests of the Tribes in defending the constitutionality of the 1998 Act in this lawsuit. In Babbitt v. Youpee, the Supreme Court did not express any concern about the United States's ability to adequately represent the interests of the absent tribes in defending the constitutionality of an act challenged by individual Indians. 519 U.S. 234, 236-45, *1177 117 S. Ct. 727, 136 L. Ed. 2d 696. In Babbitt, the individual Indian plaintiffs alleged that section 207 of the Indian Land Consolidation Act, Pub.L. No. 97-459, 96 Stat. 2519 (codified, as amended, 25 U.S.C. § 2206) ("ILCA") violated the Fifth Amendment by authorizing the taking of real property without just compensation. 519 U.S. at 236-37, 117 S. Ct. 727. The amended section of the ILCA at issue in Babbitt provided that certain fractional interests in Indian lands held by individual Indians would transfer, or "escheat," to the tribe upon the death of the owner of the interest. 25 U.S.C. § 2206; Babbitt, 519 U.S. at 236-37, 117 S. Ct. 727. In Babbitt, the Supreme Court upheld the decisions by the Ninth Circuit Court of Appeals and the Montana District Court holding the amended section was unconstitutional. 519 U.S. at 237, 117 S. Ct. 727; Youpee v. Babbitt, 67 F.3d 194 (9th Cir. 1995); Youpee v. Babbitt, 857 F. Supp. 760 (D.Mont.1994).
Prior to the decision in Babbitt, supra, a previous version of the ILCA was declared unconstitutional by the Supreme Court and the Eighth Circuit. Hodel, 481 U.S. at 718, 107 S. Ct. 2076; Irving v. Clark, 758 F.2d 1260 (8th Cir.1985). Neither the Supreme Court nor the Eighth Circuit expressed any concern pursuant to Rule 19 about the United States' ability to adequately represent the absent tribes in defending the ILCA from a constitutional challenge by individual Indian plaintiffs where the law resulted in the tribes receiving significant property that was previously granted to the individual Indian plaintiffs' ancestors. The Court finds the present case closely analogous to the factual setting in Babbitt, 519 U.S. at 236-45, 117 S. Ct. 727 and Hodel, 481 U.S. at 706-18, 107 S. Ct. 2076, wherein any trust obligation the United States may have owed to the individual Indian plaintiffs did not prevent the United States from adequately representing the interests of the absent tribes. It is interesting to note that in Hodel, the Tribes' present counsel filed a brief for the Sisseton-Wahpeton Sioux Tribe as amicus curiae urging reversal of the Eighth Circuit's decision finding the law unconstitutional and apparently did not advocate that the case should be dismissed under Rule 19 by arguing that the United States was unable to adequately represent the interest of the absent tribe in light of a conflicting trust obligation to the individual Indian plaintiffs therein. 481 U.S. at 706, 107 S. Ct. 2076.
The Tribes' attempt to distinguish Babbitt, supra, and Hodel, supra, by contending those cases did not involve a Rule 19 defense and the property interests in those cases had not vested in any tribe and may never have vested. Although the Supreme Court, the Ninth Circuit, the Eighth Circuit and the Montana District Court did not explicitly address the issue of whether the absent tribes were necessary and indispensable parties requiring dismissal under Rule 19 because the absent tribes enjoined sovereign immunity and could not be joined in the cases discussed above, the Court will assume the implications of Rule 19 were considered in those cases. See e.g., Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 111, 88 S. Ct. 733, 19 L. Ed. 2d 936 (1968) (stating that a reviewing court has an independent duty to raise sua sponte the issue of whether an absent person is a necessary and indispensable party which requires dismissal of the action). The Ninth Circuit has repeatedly raised Rule 19 issues in cases where the parties have not raised the issue in the district court. See UOP v. United States, 99 F.3d 344, 347 (9th Cir. 1996) (sua sponte raising concerns regarding joinder pursuant to Rule 19 where the parties did not raise the issue in the district court and the district court did not rule on the issue); Pit River Home & Agric. Coop. Ass'n v. United States, 30 F.3d 1088, 1099 (9th Cir.1994) (holding the Ninth Circuit may consider whether an absent person is an indispensable party to the pending litigation although the district court did not rule on the issue); CP Nat'l Corp. v. Bonneville Power Admin., 928 F.2d 905, 911 (9th Cir.1991) (same). The Ninth Circuit sua sponte raised the issue *1178 of failure to join indispensable parties both before and after its decision in Youpee, 67 F.3d at 195-200, lending support to the Court's conclusion that, although not expressly ruled upon, the issue of whether the Tribes were necessary and indispensable parties was considered by the Ninth Circuit in Youpee.
The Tribes further contend the Supreme Court's decisions in Babbitt, supra, and Hodel, supra, are distinguishable because "the law at issue in those cases dealt with the universe of tribes and with property interest that, unlike those in the case at bar, had not vested in any tribe and, depending on devise and descent choices, might never vest in any tribe. In other words, the tribal interests in those cases do not possess the constitutional dimension of the interests of the Tribes in the case at bar." (The Tribes' Reply Brief, Doc. 30 at 12, n. 5.) The Court disagrees. The Tribes cannot credibly argue that their interests under Pub.L. No. 105-387 have "vested," because the Tribes will not receive a distribution under Pub.L. No. 105-387 if final judgment is entered in favor of one or more lineal descendants in this action. See 25 U.S.C. § 1300d-27(e). The Court finds that Babbitt, 519 U.S. at 236-45, 117 S. Ct. 727, and Hodel, 481 U.S. at 706-18, 107 S. Ct. 2076, compel a finding that the Tribes are not necessary parties in this action. Based upon the above discussion, the Court holds that disposition of the instant case in the absence of the Tribes would not, as a practical matter, impair or impede the Tribes' ability to protect their interests in this action. See Fed.R.Civ.P. 19(a)(2)(i).
The Tribes argue they are necessary parties under Rule 19(a)(2)(ii) because absent their involvement in this action, the United States will be subject to inconsistent obligations in light of the United States' trust obligations to both the plaintiffs and the Tribes. Under the rationale advanced by the Tribes, the United States will have inconsistent obligations regardless of whether the Tribes are parties to this action. The Tribes are essentially arguing that the United States is violating its trust obligations to the plaintiffs by seeking to defend the constitutionality of the 1998 Act in this lawsuit, and that because of the trust obligations to the plaintiffs the United States will not make all arguments which would favor the Tribes. If the Court were to accept the Tribes' argument regarding inconsistent obligations, the United States would rarely, if ever, be able to defend any statute enacted by Congress if it involves claims adverse to any particular individual Indian or Indian tribe. Cf. Babbitt, 519 U.S. at 236-45, 117 S. Ct. 727 (United States defended the validity of the Indian Land Consolidation Act against individual Indian plaintiffs' constitutional challenges); Hodel, 481 U.S. at 706-18, 107 S. Ct. 2076 (same). Pursuant to the Tribes' argument, the United States will have inconsistent obligations whether or not the Tribes are parties to this lawsuit. Therefore, disposing of this action among the plaintiffs and the defendant will not leave the United States with inconsistent obligations by reason of the Tribes' claimed interest as set forth in Rule 19(a)(2)(ii).
Based upon the above discussion, the Court concludes that the Tribes are not "necessary" parties as defined in Rule 19(a). However, even if the Tribes were necessary parties under Rule 19(a), the Court holds that "in equity and good conscience" this action should proceed among the plaintiffs and the defendant in the absence of the Tribes. It appears that the Tribes are entitled to sovereign immunity and thus cannot be joined in this action. See Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S. Ct. 1670, 56 L. Ed. 2d 106 (1978) (stating that Indian tribes possess the common-law immunity from suit traditionally enjoyed by sovereign powers, subject to the superior and plenary control of Congress). Rule 19(b) provides that if a necessary person cannot be joined as a party, the Court must evaluate whether the absent person is indispensable considering the four factors listed in Rule 19(b).
*1179 The first factor to consider is to what extent a judgment rendered in the Tribes' absence might be prejudicial to the Tribes or to the plaintiffs and defendant. The Tribes initially argue, in connection with the analysis under Rule 19(a), that a judgment in favor of the lineal descendants would not bind the Tribes. (Tribes' Brief, Doc. 13 at 5.) The Court disagrees with the Tribes' argument because Congress specifically provided that if a final judgment is entered in favor of one or more lineal descendants in an action challenging the 1998 Act, then the 1972 Act would govern and the Tribes would not receive a distribution under the 1998 Act. See 28 U.S.C. § 1300d-27(e)(1). Therefore, a judgment rendered in the absence of the Tribes would be prejudicial to them. The Tribes' interests are not, however, unprotected in this action because the United States seeks to have the 1998 Act upheld against plaintiffs' constitutional challenge. See, e.g., United States ex rel. Steele v. Turn Key Gaming, Inc., 135 F.3d 1249, 1251-52 (8th Cir.1998) (holding that the absent tribe would not be prejudiced where the tribe's interests were the same as the plaintiff's interests). Congress recognized the likelihood that one or more of the lineal descendants would seek to challenge the 1998 Act, and Congress provided the result if such a challenge succeeded. See 25 U.S.C. § 1300d-27(e)(1). In Babbitt, 519 U.S. at 236-37, 117 S. Ct. 727, and Hodel, 481 U.S. at 716-18, 107 S. Ct. 2076, it was clear that a judgment rendered in the absence of the Oglala Sioux Tribe would be prejudicial to the tribe because a holding in favor of the plaintiffs (individual tribal members) providing that the escheat provision of the ILCA was unconstitutional would result in the Oglala Sioux Tribe not receiving the escheatable interests under the ILCA. Despite the potential prejudice to the Oglala Sioux Tribe, none of the Courts considering Babbitt and Hodel, supra, expressed any concern about the United States' ability to represent the absent tribe's interest in the individual Indians' challenge to the ILCA.
The second factor under Rule 19(b) is to what extent the prejudice to the Tribes could be lessened or avoided by the shaping of relief. The Court agrees with the Tribes' assertion that if Pub.L. No. 105-387 is declared unconstitutional or otherwise invalid, there are no measures the Court could take to lessen the prejudice of such a disposition to the Tribes. Congress, however, recognized that such a disposition could occur, and explicitly stated the 1972 Act would govern in the event a final judgment was entered in favor of one or more lineal descendants. See 25 U.S.C. § 1300d-27(e)(1).
The third factor to consider under Rule 19(b) is whether a judgment rendered in the Tribes' absence will be adequate. As stated by the Court in connection with the analysis under Rule 19(a) regarding the "complete relief" inquiry and under the first factor to consider under Rule 19(b), the Court concludes a final judgment in favor of the plaintiffs in this action would be adequate to defeat the distributions to the Tribes under the 1998 Act. See 25 U.S.C. § 1300d-27(e)(1).
The fourth factor in determining whether an absent person is indispensable under Rule 19(b) is whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder. The Tribes acknowledge that absent a legislative amendment to Pub.L. No. 105-387, plaintiffs may not have an adequate remedy if this action is dismissed. The plaintiffs have been waiting for almost thirty years to receive money that was apportioned to them under the 1972 Act. The Tribes successfully delayed any distribution to the plaintiffs during the pendency of Sisseton I, Sisseton II, and Sisseton III, supra, during which time the Tribes have had the use of their portion of the Judgment Fund. Moreover, Congress recognized the potential constitutional implications of enacting the 1998 Act and Congress further recognized the lineal descendants would likely challenge the validity of the 1998 Act. See 25 U.S.C. § 1300d-27. The Court concludes the *1180 fourth factor weighs heavily in favor of a finding that the Tribes are not indispensable parties in this action because the plaintiffs would not have an adequate remedy to challenge the constitutionality of the 1998 Act if this action is dismissed.
Citing decisions from the Ninth Circuit, the Tribes contend that their interest in preserving their sovereign immunity outweighs plaintiffs' interest in litigating their claim that the 1998 Act is unconstitutional or otherwise invalid. See Clinton v. Babbitt, 180 F.3d 1081, 1090 (9th Cir.1999); Pit River, 30 F.3d at 1102-03; Quileute Indian Tribe v. Babbitt, 18 F.3d 1456, 1460-61 (9th Cir.1994); Shermoen v. United States, 982 F.2d 1312, 1317-18 (9th Cir.1992); Confederated Tribes of Chehalis Indian Reservation v. Lujan, 928 F.2d 1496, 1499-1500 (9th Cir.1991); Fluent v. Salamanca Indian Lease Authority, 928 F.2d 542, 548 (2nd Cir.), cert. denied, 502 U.S. 818, 112 S. Ct. 74, 116 L. Ed. 2d 48 (1991); Enterprise Management Consultants, Inc. v. United States ex re. Hodel, 883 F.2d 890, 894 (10th Cir.1989); Wichita and Affiliated Tribes of Oklahoma v. Hodel, 788 F.2d 765 (D.C.Cir.1986); Lomayaktewa v. Hathaway, 520 F.2d 1324 (9th Cir.1975), cert. denied, 425 U.S. 903, 96 S. Ct. 1492, 47 L. Ed. 2d 752 (1976). All of the cases cited by the Tribes in support of the argument that their sovereign immunity outweighs the plaintiffs' interest in litigating their claim either involved conflicting claims asserted by various tribes in relation to Indian lands or claims related to contracts, leases or agreements to which the absent tribes were parties. Clinton, 180 F.3d at 1083-86 (tribal members sought to challenge, on equal protection principles, the terms of proposed leases with an absent tribe pursuant to an agreement entered into by the absent tribe); Pit River, 30 F.3d at 1092-94, (group of Indian families sought a declaration that they were the beneficial owners of a certain piece of real property despite the Secretary of the Interior's declaration that the absent tribe was the beneficial owner); Quileute, 18 F.3d at 1457-59 (intertribal dispute concerning governance of reservation lands); Shermoen, 982 F.2d at 1314-17 (intertribal conflict regarding profits from reservation land); Confederated Tribes, 928 F.2d at 1497-99 (intertribal conflict where plaintiffs were seeking to challenge the United States' continuing recognition of the absent tribe as the sole governing authority for a reservation); Fluent, 928 F.2d at 543-45 (lessees of tribal lands sought to compel the absent tribe, as lessor, to renew their leases for up to ninety-nine years); Enterprise Management, 883 F.2d at 893 (party to a bingo management contract with an absent tribe sought to obtain validation of the contract under 25 U.S.C. § 81); Wichita, 788 F.2d at 767-68 (intertribal conflict regarding proceeds from Indian land); Lomayaktewa, 520 F.2d at 1324-25 (tribal members sought to void lease entered into by absent tribe).
An additional case cited by the Tribes in support of the argument that a necessary party's sovereign immunity outweighs the plaintiffs interest in litigating his claim involved a tribe seeking to obtain validation of a compact with the State of Kansas regarding gambling operations on the tribe's reservation where the Supreme Court of Kansas had held the compact was not approved by an official empowered to do so under state law. Kickapoo Tribe of Indians v. Babbitt, 43 F.3d 1491, 1493-97 (D.C.Cir.1995). In Kickapoo it was determined that the State of Kansas could not be joined due to its sovereign immunity and that as a party to the compact at issue it would be prejudiced by a judgment therein. 43 F.3d at 1495-1500. Moreover, the United States could not represent the State's interests in light of the United States' trust obligations to the plaintiff tribe. Id. at 1499.
The Court concludes the instant case is distinguishable from all of the cases cited by the Tribes in support of their argument that the Tribes' sovereign immunity outweighs the lineal descendants' interest in litigating their claim. In this case, unlike the cases cited by the Tribes, the *1181 United States is in a position to adequately protect the interests of the Tribes in defending the validity of the 1998 Act. The United States was in a similar position in Babbitt, 519 U.S. at 236-245, 117 S. Ct. 727 and Hodel, 481 U.S. at 706-718, 107 S. Ct. 2076, wherein the Supreme Court, the Ninth Circuit and the Eighth Circuit did not find it necessary to raise any Rule 19 issues or question the United States' ability to represent the interests of the absent tribe.
The ultimate inquiry under Rule 19(b) in determining whether an absent person is indispensable, is "whether in equity and good conscience the action should proceed among the parties before it." The plaintiffs are lineal descendants who have waited nearly thirty years to receive their share of the Judgment Fund apportioned to them in 1972. See 25 U.S.C. §§ 1300d-3, 1300d-4; Sisseton-Wahpeton Sioux Tribe, 90 F.3d at 355 (stating the Secretary of the Interior had determined the lineal descendants were eligible to receive a $746.00 share of the Judgment Fund); Loudner, 108 F.3d at 898-900 (reciting history of the 1972 Act and stating that as of 1997 the Secretary had not distributed the lineal descendants' share of the Judgment Fund). The Tribes have received their portion of the Judgment Fund as apportioned in the 1972 Act. See 25 U.S.C. § 1300d-4. The Tribes' actions in initiating and pursuing lawsuits from 1987 to 1996 resulted in plaintiffs not receiving any distribution under the 1972 Act, at least during the pendency of those lawsuits. The Tribes now seek to prevent the lineal descendants from litigating their claim that the 1998 Act violates their Fifth Amendment rights by taking a significant portion of their share of the Judgment Fund and distributing it to the Tribes. Considering all of the factors listed in Rule 19(b) and based upon the above discussion, the Court finds equity and good conscience dictate that the validity of the 1998 Act be decided in this action among the plaintiffs and the defendant, and that the Tribes are not indispensable parties herein. The Court concludes the Tribes are not necessary and indispensable parties pursuant to Rule 19 and this action will proceed among the plaintiffs and the defendant. Accordingly,
IT IS ORDERED:
1. That the Sisseton-Wahpeton Sioux Tribe, the Spirit Lake Tribe and the Sisseton-Wahpeton Sioux Council of the Assiniboine and Sioux Tribes' Motion to Intervene, Doc. 11, is granted for the sole purpose of allowing the moving Tribes to seek dismissal of this action under Rule 19 of the Federal Rules of Civil Procedure.
2. That the Sisseton-Wahpeton Sioux Tribe, the Spirit Lake Tribe and the Sisseton-Wahpeton Sioux Council of the Assiniboine and Sioux Tribes' Motion to Dismiss Pursuant to Rule 19, Doc. 12, is denied.
3. That the Sisseton-Wahpeton Sioux Tribe, the Spirit Lake Tribe and the Sisseton-Wahpeton Sioux Council of the Assiniboine and Sioux Tribes are not joined as parties to this action.
NOTES
[1] Sisseton and Wahpeton Bands or Tribes, et al. v. United States, 18 Ind.Cl.Comm. 526-a (1967).
[2] The Sisseton and Wahpeton Sioux Tribes ceded approximately two million acres of land to the United States by the Treaty of Prairie du Chian of July 15, 1830 (7 Stat. 328) and approximately 25 million acres of land by the Treaty of Traverse des Sioux of July 23, 1851 (10 Stat. 949). See Sisseton-Wahpeton Sioux Tribe v. United States, 686 F. Supp. 831, 833 (D.Mont.1988) (subsequent history omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2575341/ | 98 F. Supp. 2d 1031 (2000)
UNITED STATES of America, Plaintiff,
v.
ALCOA INC., Defendants.
No. 4:99CV61AS.
United States District Court, N.D. Indiana, South Bend Division.
May 26, 2000.
Clifford D. Johnson, United States Attorney's Office, South Bend, IN, Joseph Williams, United States Environmental Protection Agency, Office of Regional Counsel, Chicago, IL, Lois J. Schiffer, Francis J. Biros, David S. Christensen, Stacey H. O'Bryan, United States Department of Justice, Environmental Enforcement Section, Washington, DC, for Plaintiff.
Anthony S. Benton, Susan K. Roberts, William P. Kealey, Stuart and Branigin, Lafayette, IN, Diane W. Whitney, Ronald W. Zdrojeski, Lee D. Hoffman, James A. Thompson, LeBoeuf Lamb Greene and MacRae, Hartford, CT, Barry M. Hartman, Lance W. High, Kirkpatrick and Lockhart, Washington, DC, Richard W. Hosking, Paul K. Stockman, Kirkpatrick and Lockhart, Pittsburgh, PA, for Defendants.
MEMORANDUM AND ORDER
ALLEN SHARP, District Judge.
This cause is before the Court on Alcoa Inc.'s Motion to Dismiss, or in the Alternative, *1032 Motion to Strike dated August 20, 1999. Alcoa Inc. ("Alcoa") moves for dismissal of all counts related to the third paragraph of the Prayer for Relief in the Complaint filed by the Plaintiff United States of America for failure to state a claim for which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6). Alternatively, Alcoa moves this Court to strike the third paragraph of Plaintiffs Prayer for Relief pursuant to Fed.R.Civ.P. 12(f) because allegedly there is no legal basis to support that request. The third paragraph in the Plaintiffs Prayer for Relief requests that the Court "Order Defendant to develop and carry out a plan, subject to approval by the EPA, for appropriate remediation of contaminated sediments in the Elliot Ditch/Wea Creek watershed." The Plaintiff has also requested additional injunctive relief and civil penalties which could be in excess of ten million dollars. The only issue before the Court at this time is whether, as a matter of law, sediment remediation is an available remedy under Section 309(b) of the Clean Water Act. 33 U.S.C. § 1319(b). At a pretrial conference on January 14, 2000, the parties were given the opportunity to argue their motions. They were also allowed to submit unlimited supplemental briefs for the purpose of fully informing the Court on this issue. The Court has considered all the submissions of the parties, and for the reasons set out below, the Defendant's Motion to Dismiss for Failure to State a Claim is hereby DENIED.
I. BACKGROUND
In the process of producing aluminum ingots and other aluminum products, Alcoa, Inc. discharges a number of regulated substances from its Lafayette, Indiana facility into Elliot Ditch. The Ditch flows into Wea Creek, and ultimately into the Wabash River. These discharges are covered by a National Pollutant Discharge Elimination System (NPDES) permit which Alcoa received in 1985, and which authorizes the discharges with strict limits for certain pollutants. Alcoa is required to monitor its effluent discharges daily and report the results to the Indiana Department of Environmental Management (IDEM). Alcoa has exceeded its authorized discharge limitations on numerous occasions. Based on Alcoa's monthly Discharge Monitoring Reports (DMR's), the Lafayette plant exceeded its daily effluent discharge limits for a total of at least 408 separate violations between 1993 and 1999, and it continues to do so. (Compl. at ¶ 48). Each day a facility exceeds an effluent limit constitutes a separate violation and subjects Alcoa to fines of up to $25,000 per day for discharges before January 31, 1997, and $27,500 per day for discharges after that date. (Id. at ¶ 49 citing 33 U.S.C. § 1319(d)).
The Government alleges that Alcoa's discharge violations have contaminated the sediments in Elliot Ditch and Wea Creek to such an extent that these sediments now present a persistent and ongoing risk of harm to human health and the environment. The Government is most concerned about the presence of Polychlorinated Biphenyls (PCBs), which even at low levels may result in acute and chronic toxicity to human health and the environment. Indiana State health officials have advised that fish taken from Elliot Ditch and Wea Creek should not be eaten because PCB concentrations found in fish samples from the area were above the United States Food and Drug Administration action levels for PCBs. (Compl. at ¶ 13). Alcoa's own sampling has consistently revealed significant levels of PCBs in the sediments and in fish found downstream of the facility in the Elliot Ditch/Wea Creek watershed. (Gov.'s Br. in Res. at 6.) In addition, the Government alleges that Alcoa is the only Facility that uses Elliot Ditch and Wea Creek for industrial discharges, making it the sole source of PCBs and other contaminants to the watershed.
Alcoa used PCBs in its manufacturing processes from the 1950s through at least the 1970s, and some residue remains in *1033 equipment, buildings and soil. Alcoa's permit allows for the discharge of minute amounts of PCBs, but 63 test samples out of 2,049 taken since 1993 indicate an amount of PCBs in the effluent discharge in excess of the limit. PCBs absorb into organic sediments, resist breaking down, and tend to accumulate in greater amounts as they move upward through the food chain. (Gov.'s Br. in Res. at 6.)
Therefore, on June 11, 1999, the United States commenced this action against Alcoa for violating its NPDES permit pursuant to the Clean Water Act (CWA), FWPCA Section 402, 33 U.S.C. § 1319(b), in which it is seeking a variety of remedies. In addition to fines and an injunction that Alcoa comply with its permits, the Government has asked for an injunction requiring the Defendant to develop and carry out a plan, subject to approval by the EPA, for appropriate remediation of contaminated sediments in the Elliot Ditch/Wea Creek watershed. (Gov.'s Prayer for Relief at ¶ 3.) The Defendant challenges this remedy as unavailable under the statute in question and asks the Court to dismiss it under Fed.R.Civ.P. Rule 12(b)(6) for failure to state a claim, or in the alternative, to strike the third paragraph pursuant to Fed.R.Civ.P. Rule 12(f).[1]
II. JURISDICTION
This cause of action arises under 33 U.S.C. § 1319(b), the enforcement provision of the Clean Water Act. The statute grants authority to United States district courts to grant appropriate relief, including a permanent or temporary injunction, to restrain violations and to require compliance.
III. STANDARD OF REVIEW
To succeed on a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the defendant must prove that even assuming the plaintiffs allegations are true, the complaint fails to state a claim upon which relief can be granted. In reviewing a motion to dismiss, the court looks only at the legal sufficiency of the complaint and not the merits, Triad Assoc., Inc. v. Chicago Housing Auth., 892 F.2d 583, 586 (7th Cir.1989), cert. denied, 498 U.S. 845, 111 S. Ct. 129, 112 L. Ed. 2d 97 (1990), taking the plaintiffs factual allegations as true and drawing all reasonable inferences in the plaintiffs favor. Veazey v. Communications & Cable of Chicago, Inc., 194 F.3d 850, 853 (7th Cir.1999). This does not mean, however, that the court is required to accept legal conclusions that may be alleged in the complaint or that may be drawn from the pleaded facts. Vaden v. Village of Maywood, 809 F.2d 361, 363 (7th Cir.), cert. denied, 482 U.S. 908, 107 S. Ct. 2489, 96 L. Ed. 2d 381, (1987); see also, Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir.1976). Dismissal is appropriate if it appears beyond doubt that no relief could be granted under any set of facts that could be proved in support of the plaintiffs claim. Veazey, 194 F.3d at 853, citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984).
IV. DISCUSSION
In 1972, Congress enacted the Clean Water Act (the "CWA"), for the stated purpose of restoring and maintaining the "chemical, physical and biological integrity of the nation's waters." FWPCA § 101(a); 33 U.S.C. § 1251(a). Congress declared it to be a national priority to clean up the nation's sadly polluted waterways and make them safe for fish, wildlife, and recreation in and on the water. It is now the "national policy" that the "discharge of toxic pollutants in toxic amounts" shall be *1034 prohibited. FWPCA § 101(a)(3); 33 U.S.C. § 1251(a)(3). Beginning with Section 301, the Act establishes a broad prohibition against "the discharge of any pollutant by any person" unless the discharge is in compliance with the Act's permit requirements, effluent limitations, and other enumerated provisions. FWPCA § 301(a); 33 U.S.C. § 1311(a).
Section 309(b) is the enforcement provision for violations of Section 402, which requires a permit for effluent discharges (an "NPDES Permit"), and § 404, which requires a permit for dredge and fill activities affecting navigable waters, including wetlands. FWPCA §§ 309(b), 402 and 404; 42 U.S.C. §§ 1319(b), 1342 and 1344. Section 309(b) gives the Administrator the authority to bring suit in federal district court for "appropriate relief, including a permanent or temporary injunction," and grants the district court "jurisdiction to restrain such violations and to require compliance." FWPCA § 309(b); 33 U.S.C. § 1319(b). The sole issue before the Court at this time is the scope of the court's discretion to fashion an equitable remedy under Section 309(b) of the Clean Water Act. The Government asserts that the jurisdictional language "to restrain such violations and to require compliance" is broad enough to encompass the remedy it seeks, an injunction ordering Alcoa to clean up sediments allegedly contaminated with PCBs as a direct result of Alcoa's violations of its NPDES Permits. The Government asserts that traditional concepts of a court's equitable discretion and the purposes of the Clean Water Act support its position. Alcoa vehemently objects to the Government's interpretation, arguing that rules of statutory construction and the legislative history of the Clean Water Act establish that the Government is not entitled to the relief it seeks.
Only one federal court has considered this issue, the Northern District of Illinois in 1982. See United States v. Outboard Marine Corporation, 549 F. Supp. 1036, 1043 (N.D.Ill.1982). In Outboard Marine, the court held that the Government could get the injunctive relief it sought under another statute, and dealt therefore in a cursory manner with the use of Section 309(b) for the clean up of in-place sediments.[2] However, in 1993, the EPA, relying in part on the ruling in Outboard Marine Corporation, included a section in its Sediment Enforcement/Remediation Training Workbook explaining that in certain situations, the EPA should be able to use Section 309(b) of the Clean Water Act to get an injunction mandating clean up of in-place contaminants. Since that time, the EPA has on several occasions sought sediment remediation for violation of the Clean Water Act. In response to a request by this Court at oral arguments, the Government submitted information on four cases where sediment clean up was sought under this provision, but all of these cases settled. (Gov.'s Supp.Br. at 22-5, n. 17.) In each case, however, defendants agreed to pay for sediment remediation as part of their Consent Decree. Remediation was a component of injunctive relief issued for the purpose of redressing "the effects of prior unlawful discharges in violation of the CWA." (Id.) However, because these cases were resolved through settlements, *1035 the courts did not rule on the issue of the scope of their authority to award sediment remediation under Section 309(b).
In 1998, the EPA published a document entitled "EPA's Contaminated Sediment Management Strategy," in which it again assessed using Section 309(b) to obtain an injunction for mandatory sediment remediation. This publication states that Section 309(b) is the appropriate provision of the CWA for the removal of illegally discharged pollutants where a link can be established between the unlawful discharge and the contaminated sediment. It suggests that where the link is not well established, creative solutions are possible that encourage polluters to undertake sediment pollution removal in lieu of civil penalties. The document also contrasts Section 309(b) with Section 504, stating that an enforcement action can be brought under Section 504[3] to compel responsible parties to clean up contaminated sediments, even if the polluter was in compliance with its permit requirements, where the polluted sediments present an "imminent and substantial endangerment" to human health or the environment. The Government submitted these documents with its Brief in Response as Exhibits C and D, therefore the Court assumes that they represent the agency's interpretation of Section 309(b) of the Clean Water Act and its interplay with Section 504.
The first issue the Court must resolve is the degree of deference the Court must show to the EPA's interpretation of the statute it administers. The Supreme Court addressed this issue in 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), where it held that "a court must give effect to an agency's regulation containing a reasonable interpretation of an ambiguous statute." Christensen v. Harris County, ___ U.S. ___, 120 S. Ct. 1655, 1662, 146 L. Ed. 2d 621 (2000). Chevron deference has also been applied to adjudicative proceedings. City of Chicago v. FCC, 199 F.3d 424, 429 (7th Cir.1999). However, the Supreme Court just recently fractured over the degree of deference that must be given to agency opinions that have not gone through a formal adjudication or notice-and-comment rulemaking. Christensen, ___ U.S. ___, 120 S.Ct. at 1662, 146 L. Ed. 2d 621. The Court stated that under Chevron, an agency's interpretation of the statute it administers must be upheld unless Congress has spoken clearly to the contrary, or the agency's interpretation is unreasonable. Id. Then Justice Thomas, writing for a four justice plurality, stated that "[i]nterpretations such as those in opinion letters like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law do not warrant Chevron-style deference." Id. The Court concluded that agency interpretations are still "entitled to respect," but only to the extent that those interpretations have the "power to persuade." Id. Justice Scalia, in a concurrence, would have given Chevron-style deference to agency opinions even when not developed through a formal rulemaking or adjudication. This seems to be the opinion of the *1036 three justices who dissented as well, and Justice Souter wrote a separate concurrence to say that nothing in the opinion prevented the Labor Department from adopting the challenged opinion as a regulation, which would entitle it to greater deference.
Applying the narrowest holding from Christensen, this Court concludes that the EPA's interpretation of Section 309(b) is not the product of a formal rulemaking or adjudication process, therefore it falls in the same category with opinion letters, policy statements, agency manuals, and enforcement guidelines. It is entitled to some deference, but only to the extent that it is a persuasive interpretation of the statute.
To determine if the EPA's interpretation is persuasive, the Court decide what Congress meant by the language of Section 309(b). Where a statute is clear and unambiguous on its face, it should be enforced according to the terms outlined. Patterson v. Shumate, 504 U.S. 753, 759, 112 S. Ct. 2242, 119 L. Ed. 2d 519 (1992). The problem with Section 309(b) is that it is not clear and unambiguous on its face. It first has language granting broad authority to the Administrator "to commence a civil action for appropriate relief, including a permanent or temporary injunction, for any violation for which he is authorized to issue a compliance order under subsection (a) of this section." FWPCA § 309(b); 33 U.S.C. § 1319(b). The Government points out, and Alcoa does not disagree, that this sentence seems to indicate the Administrator has available the full range of traditional injunctive relief. But the next sentence seems to limit the injunctive relief available when it says that federal courts shall have jurisdiction "to restrain such violation and to require compliance." Id. It is the interpretation of this second sentence, and its relationship to the first, that gives rise to the current controversy.
The Government argues that these two passages should be read together and in conjunction with the holding in Weinberger v. Romero-Barcelo, 456 U.S. 305, 102 S. Ct. 1798, 72 L. Ed. 2d 91 (1982) to support its position that the court may exercise the full extent of equitable authority traditionally available to courts of equity. The Government suggests that Alcoa's reading of the statute is "constricted" and would require the addition of the words "only" and "future" to obtain their meaning. The Court disagrees
[I]t is an elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it. In the absence of strong indicia of a contrary congressional intent, we are compelled to conclude that Congress provided precisely the remedies it considered appropriate.
Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 13, 101 S. Ct. 2615, 69 L. Ed. 2d 435 (1981).
In Section 309, Congress provided specific remedies for violations of NPDES permits. The Administrator is authorized to issue a compliance order or seek appropriate relief in a civil action, including a permanent or temporary injunction (b). The Administrator may also seek criminal penalties (c); civil penalties (d); or assess administrative penalties (g). Equitable relief under (b) is limited by the jurisdictional statement to injunctions for the purpose of restraining violations and requiring compliance. Fines are not limited by the jurisdictional statement in (b) but are instead covered by (d). The Government's interpretation of Section 309(b) as providing authority for all of the court's traditional equitable remedies is not persuasive. The Court concludes that the granting language of the first sentence is limited by the jurisdictional language of the second sentence, and that this Court's authority under Section 309(b) is limited to issuing injunctions to restrain violations or to require compliance.
*1037 The Government has a second argument which is more persuasive. It argues that the remedy it seeks, sediment remediation, is nevertheless available under the language of the statute. The Government backs its argument with cases in which courts have ordered restoration of natural resources as a means of "enforcing compliance." See United States v. Cumberland Farms, 647 F.Supp. at 1166 (D.Mass.1986); United States v. Lambert, 589 F. Supp. 366 (M.D.Fla.1984); United States v. Bradshaw, 541 F. Supp. 884, 886 (D.Md.1982); and United States v. Carter, 18 ERC 1810 (S.D.Fla.1982). Although, as the Government points out, these cases all involved the illegal filling of wetlands, rather than the violation of NPDES Permits, the Government argues that they are directly analogous to the situation at issue in this case. (Gov.'s Supp.Br. at 18). In the permit process, the issuing agency considers the amount of each listed substance produced by the applicant that can safely be released in the applicant's effluent discharge without causing harm to human health or the environment. Any exceedence, therefore, is considered to be harmful. The harm is compounded by the fact that some permitted substances do not naturally break down in the environment, but instead settle into the sediments and from there, continue to be released into the water. The Government argues that this secondary release is a continuing violation of the polluter's NPDES Permit, and therefore is a violation of the Clean Water Act. The Government asserts that the language "to require compliance" is broad enough to cover this kind of continuing violation where an entity has exceeded its NPDES permits, and where the exceedences have caused sediment contamination which continues to affect the quality of the water and limit its uses. The Government also cites United States v. Outboard Marine Corp., 549 F. Supp. 1036 (N.D.Ill. 1982), to support its position. In Outboard Marine, the court came to this same conclusion, although its determination is not binding precedent on this Court.
In addition, the Government suggests that the fundamental purpose of the Act, "to restore and maintain the chemical, physical and biological integrity of the Nation's waters," 33 U.S.C. § 1251(a) (emphasis added), should be considered when interpreting Section 309(b). According to the Government, it is necessary to interpret the phrase "to require compliance" broadly in order effectuate the Congressional purpose of restoring the integrity of the Nation's waters.
Alcoa argues that the restorations ordered in wetlands permit violations do not apply to violations of NPDES Permits under Section 402. Section 404 requires anyone planning to discharge dredged or fill material into "navigable waters of the United States" to get a permit from the Army Corps of Engineers. "Navigable waters" has been interpreted to include wetlands. Violation of this provision is frequently remedied by ordering the culprit to physically remove the fill material and restore the land to its natural condition. (Alcoa's Supp.Mem. at 10.) Alcoa alleges that violation of an NPDES Permit is distinguishable both factually and legally from a wetlands case because as long as the fill material remains in the wetland, the violation continues unless the responsible party gets a permit. (Id.) Therefore, "an order requiring removal of improperly-deposited fill is an order compelling compliance with the Clean Water Act, an injunction expressly permitted by Section 309(b)." (Id.) On the other hand, Alcoa asserts that injunctions requiring compliance in the context of an NPDES permit violation must relate to the NPDES requirements and to the act of discharge itself. Once the discharge is complete, according to Alcoa, the violation is complete and nothing can be done under Section 309 about the pollutants illegally dumped into the water. Alcoa argues that Section 309 can only be used to fine the company for its past bad behavior and to require it to comply with its permit limitations in the future, for example, by making *1038 changes in its wastewater treatment process that would eliminate the violations.
Faced with a statute which is capable of two reasonable interpretations, courts often look to the legislative history to aid in determining what Congress intended by the language. Both the Government and Alcoa have mustered considerable support from the legislative record, and subsequent attempts at amendment, to support their opposing interpretations. After carefully considering the submissions, the Court concludes that the legislative history does not cast any additional illumination on the meaning of the words "require compliance." Alcoa's strongest argument is the fact that a clarifying amendment was defeated that would have specifically granted the remedy the Government is requesting, but this fact is countered by the Senate Report which stated that the purpose of the bill was to clarify the issue, not to expand the scope of existing authority. S.Rep. 103-527, at 185 (1994). The failure of Congress to pass this amendment could mean that a majority of legislators thought the amendment was unnecessary because the federal courts already had this authority, or it could mean that they did not want the federal courts to have this authority. The legislative history is inconclusive. The Court must look elsewhere for assistance in interpreting this statute.
Both sides have made policy arguments to strengthen their positions. The Government is concerned that Alcoa, the party it believes to be responsible for contaminating Elliot Ditch and Wea Creek, will somehow escape liability for cleaning it up. Alcoa is concerned that allowing the Government to get an injunction mandating sediment remediation for violation of an NPDES permit could create a situation where the remedy is far out of proportion to the violation. It claims this would be the case if it has to dredge miles of river sediments to remove PCBs for exceeding its NPDES Permit for PCBs 63 times, when it has complied with its effluent limitations 98 percent of the time. (Alcoa's Supp.Mem. at 1.) In addition, allowing broad injunctive relief under Section 309(b) for clean up of in-place sediments would allow the Government to bypass the safeguards built into CERCLA, which Congress passed specifically to deal with the effects of past pollution and in-place contamination. However, the Government does not suggest that requiring sediment remediation would be an appropriate remedy for every violation of an NPDES Permit, only for instances where illegally discharged pollutants persist in sediments and create an ongoing threat of harm to human health and the environment. (Gov.'s Supp.Br. at 4, n. 2.) The Government alleges that this is an appropriate case to order remediation because the serious health hazard posed by PCBs and their persistence in the environment, and because of the strong connection between Alcoa's permit violations and the continual release of PCBs from the sediments into the waters of Elliot Ditch and Wea Creek.
It seems appropriate at this point to note that the company in Outboard Marine responsible for contaminating the harbor with PCBs eventually had to pay for sediment remediation, but it managed through legal maneuvering to postpone the inevitable for many years. United States v. Outboard Marine Corporation, 789 F.2d 497, 500 (7th Cir.1986); see also Erin White, Realizing Remediation: a Summary of Contaminated Sediment Remediation Activities in the Great Lakes Basin (1998) at 9-10. The Government began civil proceedings against Outboard Marine Corporation (OMC) in 1978 because of the high level of PCBs found in Waukegan Harbor near its plant. Id. It was estimated that nearly one million pounds of PCBs were present on OMC property and in the sediments of the Harbor. White, supra at 9. It took until 1989 for the EPA to complete the CERCLA process and enter a Consent Decree that required OMC to place money in a trust fund to clean up the harbor. Id. The remedial work was not completed until 1992. Id. at 10. Monitoring indicates *1039 that fish tissue contaminant concentrations in the harbor continue to decrease. Id. Warning signs from within the harbor have been removed because sampling has recently shown declines in concentrations to the same levels as the greater Lake Michigan area. Id. Compliance monitoring continues to show the remedy is meeting its objectives. Id. Total Cost for the remediation effort was estimated to be twenty-one million dollars. Id.
In balancing the equities, the Court finds that they weigh in favor of allowing the Government to proceed with its claim for sediment remediation under Section 309(b). Alcoa has not convinced the Court that Congress intended the same language in Section 309(b) to provide two different remedies, depending on whether an injunction is addressing violations under Section 402 or Section 404. Therefore, the Court concludes that the court's authority to grant an injunction "to require compliance" in Section 309(b) is broad enough to include the mandated clean up of contaminated sediments where the sediments are contaminated as a direct result of NPDES Permit violations. However, for an injunction to issue for sediment remediation under Section 309(b), the EPA must first establish that the sediments are contaminated with a substance that was released by the Defendant in an amount in excess of its NPDES Permit. In addition, it must show that the substance is hazardous to human health and the environment; that it will not naturally break down over time; and that it will continue to be released into the "waters of the United States" at such a level as to contaminate the water and make it unsafe for its designated uses. Finally, since this Court is being asked to use its equitable powers, there must be a rough proportionality between the Defendant's permit violations and the relief the Government is seeking. If the Government can prove its allegations that Alcoa is the only source of PCB contamination in Elliot Ditch and Wea Creek, and that it has exceeded its permit limitations for PCBs sixty-three times and counting, the proportionality requirement is probably met.
V. CONCLUSION
For the preceding reasons, Alcoa's Motion to Dismiss for Failure to State a Claim under Fed.R.Civ.P. 12(b)(6) is hereby DENIED.
IT IS SO ORDERED.
NOTES
[1] Rule 12(f) of the Federal Rules of Civil Procedure states that "the Court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The Defendant asks the Court to strike a paragraph in the Plaintiff's Prayer for Relief that is not a defense, nor is it redundant, immaterial, impertinent, or scandalous. The Court therefore finds this Rule inapplicable.
[2] United States v. Outboard Marine Corporation, 549 F. Supp. 1036 (N.D.Ill.1982). The court's entire analysis of the in-place sediment remediation issue was as follows:
It is less clear that Section 309(b) provides a basis for an order that OMC remedy past discharges by removing sediments from the Harbor and the North Ditch. The court has found no case in which such relief was granted under Section 309(b). One might doubt that the court's jurisdiction "to restrain such violation and to require compliance" includes the power to order cleanup of past discharges. On balance, however, the court believes that such a cleanup remedy fairly can be found within the language of Section 309(b). The Administrator is authorized to seek "appropriate relief, including a permanent or temporary injunction, for any violation for which he is authorized to issue a compliance order." This language is broad enough to include "cleanup orders."
Id. at 1043.
[3] Alcoa alleges that the EPA is trying to use Section 309(b) for sediment remediation instead of Section 504, which requires an imminent and substantial endangerment, because it cannot meet the higher standard in that and other statutes available for clean up of inplace sediments. This argument fails because the threshold for finding an imminent and substantial endangerment is quite low. See Environmental Law Handbook (Thomas F.P. Sullivan ed., 14th ed.1997) at 459 (stating that courts that have had very little difficulty finding that such an endangerment exists since the standard necessary to establish an imminent and substantial endangerment is minimal). In cases under CERCLA Section 106, courts have construed "imminent" to mean that the harm does not have to be immediate, but could arise in the future if the problem is not abated. Id. Similarly, endangerment has been construed to mean not actual harm, but only the threat of a potential harm. Id. "It is therefore difficult to imagine a situation with a release or threatened release without there also being an imminent and substantial endangerment." Id. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1503536/ | 148 F.2d 91 (1945)
BOWLES, Price Adm'r,
v.
INSEL.
SAME
v.
FELD.
SAME
v.
KRESSLER.
Nos. 8776-8778.
Circuit Court of Appeals, Third Circuit.
Argued February 12, 1945.
Decided March 12, 1945.
*92 Milton B. Conford, of Newark, N. J. (I. Edward Amada, of Newark, N. J., on the brief), for appellants.
Nathan Siegel, of Washington, D. C. (Thomas I. Emerson, Deputy Adm'r for Enforcement, Fleming James, Jr., Director, Litigation Division, and David London, Chief, Appellate Branch, all of Washington, D. C., Paul L. Ross, Regional Enforcement Executive, John Masterton, Regional Litigation Atty. and Wm. Sherman Greene, Jr., Enforcement Atty., all of New York City, on the brief), for appellee.
Before PARKER and GOODRICH, Circuit Judges, and BARD, District Judge.
PARKER, Circuit Judge.
These are appeals from orders of the District Court of New Jersey ordering appellants to appear before the enforcement attorney of the Office of Price Administration and produce records showing sales of meat items subject to Revised Maximum Price Regulation No. 169 from January 1, 1944 to August 1, 1944, including names and addresses of buyers, with quantity, grade, weight and price of meat sold. On failure of appellants to submit their records to inspection, the Administrator caused subpnas duces tecum to be issued requiring them to testify and to produce the records; and, on their failure to obey the subpnas, he applied to the District Court for an order requiring them to do so. The records in question are records required by OPA regulations to be kept and to be open to inspection. See General Maximum Price Regulation of April 28, 1942, sec. 1499.12.
We think that there can be no question as to the correctness of the order requiring appellants to obey the subpoenas. The Emergency Price Control Act authorizes the Administrator to adopt regulations requiring dealers in commodities to keep records, authorizes the inspection of such records, and authorizes the Administrator, by subpoena, to require persons having possession of the records to appear and produce them. 50 U.S.C.A.Appendix, § 922(b). In case of any refusal to obey such subpoena, the District Court is given jurisdiction to enforce compliance therewith. 50 U.S.C.A.Appendix, § 922(e).
The principal contention of appellants is that the records which they are required to produce are private records; that there is no showing of probable cause to believe that they have been guilty of any violation of law; and that under such circumstances an order to produce the records is violative of the rights protected by the Fourth Amendment to the Constitution of the United States. If the records required to be produced were in fact mere private records, this contention of appellants would be well grounded; for it is settled that without a showing of probable cause to believe that the law has been violated and specific description of the papers and records to be produced, a subpoena requiring the production of private papers is violative of the provision against unreasonable *93 searches and seizures. Boyd v. United States, 116 U.S. 616, 6 S. Ct. 524, 29 L. Ed. 746; Hale v. Henkel, 201 U.S. 43, 77, 26 S. Ct. 370, 50 L. Ed. 652; Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 44 S. Ct. 336, 68 L. Ed. 696, 32 A.L.R. 786; Jones v. Securities and Exchange Commission, 298 U.S. 1, 27, 56 S. Ct. 654, 80 L. Ed. 1015.
It is perfectly clear, however, that the records required to be produced are not private but public or quasi public records; and the mere fact that they are records of the sort which a private person would ordinarily keep with regard to his private business transactions does not detract from their public character. It was within the power of Congress, as a war measure, to regulate prices of commodities to guard against ruinous price inflation; and, since the keeping of records open to public inspection was necessary to any effective enforcement of such price regulation, it was well within the Congressional power to require that records of sales and prices be kept and be subject to inspection by public officers. Records so kept pursuant to statute and regulation are clearly public or quasi public in character; and the constitutional guaranties protecting private papers have no application to them. As said by the Supreme Court in Wilson v. United States, 221 U.S. 361, 380, 31 S. Ct. 538, 544, 55 L. Ed. 771, Ann.Cas. 1912D, 558, "The principle [i. e. that public records may not be withheld from inspection] applies not only to public documents in public offices, but also to records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established. There the privilege which exists as to private papers cannot be maintained."
In Endicott Johnson Corporation et al. v. Perkins, 317 U.S. 501, 63 S. Ct. 339, 344, 87 L. Ed. 424, there was involved an application by the Secretary of Labor for enforcement of a subpoena duces tecum to require the production of payroll and other similar records which the provisions of the Walsh-Healey Act, 41 U.S.C.A. § 35 et seq., required the petitioner there to keep. The same constitutional objections were urged there as here, but the Supreme Court thought them so unsubstantial as not to warrant discussion, referring in a footnote to the authorities relied on in support of the objections and saying: "The subpoena power delegated by the statute as here exercised is so clearly within the limits of Congressional authority that it is not necessary to discuss the constitutional questions urged by the petitioner, and on the record before us the cases on which it relies are inapplicable and do not require consideration."
Directly in point is the recent decision of the Ninth Circuit in Bowles v. Glick Brothers Lumber Co., 146 F.2d 566. In holding that records of the sort here involved were quasi public records and subject to inspection without showing of probable cause to believe that the law was being violated, the Court, speaking through Judge Healy, said [pp. 570, 571]:
"It is thus seen that dealers are required by the Act to keep such informative records as the Administrator may direct and to permit the Administrator, upon request, to inspect and copy them. These requirements are an essential part of the Congressional scheme of price stabilization and control. It is hard to see how the purposes of this vital wartime legislation could be achieved without them. To effect the end desired Congress clothed the Administrator with regulatory and investigatory powers commensurate with his responsibilities, arming him both with authority to inspect and with the power of subpoena. The regulations on the subject are in harmony with the statute. The records inspected and copied in this instance were of the type required to be kept and to be made available for inspection. They were not private books and papers of the kind involved in Boyd v. United States, 116 U.S. 616, 6 S. Ct. 524, 29 L. Ed. 746, and like cases. They were quasi-public records.
* * * * * *
"The existence of probable cause for believing that the Act has been violated is not made a prerequisite to inspection, cf. Fleming v. Montgomery Ward & Co., supra [7 Cir., 114 F.2d 384]. It must be remembered that the legislation was passed under emergency conditions closely affecting the general welfare. Upon the Office of Price Administration has been imposed the task of seeing to it that the law is complied with by all dealers in essential commodities, and that evasion be sternly checked. There is a presumption of regularity in respect of the proceedings of administrative bodies. Hence it is to be presumed that the Administrator *94 has not acted oppressively or undertaken to pursue investigations where no need therefor is apparent."
Directly in point, also, and involving production of records on subpna of the Director of the Office of Price Administration, without a showing of probable cause and against the argument that constitutional rights were thereby violated, are Cudmore v. Bowles, 79 U.S.App.D.C. ___, 145 F.2d 697, and Bowles v. Rothman, 2 Cir., 145 F.2d 831. And that such records are of a quasi public nature and subject to inspection by government officers, see Bowles v. Chew, D.C.Cal., 53 F. Supp. 787; Bowles v. Joseph Denunzio Fruit Co., D.C.Ky., 55 F. Supp. 9, 12; United States v. Tire Center, D.C.Del., 50 F. Supp. 404.
In point, also, although involving the keeping of records required under different statutes, are A. Guckenheimer Bros. Co. v. United States, 3 Cir., 3 F.2d 786; Fleming v. Montgomery Ward & Co., 7 Cir., 114 F.2d 384; Walling v. Benson, 8 Cir., 137 F.2d 501; Rodgers v. United States, 6 Cir., 138 F.2d 992; United States v. Mulligan, D.C., 268 F. 893.
Other contentions of appellant are so lacking in merit as not to warrant discussion. For the reasons stated, the orders of the court below will be affirmed.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3850254/ | Michael A. Wolak has taken this appeal from the action of the Board of Governance of the Pennsylvania Bar in recommending his disbarment from the practice of law. Appellant was admitted to the Bar in 1927 and since that time has practiced in Fayette and Allegheny Counties. The report of the Board of Governance found him guilty of depositing $675.00 of a client's money in his own bank account and failing to pay over this fund on demand. The bank in which the account was kept closed its doors, but at that time there was not sufficient money in appellant's account to equal the claim of his client. Ever since the failure of the bank, and even for some time prior thereto, appellant has been in straightened circumstances and despite repeated demands has repaid but a small portion of the amount due his client.
We have carefully examined the record in this case and agree with the Board of Governance that appellant committed a violation of the Act of April 14, 1834, P. L. 333, section 74, which reads: "If any such attorney shall retain money belonging to his client, after demand made by the client for the payment thereof, it shall be the duty of the court to cause the name of such attorney to be stricken from the record of the attorneys, and to prevent him from prosecuting longer in the said court." Here it is quite clear that appellant used money of his client for his own purpose and was unable to pay it over upon demand. When an attorney is guilty of the unlawful retention of a client's money his right to practice law should be withdrawn:Kraus's Case, 322 Pa. 362, 363.
While the facts of this case are not as aggravated as those of some of the other disbarment cases, nevertheless there is no other alternative but to inflict the penalty of disbarment:Breslin's Appeal, 316 Pa. 392. This is made mandatory by the provisions of the Act of 1834, supra. We, therefore, approve the recommendation *Page 407
of the Board of Governance, and order that the appellant, Michael A. Wolak, be disbarred from the practice of law. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3850263/ | I would affirm the action of the learned court below in entering judgment n. o. v. for defendant company on the ground that no negligence was shown, on the following excerpts from the court's opinion. "The testimony indicates that just before the collision the trolley car was stopped at a time when the automobile was thirty feet away but the auto continued in its course and crashed into the trolley car. *Page 117
"The plaintiff Charles A. McCuen called the defendant Alfred P. Brown on cross examination. Part of Brown's testimony seeks to place the blame for the occurrence upon the motorman. However, on cross examination by the defendant the Philadelphia Rapid Transit Company, Brown admitted that a statement which he had made in writing and signed told the correct story of this accident. An examination of his testimony which appears on page 132 of the transcript and continues on page 133, leaves no doubt that he is emphatic in declaring that the statement with which he was confronted is true. The statement flatly contradicts the testimony which he gave at the trial, and is in part as follows:
'I was operating my Dodge sedan, Pennsylvania License CF923, southwest on Grays Ferry Avenue on the right-hand side about one foot from the curb at not over twenty miles per hour. Just above 24th Street, a pedestrian started to step off the curb. I swerved to my left into a trolley which was coming northeast, injuring myself and a passenger in my car.
Q. Did you see the trolley coming?
A. I did not until it was on top of me.'
"Under these circumstances we could not permit the jury to attempt to reconcile the conflict which exists between this statement and his other testimony. The situation is controlled by the opinion in Cox vs. Wilkes-Barre Railway Corporation,340 Pa. 554, which in turn followed Black vs. Philadelphia RapidTransit Company, 239 Pa. 463."
It is conceded that without the testimony of Brown, there is no evidence of negligence of defendant company to submit to a jury. *Page 118 | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2773381/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 14-‐‑1892 & 14-‐‑1908
UNITED STATES OF AMERICA,
Plaintiff-‐‑Appellee,
v.
THOMAS HAWKINS and JOHN W. RACASI,
Defendants-‐‑Appellants.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 12 CR 528 — John J. Tharp, Jr., Judge.
____________________
ARGUED JANUARY 7, 2015 — DECIDED JANUARY 26, 2015
____________________
Before WOOD, Chief Judge, and POSNER and EASTERBROOK,
Circuit Judges.
EASTERBROOK, Circuit Judge. Thomas Hawkins and John
Racasi were employed as analysts on the staff of Larry Rog-‐‑
ers, a member of the Cook County Board of Review, when
they accepted money from Ali Haleem, a corrupt Chicago
police officer acting as an undercover agent in order to re-‐‑
duce the penalties for his own crimes. The Board of Review
hears complaints by property owners who believe that the
2 Nos. 14-‐‑1892 & 14-‐‑1908
assessed valuation (which affects real-‐‑estate taxes) is exces-‐‑
sive. Haleem paid Hawkins and Racasi to arrange for lower
assessments. They took his money, and the assessments
were reduced, except for one parcel about which the protest
was untimely. A jury found that Hawkins and Racasi had
violated 18 U.S.C. §666 (theft or bribery concerning pro-‐‑
grams receiving federal funds) and §1341 (mail fraud), plus
corresponding prohibitions of conspiracy. Hawkins and
Racasi contend that they committed a different offense—
they assert that they took the money with the intent to de-‐‑
ceive Haleem and did nothing in exchange for the cash—and
that the jury convicted them of the indictment’s charges only
because it was improperly instructed.
The parties agree that Cook County is covered by §666
and that the financial effect of the lower assessed valuations
exceeds the $5,000 required for a conviction. Section
666(a)(1)(B) provides that any agent of a covered organiza-‐‑
tion who “corruptly solicits or demands for the benefit of
any person, or accepts or agrees to accept, anything of value
from any person, intending to be influenced or rewarded in
connection with any business, transaction, or series of trans-‐‑
actions of such organization” commits a felony. The prosecu-‐‑
tor contended, and the jury found, that Hawkins and Racasi
took Haleem’s money “intending to be influenced or re-‐‑
warded” in connection with their jobs as analysts.
They do not complain about the jury instruction on this
element, which told the jury that it must find that they acted
with one of the two forbidden intents: an intent to be influ-‐‑
enced, or an intent to be rewarded. Their theory of defense—
that they took the money planning to deceive Haleem—
amounted to a confession of accepting payment with intent
Nos. 14-‐‑1892 & 14-‐‑1908 3
to be “rewarded” for their positions. This part of §666 for-‐‑
bids taking gratuities as well as taking bribes. See United
States v. Anderson, 517 F.3d 953, 961 (7th Cir. 2008); United
States v. Ganim, 510 F.3d 134, 150 (2d Cir. 2007); United States
v. Zimmerman, 509 F.3d 920, 927 (8th Cir. 2007); United States
v. Agostino, 132 F.3d 1183, 1195 (7th Cir. 1997). Contra, United
States v. Fernandez, 722 F.3d 1, 22–26 (1st Cir. 2013). (Defend-‐‑
ants have not asked us to overrule Anderson and Agostino in
favor of the position taken in Fernandez.) The record shows
that the payments were, if not bribes, then gratuities (from
defendants’ perspectives) even if Haleem would have pre-‐‑
ferred to get something for his money. The jury may well
have found that defendants intended to be influenced; but if
they did not, then they intended to be rewarded for the posi-‐‑
tions they held, if not for services delivered. They are guilty
either way.
The contrary argument rests on the word “corruptly”.
Hawkins and Racasi maintain that, to show that they acted
corruptly, the prosecutor must prove that they took the
money intending to perform an official act in exchange. The
judge thought otherwise and told the jury that a covered
agent acts “corruptly” if he takes money “with the under-‐‑
standing that something of value is to be offered or given to
reward or influence him in connection with his official du-‐‑
ties.” In other words, the “corruption” entails the payee’s
knowledge that the payor expects to achieve a forbidden in-‐‑
fluence or deliver a forbidden reward. This definition of
“corruptly” comes from the Seventh Circuit’s Pattern Crimi-‐‑
nal Jury Instructions (2012 ed.) for §666 (see page 205), which
derived it from United States v. Bonito, 57 F.3d 167, 171 (2d
Cir. 1995). This court has used the same definition of “cor-‐‑
4 Nos. 14-‐‑1892 & 14-‐‑1908
ruptly” in a prosecution under 18 U.S.C. §201. See United
States v. Peleti, 576 F.3d 377, 382 (7th Cir. 2009).
Defendants want us to overrule Peleti and disapprove
Bonito. We shall do neither. Defendants treat the word “cor-‐‑
ruptly” as effectively removing the statute’s prohibition of
taking money as a “reward”. Using one statutory word to
blot out another would be unsound. The understanding in
Peleti and Bonito leaves work for all words in this statute. As
defined in the instruction, agents of a covered jurisdiction
act corruptly if they know that the payor is trying to get them
to do the acts forbidden by the statute, and they take the
money anyway. That’s a sensible definition of “corruptly”.
As this jury was instructed, Hawkins and Racasi could be
convicted only if (a) the payee intended to be influenced
(that is, to perform some quid pro quo) or rewarded; (b) the
payor intended to influence or reward the defendants, and
(c) the payee knew the payor’s intent. That is a triple safe-‐‑
guard against criminalizing innocent acts. (Though it does
not matter to the instructions issue, we add that Haleem’s
payments were not small, and the recorded conversations
show that they were not innocent.)
The convictions under §1341 pose a different problem.
The mail-‐‑fraud statute is not as detailed as §666. It prohibits
schemes to defraud that use the mails but does not elaborate.
Hawkins and Racasi may have defrauded Haleem out of his
money (this was their defense!), but that was not the prosecu-‐‑
tor’s theory. The United States relied on 18 U.S.C. §1346,
which defines scheme to defraud as including “a scheme or
artifice to deprive another of the intangible right of honest
services.” The idea is that the employer has a right to loyalty
from agents and employees, and the prosecutor contended
Nos. 14-‐‑1892 & 14-‐‑1908 5
that Hawkins and Racasi deprived Cook County of their
loyal services by taking Haleem’s money secretly. But “hon-‐‑
est services” is open-‐‑ended, and in Skilling v. United States,
561 U.S. 358 (2010), the Justices deflected a contention that it
is so open-‐‑ended as to be unconstitutionally vague. They did
this by holding that §1346 covers only bribery and kickbacks.
This means that an agent’s secret receipt of a gratuity (a
“reward” in the language of §666) does not violate §1341, for
a payment that does not entail a plan to change how the em-‐‑
ployee or agent does his job is neither a bribe nor a kickback.
The district court instructed the jury that it could convict
defendants under §1341 only if they “intended to deprive
another of the intangible right to honest services through
bribery.” So far, so good. (The instructions did not mention
kickbacks, because the prosecutor did not allege any.) But
the instructions then defined bribery this way:
A defendant commits bribery when he, while acting as an agent
of government, or any agency of that government, such as Cook
County, solicits, demands, accepts, or agrees to accept, anything
of value from another person corruptly intending to be influ-‐‑
enced or rewarded in connection with some business, transac-‐‑
tion or series of transactions of the government or government
agency.
Under this instruction, defendants committed “bribery” if
they took Haleem’s money “intending to be … rewarded”
for their official positions, even if they did not plan to lift a
finger to reduce the properties’ assessed valuations. Treating
a gratuity as a bribe transgresses Skilling. The word “cor-‐‑
ruptly” in this instruction does not save it, given the way a
different instruction defined “corruptly” (a subject we dis-‐‑
cussed above).
6 Nos. 14-‐‑1892 & 14-‐‑1908
The district judge devised the definition of bribery on his
own. The prosecutor had proposed this language, from the
2012 edition of the Pattern Criminal Jury Instructions:
A defendant commits bribery when he demands, solicits, seeks,
or asks for, or agrees to accept or receive, or accepts or receives,
directly or indirectly, something of value from another person in
exchange for a promise for, or performance of, an official act.
The judge drafted an instruction that tracks §666 (by includ-‐‑
ing “reward”) rather than use the circuit’s pattern instruc-‐‑
tion for §1341 because, he said, the jury would be confused if
the §666 and §1341 charges were treated differently. Yet if
the statutes are different, the jury must be told.
The United States now defends the district judge’s in-‐‑
struction despite its use of “reward.” It contends that treat-‐‑
ing a gratuity as a bribe is consistent with Skilling because, in
the course of a lengthy opinion, the Supreme Court cited 18
U.S.C. §201(b), the principal bribery statute for federal em-‐‑
ployees, see 561 U.S. at 412 & n.45, and §201(b) permits con-‐‑
viction on proof that the defendant accepted a reward. But
that’s not what Skilling says. It reversed Skilling’s conviction
because he did not accept anything of value “in exchange
for” making misrepresentations to Enron’s investors. 561
U.S. 413. If accepting some reward were enough, then Skil-‐‑
ling’s conviction would have been affirmed—for the theory
in Skilling’s own mail-‐‑fraud prosecution was that he had
been rewarded (by his salary) for his services during a time
when Enron violated the securities laws. The Justices
thought that bribery entails a quid pro quo (planned or real-‐‑
ized), not just a receipt of money. And §201 says the same
thing. Section 201(b)(2) provides that whoever
Nos. 14-‐‑1892 & 14-‐‑1908 7
being a public official … directly or indirectly, corruptly de-‐‑
mands, seeks, receives, accepts, or agrees to receive or accept an-‐‑
ything of value personally or for any other person or entity, in
return for:
(A) being influenced in the performance of any official act;
(B) being influenced to commit or aid in committing, or to
collude in, or allow, any fraud, or make opportunity for the
commission of any fraud, on the United States; or
(C) being induced to do or omit to do any act in violation of
the official duty of such official or person
commits bribery. Subsection (b) requires proof that the pub-‐‑
lic official demanded or took money in exchange for doing
or omitting some official act. Accepting a “reward” for doing
something the official would have done anyway does not
violate §201(b). By contrast, §201(c), to which Skilling did not
refer when identifying “bribery”, prohibits some kinds of
rewards, though far from all. United States v. Sun-‐‑Diamond
Growers of California, 526 U.S. 398 (1999).
The United States maintains that proof of a completed
exchange is not essential, and that’s right. A plan to take
money in exchange for an official act constitutes a scheme to
defraud, whether or not the plan succeeds. We agree with
this aspect of decisions such as United States v. McDonough,
727 F.3d 143, 159–60 (1st Cir. 2013); United States v. Rosen, 716
F.3d 691, 700–02 (2d Cir. 2013); and United States v. Bryant,
655 F.3d 232, 244–45 (3d Cir. 2011), on which the prosecutor
relies. But none of these opinions holds that accepting a “re-‐‑
ward” without doing anything in exchange—or ever plan-‐‑
ning to—is “bribery” that can support a mail-‐‑fraud convic-‐‑
tion after Skilling. That’s the problem in this instruction.
8 Nos. 14-‐‑1892 & 14-‐‑1908
The United States weakly argues that any error was
harmless, but that contention relies entirely on the undisput-‐‑
ed fact that the defendants told Haleem that payments
would induce them to lower the assessments. Yet defendants
contend that they were lying. If they were indeed lying, then
they can’t be convicted under §1341, even though the convic-‐‑
tions under §666 are valid. The definition of “bribery” in the
instructions allowed the jury to bypass the question whether
Hawkins and Racasi were scamming Haleem rather than
Cook County. The error therefore cannot be called harmless,
and defendants are entitled to a new trial of the mail-‐‑fraud
charges.
Because the subject may occur on resentencing—
immediately if the United States elects to dismiss rather than
retry the mail-‐‑fraud charges, later if a new trial is held—we
discuss defendants’ contention that the judge erred by en-‐‑
hancing their offense levels under U.S.S.G. §2C1.1(b)(3). This
provision reads: “If the offense involved an elected public
official or any public official in a high-‐‑level decision-‐‑making
or sensitive position, increase by 4 levels. If the resulting of-‐‑
fense level is less than level 18, increase to level 18.” The
judge concluded that Hawkins and Racasi each occupied “a
high-‐‑level decision-‐‑making or sensitive position”. They
maintain, to the contrary, that they served in menial posi-‐‑
tions with only ministerial functions.
Cook County updates real-‐‑estate assessments every three
years. Taxpayers dissatisfied with a new valuation may
complain to the Board of Review. Each of the Board’s three
commissioners employs analysts, and a protest is assigned
initially to an analyst for one of the commissioners (unless
the owner requests a formal hearing, as Haleem did not).
Nos. 14-‐‑1892 & 14-‐‑1908 9
Cook County assigns every parcel an index number. An ana-‐‑
lyst types the index number into a computer; the database
software responds with a list of other parcels located near
the one in question, together with their assessed values. The
analyst is supposed to choose the other parcels most similar
to the one in question; the computer then changes the as-‐‑
sessment to make it more like the parcels selected as compa-‐‑
rable. (Note that this compares one assessment against oth-‐‑
ers, rather than the contested assessment against market
transactions; we have not been asked to decide whether this
is a sensible procedure.)
Data show that this procedure leads to some reduction
79% of the time, and the parties agree that commissioners
tell their staffs to favor modest reductions to keep constitu-‐‑
ents happy. If the first analyst recommends a reduction, the
file goes to an analyst for a second commissioner and then a
third; the majority rules. Neither the second nor the third
analyst repeats the work done by the first, unless something
in the file suggests that comparable properties have been
generated or compared improperly.
These facts set up the dispute: defendants say that ana-‐‑
lyst cannot be a “high-‐‑level” or “sensitive” position, because
the software limits the choice of comparable parcels and oth-‐‑
er analysts could outvote them. (The record does not show
what functions, if any, the commissioners themselves per-‐‑
form.) The prosecutor replied that analysts have effectively
unlimited discretion to choose which parcels on the comput-‐‑
er-‐‑generated list to use for comparison and that the choice of
comparable properties determines the outcome of the own-‐‑
er’s protest. The prosecutor illustrated this by pointing out
that Hawkins told Haleem that he could reduce the assess-‐‑
10 Nos. 14-‐‑1892 & 14-‐‑1908
ment of a parcel substantially by comparing it with another
parcel that was “just a lot.” The district judge sided with the
prosecutor and did not err in doing so. How much discretion
a particular person possesses is a question of fact. The dis-‐‑
trict judge resolved the factual dispute against defendants
without committing a clear error; and given that finding the
application of §2C1.1(b)(3) is not an abuse of discretion.
It is perplexing that the parties have devoted so much at-‐‑
tention to this subject, because the district judge imposed
sentences well below the Guideline range of 33 to 41 months
for each defendant: 24 months for Hawkins and 18 months
for Racasi. The judge did not imply that the sentences would
have been lower still, had he resolved the §2C1.1(b)(3) issue
in defendants’ favor. We have encouraged district judges to
bypass debatable issues in the calculation of Guideline rang-‐‑
es if the issues turn out not to matter, and to state on the rec-‐‑
ord whether the sentence would have been the same if the
debated issue had come out the other way. See, e.g., United
States v. Lopez, 634 F.3d 948, 953–54 (7th Cir. 2011); United
States v. Sanner, 565 F.3d 400, 405–06 (7th Cir. 2009); cf. Peugh
v. United States, 133 S. Ct. 2072, 2088 n.8 (2013) (a mistake in
calculating the Guidelines level is harmless if the sentencing
judge makes clear that the disputed issue did not affect the
sentence). We encourage the district judge to follow that ap-‐‑
proach if a further dispute crops up on remand.
The §666 convictions are affirmed and the §1341 convic-‐‑
tions vacated. The cases are remanded for further proceed-‐‑
ings consistent with this opinion. | 01-03-2023 | 01-26-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2771737/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted January 20, 2015*
Decided January 21, 2015
Before
RICHARD A. POSNER, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
DIANE S. SYKES, Circuit Judge
No. 14‐2635
HORACE TOWNSEND, Appeal from the United States District
Plaintiff‐Appellant, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 13 C 1881
ALEXIAN BROTHERS MEDICAL
CENTER and ANNE MARIE HERLEHY, Amy J. St. Eve,
Defendants‐Appellees. Judge.
O R D E R
Horace Townsend appeals the grant of summary judgment for the defendants in
this lawsuit claiming employment discrimination and retaliation under 42 U.S.C. § 1981
and Title VII of the Civil Rights Act of 1964. Townsend, who is now 24, claimed that his
former employer, Alexian Brothers Medical Center, and an administrator in charge of
surgical technologists, Anne Marie Herlehy, had refused to promote him because he is
male and black, and then retaliated when he complained. Townsend asserted that
* After examining the briefs and record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and record. See FED. R. APP.
P. 34(a)(2)(C).
No. 14‐2635 Page 2
discrimination and retaliation were evident since he was not promoted to any of the nine
postings for which he applied. The defendants countered that most of those postings
were canceled and anyway he was not qualified for those that were filled. The district
court, in granting the defendants’ motion and denying Townsend’s cross‐motion for
summary judgment, concluded that in relying on the indirect method of McDonnell
Douglas Corp. v. Green, 411 U.S. 792, 802 (1973), Townsend had not established a prima
facie case of discrimination or retaliation. We affirm that decision.
At summary judgment Townsend failed to comply with Local Rule 56.1, which
governs parties’ submissions. He did not file a Statement of Material Facts to support his
own motion, nor did he properly respond to the defendants’ Statement of Material Facts
or file a Statement of Additional Facts in response to the defendants’ motion for
summary judgment. See N.D. ILL. CIV. L.R. 56.1(a)(3), (b)(3); Petty v. City of Chicago,
754 F.3d 416, 420 (7th Cir. 2014). Instead, Townsend simply attached stacks of
documents to memoranda containing factual assertions and argument. Thus, the district
court adopted the factual representations in the defendants’ unopposed Rule 56.1
Statement of Material Facts, and we enforce the court’s choice to demand strict
compliance with the local rule. See Patterson v. Ind. Newspapers, Inc., 589 F.3d 357, 360 (7th
Cir. 2009); Fed. Trade Comm’n v. Bay Area Bus. Council, Inc., 423 F.3d 627, 633 (7th Cir.
2005). Even pro se litigants such as Townsend must follow the Rules of Civil Procedure.
See McNeil v. United States, 508 U.S. 106, 113 (1993); Cady v. Sheahan, 467 F.3d 1057, 1061
(7th Cir. 2006). With that in mind, we recount the undisputed evidence, construing all
facts and reasonable inferences in the light most favorable to Townsend. See Hutt v.
AbbVie Prods. LLC, 757 F.3d 687, 691 (7th Cir. 2014).
Townsend started working as a patient transporter at Alexian Brothers, a
not‐for‐profit religious‐based hospital, in January 2011. That April the hospital posted
vacancy announcements for two surgical technologists. Both advertised positions
required completion of a one‐year surgical‐technologist course and preferably national
certification in that specialty. Townsend, who had completed the course but was not
certified, did not qualify for these—or any other promotion—because the hospital
required that employees complete a full year of work before becoming eligible to
transfer into a different job. Nevertheless, he applied for both positions but was not
selected for either. One of the vacancy announcements was eventually canceled because
of budget concerns. In June the hospital offered the remaining position to a woman who
accepted the job but changed her mind before starting, and after that a different woman
was hired. There is no evidence about the race of either woman. Townsend questioned
defendant Herlehy about being rebuffed for these positions, and she advised that he
No. 14‐2635 Page 3
needed more experience to qualify. The successful applicant began working as a surgical
technologist in January 2012, and by then she had graduated from a program and
become certified.
Over the next two years, Townsend applied five more times for jobs as a surgical
technologist without success. Two of the postings were canceled, two of the positions
were reclassified to other jobs, and the remaining opening (which was not even posted
until after this suit was filed) was awarded to an applicant who was certified, a
qualification that Townsend still had not achieved. Moreover, one of the positions that
eventually was reclassified had been offered to a black male who accepted but then
changed his mind. The hospital did interview Townsend on one occasion but concluded
that he was unqualified because he did not satisfactorily answer questions about
operating‐room procedures.
Miffed about being rejected for the April 2011 postings, Townsend already had
filed a charge of discrimination with the Illinois Department of Human Rights and the
Equal Employment Opportunity Commission even before he applied for the five later
postings. Townsend would later allege in his motion for summary judgment that the
hospital then retaliated by not selecting him for two emergency‐room registrar positions
and that the manager of patient‐transportation services retaliated by threatening to
discipline him for bogus infractions, inappropriately changing his work schedule, and
refusing to give him time off when his father passed away. The Department of Human
Rights eventually dismissed Townsend’s complaint, and the EEOC issued a right‐to‐sue
letter in May 2013. By the time Townsend filed this action, he no longer was employed
by Alexian Brothers, but only because the hospital had contracted with a third party for
patient transportation. Townsend continues to perform the same duties for this
contractor. As far as we can tell, Herlehy is named as a defendant only because she had
the final say in hiring surgical technologists.
The district court concluded that a jury could not reasonably find that Townsend
was subjected to discrimination or retaliation. The court reasoned that Townsend could
not demonstrate he was qualified for the April 2011 postings for a surgical technologist
because he had not worked at the hospital for a year to meet its threshold qualification
for an interdepartmental transfer. Moreover, the court explained, Townsend could not
demonstrate that the hospital had hired someone less qualified, since it had canceled one
position and filled the other with a certified surgical technologist, which Townsend was
not. As for Townsend’s five later applications for a position as a surgical technologist,
only the last job was filled, and the court concluded that a jury could not reasonably infer
No. 14‐2635 Page 4
discrimination because the hospital again had hired a certified surgical technologist,
which Townsend still was not. And, finally, regarding Townsend’s claim of retaliation
for filing an administrative charge of discrimination, the district court observed that
Townsend had submitted no evidence about the registrar positions or that the manager
of patient transportation even knew about the administrative charge at the time of the
alleged retaliatory conduct. The district court dismissed the case “in its entirety” and
terminated the action. (That language imparts finality, even though Townsend questions
whether the court resolved all of his claims. See Ennenga v. Starns, 677 F.3d 766, 772
(7th Cir. 2012); Hill v. Potter, 352 F.3d 1142, 1144 (7th Cir. 2003).)
On appeal Townsend essentially argues that the district court erred in not
crediting his evidence of racial and sex discrimination and retaliation. But we have
already noted that the district court was entitled to enforce Local Rule 56.1 by accepting
the defendants’ Statement of Material Facts because Townsend’s response was
inadequate, see Apex Digital, Inc. v. Sears, Roebuck & Co., 735 F.3d 962, 965 (7th Cir. 2013),
and Townsend fails to provide us with an “articulable basis for disturbing the district
court’s judgment,” Anderson v. Hardman, 241 F.3d 544, 545 (7th Cir. 2001). Again, pro se
litigants must adhere to procedural rules, Pearle Vision, Inc. v. Romm, 541 F.3d 751, 758
(7th Cir. 2008), including Rule 28(a)(8)(A) of the Federal Rules of Appellate Procedure,
which requires that the appellant’s brief contain an argument that includes “contentions
and the reasons for them, with citations to the authorities and parts of the record on
which the appellant relies.” Townsend does not comply with this rule but instead
merely presents a rerun of his show before the district court, along with arbitrary case
citations and disconnected references to inadmissible evidence. Thus, his brief presents
us with no developed appellate claim to review. See Ball v. City of Indianapolis, 760 F.3d
636, 645 (7th Cir. 2014).
Accordingly, the judgment of the district court is AFFIRMED. | 01-03-2023 | 01-21-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2777309/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued January 27, 2015
Decided February 5, 2015
Before
RICHARD A. POSNER, Circuit Judge
DIANE S. SYKES, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
No. 14-1964
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff-Appellee, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 12 CR 440-1
LOZARO CORRAL,
Defendant-Appellant. Virginia M. Kendall,
Judge.
ORDER
Lozaro Corral was prosecuted in federal court after selling several guns to an
informant. He pled guilty to two counts of possessing a firearm as a felon in violation of
18 U.S.C. § 922(g)(1). At sentencing, Corral’s lawyer argued for a below-guideline prison
sentence based on extraordinary family circumstances and a criminal history score that
overrepresented the seriousness of Corral’s prior convictions. The district court rejected
these contentions and sentenced Corral to two consecutive terms of 70 months each, for a
total sentence of 140 months in prison, which was within the sentencing guideline range
determined by the district court. Corral has appealed. We affirm his sentence.
No. 14-1964 Page 2
After Corral pled guilty, a probation officer calculated a total offense level of 29
and criminal history category of IV, yielding a guideline imprisonment range of 121 to
151 months. Corral’s criminal history includes an Illinois conviction for second-degree
murder, as well as convictions for domestic battery, possession of cannabis, and
contributing to the delinquency of a minor. He committed the federal gun crimes while
on court supervision for the domestic battery. The probation officer noted that Corral
had been caring for his son, then six years old, and for his father, who was in poor
health. Corral had informed the probation officer, however, that he and the boy’s mother
also had a two-year-old daughter and that soon the woman and both children would be
sharing a house with his father.
Through his counsel in a written submission and again at the sentencing hearing,
Corral argued for a prison term below the guideline range. He first asserted that his
criminal history score was exaggerated by the points assessed on his convictions for
possession of cannabis and delinquency of a minor (characterized as a drinking offense).
Corral also asserted that his “minor” domestic battery had significantly increased his
criminal history score because two additional points were added for committing the gun
crimes while on supervision for that offense. Corral tried to minimize the second-degree
murder conviction by explaining that he had not himself killed the victim but was only
involved in a fight during which someone else’s gun accidentally discharged and killed
the victim.
Corral also asserted that he was the sole caretaker of his father and son, who both
lived with him. Corral’s father had suffered a heart attack two years earlier, he said, and
also had seizures, diabetes, and difficulty administering his insulin shots. Corral
submitted a letter from his father’s doctor stating that the father was on insulin, had
diabetes, high blood pressure, and high cholesterol, and did not take his medications as
prescribed. Corral did not contradict (or even acknowledge) his statement to the
probation officer that his father and son were “in the process of relocating” to a home
with the boy’s mother and sister. Corral also did not mention any of this during his brief
allocution, and he did not testify at the sentencing hearing.
The district court adopted the probation officer’s proposed findings and rejected
as grounds for mitigation Corral’s contentions about his criminal history score and
caretaking responsibilities. The court noted that Corral’s criminal history had started at a
young age and escalated, showing that he has trouble with authority. The court found
that Corral’s father’s health conditions were not severe and that his son could live with
the boy’s mother. The court also discussed how crimes like Corral’s fueled increasing
No. 14-1964 Page 3
gun violence in Chicago and reasoned that a guideline-range sentence was needed to
deter other young men from committing similar gun crimes. The judge concluded that a
sentence of 140 months was appropriate.
On appeal, Corral challenges his sentence. His arguments are a little confused, but
the basic dissatisfaction with the sentence is clear. Corral contends that the district court
“miscalculated” the guideline range “by not granting the request for a downward
departure” premised on Corral’s family circumstances and the overrepresentation of his
criminal history. This argument confuses the operation of the sentencing guidelines both
before and after the Supreme Court held in United States v. Booker, 543 U.S. 220 (2005),
that the sentencing guidelines must be treated as advisory rather than binding.
Before Booker a sentencing court could grant an upward or downward departure
and impose a prison sentence above or below the calculated guideline range. But a
departure within the overall framework of the guidelines did not alter the guideline
range itself. See, e.g., United States v. Ortega-Galvan, 682 F.3d 558, 561–62 (7th Cir. 2012);
United States v. Guyton, 636 F.3d 316, 319–20 (7th Cir. 2011). That was true even though
sentencing judges sometimes spoke of adding or subtracting offense levels or criminal
history points in crafting a hypothetical “departure range” to guide the degree of a
departure from a calculated range. See United States v. Johnson, 427 F.3d 423, 425 (7th Cir.
2005); United States v. Leahy, 169 F.3d 433, 445 (7th Cir. 1999); United States v. Sarna, 28
F.3d 657, 658-60, 663 (7th Cir. 1994).
After Booker the concept of “departures” has been supplemented by aggravating
and mitigating factors that, in applying the sentencing factors in 18 U.S.C. § 3553(a), may
lead to a variance from the guideline range regardless of whether the case fits the criteria
for a departure within the framework of the guidelines. See U.S.S.G. § 1B1.1 (method for
applying guidelines after Booker); United States v. Brown, 732 F.3d 781, 786 (7th Cir. 2013);
United States v. Lucas, 670 F.3d 784, 791 (7th Cir. 2012). Yet post-Booker variances, like
pre-Booker departures, leave the guideline range itself unchanged. See United States v.
Munoz, 610 F.3d 989, 994–95 (7th Cir. 2010); United States v. Miranda, 505 F.3d 785, 791
(7th Cir. 2007); United States v. Simmons, 485 F.3d 951, 954–55 (7th Cir. 2007). In other
words, the score remains the score even if a sentencing judge concludes that an
aggravating or mitigating circumstance warrants a sentence outside the actual guideline
range.
Corral has not identified, either in the district court or this court, an arguable error
in the calculation of the guideline range. His appellate claim is thus not really about the
No. 14-1964 Page 4
calculation of the guideline range. Nor does he contend that the district court failed to
consider his arguments in mitigation. Corral therefore has not identified any procedural
error in his sentencing. His arguments on appeal amount to a disagreement with the
district court’s weighing of the § 3553(a) factors, which is an issue of substantive
reasonableness.
To rebut the presumption that his within-guideline sentence is reasonable, Corral
must show that the district court’s reasoning was not consistent with the § 3553(a)
factors. See Rita v. United States, 551 U.S. 338, 347 (2007); United States v. Banks, 764 F.3d
686, 690 (7th Cir. 2014); United States v. Williams, 436 F.3d 767, 768–69 (7th Cir. 2006).
Here, the court weighed the § 3553(a) factors, including Corral’s family circumstances,
his criminal history, and the seriousness of the firearms crimes. The court explained that
Corral’s circumstances did not warrant a lighter sentence, especially when weighed
against his violent history and the effect of gun crimes on communities. Weighing
aggravating and mitigating factors is the heart of the district judge’s heavy responsibility
in deciding criminal sentences. The record here shows that Judge Kendall gave this case
thoughtful consideration, calculated the guideline range correctly, weighed the
appropriate factors, and reached a reasonable conclusion. Accordingly, the sentence
imposed on defendant Corral is
AFFIRMED. | 01-03-2023 | 02-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2804449/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-2983
SHANE KERVIN,
Plaintiff-Appellant,
v.
LA CLAIR BARNES, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, South Bend Division.
No. 3:14-cv-00379-JTM-CAN — James T. Moody, Judge.
____________________
SUBMITTED APRIL 14, 2015 — DECIDED MAY 29, 2015
____________________
Before POSNER, FLAUM, and ROVNER, Circuit Judges.
POSNER, Circuit Judge. Shane Kervin, an inmate of an In-
diana prison, appeals the dismissal of his suit in which, in-
voking 42 U.S.C. § 1983, he alleges that prison officials vio-
lated his constitutional rights because of his insisting on be-
ing allowed to see his lawyer, who had come to the prison to
speak with him. He contends that he was placed in segrega-
tion as punishment for insisting on keeping his appointment
with the lawyer and denied his right to due process of law
2 No. 14-2983
when his attempts to seek redress through the prison’s
grievance system for his wrongful punishment were thwart-
ed by biased grievance officers. The district judge dismissed
the suit on the pleadings.
A prison guard forbade Kervin to enter the prison’s visit-
ation room to meet with his lawyer. (We’ve not been told the
purpose of the meeting.) The guard relented after some
minutes and permitted the meeting, but according to Kervin
told him he’d write up a false report and have him placed in
segregation. And indeed it appears that Kervin was forced to
serve up to 30 days in segregation and temporarily (we do
not know for how long) denied telephone and commissary
privileges—punishments that he says he was unable to avert
because of the hostility to him of the prison’s grievance of-
ficers.
The district judge gave Kervin two opportunities to
amend his complaint in order to clarify his claims, but was
dissatisfied with Kervin’s response and after screening the
complaint pursuant to 28 U.S.C. § 1915A for nonfrivolous
claims ruled that Kervin had failed to state a valid claim. The
complaint itself alleged that despite the guard’s threat to file
a false report Kervin had been punished for defying the
guard’s order by asking to be let out of the day room to meet
with his lawyer after being told that he could not leave the
room just yet. So either the guard did not file a false report
despite his threat to do so or the report was disregarded, for
by Kervin’s own account it was not the basis of his punish-
ment—his backtalk was. And backtalk by prison inmates to
guards, like other speech that violates prison discipline, is
not constitutionally protected. Ustrak v. Fairman, 781 F.2d
573, 580 (7th Cir. 1986) (“We can imagine few things more
No. 14-2983 3
inimical to prison discipline than allowing prisoners to
abuse guards and each other. The level of violence in Ameri-
can prisons makes it imperative that the authorities take ef-
fective steps to prevent provocation”); see also Watkins v.
Kasper, 599 F.3d 791, 799 (7th Cir. 2010); Bridges v. Gilbert, 557
F.3d 541, 551 (7th Cir. 2009); Gee v. Pacheco, 627 F.3d 1178,
1187–88, 1191 (10th Cir. 2010).
Kervin further argues that he was punished not for his
insubordinate speech but rather for meeting with, and pre-
sumably talking to, his lawyer, which he also claims was
protected speech. But we aren’t told anything about the law-
yer’s meeting with Kervin, and so we don’t know whether it
involved any protected speech.
As for Kervin’s due process claim, the judge ruled that
neither the loss of privileges was a severe enough sanction,
nor his time in segregation long enough, to deprive him of
any liberty protected by the due process clause of the Four-
teenth Amendment.
The judge further ruled that Kervin’s claim against the al-
legedly hostile grievance officers failed because they had not
blocked him from pursuing his grievances in court. The
Prison Litigation Reform Act does not require a state to cre-
ate a grievance procedure for its prison inmates, 42 U.S.C.
§ 1997e(b), though if it does yet prevents a prisoner from uti-
lizing it he will be excused from having to exhaust the griev-
ance process as a prerequisite to suing in federal court on the
ground that the grievance is of federal constitutional magni-
tude. Kaba v. Stepp, 458 F.3d 678, 684–86 (7th Cir. 2006). But
the inadequacies of the grievance procedure itself, as distinct
from its consequences, cannot form the basis for a constitu-
tional claim. Bridges v. Gilbert, supra, 557 F.3d at 555;
4 No. 14-2983
Grieveson v. Anderson, 538 F.3d 763, 772–73 (7th Cir. 2008);
Adams v. Rice, 40 F.3d 72, 75 (4th Cir. 1994).
The district judge rejected Kervin’s complaint about the
grievance proceedings not because of Kervin’s ability to liti-
gate his grievance, however, but rather because his stints in
segregation and denial of telephone and commissary privi-
leges were, the judge decided, neither “atypical” nor “signif-
icant,” hence not “a dramatic departure from the basic con-
ditions of [the prisoner’s] sentence.” And so, consistently
with Sandin v. Conner, 515 U.S. 472, 484–85 (1995), from
which we’ve been quoting, Kervin hadn’t been deprived of
liberty.
The Supreme Court has noted that “in Sandin’s wake the
Courts of Appeals have not reached consistent conclusions
for identifying the baseline from which to measure what is
atypical and significant in any particular prison system. This
divergence indicates the difficulty of locating the appropri-
ate baseline.” Wilkinson v. Austin, 545 U.S. 209, 223 (2005) (ci-
tations omitted). Compare Beverati v. Smith, 120 F.3d 500, 504
(4th Cir. 1997), which thought disgusting conditions of ad-
ministrative segregation not to be actionable because they
had lasted for “only” six months, with Hatch v. District of Co-
lumbia, 184 F.3d 846, 858 (D.C. Cir. 1999), holding that 29
weeks (a shade over six months) in administrative segrega-
tion could be actionable even though the conditions of seg-
regation, although restrictive, were not unsanitary or other-
wise disgusting, id. at 854—were not, as alleged in Beverati,
“infested with vermin,” “smeared with human feces and
urine,” “flooded with water from a leak in the toilet on the
floor above,” etc. 120 F.3d at 504. Wilkerson v. Goodwin, 774
F.3d 845, 853 (5th Cir. 2014), and Brown v. Oregon Department
No. 14-2983 5
of Corrections, 751 F.3d 983, 988 (9th Cir. 2014), sensibly sug-
gest that the severity of treatment should be combined with
its duration in assessing the gravity of the conditions com-
plained of by the prisoner. See also Keenan v. Hall, 83 F.3d
1083, 1089 (9th Cir. 1996). But this need not imply that a rigid
six-month period of inhuman confinement is a condition
precedent to a deprivation of a prisoner’s constitutionally
protected liberty.
Marion v. Radtke, 641 F.3d 874, 876 (7th Cir. 2011), points
out that that “the right comparison is between the ordinary
conditions of a high-security prison in the state, and the
conditions under which a prisoner is actually held.” That
doesn’t say a great deal, however, because the critical ques-
tion is how far the treatment of the complaining inmate de-
viates from those ordinary conditions. And what if the in-
mate is an elderly person convicted of a nonviolent crime
such as bank fraud and serving his prison term in a mini-
mum-security prison; wouldn’t it be “atypical” and “signifi-
cant” for him to be sent to a high-security prison for a trivial
disciplinary infraction?
Meachum v. Fano, 427 U.S. 215 (1976), contains language
to the effect that moving a prisoner from a lower-security to
a higher-security prison does not deprive him of liberty pro-
tected by the due process clause. But that was a case in
which prisoners were transferred because they were sus-
pected of having committed arson in the lower-security
prison. They had to be transferred, to protect the inmates and
staff of the lower-security prison. It would be a mistake to
extrapolate from those facts a rule that allowed a prisoner to
seek relief for being placed in solitary confinement in his
prison but never for being transferred from a prison in
6 No. 14-2983
which he hadn’t been in solitary confinement to one in
which all prisoners are in solitary (or the common 23-hour
approximation thereto), as at ADX, the federal “Supermax”
prison in Florence, Colorado.
The judge made two errors in finding that Kervin could
not establish a violation of the Sandin standard, though they
were not consequential. The first was to evaluate separately
the gravity of each punishment meted out to him, thereby
failing to assess the aggregate punishments inflicted. We
said in Marion v. Columbia Correctional Institution, 559 F.3d
693, 699 (7th Cir. 2009), that “we must take into considera-
tion all of the circumstances of a prisoner’s confinement in
order to ascertain whether” he has been deprived of liberty
within the meaning of the due process clause. The judge’s
second error was to suggest, echoing the Beverati decision,
that a prisoner must spend at least six months in segregation
before he can complain about having been deprived of liber-
ty without due process of law. A considerably shorter period
of segregation may, depending on the conditions of con-
finement and on any additional punishments, establish a vi-
olation, as held in such cases as Palmer v. Richards, 364 F.3d
60, 65–67 (2d Cir. 2004) (77 days); Mitchell v. Horn, 318 F.3d
523, 527, 532–33 (3d Cir. 2003) (90 days); and Gaines v.
Stenseng, 292 F.3d 1222, 1225–26 (10th Cir. 2002) (75 days).
Six months is not an apt presumptive minimum for es-
tablishing a violation. Judges who lean toward such a pre-
sumption may be unfamiliar with the nature of modern
prison segregation and the psychological damage that it can
inflict. Segregation isn’t just separating a prisoner from one
or several other prisoners. As noted by the Supreme Court in
the Wilkinson case, “almost all human contact is prohibited,
No. 14-2983 7
even to the point that conversation is not permitted from cell
to cell; the light, though it may be dimmed, is on for 24
hours; exercise is for 1 hour per day, but only in a small in-
door room.” 545 U.S. at 223–24. The serious psychological
consequences of such quasi-solitary imprisonment have
been documented. See, e.g., Elizabeth Bennion, “Banning the
Bing: Why Extreme Solitary Confinement is Cruel and Far
Too Usual Punishment,” 90 Indiana Law Journal 741 (2015);
Stuart Grassian, “Psychiatric Effects of Solitary Confine-
ment,” 22 Washington University Journal of Law & Policy 325
(2006); Craig Haney & Mona Lynch, “Regulating Prisons of
the Future: A Psychological Analysis of Supermax and Soli-
tary Confinement,” 23 N.Y.U. Review of Law & Social Change
477 (1997).
Kervin, however, was placed in segregation for at most
30 days and, more importantly, does not allege that he suf-
fered any significant psychological or other injury from it. So
the judge was right to dismiss his suit. But we take this op-
portunity to remind both prison officials and judges to be
alert for the potentially serious adverse consequences of pro-
tracted segregation as punishment for misbehavior in prison,
especially the kind of nonviolent misbehavior involved in
the present case.
AFFIRMED. | 01-03-2023 | 05-29-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2986264/ | Affirmed in Part, Reversed and Remanded in Part, and Majority and Dissenting
Opinions filed August 8, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00066-CV
IGNAZIO LA CHINA, Appellant
V.
THE WOODLANDS OPERATING COMPANY, L.P. D/B/A THE WOODLANDS
RESORT & CONFERENCE CENTER, MS TWC, INC., WECCR, INC.
D/B/A THE WOODLANDS RESORT & CONFERENCE CENTER, THE
WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., WECCR
GENERAL PARTNERSIP, MS HOSPITALITY, L.P., AND MND
HOSPITALITY, INC., Appellees
On Appeal from the 9th District Court
Montgomery County, Texas
Trial Court Cause No. 11-06-06810-CV
DISSENTING OPINION
A water-park patron who suffered injuries as a result of a collision on a
waterslide asserted premises-liability negligence claims against three defendants.
These defendants sought a traditional summary judgment on only one ground—
that they owe no legal duty to the plaintiff because they are not the owners, lessors,
lessees, or managers of the location identified in the plaintiff’s petition, nor the
employers of persons working there. The trial court granted summary judgment.
The only evidence offered in support of the motion was a two-page affidavit
containing conclusory statements, which cannot be the basis for a summary
judgment. Even if the defendants had proved conclusively that they did not
occupy the role of owner, lessor, lessee, or manager of the location and were not
the employer of the persons working there, that would not negate the element of
duty as a matter of law. Therefore, this court should reverse and remand the trial
court’s summary judgment as to these three defendants.
The trial court granted a one-ground motion for traditional summary judgment
based on a two-page conclusory affidavit.
While patronizing a water park at The Woodlands Resort and Conference
Center, appellant/plaintiff Ignazio La China collided with another patron on a
waterslide and sustained injuries to his nose and back. Exactly two years later, La
China brought suit against The Woodlands Operating Company, L.P., d/b/a The
Woodlands Resort & Conference Center; MS TWC, Inc.; and WECCR, Inc. d/b/a/
The Woodlands Resort & Conference Center (collectively, the ―Original
Defendants‖), asserting claims for negligence and gross negligence. La China
alleged the Original Defendants did not have an employee at the top of the
waterslide to regulate traffic and that they failed to reasonably and prudently
protect the safety of water-park patrons.
2
The Original Defendants did not move for a no-evidence summary
judgment, but they did file a motion for traditional summary judgment in which
they made the following assertions:
The [Original Defendants] file this Motion for Summary Judgment
because they are not the owners, lessors, lessees, or managers of the
location complained of by Plaintiff, nor the employer of persons
working there.
...
It is black letter law that one who is not the owner, lessor, lessee,
employer at the premises or manager of a premises does not owe a
legal duty to persons on that premises.
...
In order to succeed in establishing that [the Original Defendants] had
a legal duty to Plaintiff, [the Original Defendants] must be the owners,
lessors, lessees, employers at the location or managers of the location
where the incident is alleged to have occurred.
[The Original Defendants] are not the owners, lessors, lessees,
employers at the location, or managers of the location where the
incident is alleged to have occurred, see Affidavit of A. Karen West,
attached as Exhibit A, hereto. [The Original Defendants] have no
duty associated with that property. Accordingly, they cannot be liable
to Plaintiff as a matter of law.
The only evidence submitted in support of this motion was the two-page affidavit
of A. Karen West. La China opposed this motion and objected that the statements
in the West affidavit are conclusory. The trial court granted the Original
Defendants’ motion and dismissed La China’s claims against them. On appeal, La
China asserts that the trial court erred in granting summary judgment.
3
Because the statements in the West affidavit are conclusory, they are
incompetent to support the trial court’s summary judgment.
Under the Original Defendants’ sole summary-judgment ground, they would
owe no legal duty to La China as a matter of law if they are not the owners, lessors,
lessees, or managers of the location in question, nor the employers of persons
working at that location. To prove their entitlement to summary judgment under
this ground, the Original Defendants rely upon the following statements from
West’s affidavit:
3. The Woodlands Operating Company, L.P., MS TWC, Inc.,
and WECCR, Inc. are not the owners, lessors, lessees, or
managers of the location complained of by [La China] in his
petition, nor the employer [sic] of persons working there;
4. The Woodlands Commercial Properties Company, L.P. is
the owner of that location;
5. WECCR General Partnership is the lessee of that location;
6. MS Hospitality, L.P. is the Manager of that location[; and]
7. MND Hospitality, Inc. is the employer at that location.1
A statement is conclusory if it provides a conclusion but does not provide
the underlying facts to support the conclusion.2 See Pipkin v. Kroger Texas, L.P.,
1
In her affidavit, West also states that The Woodlands Operating Company, L.P. and WECCR,
Inc. do not do business as The Woodlands Resort & Conference Center. Even if these statements
are not conclusory, they do not show that either defendant is not the owner, lessor, lessee, or
manager of the location identified by La China in his petition, or the employer of persons
working there.
2
The majority quotes a definition of ―conclusory‖ from Black’s Law Dictionary that is quoted in
a parenthetical in a long citation in Arkoma Basin Exploration Co. v. FMF Assocs. 1990-A, Ltd.,
249 S.W.3d 380, 389 n.32 (Tex. 2008). The majority suggests that the Supreme Court of Texas
adopted this definition in that case. See ante at p. 5. Though the Arkoma Basin court cited
various authorities, including Black’s Law Dictionary, that court did not address the proper
definition of ―conclusory‖ or ―conclusory statement.‖ See Arkoma Basin Exploration Co., 249
S.W.3d at 389.
4
383 S.W.3d 655, 670 (Tex. App.—Houston [14th Dist.] 2012, pet. denied);
Dolcefino v. Randolph, 19 S.W.3d 906, 930 (Tex. App.—Houston [14th Dist.]
2000, pet. denied). A statement may be conclusory either because it sets forth an
unsupported legal conclusion or because it sets forth an unsupported factual
conclusion. Pipkin, 383 S.W.3d at 670. Statements in an affidavit that recite the
legal standard asserted in the motion for summary judgment are conclusory. See
Doherty v. The Old Place, Inc., 316 S.W.3d 840, 844–45 (Tex. App.—Houston
[14th Dist.] 2010, no pet.); Brookshire Katy Drainage Dist. v. The Lily Gardens,
LLC, 333 S.W.3d 301, 308 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).
Conclusory statements are incompetent and insufficient to support or defeat a
motion for summary judgment. See Anderson v. Snider, 808 S.W.2d 54, 55 (Tex.
1991). General statements are convenient but lack the authority of particular
facts.3
The first statement (paragraph 3) quoted above is simply a recitation of the
legal standard asserted by the Original Defendants in their motion for summary
judgment. As such, this statement is conclusory and cannot be used to support the
trial court’s judgment. See Doherty, 316 S.W.3d at 844–45; Brookshire Katy
Drainage Dist., 333 S.W.3d at 308; Selz v. Friendly Chevrolet, Ltd., 152 S.W.3d
833, 837 (Tex. App.—Dallas 2005, no pet.). The above-quoted statements provide
conclusions that (1) none of the Original Defendants are the owner, lessor, lessee,
or manager of the location about which La China complains in his petition, nor the
employer of persons working there, and (2) an entity other than the Original
Defendants is the owner, lessor, lessee, or manager of that location, and the
3
Paraphrased from a quote by Oliver Wendell Holmes, Sr. See Oliver Wendell Holmes, Sr., The Poet at
the Breakfast Table 10 (1872) (―A wise man recognizes the convenience of a general statement, but he
bows to the authority of a particular fact.‖).
5
employer of persons working there. But, the West affidavit does not provide the
underlying facts to support these conclusions. Nor does the West affidavit address
the location about which La China complains in his petition. Is it The Woodlands
Resort & Conference Center or the waterslide on which La China was injured or
the real property on which this waterslide is located? The affidavit does not
contain facts supporting West’s conclusion that none of the Original Defendants
are owners of the property. The affidavit reflects that West is an officer of The
Woodlands Operating Company, L.P. (―Woodlands Operating‖) but does not show
that West has any connection with MS TWC, Inc. or WECCR, Inc. Does West
base her conclusion that the Original Defendants are not owners on the personal
knowledge that she obtained in the course of fulfilling her responsibilities as Vice
President and General Counsel of Woodlands Operating? Does West base this
conclusion on business records that purport to reflect the property owned by the
Original Defendants? Did West conduct a title search in the Montgomery County
real property records or review documents reflecting a title search by someone
else? Does West base this conclusion on statements made to her by others, and if
so, by whom? Does West base this conclusion on a blog entry that she read on the
internet? Ownership of property or lack thereof is not something that can be
observed by the five senses, and conclusions of ownership or lack of ownership
must be supported by underlying facts. See Geiselman v. Cramer Financial
Group, Inc., 965 S.W.2d 532, 536–38 (Tex. App.—Houston [14th Dist.] 1997, no
pet.). The West affidavit is devoid of necessary facts to support West’s statements.
In her affidavit, West does not supply the facts underlying her conclusions
that, when she executed her affidavit, entities other than the Original Defendants
were the owner, lessor, lessee, or manager of the location made the subject of La
China’s petition, or the employer of persons working there. In addition, West does
6
not identify the owner, lessor, lessee, or manager of that location, or the employer
of persons working there at the time La China was injured on the waterslide, more
than two years before West executed her affidavit. Because West failed to supply
the facts underlying her conclusions, the statements in her affidavit are conclusory
and provide no basis for affirming the trial court’s summary judgment. 4 See
Anderson, 808 S.W.2d at 55 (holding affidavit containing legal conclusions was
insufficient to support traditional summary judgment in favor of defendant);
Olivares v. Brown & Gay Engineering, Inc., No. 14-12-00198-CV, —S.W.3d—,
—, 2013 WL 1775998, at *6 (Tex. App.—Houston [14th Dist.] Apr. 25, 2013, no
pet. h.) (holding that statements in affidavit that one defendant controlled and
directed the work of another defendant were conclusory); Doherty, 316 S.W.3d at
844–45 (holding that statements in affidavit attempting to show that party held title
to certain real property were conclusory and did not raise fact issue in trespass to
try title action); Geiselman, 965 S.W.2d at 536–38 (holding that evidence was
4
The majority relies upon two cases in support of the proposition that a bare statement that an
entity owns property is not conclusory. See ante at p.7 (citing Nguyen v. Citibank N.A., —
S.W.3d—,—, No. 14-12-00153-CV, 2013 WL 3192884, at *3 (Tex. App.—Houston [14th Dist.]
June 25, 2013, no. pet. h.); Cannon v. Texas Indep. Bank, 1 S.W.3d 218, 225 (Tex. App.—
Texarkana 1999, pet. denied)). These cases do not support this proposition and involve
summary-judgment proof different from that in the case under review. See Nguyen, 2013 WL
3192884, at *3 (involving affidavit in which employee and records custodian of plaintiff (1)
identified defendant’s account as being owned by plaintiff, (2) stated that plaintiff’s business
records reflect the activity on defendant’s account, including charges, payments, interest, and
balances due, (3) authenticated and attached to the affidavit numerous billing statements that
affiant testified had been sent to the defendant by the plaintiff), and (4) stated that the plaintiff is
the party to whom the delinquent debt is due); Cannon, 1 S.W.3d at 225 (involving testimony by
bank vice president in both affidavit and deposition that bank was the current owner and holder
of the note and testimony that (1) after an attempted foreclosure sale by the bank as servicing
agent of the Federal National Mortgage Association (―Fannie Mae‖), Fannie Mae required the
bank to repurchase the note, which the bank did in June 1997, (2) when Fannie Mae sold the note
back to the bank, indorsement of the note was not necessary because the bank had indorsed the
note in blank when it sold the note to Fannie Mae).
7
insufficient to prove that alleged assignee of notes was the owner of the notes,
despite conclusory statement in affidavit that alleged assignee was the owner of the
notes). Because West’s statements are the only evidence supplied by the Original
Defendants in support of their summary-judgment motion and because these
statements do not show that these defendants are entitled to summary judgment,
this court should reverse the trial court’s judgment as to the Original Defendants.5
See Anderson, 808 S.W.2d at 55.
Even if the statements in the West affidavit are not conclusory, the trial court
erred in granting summary judgment as to the Original Defendants.
In their motion, the Original Defendants asserted a single ground that was
based on the proposition that a defendant in a premises-liability case, as a matter of
law, does not owe the plaintiff a negligence duty if the defendant is not the owner,
lessor, lessee, or manager of the location made the subject of the plaintiff’s
petition, nor the employer of persons working there. La China’s negligence theory
is a nonfeasance theory based upon the defendants’ failure to take measures to
5
La China also asserts that West failed to show how she had personal knowledge of the
statements she made as to all entities other than Woodlands Operating. In a recent case from this
court, a closely divided en banc court held that an affidavit’s failure to affirmatively show how
the affiant has personal knowledge of the statements contained therein is a defect of form, and
under this reasoning of the en banc majority, La China waived the complaint by failing to obtain
a ruling on his objection in the trial court. See Washington DC Party Shuttle, LLC v. IGuide
Tours, LLC, No. 14-12-00303-CV, —S.W.3d—,—, 2013 WL 3226768, at *10 (Tex. App.—
Houston [14th Dist.] June 27, 2013, no pet. h.) (en banc). Though this case was transferred from
the Ninth Court of Appeals to this court, research has not revealed any precedent from the
transferor court inconsistent with the five-justice en banc majority opinion in Washington DC
Party Shuttle. See Tex. R. App. P. 41.3. Thus, this panel is bound by the majority opinion in
Washington DC Party Shuttle. But, if the Supreme Court of Texas were to agree with the en banc
dissenting justices in Washington DC Party Shuttle, then the West affidavit’s failure to
affirmatively show how West has personal knowledge as to the statements regarding all entities
other than Woodlands Operating would be another basis for reversing as to MS TWC, Inc. and
WECCR, Inc., and perhaps as to Woodlands Operating. See Washington DC Party Shuttle, LLC,
—S.W.3d at —, 2013 WL 3226768, at *17–20 (Frost, J., dissenting).
8
make the property safe, rather than a malfeasance theory based on affirmative,
contemporaneous conduct by the defendants that allegedly caused the injury.
Thus, La China’s negligence claim is based on a premises-liability theory rather
than a negligent-activity theory. See Del Lago Partners, Inc. v. Smith, 307 S.W.3d
762, 776 (Tex. 2010). To prove, as a matter of law, that they owed La China no
negligence duty, the Original Defendants, at a minimum, had to prove, as a matter
of law, that they did not own, occupy, or control the premises in question at the
time of the accident. See Wilson v. Texas Park & Wildlife Dep’t, 8 S.W.3d 634,
635 (Tex. 1999) (holding that, under a premises-liability theory, negligence duty is
owed by person who owns, occupies, or controls the premises where the injury
occurred); Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 324 (Tex. 1993)
(holding that defendant who had control over premises where injury occurred owed
negligence duty under premises-liability theory). Significantly, the Original
Defendants did not assert in their motion that they were not occupiers of the
location in question or that they did not control the premises where the accident
occurred.6
6
The majority asserts that this dissent addresses an issue not asserted or briefed by La China.
See ante at p.8. The Supreme Court of Texas has stressed that appellate courts must construe an
appellant’s brief ―reasonably, yet liberally‖ so as to ―reach the merits of an appeal whenever
reasonably possible.‖ Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008). See also Ditta v.
Conte, 298 S.W.3d 187, 189–90 & n.5 (Tex. 2009) (broadly construing the issues presented in
petitioner’s petition for review in light of brief to include an argument not expressly contained in
the petition for review or the brief). In his appellant’s brief, La China argues that the trial court
erred in granting summary judgment based on the West affidavit and asserts that summary
judgment is proper only if the Original Defendants establish that there is no genuine issue of
material fact and that they are entitled to judgment as a matter of law. La China’s brief is
sufficient to assert the argument that the West affidavit does not conclusively prove the Original
Defendants’ entitlement to summary judgment. See Ditta, 298 S.W.3d at 189–90; Perry, 272
S.W.3d at 587. Concluding otherwise not only undermines the high court’s directive but also
contravenes the practice and precedent of this court. See, e.g., Speedy Stop Food Stores, Ltd. v.
Reid Road Municipal Util. Dist., 282 S.W.3d 652, 655 (Tex. App.—Houston [14th Dist.] 2009)
(liberally construing appellant’s brief to include challenge to trial court’s order striking
9
The legal proposition advanced in the Original Defendants’ motion suffers
from at least two deficiencies. First, without citing any cases in support of the
proposition, the Original Defendants presume that a party who is not an owner,
lessor, lessee, or manager of the premises and who does not employ anyone
working there, cannot ever occupy or control the premises in question. But, the
Supreme Court of Texas has not taken such a narrow view. Under the high court’s
precedent, a party who undertakes to perform services on a property yet fails to
perform those services may be deemed to have sufficient control over the property
for the imposition of a negligence duty, even though the party does not fall within
any of the categories listed in the Original Defendants’ motion. See County of
Cameron v. Brown, 80 S.W.3d 549, 556 (Tex. 2002) (holding plaintiff sufficiently
pleaded negligence duty under premises-liability theory based upon allegations that
defendant had undertaken to maintain the premises, even though defendant was not
the owner, lessor, lessee, or manager of the premises and did not employ anyone
working there); Brenham Housing Auth. v. Davies, 158 S.W.3d 53, 59–60 (Tex.
App.—Houston [14th Dist.] 2005, no pet.) (recognizing that defendant who was
not owner, lessor, lessee, or manager of the premises and did not employ anyone
working there could owe negligence duty under premises-liability theory),
abrogated in part on other grounds by, Rusk State Hosp. v. Black, 392 S.W.3d 88,
95 n.3 (Tex. 2012). The Original Defendants’ motion and evidence are based upon
a false premise—that only owners, lessors, lessees, managers, or employers of
summary-judgment affidavit even though the appellant did not expressly state this argument but
instead argued the affidavit raised a genuine issue of material fact), aff’d, 337 S.W.3d 846 (Tex.
2011).
10
people working on the property may be occupiers of the property or people who
have control over the property.7 Others also potentially fall into that category.
For example, the owner of the waterslide might have had a contract with one
of the Original Defendants for that defendant to serve as ―waterslide safety
coordinator‖ with the right to control the flow of patrons down the waterslide, but
that defendant might have chosen not to send any of its employees to work at the
waterslide.8 Thus, the Original Defendants’ summary-judgment ground is based on
a legal standard that does not accurately reflect Texas law.9 See County of
Cameron, 80 S.W.3d at 556; Wilson, 8 S.W.3d at 635; Alexander, 868 S.W.2d at
24; Brenham Housing Auth., 158 S.W.3d at 59–60. This is a fatal defect. And, it
is not the only one.
7
The motion and affidavit adopt a static, categorical analysis not supported by the caselaw. In
the motion and affidavit, the Original Defendants and West essentially assert that another entity
is the ―owner,‖ ―lessor,‖ ―lessee,‖ ―manager,‖ and ―employer.‖ But, the fundamental issue is
not whether the Original Defendants fall into any of these static categories or whether other
entities do, but whether the Original Defendants controlled or had the right to control the
premises in question when the accident occurred. See County of Cameron, 80 S.W.3d at 556;
Wilson, 8 S.W.3d at 635; Alexander, 868 S.W.2d at 324. The Original Defendants could have
controlled or had the right to control the premises in question when the accident occurred
without falling into any of these categories. See County of Cameron, 80 S.W.3d at 556;
Brenham Housing Auth., 158 S.W.3d at 59–60.
8
The Original Defendants did not submit any evidence showing that they have no connection
with the waterslide or showing what, if any, connection they have with the waterslide. Nor did
the Original Defendants submit any evidence as to whether they entered into any contracts with
any party regarding the waterslide.
9
The majority relies upon Gunn v. Harris Methodist Affiliated Hospitals. See 887 S.W.2d 248,
251–52 (Tex. App.—Fort Worth 1994, writ denied). In that case, the plaintiff did not assert any
argument that the affidavit statements were conclusory, and the court did not quote any
statements from the affidavit or state that the affidavit contained only a statement that the
defendant did not own, operate, or maintain the premises where the plaintiff was injured. See id.
The Gunn court concluded that the defendant conclusively proved that it did not control the
premises by proving that it did not own, operate, or maintain the premises. See id. Even if this
court were to decide to follow Gunn, the West affidavit does not address whether the Original
Defendants operated or maintained the premises.
11
The relevant inquiry is the defendant’s relationship to the premises at the
time of the occurrence made the basis of the suit. See Lefmark Management Co. v.
Old, 946 S.W.2d 52, 54 (Tex. 1997). But, the legal standard on which the Original
Defendants’ motion and the West affidavit are based addresses each defendant’s
relationship to the premises when the motion was filed and the affidavit was
executed, which was more than two years after the accident. For this additional
reason, the Original Defendants’ summary-judgment ground is based on a legal
standard that does not accurately reflect Texas law. See id.
Even presuming for the sake of argument that the statements in the West
affidavit are not conclusory and are true, these statements do not prove as a matter
of law that the Original Defendants owed no negligence duty to La China because
the legal standard upon which these statements are based does not correctly reflect
Texas law.10 See County of Cameron, 80 S.W.3d at 556; Wilson, 8 S.W.3d at 635;
Lefmark Management Co., 946 S.W.2d at 54; Alexander, 868 S.W.2d at 24;
Brenham Housing Auth., 158 S.W.3d at 59–60. Therefore, summary judgment was
not proper.
For the foregoing reasons, the trial court erred in granting summary
judgment in favor of the Original Defendants. See M.D. Anderson Hosp. & Tumor
Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000); Wilson, 8 S.W.3d at 635;
Alexander, 868 S.W.2d at 324; Anderson, 808 S.W.2d at 55; Buffington v. Sharp,
—S.W.3d—,—, No. 14-11-00588-CV, 2012 WL 3758098, at *5–6 (Tex. App.—
10
The majority relies upon two cases that are not on point. See Am. Fid. & Cas. Co. v. Traders
& Gen. Ins. Co., 334 S.W.2d 772, 775 (Tex. 1959) (determining that company was in control of
the premises where the accident occurred for the purposes of determining insurance coverage);
State v. Garcia, 823 S.W.2d 793, 798 (Tex. App.—San Antonio 1992, pet. ref’d) (addressing
meaning of ―own‖ or ―operate‖ a ―Sexually Oriented Commercial Enterprise‖ in a
commissioners’ court order during analysis of constitutional issue in a criminal case).
12
Houston [14th Dist.] Aug. 30, 2012, pet. denied). This court should reverse the
trial court’s judgment in its entirety and remand for further proceedings.11 Because
it does not, I respectfully dissent.
/s/ Kem Thompson Frost
Justice
Panel consists of Justices Frost, Christopher, and Jamison. (Jamison, J., majority).
11
The majority is correct in concluding that the trial court’s judgment should be reversed as to
the claims against the defendants added in La China’s amended petition and the case remanded
as to these claims.
13 | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2775613/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
AMERICAN SOCIETY FOR TESTING )
AND MATERIALS et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 13-cv-1215 (TSC) (DAR)
)
)
PUBLIC.RESOURCE.ORG, INC., )
)
Defendant. )
)
MEMORANDUM OPINION
Before the Court is Plaintiffs’ motion to strike Defendant’s jury demand. Because no
party seeks damages and Defendant has not otherwise shown any grounds for its jury demand,
the motion is granted.
I. BACKGROUND
Plaintiffs American Society for Testing and Materials, National Fire Protection
Association, Inc., and American Society Of Heating, Refrigerating, And Air-Conditioning
Engineers, Inc., brought this action for copyright infringement and trademark infringement
against Public.Resource.org, Inc. (“Public Resource”). Plaintiffs are not-for-profit organizations
that develop private-sector codes and standards. Plaintiffs sell or license these codes to generate
revenue. State and local government entities frequently incorporate Plaintiffs’ codes into
statutes, regulations, and ordinances. For example, Plaintiff National Fire Protection Association
develops the National Electrical Code, which provides a standardized code for installation of
electrical systems. Plaintiffs allege that the codes are original works protected from copyright
1
infringement, and brought suit because Public Resource has posted a number of Plaintiffs’ codes
on its website. Plaintiffs seek a permanent injunction enjoining Public Resource from posting
Plaintiffs’ codes and trademarks. Plaintiffs do not seek money damages in their Complaint.
Defendant Public Resource is a non-profit entity devoted to publicly disseminating legal
information. According to Defendant, its “mission is to improve public access to government
records and the law . . . To accomplish this mission, Public Resource acquires copies of . . .
records, including legal decisions, tax filings, statutes, and regulations, and publishes them
online in easily accessible formats that make them more useful to readers, entirely free of
charge.” (Def. Answer ¶¶ 27-28). Public Resource argues that because the codes at issue have
been incorporated by reference into federal, state, and local laws, it is entitled to publish them as
public materials. Public Resource filed a counterclaim seeking a declaratory judgment that
posting the codes does not infringe Plaintiffs’ copyrights or trademarks, and included a jury
demand in its counterclaim.
Plaintiffs have moved to strike this jury demand, arguing that because neither party seeks
money damages, there is no basis for a jury demand. Plaintiffs further argue that as the
copyright holders, they possess the right to demand a jury, and Public Resource cannot rely on a
counterclaim for a declaratory judgment of noninfringement as a basis for a jury demand. Public
Resource argues in response that it is entitled to a jury trial on its noninfringement counterclaim
based on the fact that Plaintiffs could have requested a jury trial, had they asked for money
damages. Public Resource argues that its counterclaims are legal claims which create a jury
right, and further that its declaratory judgment counterclaims must be “inverted,” meaning Public
Resource is considered the plaintiff on those claims and can assert whatever jury rights Plaintiffs
may have had – regardless of the fact that Plaintiffs have not made a jury demand. Public
2
Resource further argues that because Plaintiffs in this case could have demanded money
damages (even though they did not), this entitles Public Resource to a jury trial.
II. LEGAL STANDARD
The Seventh Amendment to the United States Constitution declares that “[i]n suits at
common law . . . the right of trial by jury shall be preserved . . . .” U.S. Const. amend. VII. The
Amendment has been construed to preserve the right to jury trial as it existed in 1791. To
determine whether a particular action is a suit “at common law,” courts examine both the nature
of the issues involved and the nature of the remedy sought. Specifically, the test for statutory
actions involves two steps: (1) comparing the statutory action to 18th-century actions brought in
the courts of England prior to the merger of the courts of law and equity to determine whether
the claim is legal or equitable in nature, and (2) examining the remedy sought and determining
whether it is legal or equitable in nature. Chauffeurs, Teamsters & Helpers, Local No. 391 v.
Terry, 494 U.S. 558, 565 (1990). The second part of the test—the remedy sought—is more
important than the first. Id.
III. DISCUSSION
The question at issue is: if a plaintiff copyright holder brings an infringement claim and
seeks only equitable relief, can a defendant demand a jury based on a counterclaim of
noninfringement where that defendant also only seeks equitable relief? Public Resource claims
that this is an issue of first impression, and that given the importance of the jury right, the answer
is yes. However, numerous courts have analyzed similar situations and found that the defendant
in these circumstances does not have a jury right because generally the rights holder determines
whether a jury demand is available.
3
The D.C. Circuit has not directly addressed this question. However, several cases from
the Federal Circuit have analyzed the jury rights of parties in infringement actions.1 The first
such case is In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995), vacated sub nom., Am. Airlines, Inc.
v. Lockwood, 515 U.S. 1182 (1995).2 In that case, the patentee sued American Airlines for
patent infringement and American Airlines filed a counterclaim for a declaratory judgment that
its activities were noninfringing and that the patents were invalid and unenforceable. The
plaintiff-patentee demanded a jury trial on the issue of patent validity raised in the defendant’s
declaratory judgment counterclaim. The district court granted American Airlines’ motion for
summary judgment on noninfringement and struck the patentee’s demand that the issue of
validity be determined by a jury. The Federal Circuit reversed, finding that the patentee had a
right to a jury trial on the declaratory judgment counterclaim regarding patent validity because in
the 18th century, patent validity as a claim did not exist. The only way patent validity could be
raised was through an action for patent infringement by the patentee. In that scenario, the
patentee would have had the option to bring the case in a court of law or a court of equity. The
Federal Circuit held that an alleged infringer could not usurp the patentee’s choice by bringing a
claim for invalidity first. Id. at 980. The court explained:
In eighteenth-century England, allegations of patent infringement could be raised
in both actions at law and suits in equity. Because an action at law for damages
could not obviate the need for perpetual litigation over future acts of infringement
nor ascertain the full extent of the injury done to one’s interests by past acts of
infringement, courts of equity gave a patentee the option of pursuing injunctions
and accountings against alleged infringers. The choice of forum and remedy, and
1
Most of the cases that discuss this issue arise in the context of patent infringement, not copyright infringement.
However, courts have explained that “[p]atent and copyright infringement actions find their constitutional derivation
in the same provision . . . . The Supreme Court treats patent and copyright the same when looking at the purposes
behind the constitutional provision and the laws thereby enacted.” Cass Cnty. Music Co. v. C.H.L.R., Inc., 88 F.3d
635, 641 (8th Cir. 1996) (collecting cases); see also Ricoh Co. v. Quanta Computer Inc., 550 F.3d 1325, 1338 (Fed.
Cir. 2008).
2
Although the Supreme Court vacated In re Lockwood, the parties agree that many courts continue to cite it as
persuasive authority.
4
thus of the method of trial, was left with the patentee. . . . If the patentee sought
only damages, the patentee brought an action at law; in such a case, the defense of
invalidity was tried to the jury, assuming that a jury had been demanded.
However, if the patentee facing past acts of infringement nevertheless sought only
to enjoin future acts of infringement, the patentee could only bring a suit in
equity, and the defense of invalidity ordinarily would be tried to the bench. Under
both English and American practice, then, it was the patentee who decided in the
first instance whether a jury trial on the factual questions relating to validity
would be compelled.
We cannot, consistent with the Seventh Amendment, deny Lockwood that same
choice merely because the validity of his patents comes before the court in a
declaratory judgment action for invalidity rather than as a defense in an
infringement suit. Lockwood is entitled to have the factual questions relating to
validity in this case tried to a jury as a matter of right.
Id. at 976 (internal quotation marks and citations omitted).
The Federal Circuit confirmed this understanding in Tegal Corp. v. Tokyo Electron Am.,
Inc., 257 F.3d 1331 (Fed. Cir. 2001). The threshold issue in that case was whether a defendant,
asserting only affirmative defenses and no counterclaims, had a right to a jury trial when the
plaintiff-patentee sought only injunctive relief. Id. at 1339. The court treated it as a matter of
first impression because In re Lockwood had been vacated, but adopted Lockwood’s reasoning
and held that such a defendant does not have a right to a jury trial. Id. at 1339-40.
After the decisions in Lockwood and Tegal, there was some uncertainty as to whether a
party could demand a jury where the rights holder could have brought a damages claim, even if
they chose not to. The Federal Circuit addressed this uncertainty in In re Tech. Licensing Corp.,
423 F.3d 1286 (Fed. Cir. 2005):
In sum, Lockwood does not stand for the proposition that a counterclaim for
invalidity always gives rise to a right to a jury trial (for either party) on the ground
that it is an inverted infringement action and that a patentee at common law had
the right to a jury by filing an infringement action and seeking damages. Instead,
the more accurate reading of Lockwood is that (1) it preserves to the patentee the
right to elect a jury by seeking damages in an infringement action or
counterclaim, and (2) the accused infringer or declaratory judgment
counterclaimant is entitled to a jury trial only if the infringement claim, as
asserted by the patentee, would give rise to a jury trial. Thus, if the patentee seeks
5
only equitable relief, the accused infringer has no right to a jury trial, regardless of
whether the accused infringer asserts invalidity as a defense (as in the Tegal case)
or as a separate claim (as in this case).
Id. at 1290-91.
Thus, according to the Federal Circuit, the right to a jury is dictated by the nature of the
case brought by the rights holder, not the rights infringer, regardless of who is the plaintiff or
defendant. Other courts have ruled similarly.3 Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610
F.3d 1171, 1183-84 (9th Cir. 2010) (“Finally, we consider the Tabaris’ claim that the district
court deprived them of their right to a trial by jury when it failed to empanel a jury to decide
Toyota’s trademark claims. Because Toyota only sought an injunction, the district court did not
err by resolving its claims in a bench trial. Nor were the Tabaris entitled to a jury trial on their
equitable defenses to those claims, or their counterclaims seeking declarations of trademark
invalidity and non-infringement . . . .”) (citations omitted); Taylor Corp. v. Four Seasons
Greetings, LLC, 403 F.3d 958, 968-69 (8th Cir. 2005) (“The Federal Circuit concluded neither
party had a right to a jury, holding ‘a defendant, asserting only affirmative defenses and no
counterclaims, does not have a right to a jury trial in a patent infringement suit if the only
3
At oral argument, counsel for Public Resource argued that the dissent in In re Tech. Licensing supports its
argument that the rights holder’s election does not always control for Seventh Amendment purposes. In that dissent,
Judge Newman disagreed with the Federal Circuit’s holding, arguing that patent validity, separate and apart from
infringement, was a legal issue which carried the right to a jury (analogizing a patent validity claim to a writ of scire
facias, which according to Judge Newman would be tried to a jury in 18th-century England). In re Tech. Licensing
Corp., 423 F.3d at 1292 (Newman, J., dissenting). However, Judge Newman focused entirely on the nature of a
patent validity claim (which is not at issue in this case), and did not assert that (non)infringement is a legal claim
which automatically creates the right to a jury. In fact, Judge Newman seemed to suggest the opposite: “Jury trial of
Gennum’s claim of invalidity is available as of right, whatever the requested remedy for infringement. . . . Litigation
of patent validity is an action at law, separate from the infringement cause of action. . . . Professor Pomeroy,
summarizing the early United States jurisprudence in his treatise on equity, explained that when only an injunction
is sought as remedy for infringement, unless validity is contested the issue is entirely equitable: ‘The ordinary form
of relief [for infringement is] an injunction in equity; indeed, the action at law is seldom resorted to, except for the
purpose of establishing the validity of the patent or copyright by the verdict of a jury when it is really contested.’”
Id. at 1292-95 (citations omitted). Neither Judge Newman nor Public Resource has argued that infringement
standing alone (without a demand for damages) creates a jury right. As discussed elsewhere in this opinion, Public
Resource has also not identified any other claim (like the patent validity claim discussed in Judge Newman’s
dissent) which creates a jury right.
6
remedy sought by the plaintiff-patentee is an injunction.’ We agree with the Federal Circuit’s
holding in Tegal. Recognizing the ‘historic kinship between patent law and copyright law,’ we
apply the Federal Circuit’s holding in Tegal to this copyright action. Therefore, Four Seasons
was not entitled to a jury trial on Taylor’s action seeking only a permanent injunction.”)
(citations omitted); Duhn Oil Tool, Inc. v. Cooper Cameron Corp., 818 F. Supp. 2d 1193, 1204
(E.D. Cal. 2011) (“The accused infringer or declaratory judgment counterclaimant is entitled to a
jury trial if the infringement claim, as asserted by the patentee, would give rise to a jury trial.”);
Kao Corp. v. Unilever U.S., Inc., No. 01-680, 2003 WL 1905635, at *3 (D. Del. Apr. 17, 2003)
(“In sum, an alleged infringer has no entitlement to a trial by jury by virtue of pleading
counterclaims asserting noninfringement and invalidity, claims which are equitable in nature
with no attendant right to damages.”); Empresa Cubana Del Tabaco v. Culbro Corp., 123 F.
Supp. 2d 203, 211-12 (S.D.N.Y. 2000), on reconsideration in part, No. 97 Civ. 8399, 2001 WL
487960 (S.D.N.Y. May 8, 2001) (“Finally, General Cigar’s counterclaim for declaratory relief
presents no right to trial by jury. A complaint for declaratory relief does not give rise to a right
to jury trial when the underlying issues in the action do not give rise to a right to a jury trial. See
Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 504 (1959). As set forth above, Cubatabaco’s
complaint for injunctive and ancillary relief raises solely equitable issues properly addressed
only to the court. General Cigar’s counterclaim for declaratory relief, asking for dismissal of the
complaint and declaring its right to use the COHIBA mark, adds nothing new to the issues raised
in the complaint and therefore raises no legal rights. Therefore, there is no jury trial right on
General Cigar’s counterclaim.”) (citations omitted).
7
1. Jury Right Based on Public Resource’s Counterclaims or Defenses
Public Resource argues that because its claims “standing alone, sound in law,” it is
entitled to a jury independently of Plaintiffs’ claims. (Def. Opp’n 6). It asserts that “where one
party’s claims give rise to a Seventh Amendment right to a jury trial, an opposing party cannot
frustrate that right by artful pleading of its own claims.” (Id. at 4). Public Resource offers
almost no argument regarding which of its claims entitles it to a jury or why.4 There is scant
detail about why its noninfringement counterclaim is a legal issue which implicates the Seventh
Amendment,5 no discussion of the history of noninfringement claims or the analogous action that
may have existed in the 18th century, and no explanation of what issues of fact the jury would
need to find, or why a jury is appropriate to handle a noninfringement counterclaim even where
there is no jury right for Plaintiffs’ infringement claim. At oral argument, counsel for Public
Resource essentially admitted that at this point in the case, the jury would have nothing to
decide, but that documents gleaned in discovery could theoretically create a jury triable issue.
4
Public Resource asserts (albeit in a conclusory manner) that a fair use defense may give rise to a jury right. It does
little to develop this argument, and at oral argument only mentioned it briefly. The Supreme Court has held that
“[f]air use is a mixed question of law and fact.” Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S.
539, 560 (1985). However, “[t]he existence of an issue of fact does not per se create a ‘legal claim.’” Shubin v. U.S.
Dist. Court for S. Dist. of Cal., 313 F.2d 250, 251 (9th Cir. 1963). Furthermore, courts have frequently identified
fair use as an equitable doctrine. See Television Digest, Inc. v. U.S. Tel. Ass’n, 841 F. Supp. 5, 9 (D.D.C. 1993)
(“Fair use is an equitable doctrine requiring an examination of the specific facts of each case.”); Harper & Row
Publishers, Inc., 471 U.S. at 560-61 (“[T]he doctrine is an equitable rule of reason . . . .”). Given that Public
Resource did not identify any issues of fact associated with its fair use defense or make any substantial argument,
the Court cannot and will not uphold the jury demand on this basis without more. See Cement Kiln Recycling Coal.
v. E.P.A., 255 F.3d 855, 869 (D.C. Cir. 2001) (“A litigant does not properly raise an issue by addressing it in a
cursory fashion with only bare-bones arguments.”) (internal quotation marks omitted).
5
One Supreme Court case seemed to suggest that infringement actions were always legal. Markman v. Westview
Instruments, Inc., 517 U.S. 370, 377 (1996) (“Equally familiar is the descent of today’s patent infringement action
from the infringement actions tried at law in the 18th century, and there is no dispute that infringement cases today
must be tried to a jury, as their predecessors were more than two centuries ago.”); id. at 384 (“[D]etermining
whether infringement occurred . . . is a question of fact, to be submitted to a jury.”). However, the Federal Circuit
has explained that in Markman the plaintiff sought damages, and the Supreme Court was likely discussing
infringement actions in which damages were sought and not where the plaintiff sought only equitable relief. Tegal
Corp., 257 F.3d at 1340 (“The Supreme Court briefly addressed the issue before us in its affirmance of our
Markman opinion. . . . The Supreme Court’s cursory disposal of the issue was entirely understandable and
appropriate because damages were requested in the original trial litigation. . . . Thus, the Supreme Court’s
affirmance provides no guidance on how to analyze the case before us, in which damages are not at issue.”).
8
Public Resource may be correct that “[t]he ‘counterpart’ of a declaratory judgment claim
is not the opposing party’s claims. It is, rather, the equivalent claim that would have been
brought before the merger of law and equity. . . . Likewise, the ‘counterpart’ of Public
Resource’s declaratory judgment claim is not Plaintiff-Counterdefendants’ claim. It is the claim
that would have been brought pre-merger.” (Def. Opp’n 7). Public Resource also correctly
asserts that declaratory judgment claims are not necessarily legal or equitable, Gulfstream
Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 284 (1988), but are defined by the
underlying issues in the case. This argument, however, serves only to undercut its purported
right to a jury trial. Public Resource asks the Court to analyze its counterclaim independently of
Plaintiffs’ claims, but fails to engage in any analysis of its own—likely because the pre-merger
counterpart of a declaratory judgment counterclaim for noninfringement is simply a defense of
noninfringement, which does not create a jury right. As the Federal Circuit explained, a patent
infringement action with a counterclaim of invalidity “resembles nothing so much as a suit for
patent infringement in which the affirmative defense of invalidity has been pled.” In re
Lockwood, 50 F.3d at 974. The Federal Circuit has further noted that in such actions, “the
patentee could elect whether to proceed at law or in equity, based on the remedy sought, and the
right to a jury would depend on the patentee’s choice.” In re Tech. Licensing Corp., 423 F.3d at
1289. These Federal Circuit cases analyzed a counterclaim of invalidity as opposed to
noninfringement, but a noninfringement counterclaim presents an even weaker case. For
Seventh Amendment purposes, a copyright infringement action with a counterclaim of
noninfringement (as in this case) is equivalent to a copyright infringement action with a defense
of noninfringement. In either case, it is the copyright holder who dictates the availability of a
9
jury by choosing to seek money damages or not. Plaintiffs have not sought damages here;
therefore Public Resource cannot demand a jury.
2. Claim Inversion
Public Resource also argues that because Plaintiffs could have brought a legal claim for
damages which would create a right to a jury, Public Resource is entitled to step into Plaintiffs’
shoes and assert that same right. This entitlement arises, according to Public Resource, because
as long as a plaintiff could have sought damages then either party may invoke plaintiff’s
theoretical right to a jury, even if the plaintiff does not actually seek damages or request a jury.
According to Public Resource, a defendant acquires the plaintiff’s jury right because declaratory
judgment counterclaims must always be inverted into affirmative claims, meaning the defendant
is placed in the position of the plaintiff and can assert whatever theoretical rights that plaintiff
may have had. In support of this argument, Public Resource relies on cases which discuss claim
inversion, in which “for purposes of the right to a jury trial in patent cases, it is inconsequential
whether the parties are aligned in the conventional manner (patentee as plaintiff and accused
infringer as defendant and invalidity counterclaimant) or in the manner that results when the
accused infringer initiates the action as a declaratory judgment (accused infringer as plaintiff and
patentee as defendant and infringement counterclaimant).” In re Tech. Licensing Corp., 423
F.3d at 1288.
The rationale behind claim inversion is the protection of the rights holder’s right to a jury.
Before a declaratory judgment action existed, only the rights holder could initiate a lawsuit, and
the rights holder could decide whether to bring the case in law or in equity. As a result of the
Declaratory Judgment Act, the accused infringer now has the option of initiating a suit, seeking a
declaration of noninfringement instead of waiting to be sued for infringement. Courts have
10
therefore noted that in the latter instance, where the case is “inverted” so the plaintiff is the
alleged infringer and the defendant is the rights holder, the rights holder still has the right to
demand a jury.
Public Resource’s inversion argument is an unnecessary detour for the simple reason that
this case is not inverted. The procedural posture here is the “conventional manner,” wherein the
rights holder sues for infringement and the accused infringer is the defendant and claims
noninfringement. Public Resource’s argument—that because it is the defendant-declaratory
judgment counterclaimant, the action is automatically inverted and it steps into the shoes of the
rights holder plaintiffs and asserts whatever jury rights those plaintiffs may have theoretically
had—is without foundation and contrary to precedent. Even if Public Resource could step into
the Plaintiffs’ shoes, Public Resource has not made (and could not make) a claim for damages.
Nor have Plaintiffs sought damages. There is therefore no basis for Public Resource to assert a
right to a jury simply because Plaintiffs could have brought a claim for damages, even though
Plaintiffs did not.6 See Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1017 (7th Cir. 1991)
(“Had [plaintiff] sought only an injunction, [defendant] certainly would have had no entitlement
to a jury trial.”); Shubin, 313 F.2d at 251 (“The defendants seek only a permanent injunction
against threatened infringement. This is not a legal issue. Defendants’ only remedy would be in
equity.”); Predator Int’l, Inc. v. Gamo Outdoor USA, Inc., No. 09-cv-00970, 2014 WL 103660,
at *3 n.1 (D. Colo. Jan. 10, 2014) (“Predator does not have the right to a jury trial on its
copyright claim since that claim is limited to a remedy of declaratory or injunctive relief.”);
6
Public Resource mischaracterizes the holding in Sanofi-Synthelabo v. Apotex, Inc., No. 02-Civ-2255, 2002 WL
1917871 (S.D.N.Y. Aug. 20, 2002). It asserts that Sanofi held that as long as a plaintiff could have brought
damages, even if they did not, then a defendant-declaratory judgment counterclaimant can always demand a jury.
That is not the holding of Sanofi. Sanofi merely held that in cases where plaintiffs could not possibly seek damages
because the claim was for future infringement, no jury right can ever attach. This is not the same as holding that if
there could possibly be damages, the jury right always attaches. The relevant inquiry is whether damages are
actually sought, not whether they could be. Notably, Sanofi was also decided before In re Tech. Licensing.
11
Caldwell-Gadson v. Thomson Multimedia, S.A., No. IP 99-1734, 2001 WL 1388052, at *8 (S.D.
Ind. Sept. 18, 2001) (“A suit for copyright infringement, insofar as it seeks an injunction, is
equitable in nature.”) (internal quotation marks and citation omitted).
IV. CONCLUSION
Public Resource’s counterclaim for noninfringement is analogous to a defense of
noninfringement in an 18th century suit for copyright infringement. As a result, Plaintiffs can
decide whether to bring the suit in a court of law or equity. Here, Plaintiffs seek only an
injunction, therefore the case is equitable and there is no right to a jury. Public Resource has not
identified any stand-alone legal claims which create a jury right, nor any factual issues related to
any claims or defenses that a jury could decide. Plaintiffs’ motion to strike Public Resource’s
jury demand is therefore GRANTED. An appropriate Order accompanies this Memorandum
Opinion.
Date: February 2, 2015
Tanya S. Chutkan
TANYA S. CHUTKAN
United States District Judge
12 | 01-03-2023 | 02-02-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1591413/ | 563 F.Supp. 401 (1983)
Shyamala RAJENDER, on behalf of herself and a class of academic non-student employees and applicants at the University of Minnesota, Plaintiff,
v.
The UNIVERSITY OF MINNESOTA and the Regents of the University of Minnesota, Defendants.
Civ. 4-73-435.
United States District Court, D. Minnesota, Fourth Division.
February 16, 1983.
*402 Paul Sprenger, Sprenger Olson & Shutes, Minneapolis, Minn., for plaintiff class.
Steven Dunham, Minneapolis, Minn., for defendants.
ORDER
MILES W. LORD, Chief Judge.
Before this court is the Recommended Order for Amendment of the Consent Decree filed by the special masters in the above-entitled action. The recommended order was issued after a hearing at which the following persons appeared in support of the masters' February 1, 1982, Order to Show Cause: Paul C. Sprenger of Sprenger, Olson & Shutes, P.A., attorney for the class; Carolyn Chalmers and Kathleen Graham of Dayton, Herman, Graham & Getts; Dolores C. Orey of Kampf & Orey, P.A.,: Mark P. Wine of Oppenheimer, Wolff, Foster, Shepard & Donnelly; Gary A. Weissman of French & Weissman, P.A.; Laura Cooper of the Equal Employment Opportunity for Women Committee; representatives of the Faculty Advisory Committee for Women; and several members of the plaintiff class. Appearing in opposition to portions of the masters' Order to Show Cause were Peter S. Hendrixson of Dorsey & Whitney and Charles C. Mays of Leonard, Street and Deinard. Subsequent to the filing of the Masters' Recommended Order for Amendment of the Consent Decree, objections were filed by both claimants and the University, pursuant to Rule 53(e)(2), Fed.R. Civ.P.
On September 2, 1982, a hearing was held before this court. At that time, arguments of counsel were presented on the specific issue of the masters' recommended removal of the $6,000 limitation on partial attorneys' fees. Following the September 1982 hearing, additional fee information was requested of the University. The University complied with the court's request over a period of months, with the final affidavit submitted on December 2, 1982. The matter was then taken under advisement.
Having considered the objections of counsel, together with the Recommended Order and Memorandum of the Special Masters, this court adopts the recommendations in part and modifies in part.
FACTS
This dispute derives from a class action originally brought by Dr. Shyamala Rajender against the University of Minnesota. The plaintiff filed her complaint on September 5, 1973, and her Second Amended Complaint on September 6, 1975, alleging that the defendants were engaged in employment discrimination based upon sex and national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as amended, and 42 U.S.C. §§ 1981 and 1983.
On February 13, 1978, pursuant to a motion for class determination, the court entered an order establishing that the action be maintained as a class action on behalf of:
all women academic non-student employees who have been employed by the University of Minnesota at any time after March 24, 1972, women who have applied for but were denied employment by the University in such positions after that date or women who would have applied *403 for such positions but for the discriminatory policies and practices of the University; all present women academic nonstudent employees; and all women who may in the future be employed in academic non-student positions or may in the future apply for but be denied such employment.
On April 24, 1978, the Court commenced a pilot trial of the Rajender claims and the sex-based claims of a subclass consisting of that portion of the class in the University's Chemistry Department on the Twin Cities campus. At the end of May 1978, the trial was recessed to enable the parties to explore the possibility of settlement. Following several rounds of extensive negotiations between plaintiffs' attorney Paul Sprenger and defendants' attorney Charles Mays, the parties began in January of 1980 a third round of settlement discussions which eventually produced the Consent Decree approved by this court on August 13, 1980. Portions of that Decree are the subject of the present Order.
DISCUSSION
The focal point of the present controversy is that section of the Decree which limits a prevailing plaintiff's recovery of attorneys' fees to "... a reasonable sum, not exceeding Six Thousand Dollars ($6,000), for partial attorneys' fees which she incurred because of the proceedings." Consent Decree, Section II, Paragraph 9 (August 1980). The Recommended Order filed by the special masters would have this court delete that portion of Section II, Paragraph 9 which reads, "... not exceeding Six Thousand Dollars ($6,000)," thereby lifting the previously imposed ceiling but retaining the qualifications that the fee recovery be "partial." Recommended Order for Amendment of Consent Decree, p. 2 (March 31, 1982). The defendants object to the masters' recommended amendment on a number of grounds, primarily the following:
1) the fee limitation was a bargained for material part of the Consent Decree; and
2) circumstances since the approval of the Decree, as reflected in the evidence presented at the show cause hearing, have not changed so drastically that the $6,000 limit on partial attorneys' fees is a source of grievous harm to the Rajender claimants. Responsive Memorandum of University of Minnesota in Opposition to Modification of Attorneys' Fee Provision in Consent Decree (March 8, 1983).
In addition to the foregoing, the defendants also object to the recommended changes by challenging the authority of the special masters to initiate the modification procedure. Because that challenge raises a threshold issue, this court will address the matter at this stage of the Order.
To resolve the problem, this court must look to two documents, the Consent Decree itself and the September 10, 1979, Order of Reference appointing the special master. The language of the Order of Reference provides that,
the powers and duties of the Special Master shall be those of the Court in resolving the issues herein, including the power to regulate all proceedings in every hearing before him and to do all acts and take all measures necessary or proper for the efficient performance of his duties under this order.
Order of Reference, paragraph 3 (September 10, 1979). Although that Order was entered prior to the final approval of the Consent Decree, it remains in effect as to those portions not specifically altered by subsequent decree.
The Consent Decree speaks only to the powers of the special master relating to the hearing and resolving of claims. Although not specifically enumerated in the Decree, the duties of the master to date have included the conducting of motion practice, the holding of elections, and the granting of exemptions to parties proceeding under the Decree. Both the University and the class have availed themselves of these extra-Decree powers and rightly so. For reasons of judicial economy, the powers of the master must be sufficiently broad to permit facilitating the remedial design of the Consent Decree without seeking leave of the court *404 at every turn. As a practical matter, any powers of this court, unless otherwise limited by either the Order of Reference or the Consent Decree, shall be the powers of the masters in relation to the effectuation of the Decree. Therefore, based upon the empowering documents and the accepted practice of administering the Consent Decree, it is the opinion of this court that initiating the modification process was within the scope of the masters' authority.
The plaintiffs' sole objection to the masters' Recommended Order challenges the proposed change in the fee provision as follows:
The recommendation that the Consent Decree be amended so that the Special Masters have discretion to provide only partial attorneys' fees using criteria set out in the Memorandum is objected to as being ambiguous and permitting an interpretation contrary to Title VII, and further renders the Consent Decree inequitable, given the defendants' failure to comply with the Decree's provisions governing resolution of claims by internal processes."
Objections of Kathleen M. Graham (April 12, 1982). In order to resolve the instant controversy, this court must first consider the nature of a consent decree.
This court begins its examination of a consent decree by recognizing that the subject of the investigation is something of a hybrid in the law, having attributes of both contracts and judicial decrees. United States v. ITT Continental Baking Co., 420 U.S. 223, 236 n. 10, 95 S.Ct. 926, 934 n. 10, 43 L.Ed.2d 148 (1974). Because consent decrees represent the agreements on precise terms reached by parties after negotiation, the scope of a decree must be found within its "four corners." See United States v. Armour & Co., 402 U.S. 673, 682, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971). The Supreme Court stated in ITT Continental Baking Co. that, "since a consent decree or order is to be construed for enforcement purposes basically as a contract, reliance upon certain aids to construction is proper, as with any other contract." ITT Continental Baking Co., 420 U.S. at 238, 95 S.Ct. at 935. Such aids to construction would certainly include an examination of the circumstances surrounding the formation of the decree itself. See Brown v. Neeb, 644 F.2d 551 (6th Cir.1981); ITT Continental Baking Co., 420 U.S. at 238, 95 S.Ct. at 935.
In the instant case, the Rajender Consent Decree embodies the bargained-for terms of the settlement of a Title VII action against the University of Minnesota by which each party relinquishes valuable rights in order to attain mutually acceptable benefits.
These contractual properties of a consent decree significantly define its scope. However, the terms of a decree are subject to an initial determination of reasonableness by the court and, in addition, the decree itself is subject to continued judicial supervision. Therefore, a consent decree also has attributes of a judicial act. The Court of Appeals for the Sixth Circuit, in an opinion affirming a district court's modification of a decree in a civil rights case, shed considerable light on this dual nature of a consent decree. Stotts v. Memphis Fire Dept., 679 F.2d 541 (1982). Judge Keith, writing for the circuit court, stated that "[a]n approved consent decree is not simply a compact between former litigants, rather it is a court order. Consequently, a court has an affirmative duty to protect the integrity of its decree. This duty arises where the performance of one party threatens to frustrate the purpose of the decree." Stotts, 679 F.2d at 557. This positive mandate, which requires the court to serve as a guardian of rights embodied in a consent decree, also gives the court inherent authority to modify a decree should circumstances arise which thwart the decree's stated resolution.
The leading case on modification of a consent decree is United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932). There, Justice Cardozo said:
We are not doubtful of the power of a court of equity to modify an injunction in adaptation to changed conditions, though it was entered by consent.... Power to modify the decree was reserved by its *405 very terms, and so from the beginning went hand in hand with its restraints. If the reservation had been omitted, power there still would be by force of principles inherent in the jurisdiction of the chancery. A continuing decree of injunction directed to events to come is subject always to adaptation as events may shape the need.
United States v. Swift & Co., 286 U.S. at 114, 52 S.Ct. at 462.
The rule in Swift clearly establishes the court's right to modify a decree where there has been a change in the conditions which would make continued enforcement inequitable. However, a modification is not to be casually granted. The standard set down in Swift requires that "[n]othing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change what was decreed after years of litigation with the consent of all concerned." Swift at 119, 52 S.Ct. at 464.
The issue before this court becomes, therefore, whether or not the requisite showing of wrong has been made in order to justify the recommended modification of the 1980 Rajender Consent Decree.
The stated purpose of the Rajender Decree was "to correct previous inequities, if any, and to achieve on behalf of women full representation with respect to faculty employment at the University of Minnesota." Consent Decree, p. 3 (1980). In order to achieve that goal, the parties to the Decree created certain procedural measures. One of the more significant of these measures, agreed to by the parties and approved by this court, was an internal/administrative process, whereby the special masters "shall defer action on any claim which has not been previously heard and determined by an appropriate University tribunal and shall refer such claim to the University, which may refer the matter to an appropriate internal academic tribunal." Consent Decree, Section II, D(1) (1980). As the masters ably stated in the memorandum accompanying their Recommended Order, the value to the University of such an internal process was the possibility of peer resolution within the University system before resort to judicial intervention. Both parties potentially would benefit by this extremely "cost-efficient method of finding facts" in which neither claimant nor defendant required counsel. Memorandum of Special Masters, p. 5 (March 31, 1982). In addition, it was anticipated that in the few cases that would be heard by the masters where counsel would be retained for trial, the issues left for resolution would have been narrowed considerably and any discovery would have largely been completed by the time the claimant contacted an attorney. The quid-pro-quo for the University's providing the internal grievance procedure and its streamlining effect was the approval by the class and the court of the ceiling on partial attorneys' fees for prevailing claimants.
It is obvious to this court that the basic problem with the Consent Decree at this point in time is the failure of that internal grievance procedure to function as originally planned. Regardless of whether the failure arose from defendants' neglect or from the unanticipated number of claims filed, an inequity has resulted that the masters' proposed modifications are intended to cure.
The defendants, however, object to the suggested change in the attorneys' fees limitation by stating that "the evidence presented at the hearing was insufficient, as a matter of fact and law, to justify the amendment proposed in paragraph 1(a) of the Recommended Order." Defendants' Objections to Recommended Order (April 12, 1982). Incorporated into its objections in an earlier memorandum, filed shortly after the show cause hearing, the University, in an apparent attempt to show that no "grievous wrong" has been suffered by plaintiffs, lauds the Consent Decree as "good" and "workable," including the attorneys' fee provision. Responsive Memorandum of University of Minnesota (March 8, 1982). The memorandum cites the number of claims already filed under the decree and the potential monetary benefits to the class as substantiation for its position. Responsive Memorandum at p. 4.
*406 In theory, this court concurs wholeheartedly with the University's evaluation of the Rajender decree. Since its inception, the Consent Decree has served as a model for the resolution of other complex litigation involving similar issues. Numerous Rajender claimants have availed themselves of the special masters; and in many instances where the plaintiff has prevailed, considerable benefits have been realized. These benefits, inuring to the class following trial or settlement, have included promotion, tenure, back pay and salary increases, some of them substantial. However, the fact that the system has proved workable for some does not mean it has served equally well all for whom it was created to serve.
The affidavit of the law clerk to the special masters, filed in anticipation of the show cause order, expresses an understanding that a number of claimants are unable to secure representation because of the $6,000.00 fee limitation. Corroborating information in the form of affidavits submitted by attorneys for class members indicates that trial preparation for a Rajender claim can be very costly; and even if the claimant prevails, it is unreasonable to expect her to bear the cost of the litigation out of her annual salary or any award of back pay she may receive. At least one attorney stated in her affidavit that she will take no more Rajender cases under the present structure of the Consent Decree. A number of claimants testified at the show cause hearing, and were cross examined by the University, regarding their difficulties in finding an attorney to represent them. Several of the women commented that even if they found attorneys who were interested in their cases, the attorneys eventually declined to represent them because the $6,000 limitation on fees would not begin to compensate them adequately for the work required to prepare the cases for trial. An affidavit from the Deputy Executive Director of the MEA attests to the fact that the union is paying the legal fees of several claimants and that those fees far exceed $6,000 per claimant. However, other evidence indicates that only a small portion of the class is entitled to these legal services and, therefore, the effect of this support on the fee problem as a whole is insignificant.
This evidence clearly shows that claimants without the benefit of the internal procedure are now approaching attorneys with only the rudiments of their cases. Many of those attorneys with enough experience to understand the complexity and length of Title VII litigation refuse to take the cases because the partial fee limitation does not cover expenses or provide sufficient monetary incentive. Therefore, claimants are left to prosecute a claim without counsel in an area of the law which cries out for the attention of an expert. It is the opinion of this court that the present state of the Consent Decree procedures, unforeseen at the time the agreement was approved, grievously wrongs the members of the class and amounts to a frustration of the Decree's stated purpose.
Examination of the record of the show cause hearing evidences the fact that a possible solution to the attorney retention problem was considered by the masters. It was proposed at the hearing that a panel of attorneys be established so that potential claimants would have a pool of professionals, trained in the workings of the Consent Decree, to draw upon for representation of their respective claims. Hearing Transcript, Vol. I, p. 22 (February 16, 1982). While availability of knowledgeable attorneys would no doubt expedite the resolution of Rajender cases, it is the opinion of this court that utilizing the panel without curing the fee limitation problem would not provide an effective solution. Use of the panel represents a step in the right direction; however, comprehensive relief will not be accomplished without more.
The inequity in the present status of the Decree is further reflected by the disparity in amounts paid by the University to its own attorneys in defense of claims and the amounts available to prevailing class members for payment to their respective counsel. The affidavits and billing information submitted by the University pursuant to this Court's request indicate that as of November 24, 1982, the University had paid *407 $691,035.41 to its counsel for work on approximately 260 claims. Although the equivalent information is not available for the class, an example of a recently completed trial serves to illustrate the scope of the disparity. Drs. Schick and Plack, claimants under the Consent Decree, retained a Minneapolis attorney to represent them in their respective claims. The cases were consolidated for trial and heard by Special Master Edward Parker, who, after four weeks of trial, recommended that judgment be entered for the plaintiffs. If the recommended judgment stands on appeal, the maximum amount of money for attorney's fees available to each prevailing plaintiff is $6,000.00. An affidavit submitted by plaintiffs' counsel during the pendency of the trial estimated the cost of the litigation would be between $70,000 and $100,000. Affidavit of Kathleen M. Graham (September 2, 1982). The report on Rajender attorneys' fees prepared for this court by the University and submitted after the close of the Schick and Plack trial indicates the University has paid its own attorneys a total of $117,493.85 in defense of the Schick and Plack claims. This disparity in resources underlines the inequity in the very system designed to promote equality. As stated by the masters, "[t]o retain the $6,000.00 ceiling on fees for claimants, who now must compete in what is a normal complex litigation forum rather than a peer resolution, would transform an agreement fair when made into an `instrument of wrong.'" (Citation omitted.) Memorandum of Special Masters (March 31, 1982).
It is the opinion of this court that the Swift standard for modification of a consent decree has been met. While the court concurs with the masters and adopts their reasoning and proposed changes for the majority of the modifications, it cannot concur with the masters' proposed retention of the concept of partial fees. In light of the failure of the internal grievance procedure to function as planned, reimbursement of full, reasonable attorneys' fees to prevailing plaintiffs seems essential to assure just resolution of the claims filed under the Decree. Anything less would be ambiguous, inequitable and confusing to administer.
Therefore, based upon the recommendations of the masters and an independent review of the files, record, and proceedings, IT IS HEREBY ORDERED That Section II, Paragraph 9, of the Consent Decree is amended as to the first sentence of the second paragraph thereof to read as follows:
In any Claim Proceedings hereunder before a Hearing Panel in which a Claimant finally prevails, she shall receive, in addition to any backpay or other relief to which she may be entitled, her reasonable costs and disbursements which would be recoverable in a Title VII action and a reasonable sum for attorneys' fees which she incurred because of the proceedings.
There shall be no retroactive effect to this portion of the Order except where provided for by previous agreement of the parties.
Because this court has reviewed the masters' remaining recommendations and concurs with the proposed changes and because no specific objections were filed regarding those proposed changes, IT IS HEREBY FURTHER ORDERED That the Consent Decree is modified as follows:
1) That section II, Paragraph 7, shall be amended to delete the third sentence of the third paragraph and substitute therefor the following language:
No transcript of trial proceedings hereunder shall be prepared and filed unless specifically requested by a party to the action; and where a transcript is required, attorneys for both parties shall confer and stipulate to those sections of the transcript deemed necessary. The cost of preparing any such written transcript or portion thereof shall be a cost of the Special Master(s);
2) That Exhibit B, Paragraph 4(1), is amended to delete the reference to The New York Times;
3) That all settlements of claims between claimants and defendants shall be submitted to the Special Masters for ministerial review. All such agreements shall include *408 the substantive terms of the agreement and a specification of remedies agreed upon. Following said ministerial review, the special masters shall file the signed stipulation of dismissal of the parties with the Clerk of District Court.
4) That the Hennepin County Bar Association Lawyer Referral and Information Service is authorized to create a panel of attorneys and to assist in locating competent counsel for members of the class with claims herein. That any panel created be composed of lawyers familiar with the procedures under the Consent Decree and agreeable to the policies and practices of the Lawyers' Referral Service. That membership by an attorney on said panel is voluntary and not a requirement of undertaking representation of Rajender class claimants. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3523085/ | On March 19, 1920, the Assistant Circuit Attorney of the City of St. Louis, Missouri, filed, in the circuit court of said city, his verified information, charging therein that John H. Brown,alias De Priest, on December 27, 1919, at the City of St. Louis aforesaid, did feloniously make an assault on Ben Levin and rob him of $15, etc.
Defendant was formally arraigned, entered a plea of not guilty, was tried before a jury and, on April 27, 1920, a verdict of guilty was returned as follows:
"We, the jury, in the above entitled cause, find the defendant guilty of robbery in the first degree as charged in the information and assess the punishment at imprisonment in the penitentiary for five years."
The prosecuting witness, Ben Levin, a cutter for the Crawford
Meyer Cloth Suit Company, at 9th and Washington Avenue, St. Louis, testified, in substance, that on December 27, 1919, about 8:45 p.m., he was walking to his home at 3200 Locust Street in said city; that when he got to 2900 Locust, the defendant stopped him there, and ordered him to go into the alley; that some one was walking with or near appellant just before this occurred; that defendant told Levin to raise his hands and stand still; that appellant then emptied the *Page 180
pockets of Levin, and took therefrom $15 in money; that defendant had a gun pointed toward Levin, and after he had taken his money, told him to walk straight ahead and to stay in the alley. Levin testified, that he got a good look at Brown, and identified him; that he had seen Brown before and had known his name for a couple of years; that a few weeks later, he saw defendant on the street, and had him arrested; that he saw Brown walking on 18th and Franklin Avenue, and identified him as the man who robbed him; that he had seen defendant frequently at a barber shop at 1500 Franklin Avenue; that he reported the robbery to Officer Wells, but did not at that time, tell him defendant's name; that he had seen Brown many times at Leo's barber shop.
George J. Lawless testified, in substance, that he was a special police officer, and assisted in the arrest of Brown on February 17th, about eight o'clock p.m. at 1813 Franklin Avenue, which was near 905 North 15th Street, where appellant said he lived; that he was present when Levin first saw Brown after the arrest; that Levin identified defendant as the man who held the pistol at the time he was robbed; that Levin had told witness about being robbed at 23rd and Franklin Avenue; that when Brown was arrested, he said it was a mistake, that he did not know anything about it; that defendant requested witness to take him out to Levin's house; that when they reached there, defendant was identified by Levin; that Levin did not give defendant's name in his report to the police station.
Appellant testified, in substance, that he was sometimes called De Priest, because his mother had been married twice; that his name is John H. Brown; that he never used the name of De Priest as an alias to deceive anybody, or hide anything; that he did not, on the night of December 27, 1919, hold up Levin and take money from him on 29th and Locust Street; that he was at the Wiehe Furniture Store that night; that he arrived at the last named place close to 7:30 o'clock, maybe a little before or a little after; that he remained *Page 181
there until 10:30; that he did not leave there between 7:30 and 10:30; that he remembered being at the Wiehe Furniture Store on the night of December 27, 1919, because he got a check that day for $175, and deposited it; that his bank book shows the deposit; that it was a part of his $265.50 of insurance money; that he and Mr. Doring talked about the check while he was in said store; that he exhibited his bank book showing the $175 deposit at that time. His attorney then asked this question:
"Q. Have you ever been convicted of any crime or offense? A. No, sir; never was."
Defendant's bank book was offered in evidence, showing the above entry.
On cross-examination of defendant, the following occurred:
"Q. You say you have never been convicted of a crime? A. No, sir.
"Q. Your name is John H. Brown, isn't it? A. Yes, sir.
"Q. And you are known also as alias De Priest? A. I have been; yes, sir.
"Q. And you are also known as Booby Brown, you are referred to as Booby Brown, and didn't you plead guilty on May 6, 1912, in Division No. 10 of this court, of assault to kill, and weren't you sentenced to one year in the city workhouse? A. I pleaded to malicious assault. . . .
"By MR. REEDER: Q. You plead guilty and you were sentenced to one year in the city workhouse, weren't you? A. Yes, sir, for assault to kill.
"Q. And on April 10, 1911, before that, in this courtroom, didn't you plead guilty to exhibiting a dangerous and deadly weapon, and weren't you sentenced to fifty days in the workhouse? A. What are the dates?
"Q. April 10, 1911. A. I think that is right.
"Q. What do you mean by saying you were never convicted of a crime? A. I misunderstood that.
"Q. You didn't think I had the record, did you? A. I never thought anything like that, I thought it was *Page 182
about any theft or robbery, that is what I was answering, I didn't need to say no."
He said he was playing cards with other men at the Wiehe Furniture Store, on the night of December 27, 1919; that he could not remember other dates when he was playing cards at above store; that he remembers the date, because it was shortly after Christmas.
Eric Doring, Edgar Allison, Edward H. Rife and Harry Fox, each testified, in substance, that he was at the Wiehe Furniture Store on the night of December 27, 1919; that defendant Brown was there from 7:30 to 10:30 o'clock that night, and the above parties were playing cards; that Rife was balancing his books. Allison, had known Brown about six years. Rife had known him about fifteen years, and Fox had known him about eight or nine years.
The foregoing covers substantially all the testimony in the case. The instructions and rulings of the court will be considered, as far as necessary, in the opinion.
The defendant, in due time, filed his motion for a new trial, which was overruled. After being duly sentenced in conformity to the verdict, defendant was granted an appeal to this court.
I. A single assignment of error is presented and discussed in appellant's brief, which reads as follows:
"The evidence is not substantial enough to sustain the verdict."
It may be conceded that, unless the record containssubstantial evidence tending to show defendant's guilt, it becomes our plain duty to reverse the case and discharge him from custody. [State v. Kelsay, 228 S.W. (Mo.) l.c. 756, and cases cited.]
We have made a very full statement of the facts heretofore, and it will only be necessary to refer to same as occasion requires.
The testimony of Ben Levin, the prosecuting witness, is clear and positive that about 8:45 p.m. on December 27, 1919, the defendant Brown, in the City of St. Louis, Missouri, held him up at the point of a gun, *Page 183
and robbed him of $15. He testified, that as soon as defendant stopped him, he looked in Brown's face, and knew him well; that he had been going to Leo's barber shop at 1515 Franklin Avenue during the last five years, and had seen defendant Brown there many times; that immediately after the robbery he went straight to the Dayton Police Station and reported it; that he did not report the robbery as occurring at 23rd and Franklin Avenue; that he identified defendant after the robbery, as the man who held the pistol and took his money; that he recognized defendant, when the latter was brought to the house of witness by the officer; that he recognized defendant Brown at the trial of the case, as the man who robbed him on the night of December 27, 1919.
George J. Lawless, a special police officer, testified that he assisted in arresting defendant on February 17, 1919; that he was present when Levin first saw defendant after the arrest; that Levin then identified Brown at the man who held the pistol at the time of the robbery; that after the arrest of Brown, he (witness) called up the 9th district, where 23rd and Franklin is located, to find out if a report of the robbery had been made, and the ninth district said, Levin come in there on the night of the 27th and complained of being robbed of $15 at 23rd and Franklin Avenue.
Thereupon the State rested, and no demurrer to the evidence was interposed.
Doring, Allison, Rife and Fox each testified that defendant was with them at the store of the Wiehe Furniture Co. on the night of December 27, 1919; that he was with them from 7:30 to 10:30 o'clock that night.
The defendant denied that he robbed Levin, and alleged that he was with his friends at the store of the Furniture Company on the above date.
It was not a material issue as to whether Levin was robbed on Locust Street, or on 23rd and Franklin Avenue, except in so far as it affected his credibility. The jurors may have concluded that Levin was right, and the other testimony wrong, in regard to place of *Page 184
robbery. They were more interested in determining whether defendant held up Levin at the point of a gun, in the city of St. Louis, Missouri, and robbed him of $15, on the night of December 27, 1919. The jurors may have concluded that on the last named date the sun set before five o'clock, and that the robbery occurred before defendant went to the furniture store, if he was there that night. The jurors heard these friends of defendant testify as to appellant's presence at the store that night, between 7:30 and 10:30 p.m., and may not have believed their testimony to be true. The jury may have believed that Levin was mistaken as to the place where he claimed to have been robbed, and yet may have been satisfied from the evidence that defendant robbed him of the $15 in said city, on above date. None of appellant's witnesses testified as to defendant's previous character. We are of the opinion that there was substantial evidence before the jury, tending to show that defendant was guily as charged in the information.
It was the peculiar province of the jury to pass upon the facts. The witnesses were present in court where the jury and trial court could hear them testify, and determine what weight should be given their testimony. There is nothing in the record to indicate that the jury was actuated by either passion or prejudice. On the other hand, it appears from the record that defendant received a fair and impartial trial before the jury. The judge who tried this case had the witnesses before him, and heard them testify. He overruled defendant's motion for a new trial and, in so doing necessarily held that he was convicted on substantial evidence. On the record before us, we do not feel that this court would be justified in reversing the case or remanding it for a new trial.
The above assignment of error is accordingly overruled.
II. Only one assignment of error is presented in appellant's brief, which has been disposed of in the preceding proposition, but as the motion for a new trial *Page 185
complains of other alleged errors, we have carefully examined the record, as well as briefs of counsel, with the view of passing on same. We are of the opinion that the information isOther good; that the instructions given by the courtAssignments. fairly and properly declare the law that was necessary for the jury to intelligently pass on all the issues in the case; that no error was committed by the court during the progress of the trial of which defendant can legally complain; and that the defendant has been legally convicted upon substantial evidence after a fair and impartial trial.
The judgment of the trial court is accordingly affirmed.White and Reeves, CC., concur. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2806439/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE COLONIAL BANCGROUP, INC.,
As post-confirmation debtor,
and KEVIN O'HALLORAN, as plan
trustee acting for and on
behalf of the debtor,
Plaintiffs,
v.
PRICEWATERHOUSECOOPERS LLP, Civil Action No. 15-mc-201 (GK)
A United States limited Civil Action No. 15-mc-213 (GK)
liability partnership; CROWE
HORWATH LLP, a United States
limited liability partnership
Defendants.
FEDERAL DEPOSIT INSURANCE
CORPORATION as receiver for
COLONIAL BANK
Plaintiff
v.
PRICEWATERHOUSECOOPERS, LLP
and CROWE HORWATH, LLP,
Defendants.
MEMORANDUM OPINION
The Board of Governors of the Federal Reserve System
("Board"), the Federal Deposit Insurance Corporation ("FDIC"), and
the Office of the Comptroller of the Currency ("OCC") have asked
this Court to quash third party subpoenas served in connection
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with litigation pending in the Middle District of Alabama 1 (the
"Alabama Actions").
On February 13, 2015, the OCC filed a Motion to Quash ("OCC
Motion") [15-mc-201, Dkt. No. 1] with this Court, and on February
19, 2015, the FDIC and Board filed a related Motion to Quash ("FDIC
Motion") [15-mc-213, Dkt. No. 1] . On March 9, 2015,
PricewaterhouseCoopers LLP ("PwC") filed its Opposition ("PwC
Opp'n") [15-mc-201, Dkt. No. 11] to the OCC Motion. On March 10,
2015, Crowe Horwath LLP ("Crowe") filed its Opposition ("Crowe
Opp'n") [15-201, Dkt. No. 14; 15-mc-213, Dkt. No. 6] to both the
OCC and FDIC Motions. On March 26, 2015, the OCC filed its Reply
("OCC Reply") [15-mc-201, Dkt. No. 16] and the FDIC and Board filed
their Reply ("FDIC Reply") [15-mc-213, Dkt. No. 9]. Crowe also
filed a Sur-Reply ("Crowe Sur-Reply") [15-mc-201, Dkt. No. 22] on
May 27, 2015.
Upon consideration of the Motions, Oppositions, Reply, Sur-
Reply, the entire record herein, and for the reasons stated below,
the OCC's Motion to Quash is granted in part and denied in part,
and the FDIC's Motion to Quash is granted.
1 The cases, which have been consolidated, are Colonial BancGroup,
Inc., et al. v. PricewaterhouseCoopers LLP & Crowe Horwath LLP,
Civ. No. 2:11-cv-00746-WKW (M.D. Ala.) and Federal Deposit
Insurance Corporation v. PricewaterhouseCoopers LLP & Crowe
Horwath LLP, Civ. No. 2:12-cv-00957-WKW (M.D. Ala.).
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I . BACKGROUND
The Alabama Actions involve claims stemming from the 2009
failure of Colonial Bank, Montgomery, AL ("Colonial" or "Bank"),
asserted by the FDIC as Receiver ("FDIC-R") against Crowe,
Colonial' s former internal auditor, and PwC, Colonial' s former
outside auditor (collectively, "Defendants"). OCC Mot. at 2.
Colonial's failure was caused in part by a multi-year fraud in its
Mortgage Warehouse Lending Division ("MWLD"). The FDIC-R alleges,
inter alia, that the Defendants breached their professional duties
by failing to discover the fraud. Id. The Board, FDIC, and OCC are
not parties to the Alabama Actions.
On November 26, 2014, Defendants served a subpoena duces tecum
on the OCC (the "Document Subpoena") 2 • See OCC Mot. , Exhibit D.
The Document Subpoena contains thirteen requests, which can be
summarized as follows:
• Request 1 relates to OCC's supervision of Colonial;
• Request 2 relates to Colonial's internal audit function;
• Request 3 relates to internal audit work performed by
Crowe;
• Request 4 relates to external audit work performed by PwC;
• Request 5 relates to Colonial's charter change;
2 Subpoenas duces tecum were also served on the Board and FDIC,
but the Board and FDIC have not moved· to quash them, and they are
not at issue here. Crowe Opp'n at 5.
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• Request 6 relates to Taylor Bean & Whitaker Mortgage Corp.
("TBW") and Ocala Funding LLC;
• Request 7 is for identification of OCC employees who
examined Colonial;
•· Request 8 relates to Colonial's activity after OCC's
supervision ended;
• Request 9 relates to documents the OCC produced or received
in litigation in connection with Colonial or TBW;
• Requests 10-12 are for internal and draft documents
relating to the Interagency Policy Statement on the
Internal Audit Function and Its Outsourcing, dated March
17, 2003 (the "Interagency Policy Statement"); and
• Request 13 relates to the FDIC Off ice of Inspector
General's Material Loss Review ("MLR") of Colonial.
In addition to the Document Subpoena, on February 4, 2015,
Defendant Crowe served subpoenas ad testif icandum on four banking
regulators (the "Deposition Subpoenas") : Arthur Lindo (Senior
Associate Director for Policy, Division of Banking Supervision &
Regulation, Board) , Doreen Eberley (Director, Di vision of Risk
Management Supervision, FDIC) , Jennifer Kelly (Senior Deputy
Comptroller and Chief National Bank Examiner, OCC), and Judith
Dupre (FDIC employee and Executive Secretary of the Federal
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Financial Institutions Examination Council). OCC Mot., Ex. E; FDIC
Mot., Ex. 1.
The OCC has only moved to quash Requests 1-7 and 10-12, and
therefore Requests 8-9 and 13 are not at issue here. See OCC Mot.
at 5, n. 1. After the Motions to Quash were filed, Defendants
narrowed their Interagency Policy Statement requests to exclude
all documents pre-dating the promulgation of the Interagency
Policy Statement. Crowe Opp'n at 4-5, 24. In addition, Crowe is no
longer pursuing Ms. Dupre's deposition in light of her declaration
that she does not know any relevant facts. Crowe Opp'n at 31.
II. Analysis
"The quashing of a subpoena is an extraordinary measure, and
is usually inappropriate absent extraordinary circumstances. A
court should be loath to quash a subpoena if other protection of
less absolute character is possible. Consequently, the movant's
burden is greater for a motion to quash than if she were seeking
more limited protection." U.S. Dep't of the Treasury v. Pension
Benefit Guar. Corp.,. 301 F.R.D. 20, 25 (D.D.C. 2014) (internal
citation omitted) . The OCC, FDIC, and Board have the burden of
demonstrating that they are entitled to this extraordinary relief.
Id.
A party "may obtain discovery regarding any nonpri vileged
matter that is relevant to any party's claim or defense . [or
which] appears reasonably calculated to lead to the discovery of
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admissible evidence." Fed. R. Ci v. P. 2 6 (b) ( 1) . " [T] he general
policy favoring broad discovery is particularly applicable where
the court making the relevance determination has jurisdiction
only over the discovery dispute, and hence has less familiarity
with the intricacies of the governing substantive law than does
the court overseeing the underlying litigation." Jewish War
Veterans of the United States of Am., Inc. v. Gates, 506 F. Supp. 2d
30, 42 (D.D.C. 2007).
A. The Document Subpoenas
1. Requests 1-7
The OCC argues that Requests 1-7 should be quashed because
the documents sought are not relevant. See OCC Mot. at 11-18. The
OCC states that Defendants seek the documents to "shield themselves
from liability based on [] pre-receivership conduct of the OCC or
another prudential regulator." OCC Mot. at 12. It is well-
established that a defendant in an FDIC-R action cannot raise an
affirmative defense based on the pre-receivership conduct of a
banking regulator, and therefore, the OCC argues, Requests 1-7 are
legally irrelevant. See id.; Grant Thornton, LLP v. FDIC, 535 F.
Supp. 2d 676, 722 (S.D.W. Va. 2007), rev'd on other grounds sub
nom. Ellis v. Grant Thornton LLP, 530 F.3d 280 (4th Cir. 2008)
(collecting cases and concluding that "[c] ourts have uniformly
held that claims or defenses based upon pre-receivership actions
of regulators are legally insufficient")
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Defendants respond that they are not seeking the documents to
shield themselves from liability or to show that the OCC owed
Colonial a duty. Rather, they are seeking the documents in order
to respond to the Alabama plaintiffs' arguments that the fraud was
easy to catch and that the accountants were negligent in not doing
so. Crowe Opp'n at 8.
While the OCC has no responsibility for auditing banks, it
has an enormous amount of responsibility for the supervision and
monitoring of banks. PwC contends that the documents generated by
and within the OCC are relevant because they "would reflect real-
time observations, analyses, and assessments of bank management,
the MWLD, risk factors, controls, audits, and other aspects of the
bank that relate directly to the claims and defenses in the
[Alabama Actions] , or at least reasonably could lead to information
bearing on the issues in the [Alabama Actions]." PwC Opp'n at 11.
Construing relevance liberally for purposes of discovery,
Food Lion, Inc. v. United Food & Comm'l Workers Int'l Union, 103
F.3d 1007, 1012 (D.C. Cir. 1997), the Court concludes that Requests
1-7 are all relevant.
Relevance is not the end of the inquiry though. The "undue
burden" standard of Federal Rule of Civil Procedure 45 "requires
district courts supervising discovery to be generally sensitive to
the costs imposed on third parties." Watts v. S. E. C., 482 F.3d
501, 509 (D.C. Cir. 2007). Federal Rule of Civil Procedure
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26 (b) (1) - (2) requires district courts to consider a number of
factors pertaining to the question of undue burden, including:
whether the discovery is "unreasonably cumulative or duplicative";
whether the discovery sought is "obtainable from some other source
that is more convenient, less burdensome, or less expensive"; and
whether "the burden or expense of the proposed discovery outweighs
its likely benefit, taking into account the needs of the case, the
amount in controversy, the parties' resources, the importance of
the issues at stake in the litigation, and the importance of the
proposed discovery in resolving the issues." Fed. R. Civ. Pro. 26;
Watts, 482 F.3d at 509.
The OCC has offered to provide . a breadth of documents to
Defendants, and contends that these documents are "more than
sufficient to meet the Defendants' needs" with regard to Requests
1-7. The OCC argues that any further production would be an undue
burden. OCC Mot. at 18.
The OCC has offered to produce a copy of its "Transition
Binder," which it compiled and provided to Colonial's new
regulators "to give them an up-to-date and comprehensive
understanding of the OCC's conclusions regarding [Colonial] from
the time of the last completed OCC examination until the time of
[Colonial] Bank's transition to the state charter." OCC Reply at
8, n. 8. The OCC has also offered to not object to the FDIC-R's
production of all OCC supervisory correspondence that was in
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Colonial' s possession, as well as to supplement any ·advisory
correspondence that is missing from Colonial's records. See id.
The supervisory correspondence includes "the OCC's completed ROEs,
Supervisory Letters, emails, and any other supervisory
correspondence that the OCC routinely provided to Colonial during
the time it was under the OCC's supervision." Id.
According to the OCC, these documents constitute "the
entirety of the OCC's considered conclusions and assessments of
Colonial covering the duration of the OCC's supervision of the
institution." OCC Mot. at 20. Defendants argue that the remaining
documents, such as work papers, records of meetings, and email
exchanges are relevant. PwC Opp'n at 12.
The documents Defendants seek in addition to those already
offered by the OCC are likely to be "unreasonably cumulative or
duplicative," and, taking into account "the importance of the
proposed discovery in resolving the issues," the burden and expense
of the proposed discovery outweighs its likely benefit. Fed. R.
Civ. Pro. 26(b) (2) (C).
Therefore, the OCC's Motion to Quash the Document Subpoena
with regard to Requests 1-7 is granted to the extent Defendants
seek documents beyond those already offered by the OCC. The OCC
shall provide the "Transition Binder" to Defendants and produce
all correspondence with Colonial that occurred over the OCC' s
secure email server for the relevant time period, as defined in
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the Document Subpoena. 3 In addition, the OCC shall not object to
the FDIC-R's production of all OCC supervisory documents in
Colonial's possession.
2. Requests 10-12
The OCC also argues that information relating to the
Interagency Policy Statement (Requests 10-12) 4 is irrelevant. OCC
Mot. at 16-18. Defendants counter that the Interagency Policy
Statement and related documents are relevant to defining the scope
and nature of Defendants' duty to Colonial. Crowe Opp'n at 15-17.
The Court agrees that while the Interagency Policy Statement
is itself relevant, Defendants are seeking a broad range of
documents related to it, many of which have little or no relevance
to the Alabama Actions or Defendants' duty of care. Defendants
clearly explain how the Interagency Policy Statement itself is
relevant, but put forward very little explanation as to why the
3 In its Sur-Reply, Crowe states that the OCC used a secure email
program to correspond with Colonial during OCC's supervision of
Colonial, and that these emails are either not available in the
FDIC-R's production or are not easily accessible. See Crowe Sur-
Reply at 2. Given the difficulties in identifying, accessing, and
authenticating the emails sent over the OCC's secure server, the
Court cannot feel confident that the documents produced by the
FDIC-R constitute the "the entirety of the OCC's considered
conclusions and assessments of Colonial," OCC Mot. at 20, unless
the OCC produces the correspondence sent using the secure email
program.
4 As noted previously, Defendants narrowed their requests so they
now seek only "post-decisional documents concerning the
implementation and interpretation df the Interagency Policy
Statement." Crowe Opp'n at 26.
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related documents they seek are relevant. See Crowe Opp'n at 15-
20.
The OCC's position is that all relevant documents regarding
the Interagency Policy Statement are publicly available, including
the Interagency Policy Statement itself, published guidance
regarding internal and external audits, news releases, and the
Comptroller's Handbook: Internal and External Audits. OCC Reply
at 11. The OCC states that there is no non-public OCC guidance
with respect to the Interagency Policy Statement, nor have there
been any OCC amendments or modifications to the Interagency Policy
Statement since its issuance. Id. at 11.
Given the attenuated relevance of any non-public Interagency
Policy Statement documents, and the burden in producing them, OCC's
Motion to Quash Requests 10-12 is granted.
B. The Deposition Subpoenas
In addition to documents, Defendant Crowe seeks the
deposition testimony of three officials. It is undisputed that
Crowe did not submit administrative requests to the Board, FDIC,
or OCC prior to serving the Deposition Subpoenas, as required by
the regulations of each respective agency. See United States ex
rel. Touhy v. Ragen, 340 U.S. 462, 468 (1951) (discovery from a
non-party federal agency is subject to the regulations promulgated
by that agency); 12 C.F.R. § 4.31 et seq. (OCC regulations); 12
C.F.R. § 261.22 (b) (Board regulations); 12 C.F.R. •§ 309.6 (FDIC
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regulations). Crowe's explanation for this failure is that,
because the agencies said they would never agree to any depositions
concerning the Interagency Policy Statement, sending a formal
letter "seemed an exercise in inevitable futility." Crowe Opp'n at
31.
The agencies' requirements to submit an administrative
request for information prior to seeking relief from the court are
clear. Counsel cannot independently decide that it need not comply
with the regulations simply because it will be a losing
proposition.
The Supreme Court has long recognized the general rule that
a party must exhaust· its administrative remedies before seeking
relief from federal courts. See McCarthy v. Madigan, 503 U.S. 140,
144-45 (1992). The exhaustion doctrine serves the interests of
judicial economy, by offering an agency the opportunity to correct
its own errors and to develop an administrative record, and
separation of powers, by assuring that courts do not unduly intrude
into the operations of executive branch administrative agencies.
Id.
While Crowe suggests that a party's failure to comply with
Touhy is not always fatal to a subpoena, it provides limited
support for this proposition. See Crowe Opp'n at 31 (citing
Forstmann Leff Assocs. v. American Brands, 1991 WL 168002, at *2
(S.D.N.Y. Aug. 16, 1991)); OCC Reply at 13. In any case, Crowe has
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not presented exceptional circumstances that would warrant an
exception to the requirement that it exhaust its administrative
remedies.
In light of Crowe's failure to comply with the OCC, FDIC, and
Board's administrative requirements, the OCC and FDIC's Motions to
Quash are granted with regard to the three Deposition Subpoenas.
Because the Motions are quashed on other grounds, the Court need
not determine whether the proposed deponents are protected under
the high government official doctrine at this time.
III. Conclusion
For the foregoing reasons, Defendant's Motion to Quash
shall be granted in part and denied in part. An Order shall
accompany this Memorandum Opinion.
June 8, 2015
Judge
Copies to: attorneys on record via ECF
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https://www.courtlistener.com/api/rest/v3/opinions/2830919/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-3448
C.W. and E.W., by Guardians and Next Friends
ADELE A. WOOD and JASON A. WOOD,
Plaintiffs-Appellants,
v.
TEXTRON, INC.,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, South Bend Division.
No. 3:10 CV 87 — Philip P. Simon, Chief Judge.
____________________
ARGUED MAY 18, 2015 — DECIDED AUGUST 26, 2015
____________________
Before KANNE and SYKES, Circuit Judges, and Ellis, District
Judge.*
KANNE, Circuit Judge. Government regulators and scien-
tists agree: exposure to vinyl chloride poses serious health
*TheHonorable Sara L. Ellis, of the United States District Court for the
Northern District of Illinois, sitting by designation.
2 No. 14-3448
risks to humans. Vinyl chloride is a known carcinogen, mu-
tagen, and genotoxin.1 But in what quantity and for how
long must a human—in this case, two infant children—be
exposed to vinyl chloride before those health risks material-
ize? The experts for C.W. and E.W., the minor children of Ja-
son and Adele Wood, attempted to answer these difficult
questions in this toxic-tort case.
Unfortunately for the Woods, their attempts fell short.
The district court excluded each of the appellants’ experts,
observing they did not use reliable bases to support their
opinions. Having excluded the appellants’ experts, the dis-
trict court then granted summary judgment in favor of Tex-
tron. It found that, without the experts’ opinions, the appel-
lants could not prove general and specific causation—
required elements under Indiana law in a toxic-tort case.
Although we disagree with the district court’s rationale re-
garding causation, we nevertheless affirm.
I. BACKGROUND
A. Preliminary History
Textron began operations at its fastener manufacturing
plant in Rochester, Indiana, in 1954. The Torx plant, as it
came to be known, proved to be successful; it remained in
operation through 2006. During its operations, however, the
1 For the sake of clarity (primarily our own), we define scientific terms as
the need arises. This occasion presents such a need. In reverse order: a
genotoxin is a poisonous substance that damages DNA; a mutagen is
something that is capable of causing mutations to DNA; and a carcino-
gen is something that causes cancer. MedicineNet.com Home Page, avail-
able at search.medicinenet.com (last visited Aug. 5, 2015).
No. 14-3448 3
plant released vinyl chloride—a toxic gas. That vinyl chlo-
ride eventually seeped into the ground water, contaminating
nearby residential wells.
One of those wells belonged to the Woods. Both Textron
and the Indiana Department of Environmental Management
performed testing on the Woods’ well. Their tests revealed
varying levels of vinyl chloride—from 5.00 and 8.40 parts
per billion to 8.60 and 9.00 parts per billion.2
Once the Woods learned that this toxic substance had
contaminated their well, they understandably left immedi-
ately. Jason and Adele believed the health risks to their chil-
dren were simply too high to remain at the Rochester house.
But in the Woods’ opinion, there was more at stake than the
future risk of cancer; there was the present risk of illness.
While living at the Rochester house, C.W. and E.W. experi-
enced gastrointestinal issues (vomiting, bloody stools), im-
munological issues, and neurological issues.
The Woods adopted their son, C.W., when he was eleven
weeks old. He came home on May 11, 2007. The Woods
adopted their daughter, E.W., when she was eleven days old.
She came home on April 25, 2008. Both children were
younger than two years old when the entire family left the
Rochester house in November 2008. Their illnesses coincided
with their time spent in that house.
After the Woods moved from that house, C.W.’s and
E.W.’s health improved. But the parents’ concerns did not
abate. Fearful that vinyl chloride caused C.W.’s and E.W.’s
2The appellants’ experts later estimated that C.W. and E.W. ingested
water contaminated by vinyl chloride at 3 parts per billion.
4 No. 14-3448
conditions (and mindful of the known cancer risks), Jason
and Adele sued Textron on behalf of their children in Fulton
County Circuit Court. There, they advanced a three-count
complaint, alleging negligence, negligence per se, and negli-
gent infliction of emotional distress.3 The crux of these Indi-
ana tort-law claims was that Textron exposed C.W. and E.W.
to vinyl chloride, which caused their illnesses and substan-
tially increased their risk of cancer and other adverse health
effects. Just one week after the filing of the complaint, Tex-
tron successfully removed the case to federal court. 28 U.S.C.
§§ 1332, 1441, 1446. The appellants then filed a Second
Amended Complaint, this time in federal court, to add a
fourth count for willful and wanton misconduct.
The case proceeded through discovery and the marshal-
ing of experts until, nearly four years after the appellants
filed their original complaint, Textron filed a motion in
limine to exclude the appellants’ three expert witnesses. As
we noted above, that motion was successful; the district
court granted it in its entirety. The district court then found
that, without the experts, the appellants could not prove
general or specific causation. It granted summary judgment
in favor of Textron on all of the appellants’ claims.
Before we turn our attention to the experts, we note that
there are a number of contested facts that are not at issue in
this appeal. For example, this appeal is not about whether, or
with what frequency, Jason and Adele used bottled instead
of tap water to make formula for their infant children. Nor is
3 In their Second Amended Complaint, the appellants added a fourth
count for willful and wanton misconduct.
No. 14-3448 5
this appeal about whether Jason and Adele’s reverse-
osmosis-water-filtration system sufficiently guarded the
children against unacceptable levels of vinyl chloride.
Instead, this appeal is about whether the district court
abused its discretion in excluding the appellants’ experts
based on the reliability of their methodology, and if it did not
abuse its discretion, whether we should affirm its grant of
summary judgment in favor of Textron. See Anderson v. Liber-
ty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Only disputes over
facts that might affect the outcome of the suit under govern-
ing law will properly preclude the entry of summary judg-
ment.”).
B. The Experts
Because our jurisdiction is based on diversity of citizen-
ship, we apply federal procedural law and state substantive
law. Allen v. Cedar Real Estate Grp., LLP, 236 F.3d 374, 380 (7th
Cir. 2001) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).
The parties do not dispute that Indiana substantive law ap-
plies here. To prove their toxic-tort claims under Indiana law,
the appellants needed to present evidence of general and
specific causation. 7-Eleven, Inc. v. Bowens, 857 N.E.2d 382,
389 (Ind. Ct. App. 2006). General causation examines wheth-
er the substance—in this case, vinyl chloride—“had the ca-
pacity to cause the harm alleged[.]” Id. (emphasis added).
Specific causation, by contrast, examines whether the sub-
stance did, in fact, cause the harm alleged. Id. (emphasis
added). To satisfy this bifurcated burden, the plaintiffs of-
fered the testimony of three experts: (1) Dr. James G.
Dahlgren; (2) Dr. Vera S. Byers; and (3) Dr. Jill E. Ryer-
Powder.
6 No. 14-3448
Both parties agree that these experts are well-qualified.
So we can set that issue to the side. The dispute before us
concerns the reliability of the methodology they employed in
generating their expert opinions. The following section high-
lights their methodology as well as the district court’s ra-
tionale in rejecting it. We begin with Dr. Dahlgren.
1. Dr. James G. Dahlgren
Dr. Dahlgren offered opinions on both general and spe-
cific causation, testifying that, in his judgment, vinyl chlo-
ride can cause and did cause the children’s illnesses. He also
opined that it is highly likely that both children will develop
cancer at some point in the future. He based these opinions
on a differential etiology4 and the fact that levels of vinyl
chloride detected in the appellants’ water supply exceeded
the regulatory levels set by the United States Environmental
Protection Agency (“EPA”) and the Indiana Department of
Environmental Management, among other government
agencies. Dr. Dahlgren also based his opinions on timing, or
in his words, “temporality.” In his view, the fact that the ap-
pellants’ symptoms began after exposure to vinyl chloride
4 “Etiology is the study of causation.” Myers v. Ill. Cent. R.R. Co., 629 F.3d
639, 644 (7th Cir. 2010) (citations omitted). A differential etiology is a
process-of-elimination approach to determining a subject’s cause of inju-
ry. Under this method, an expert “considers all relevant potential causes
of the symptoms and then eliminates alternative causes.” Federal Judicial
Center, Reference Manual on Scientific Evidence 214 (1994). Although the
parties and the district court below refer to this method as a “differential
diagnosis,” that term is really a misnomer. A “diagnosis” is concerned
only about naming the condition or ailment, not establishing its cause.
Id.; see also Happel v. Walmart Stores, Inc., 602 F.3d 820, 825 n.7 (7th Cir.
2010).
No. 14-3448 7
and lessened after removal helps demonstrate that vinyl
chloride is the cause.
As for Dr. Dahlgren’s differential etiology, it is largely
based on the findings (or lack thereof) of other doctors who
have examined C.W. and E.W. To be sure, Dr. Dahlgren con-
ducted physical examinations of both C.W. and E.W. He also
reviewed their medical records. But his differential etiology
is silent on these matters. According to Dr. Dahlgren, “[t]he
scientific studies … demonstrate that damage to the immune
system and the nervous system are known to be caused by
[vinyl chloride] exposure. The thorough evaluations by the chil-
drens’ [sic] doctors have not found an alternative explanation … .”
(emphasis added).
Thus, to accept Dr. Dahlgren’s approach to differential
etiology, one must accept both the scientific studies upon
which Dr. Dahlgren relied and the care taken by the doctors
who examined C.W. and E.W. One must also accept that vi-
nyl chloride should be ruled in as a possible cause at all—a
point we address below.
The district court found Dr. Dahlgren’s methodology to
be unreliable. Citing Cunningham v. Masterwear Corp., 569
F.3d 673, 674–75 (7th Cir. 2009), it first found that Dr.
Dahlgren could not rely on regulatory exceedances to
demonstrate causation. Second, the district court found that
Dr. Dahlgren failed to connect the dots between the scientific
studies that he analyzed and the opinions that he offered.
This is a Joiner problem. In Gen. Elec. v. Joiner, 522 U.S. 136,
138 (1997), the Supreme Court decided to apply the abuse of
discretion standard in reviewing the admission or exclusion
of expert testimony. Affirming the district court’s exclusion
of the experts there, the Court held that “nothing in either
8 No. 14-3448
Daubert or the Federal Rules of Evidence requires a district
court to admit opinion evidence which is connected to exist-
ing data only by the ipse dixit of the expert. A court may con-
clude that there is simply too great an analytical gap be-
tween the data and the opinion proffered.” Id. at 146 (cita-
tions omitted).
In the case before us, the district judge found fault in the
studies that Dr. Dahlgren relied upon. “These articles … fail
to establish that [vinyl chloride] at the dose and duration
present in this case could cause the problems that the
[p]laintiffs have experienced or claim that they are likely to
experience.” C.W. v. Textron, 2014 U.S. Dist. LEXIS 34938, at
*53 (N.D. Ind. Mar. 17, 2014) (“Textron I”). The district judge
then rejected Dr. Dahlgren’s efforts to apply those studies to
this case. Id. at *45 (“The problem again, however, is that …
Dahlgren fails to bridge [the] gap by explaining how he is
able to extrapolate” from those studies).
2. Dr. Vera S. Byers
Like Dr. Dahlgren, Dr. Byers also offered opinions on
both general and specific causation. In her view, exposure to
vinyl chloride can cause and did cause the children’s illnesses.
She traced the children’s exposure to vinyl chloride to their
ingestion of contaminated drinking water, inhalation of va-
pors from bathing, and dermal contact. She then linked that
exposure to their gastrointestinal and immune-system prob-
lems. “The GI problems suffered by both children,” Dr.
Byers wrote, “are consistent with the adverse events associ-
ated with vinyl chloride exposure.” As for the appellants’
immune-system issues, she noted that C.W. and E.W. have a
“very similar pattern of elevated … immune complexes … .
Given that these two children are genetically unrelated, the
No. 14-3448 9
most probable cause of this acquired immune complex com-
plement activation is the Vinyl Chloride exposure.” Dr.
Byers admitted that she knew little about C.W.’s and E.W.’s
family medical histories. She further opined that both chil-
dren are now at a heightened risk level for developing can-
cer.
Like Dr. Dahlgren, Dr. Byers based her opinion, in part,
on a differential etiology. For E.W., Dr. Byers ruled in:
Congenital structural abnormalities
Infectious agents including viral
Degenerative
Neoplastic
Toxicity including allergies or in this case exposure
to vinyl chloride
Metabolic disorders
Psycho-social issues
She then ruled out each alternative explanation until siding
with vinyl chloride as the specific cause.5 To buttress her
conclusion, Dr. Byers also relied on timing. “Vinyl Chloride
exposure is the most probable cause of [E.W.’s] acute symp-
toms[,]” she opined. “Both children suffered these symp-
toms, most seriously by [E.W.], and both childrens’ [sic]
symptoms subsided when the exposure ceased.”
Once again, to accept Dr. Byers’s approach, one must ac-
cept as relevant the scientific studies upon which Dr. Byers
relied. One must also accept that vinyl chloride should be
5 Dr. Byers’s report does not discuss a differential etiology for C.W.
10 No. 14-3448
ruled in as a possible cause in the first place. The district
court accepted neither. It excluded Dr. Byers based on her
attenuated studies and on her failure to adequately extrapo-
late from them.
3. Dr. Jill E. Ryer-Powder
That brings us to Dr. Ryer-Powder. In her initial report of
August 17, 2011, she addressed the issue of general causa-
tion. Dr. Ryer-Powder claimed that the children’s exposure to
vinyl chloride was “at levels sufficient to cause harm” dur-
ing the applicable time period. She further claimed that this
same level of exposure was “sufficient to present an unac-
ceptable risk of cancer in the future.” Like Dr. Byers, she tied
the appellants’ exposure to ingestion, inhalation, and dermal
contact with vinyl chloride.
For largely the same reasons the district court excluded
the testimony of Doctors Dahlgren and Byers, the district
court also excluded the testimony of Dr. Ryer-Powder. For
example, Dr. Ryer-Powder relied on regulatory exceedances
to formulate her opinion as to causation: “One means by
which the health risks from exposures to chemicals can be
assessed is by comparison to government standards and
regulations.” She found that in this case, the Woods’ drink-
ing water exceeded the standards set by relevant govern-
ment agencies. So in her view, that meant vinyl chloride was
within the realm of possible causes for the appellants’ inju-
ries.
Dr. Ryer-Powder also relied on attenuated studies con-
cerning much higher exposure levels of vinyl chloride than
the ones experienced here. As with Doctors Dahlgren and
Byers, the district court found that she did not do the neces-
No. 14-3448 11
sary work of extrapolating from those studies to C.W. and
E.W. In sum, the district court found that Dr. Ryer-Powder
did not offer a reliable basis to support her proffered opin-
ion.
With this overview in mind, we turn to the merits.
II. ANALYSIS
A. Principles of Law
1. Admissibility of Expert Testimony
Federal Rule of Evidence 702 and Daubert v. Merrell Dow
Pharmaceuticals., Inc., 509 U.S. 579 (1993), govern the admis-
sion of expert testimony in federal courts, even when our ju-
risdiction rests on diversity. See Wallace v. McGlothan, 606
F.3d 410, 419 (7th Cir. 2010) (holding “standards for admit-
ting expert evidence” are “matters that fall on the procedural
side of the Erie divide,” and are thus governed by federal
law) (citations omitted). Daubert itself commenced as a state
court action before it was removed to the Southern District
of California on diversity grounds. 509 U.S. at 582.
Rule 702 provides:
A witness who is qualified as an expert by
knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise
if: (a) the expert’s scientific, technical, or other spe-
cialized knowledge will help the trier of fact to un-
derstand the evidence or to determine a fact in is-
sue; (b) the testimony is based on sufficient facts or
data; (c) the testimony is the product of reliable
principles and methods; and (d) the expert has reli-
ably applied the principles and methods to the facts
of the case.
12 No. 14-3448
Fed. R. Evid. 702. Under this rule, expert testimony must not
only assist the trier of fact. It must also demonstrate suffi-
cient reliability—a key concern of the district court below. Id.
The district court is the gatekeeper of expert testimony.6
We stress that “the key to the gate is not the ultimate cor-
rectness of the expert’s conclusions. Instead, it is the sound-
ness and care with which the expert arrived at her opin-
ion[.]”Schultz v. Akzo Nobel Paints, LLC, 721 F.3d 426, 431 (7th
Cir. 2013) (citations omitted).
Daubert provides several guideposts for determining reli-
ability. These guideposts examine (1) whether the scientific
theory has been or can be tested; (2) whether the theory has
been subjected to peer-review and/or academic publication;
(3) whether the theory has a known rate of error; and (4)
whether the theory is generally accepted in the relevant sci-
entific community. Schultz v. Akzo Nobel Paints, LLC, 721 F.3d
426, 431 (7th Cir. 2013) (citing Daubert, 509 U.S. at 593–94).
Importantly, this list is neither exhaustive nor mandatory.
Chapman v. Maytag Corp. (In re Chapman), 297 F.3d 682, 687
(7th Cir. 2002). In some cases it may also be appropriate to
examine, as the district court did here, whether there is “too
great an analytical gap between the data and the opinion
proffered.” Joiner, 522 U.S. at 146. Ultimately, reliability is
determined on a case-by-case basis. Ervin v. Johnson & John-
son, 492 F.3d 901, 904 (7th Cir. 2007).
6 We stress that “the key to the gate is not the ultimate correctness of the
expert’s conclusions. Instead, it is the soundness and care with which the
expert arrived at her opinion[.]”Schultz v. Akzo Nobel Paints, LLC, 721
F.3d 426, 431 (7th Cir. 2013) (citations omitted).
No. 14-3448 13
2. Standard of Review
We employ a two-step standard of review in cases chal-
lenging a district court’s admission or exclusion of the testi-
mony of an expert. First, we review de novo a district court’s
application of the Daubert framework. United States v. Brum-
ley, 217 F.3d 905, 911 (7th Cir. 2000). If the district court
properly adhered to the Daubert framework, then we review
its decision to exclude (or not to exclude) expert testimony
for abuse of discretion. Id. (citing Walker v. Soo Line R.R. Co.,
208 F.3d 581, 590 (7th Cir. 2000)).
B. The District Court’s Adherence to Daubert
The district court properly adhered to the Daubert
framework. The court began its exhaustive review of the ap-
pellants’ three proposed experts by accurately outlining the
Daubert framework. Textron I, 2014 U.S. Dist. LEXIS 34938, at
*6–10. During that outline, the court aptly noted the need for
flexibility in applying Daubert, particularly given “the vari-
ous types of potentially appropriate expert testimony.” Id. at
*9 (citing Deputy v. Lehman Bros., Inc., 345 F.3d 494, 505 (7th
Cir. 2003)) (additional citations omitted).
The court then conducted an in-depth review of the rele-
vant studies that the experts relied upon to generate their
differential etiology. Textron, supra, at *11–53. This careful
approach stands in stark contrast to other cases where we
concluded that courts did not adhere to the Daubert frame-
work. See, e.g., Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d
748, 760 (7th Cir. 2010) (declining to apply abuse of discre-
tion standard where the district court’s one-sentence expert
determination did not satisfy Daubert); Naeem v. McKesson
Drug Co., 444 F.3d 593, 608 (7th Cir. 2006) (same). And on a
14 No. 14-3448
much larger scale, the district court’s approach follows the
same path blazed by the Supreme Court in Joiner. 522 U.S. at
145 (reviewing four epidemiological studies advanced by the
respondent in support of the experts’ conclusions).
According to the appellants, however, the district court
imposed an unachievable requirement that “published liter-
ature exist on the topic of vinyl chloride poisoning in small
children.” It did so, allegedly, despite the Supreme Court’s
admonition that “[p]ublication (which is but one element of
peer review) is not a sine qua non of admissibility.” Daubert,
509 U.S. at 593. The argument that the district court errone-
ously inflated the importance of publications is unavailing.
The appellants misread the district court’s decision. The
district court imposed no such requirement. Instead, it fault-
ed the appellants’ experts for failing to adequately extrapo-
late from the studies they had. To be sure, the district court
also rejected some of the studies as too attenuated from the
appellants’ case. But its rejection of these studies is not tan-
tamount to a requirement of absolute precision. Instead, its
rejection is a recognition of an analytical gap too wide to be
bridged.
Take, for example, the rejected study that analyzed the
carcinogenic effect of vinyl chloride on lab rats.7 Cesare Mal-
toni, et al., Carcinogenity Bioassays of Vinyl Chloride Monomer:
A Model of Risk Assessment on an Experimental Basis, 41 Envtl.
Health Persp. 3 (1981). This study found no statistically sig-
7For the sake of economy, we pull two studies as a representative sam-
ple of the whole—one that deals with animals and one that deals with
humans.
No. 14-3448 15
nificant increase in the number of tumors developed by rats
that were fed 0.03 milligrams of vinyl chloride per kilogram
of bodyweight, (0.03 mg/kg), of vinyl chloride per day (4 to 5
days per week, for 59 weeks), over the control group of rats
that were fed only olive oil. Id. at 16, 21. Remarkably, 0.03
mg/kg is ten times higher than the amount the appellants
allegedly ingested—Dr. Ryer-Powder estimates they ingest-
ed 0.003 mg/kg. And the rats ingested it over a period of
time much longer, at least in rat years, than the children’s
exposure here. Given these facts, Dr. Ryer-Powder’s conclu-
sion that this study shows that C.W. and E.W. are now at an
increased risk of developing cancer was an inferential leap
that the district court was rightly unwilling to make.
This second rejected study, which analyzed the effect of
vinyl chloride on French workers, fares no better. See Steven
J. Smith, et al., Molecular Epidemiology of p53 Protein Mutations
in Workers Exposed to Vinyl Chloride, 147 Am. J. Epidemiology
302 (1998). It drew from a group of adults over the course of
five years. Id. at 302. Yet C.W. and E.W. were exposed to vi-
nyl chloride for less than seventeen and seven months, re-
spectively. As for the levels of exposure, the workers were
divided into exposure groups with the average level set at
3,735 parts per million. Id. at 304. That amount is over 1,000
times greater than the 3 parts per billion to which the chil-
dren were exposed. Nevertheless, Dr. Byers offered it in
support of her opinion that the children are at an increased
risk of developing cancer.
In rejecting these studies and others like it, the district
court properly exercised its role as gatekeeper under Daub-
ert. And the district court acknowledged that studies need
not be precisely analogous to meet the Daubert reliability
16 No. 14-3448
standard. Textron I, supra, at *53 (“I am mindful that an ex-
pert’s opinion does not have to be unequivocally supported
by epidemiological studies in order to be admissible under
Daubert.”) (internal quotations and citations omitted). Ac-
cordingly, it is entitled to deferential review in the second
stage of our analysis.
C. The District Court’s Exclusion of the Experts’ Testimony
Under the second step in our analysis, we apply the
abuse of discretion standard of review. Brumley, 217 F.3d at
911. This standard demands that we “not disturb the district
court’s findings unless they are manifestly erroneous.” Laps-
ley v. Xtek, Inc., 689 F.3d 802, 809 (7th Cir. 2012) (citations
omitted). A deferential standard, it flows from the “wide lati-
tude and discretion” that district courts enjoy when deciding
whether to admit or exclude expert testimony. Ervin, 492
F.3d at 904 (quoting Wintz by & Through Wintz v. Northrop
Corp., 110 F.3d 508, 512 (7th Cir. 1997)).
Here, the district court did not abuse its discretion in ex-
cluding the appellants’ experts. The district court’s primary
concern, and ours on appeal, is the failure of the experts to
connect the dots from the studies to the illnesses endured by
the children. This is the Joiner problem to which we referred
earlier. When a district court “conclude[s] that there is simp-
ly too great an analytical gap between the data and opinion
proffered” such that the opinion amounts to nothing more
than the ipse dixit of the expert, it is not an abuse of discre-
tion under Daubert to exclude that testimony. Joiner, 522 U.S.
at 146. That is what happened here.
The appellants counter with a reasonable argument. They
note that there are no studies available on the impact of vi-
No. 14-3448 17
nyl chloride on children. These studies are unavailable be-
cause of the ethical and moral concerns of introducing toxins
to children. This point is well taken and, we note, the district
court recognized as much. Textron I, supra, at *44 (“[I]t’s
wholly unsurprising that Dahlgren was unable to cite a
study at the precise dose and duration that the … children
were subject to, and nothing in the case law says that he
must do so.”).
But there is a scientific end-around to make up for this
dearth in literature. Scientists have developed computer-
based models to extrapolate from animal data to human sub-
jects, and from high doses to lower doses. Bernard D.
Goldtsein & Mary Sue Henifin, Reference Guide on Toxicology
in Federal Manual on Scientific Evidence 646 (3d ed. 2011)
(“The mathematical depiction of the process by which an ex-
ternal dose moves through various compartments in the
body until it reaches the target organ is often called physio-
logically based pharmokinetics or toxicokinetics.”). Gold-
stein and Henifin recognize that “[a]dvances in computa-
tional toxicology” have facilitated this approach. Id. at 646–
47. The EPA recognizes this and other methods of extrapola-
tion as valid approaches to bridging the gap between the
studies and the general public. U.S. Envtl. Prot. Agency, Toxi-
cological Review of Vinyl Chloride 37–63 (2000) (discussing
methods to extrapolate to low doses and to humans, general-
ly). The appellants’ experts do not mention or refer to this
model of extrapolation.
As for the district court’s rejection of the attenuated stud-
ies themselves, that too falls within the ambit of Joiner. See
522 U.S. at 144–45 (“The studies were so dissimilar to the
facts presented in this litigation that it was not an abuse of
18 No. 14-3448
discretion for the District Court to have rejected the experts’
reliance on them.”). The district court’s decision fell within
its wide scope of discretion, and we will not upset it here.
The district court also found fault in the experts’ differen-
tial etiology because, in its view, the etiology was not relia-
ble. We agree. Dr. Dahlgren’s differential etiology does not
present the reliability that Daubert demands. An example is
helpful here. After ruling in the alternative causes of “inher-
itance, allergy, infection or another poison,” Dr. Dahlgren
then ruled them out because, in his view, these causes
“would have been detected by [the appellants’] doctors and
treated accordingly.”
This approach is not the stuff of science. It is based on
faith in his fellow physicians—nothing more. The district
court did not abuse its discretion in rejecting it. As for Dr.
Byers’s differential etiology, it showcases a rigor missing in
Dr. Dahlgren’s. But it nevertheless contains a fatal flaw: rul-
ing in vinyl chloride as a cause in the first place. Without the
benefit of analogous studies and an acceptable method of
extrapolation, Dr. Byers, like the other experts, is forced to
take a leap of faith in pointing to vinyl chloride as having the
capacity to cause the injuries (and risk of injury) to C.W. and
E.W. The district court ably performed its gatekeeper role in
shielding a jury from this leap.
Dr. Ryer-Powder seeks a boost from government regula-
tion. Recall her report: “One means by which the health risks
from exposure to chemicals can be assessed is by compari-
son to government standards and regulation.” But exceed-
ance of government regulation, as we’ve held before, does
not by itself prove causation. See Cunningham, 569 F.3d at 675
(rejecting this approach because the expert would have to
No. 14-3448 19
know “the specific dangers” that caused the regulatory
agency “to pick the safe level it did”). The district court did
not abuse its discretion in rejecting this methodology. To the
extent the experts also based their opinions on the timing of
C.W.’s and E.W.’s injuries, the district court properly rejected
this methodology as well. Ervin, 492 F.3d at 904–05 (7th Cir.
2007) (“The mere existence of a temporal relationship be-
tween taking a medication and the onset of symptoms does
not show a sufficient causal relationship.”).
In sum, the district court did not abuse its discretion in
excluding the appellants’ experts. We now turn to the final
question on appeal: whether that exclusion was fatal to the
appellants’ toxic-tort case.
D. Summary Judgment
We review a district court’s grant of summary judgment
de novo. Hanover Ins. Co. v. N. Bldg. Co., 751 F.3d 788, 791 (7th
Cir. 2014). Summary judgment is appropriate where the ad-
missible evidence reveals no genuine issue of any material
fact. Fed. R. Civ. P. 56(c).
Given the complex nature of this case, and considering
the appellants make no argument that their case can survive
without the excluded experts,8 this final issue can be re-
solved more simply. With no experts to prove causation—be
it general or specific, see Bowens, 857 N.E.2d at 389—the ap-
8 Before the district court, the appellants’ argued that the opinions of
their treating physicians, Doctors Claude Ruffalo and Jerrod Feldman,
along with Textron’s expert, Dr. Thomas McHugh, were sufficient to es-
tablish causation to survive summary judgment. Textron II, supra, at *5–6.
These arguments are not advanced here.
20 No. 14-3448
pellants cannot prove their toxic-tort case under Indiana law.
Accordingly, we hold that summary judgment in this case
was proper.
Before concluding, however, we must part ways with the
district court’s rationale in granting summary judgment. For
we think the court unnecessarily foreclosed an issue better
left open for future litigants in other cases. The district court
held that differential etiology “cannot be used to support
general causation.” C.W. v. Textron, 2014 U.S. Dist. LEXIS
141593, at *11 (N.D. Ind. Oct. 3, 2014) (“Textron II”). It reiter-
ated this holding in a footnote: “Differential [etiology] is
admissible only insofar as it supports specific causation,
which is secondary to general causation … .” Id. at *12 n.3.
We disagree with the district court’s categorical exclusion
of differential etiology as a method to establish general cau-
sation. Indiana recognizes the important role that differential
etiology plays in toxic-tort cases. Hannan v. Pest Control
Servs., 734 N.E.2d 674, 682 (Ind. Ct. App. 2000). And there
may be a case where a rigorous differential etiology is suffi-
cient to help prove, if not prove altogether, both general and
specific causation.9 The Second Circuit already takes this ap-
9 The Federal Rules of Evidence contemplate using one piece of evidence
to help prove multiple facts in issue. That is why, in appropriate circum-
stances, Rule 105 allows a district court to restrict the scope of evidence
and instruct a jury accordingly. Fed. R. Evid. 105. For this reason, among
others, at least one scholar believes differential etiology “should be ad-
missible on general causation.” Edward J. Imwinkelreid, The Admissibility
and Legal Sufficiency of Testimony About Differential Diagnosis (Etiology): Of
Under–and Over–Estimations, 56 Baylor L. Rev. 391, 406 (2004) (“[A]n etio-
logical opinion expressly addressing specific causation is also relevant to
general causation; a plausible finding that a factor was the cause in a
(continued…)
No. 14-3448 21
proach. See Ruggiero v. Warner-Lambert Co., 424 F.3d 249, 254
(2d Cir. 2005) (“There may be instances where, because of
the rigor of differential diagnosis performed, the expert’s
training and experience, the type of illness or injury at issue,
or some other … circumstance, a differential diagnosis is suf-
ficient to support an expert’s opinion in support of both gen-
eral and specific causation.”). And we adopt it today.
III. CONCLUSION
For the foregoing reasons, the district court properly ap-
plied the Daubert framework to the appellants’ experts. It did
not abuse its discretion in excluding their testimony. With-
out expert testimony to prove general and specific causation,
the appellants could not prove their case. Although we disa-
gree with the district court that differential etiology can nev-
er be used to establish general causation, we nevertheless
AFFIRM its final judgment.
(…continued)
specific case slightly strengthens the inference that the factor in question
is capable of causing illness which the plaintiff developed.”). | 01-03-2023 | 08-26-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2830461/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-3563
STEVEN OLSON,
Plaintiff-Appellant,
v.
BEMIS COMPANY, INCORPORATED, and
UNITED STEEL, PAPER AND FORESTRY,
RUBBER MANUFACTURING, ENERGY,
ALLIED INDUSTRIAL AND SERVICE
WORKERS INTERNATIONAL UNION,
AFL-CIO/CLC LOCAL 2-0148,
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 14-C-842 — William C. Griesbach, Chief Judge.
____________________
ARGUED MAY 18, 2015 — DECIDED AUGUST 25, 2015
____________________
Before KANNE and SYKES, Circuit Judges, and ELLIS,
District Judge.*
* Of the Northern District of Illinois, sitting by designation.
2 No. 14-3563
SYKES, Circuit Judge. Steven Olson worked for Bemis
Company, Inc., at its factory in Neenah, Wisconsin, and was
a member of the Local 2-0148, an affiliate of the United Steel,
Paper and Forestry, Rubber Manufacturing, Energy, Allied
Industrial and Service Workers International Union, AFL-
CIO/CLC (“the Union”). He was injured on the job and later
fired. The Union filed a grievance on Olson’s behalf as
permitted under its collective bargaining agreement
(“CBA”), and Bemis and the Union ultimately entered into a
settlement under which Bemis agreed to pay Olson $20,000
in exchange for a waiver of all legal claims he had against
the company. Olson didn’t like the terms of the deal, so he
sued Bemis and the Union in federal court, challenging both
his discharge and the legitimacy of the settlement. He lost on
summary judgment.
Olson later filed a second suit against Bemis and the
Union, this time in state court, arguing that if the settlement
was a valid contract, then he was entitled to the $20,000
payout. The defendants removed the case, and the district
court held that it had federal-question jurisdiction over
Olson’s state-law claims because they were preempted by
§ 301 of the Labor Management Relations Act (“LMRA”),
29 U.S.C. § 185(a). The court then dismissed the complaint
for failure to state any valid claim.
We affirm. Olson breached the waiver-of-claims clause in
the settlement agreement by filing his first suit against
Bemis, so the company had no obligation to pay him.
No. 14-3563 3
I. Background
Olson worked as a machine operator at a plastics packag-
ing factory in Neenah owned and operated by Bemis. On
January 5, 2012, he injured his back while lifting one end of a
130-pound shaft. Bemis investigated the incident and con-
cluded that Olson had violated its worker safety code. It
wasn’t his first breach of safety protocol, so the company
terminated his employment.
The Union is empowered under the CBA to file grievanc-
es against the company on behalf of its members, a process
that culminates in binding arbitration. It filed a grievance on
Olson’s behalf alleging that he was wrongfully discharged
without cause. After looking into the accident more closely,
however, the Union determined that an arbitrator would be
unlikely to order Olson’s reinstatement or provide any
compensation, so it proceeded to negotiate a settlement:
Olson wouldn’t get his job back, but Bemis agreed to pay a
lump sum of $20,000 in exchange for a waiver of any legal
claims he might have against the company. The offer was
good only until May 8, 2012; if it wasn’t accepted by then,
the grievance would be sent to arbitration.
Olson retained private counsel and made a counteroffer
to Bemis, which the company rejected. On May 7, the day
before the settlement offer expired, Union representatives
went to Olson’s house. They told him that the settlement was
more generous than what he could expect from an arbitrator
and then informed Olson that they had decided to accept the
deal on his behalf (in fact, they had already signed it). Olson
refused to consent. Bemis signed the agreement later that
same day. One week later, the company mailed Olson a
$20,000 check.
4 No. 14-3563
Olson didn’t immediately cash the check. Instead he filed
a “hybrid” § 301 suit against Bemis and the Union. Sec-
tion 301 of the LMRA permits individual employees to sue
their employers for violating a CBA. See Rutherford v. Judge &
Dolph Ltd., 707 F.3d 710, 714 (7th Cir. 2013). But “as a practi-
cal matter, an employee often cannot go straight to federal
court with such a claim because many CBAs … have manda-
tory provisions that require the employee, represented by
his union, to pursue his grievances through arbitration.” Id.
Unions have broad discretion to decide how to resolve
employees’ grievances. See Titanium Metals Corp. v. NLRB,
392 F.3d 439, 448 (D.C. Cir. 2004) (“[T]he union is empow-
ered to bind the individual employee to the result obtained
through the grievance process.” (quoting Plumbers & Pipefit-
ters Local Union No. 520 v. NLRB, 955 F.2d 744, 753 (D.C. Cir.
1992))) (alterations omitted). Therefore, in order for an
employee to prevail in a suit against his employer, he must
also prove that “the union representing the employee in the
grievance/arbitration procedure act[ed] in such a discrimina-
tory, dishonest, arbitrary, or perfunctory fashion as to breach
its duty of fair representation.” DelCostello v. Int’l Bhd. of
Teamsters, 462 U.S. 151, 164 (1983). 1 If he can’t, then the
grievance adjudication is final.
The district judge held that no reasonable jury could find
that the Union had failed to represent Olson fairly. See Olson
v. Bemis Co., Inc. (“Olson I”), No. 12-C-1126, 2014 WL
1576786, at *18 (E.D. Wis. Apr. 17, 2014). In so holding, the
1 In a hybrid § 301 action, “[t]he employee may, if he chooses, sue one
defendant and not the other; but the case he must prove is the same
whether he sues one, the other, or both.” DelCostello v. Int’l Bhd. of
Teamsters, 462 U.S. 151, 165 (1983).
No. 14-3563 5
judge confirmed that the Union had the authority to settle
the grievance over Olson’s objection and that the settlement
was effective as of the date it was signed: May 7, 2012. Id. at
*9, *15. The judge accordingly entered summary judgment
for the defendants. Id. at *18.
Olson didn’t appeal that decision. He did, however, try to
cash the settlement check—but Bemis had put a stop on the
funds. Olson then filed another lawsuit, this time in Wiscon-
sin state court. His complaint again named Bemis and the
Union as codefendants and alleged four state-law causes of
action arising out of Bemis’s failure to pay him the $20,000:
(1) breach of a written contract; (2) breach of an oral contract;
(3) equitable estoppel; and (4) promissory estoppel. 2
The defendants removed the case to federal court, where
it was assigned to the same judge who presided in Olson I.
Olson moved to remand, challenging the district court’s
jurisdiction. The judge held that Olson’s claim for breach of a
written contract was preempted by § 301 of the LMRA and
that his other claims were, at minimum, within the scope of
its supplemental jurisdiction.
The defendants moved to dismiss for failure to state a
claim. See FED. R. CIV. P. 12(b)(6). The judge took judicial
notice of Olson I, the hybrid § 301 suit, and held that “in light
of his earlier action against Bemis and the Union,” Olson had
repudiated the settlement agreement and had no right to
enforce its terms. The judge granted the defendants’ motion
to dismiss, and this appeal followed.
2 In the two contract claims, Olson alleged that he was a third-party
beneficiary of a contract between Bemis and the Union.
6 No. 14-3563
II. Discussion
A. Subject-Matter Jurisdiction
Although the parties did not brief the issue of jurisdic-
tion, “federal courts have an independent ‘obligation at each
stage of the proceedings to ensure that they have subject
matter jurisdiction over the dispute.’” Crosby v. Cooper B-Line,
Inc., 725 F.3d 795, 800 (7th Cir. 2013) (quoting Ne. Rural Elec.
Membership Corp. v. Wabash Valley Power Ass’n, Inc., 707 F.3d
883, 890 (7th Cir. 2013)) (alteration omitted). Here, Olson
filed suit in state court asserting contract and estoppel claims
arising out of Bemis’s alleged breach of the grievance settle-
ment. The defendants removed the case to federal court,
relying on federal-question jurisdiction and arguing that
§ 301 of the LMRA preempted the state-law claims. Olson
moved to remand, but the judge concluded that Olson’s
claims were preempted by § 301, giving rise to federal-
question jurisdiction.
Ordinarily “[a] disagreement about whether parties to a
settlement have honored their commitments is a contract
dispute. Suits for breach of contract … arise under state law.
They cannot be adjudicated in federal court unless there is
an independent basis of subject-matter jurisdiction … .” Jones
v. Ass’n of Flight Attendants-CWA, 778 F.3d 571, 573 (7th Cir.
2015) (citation omitted); see also Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 381–82 (1994). An independent
jurisdictional basis exists, however, when the substance of a
plaintiff’s state-law claim is “inextricably intertwined with
consideration of the terms of [a] labor contract.” Allis-
Chalmers Corp. v. Lueck, 471 U.S. 202, 213 (1985). In those
circumstances, § 301 of the LMRA, codified at 29 U.S.C.
§ 185(a), completely preempts the state-law cause of action.
No. 14-3563 7
Id. at 209–10. “Once an area of state law has been completely
pre-empted, any claim purportedly based on that pre-
empted state law is considered, from its inception, a federal
claim, and therefore arises under federal law.” Caterpillar,
Inc. v. Williams, 482 U.S. 386, 393 (1987).
Section 301(a) of the LMRA states: “Suits for violation of
contracts between an employer and a labor organization
representing employees in an industry affecting com-
merce … may be brought in any district court of the United
States having jurisdiction of the parties … .” 29 U.S.C.
§ 185(a). State-law suits of this sort are completely preempt-
ed because “[t]he subject matter of § 301(a) is peculiarly one
that calls for uniform law. … The possibility that individual
contract terms might have different meanings under state
and federal law would inevitably exert a disruptive influ-
ence upon both the negotiation and administration of collec-
tive agreements.” Allis-Chalmers, 471 U.S. at 210 (quoting
Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 103 (1962)).
And since § 301 completely preempts state-law claims, “[b]y
its terms, this provision [also] confers federal subject-matter
jurisdiction … over ‘suits for violation of contracts.’” Textron
Lycoming Reciprocating Engine Div., Avco Corp. v. UAW & Its
Local 787, 523 U.S. 653, 656 (1998); see also 28 U.S.C. § 1331.
The question here is whether a grievance settlement is a
contract under § 301. The district court thought it was, and
numerous other courts have reached the same conclusion (in
fact, we’re not aware of any that have found otherwise). See,
e.g., Freeman v. Duke Power Co., 114 F. App’x 526, 531 (4th Cir.
2004) (per curiam); Davis v. Bell Atl.–W. Va., Inc., 110 F.3d 245,
249 (4th Cir. 1997); Jones v. Gen. Motors Corp., 939 F.2d 380,
382 (6th Cir. 1991); Chi. Reg’l Council of Carpenters v. Joyce
8 No. 14-3563
Installation Co., No. 10 C 5314, 2011 WL 635864, at *2 (N.D.
Ill. Feb. 10, 2011); SEIU, Local 4 v. EMI Enters., Inc., No. 04 C
3598, 2004 WL 1899217, at *9 (N.D. Ill. Aug. 13, 2004). We
agree.
Section 301 refers, without qualification, to “contracts be-
tween an employer and a labor organization.” 3 Although
most § 301 litigation involves alleged violations of CBAs, the
Supreme Court has squarely held that “[a] federal forum
was provided for actions on other labor contracts besides
collective bargaining contracts.” Retail Clerks Int’l Ass’n, Local
Unions Nos. 128 & 633 v. Lion Dry Goods, Inc., 369 U.S. 17, 26
(1962); see also id. at 25 (“The Section says ‘contracts’ though
Congress knew well the phrase ‘collective bargaining con-
tracts.’”). Because a grievance settlement is a contract be-
tween a union and an employer (at least when the grievance
is controlled by the union), it’s a contract under § 301. Thus,
it’s irrelevant whether the interpretation of the settlement
agreement requires reference to the CBA. Cf. Jones, 939 F.2d
at 382–83 (“The resolution of this claim will not involve the
direct interpretation of a precise term of the CBA, but it will
require a court to address relationships that have been
created through the collective bargaining process and to
mediate a dispute founded upon rights created by a CBA.”).
3 The text of § 301 also clearly excludes certain labor-related contracts.
Notably, suits involving contracts between parties other than employers
and unions are not within its scope and thus are not preempted. See, e.g.,
Caterpillar, Inc. v. Williams, 482 U.S. 386, 394–95 (1987) (finding no
preemption of suit alleging breach of individual employment contracts
between employees and their employer distinct from the union-
negotiated CBA); Loewen Grp. Int’l, Inc. v. Haberichter, 65 F.3d 1417, 1423
(7th Cir. 1995) (same).
No. 14-3563 9
On its way to holding that a strike-settlement agreement
was “plainly” covered by § 301, the Supreme Court has said
that “[i]t is enough that this is clearly an agreement between
employers and labor organizations significant to the mainte-
nance of labor peace between them.” Lion Dry Goods,
369 U.S. at 28. Given the Court’s textual analysis in Lion Dry
Goods, we doubt that the “maintenance of labor peace” is a
distinct requirement for a contract to fall within § 301. Even
if it is, however, the violation of a grievance settlement
agreement is, by nature, every bit as disruptive to labor
peace as the refusal to participate in a grievance adjudication
or the repudiation of an arbitration award. 4 And since “[t]he
first characteristic of a good jurisdictional rule is predictabil-
ity and uniform application,” Exch. Nat’l Bank of Chi. v.
Daniels, 763 F.2d 286, 292 (7th Cir. 1985), we see little benefit
in requiring litigants and courts to debate whether a given
settlement agreement meets some amorphous threshold of
“disruptiveness” to labor peace. A grievance settlement is a
contract between a union and an employer—that ends the
§ 301 inquiry. 5 The district court correctly concluded that
4 Several courts have emphasized that grievance settlements are closely
tied to the CBAs that authorize them. See, e.g., Davis v. Bell Atl.–W. Va.,
Inc., 110 F.3d 245, 248 (4th Cir. 1997) (“That agreement’s entire vitality
and legitimacy … draws on the underlying collective-bargaining
agreement.”); Jones v. Gen. Motors Corp., 939 F.2d 380, 383 (6th Cir. 1991)
(“[T]he settlement agreement itself is a creature wholly begotten by the
CBA.”). The close settlement-CBA connection underscores that the
breach of a grievance settlement is a direct challenge to the authority of
the CBA’s dispute-resolution mechanisms.
5 The Supreme Court has held that “[i]f the policies that animate § 301
are to be given their proper range … , the pre-emptive effect of § 301
must extend beyond suits alleging contract violations.” Allis-Chalmers
Corp. v. Lueck, 471 U.S. 202, 210 (1985). When a plaintiff brings a state-law
10 No. 14-3563
Olson’s claim for breach of a written contract was preempted
by § 301.
District courts “may exercise supplemental jurisdiction
over state law claims that share ‘a common nucleus of
operative facts’ with a federal claim properly before the
court.” Bailey v. City of Chicago, 779 F.3d 689, 696 (7th Cir.
2015); see also 28 U.S.C. § 1367(a). The district court held that
if Olson’s other state-law claims were not preempted, they
arose out of the same set of facts as the claim for breach of a
written contract and therefore were properly before the
court. The exercise of supplemental jurisdiction is reviewed
for abuse of discretion, Bailey, 779 F.3d at 696, and we see no
abuse of discretion here.
B. Substantive Law Under § 301 of the LMRA
“[W]hen resolution of a state-law claim is substantially
dependent upon analysis of the terms of an agreement made
between the parties in a labor contract, that claim must
either be treated as a § 301 claim or dismissed as pre-empted
cause of action other than for breach of a contract that literally falls within
§ 301, the court must carefully assess whether the claim is “inextricably
intertwined with consideration of the terms of [a] labor contract.” Id. at
213. There is no § 301 preemption “when the meaning of contract terms
is not the subject of dispute.” Livadas v. Bradshaw, 512 U.S. 107, 124 (1994);
see, e.g., id. at 125 (“[T]he mere need to ‘look to’ the collective-bargaining
agreement for damages computation is no reason to hold the state-law
claim defeated by § 301.”); Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S.
399, 407–08 (1988) (holding that a retaliatory discharge claim was not
preempted because the elements of the state tort did not necessitate
interpretation of a labor contract); Crosby v. Cooper B-Line, Inc., 725 F.3d
795, 801–02 (7th Cir. 2013) (same).
No. 14-3563 11
by federal labor-contract law.” Allis-Chalmers, 471 U.S. at 220
(citation omitted). Here, the judge elected not to dismiss
Olson’s suit but rather to evaluate whether he stated a valid
claim under § 301. The judge concluded that he had not.
The conversion of a state-law contract action into a claim
under § 301 raises some preliminary questions, most notably
this one: Under what circumstances can an individual
employee (or former employee) sue under § 301 “for viola-
tion of contracts between an employer and a labor organiza-
tion representing employees”? Such suits are clearly al-
lowed, at least in some circumstances. See Wooddell v. Int’l
Bhd. of Elec. Workers, Local 71, 502 U.S. 93, 100–01 (1991) (“We
[have] held that § 301 suits [are] not limited to suits brought
by the contracting parties and that an individual employee
[can] sue under § 301 for violation of an employer-union
contract.”); Int’l Bhd. of Elec. Workers, AFL-CIO v. Hechler, 481
U.S. 851, 865 n.7 (1987) (noting that in the § 301 context,
“third-party beneficiaries to a contract ordinarily have the
right to bring a claim based on the contract”).
As we’ve noted, however, “[o]rdinarily … an employee is
required to attempt to exhaust any grievance or arbitration
remedies provided in the collective bargaining agreement”
before going to court. DelCostello, 462 U.S. at 163. This prin-
ciple applies equally to the alleged breach of a settlement
agreement as to the dispute that sparked the grievance in the
first place. And as with the initial adjudication, the union
controls the grievance. If the employee is not satisfied with
the result, he must show that the union failed to represent
him in good faith—in other words, he must file a hybrid
§ 301 suit. See Cleveland v. Porca Co., 38 F.3d 289, 296–97 (7th
Cir. 1994) (“The plaintiffs lack standing to enforce the arbi-
12 No. 14-3563
tration award … because when employees are represented
by a union they are not parties to either the collective bar-
gaining agreement or any union-company arbitration. They
therefore generally cannot challenge, modify, or confirm the
award in court. An exception to this general rule exists …
‘but only if the employees state a claim for a Section 301 fair
representation case … .’” (quoting Martin v. Youngstown Sheet
& Tube Co., 911 F.2d 1239, 1244 (7th Cir. 1990))) (citations
omitted).
On the other hand, if the employee’s claim is not subject
to mandatory alternative-dispute resolution (under the CBA
or otherwise), he can bring “a straightforward breach of
contract suit under § 301,” which “closely resembles an
action for breach of contract cognizable at common law.”
DelCostello, 462 U.S. at 165, 163. Like all § 301 claims, such
suits are governed by federal common law. See Allis-
Chalmers, 471 U.S. at 209.
The preemption of Olson’s state-law claims thus raises
the question whether his § 301 suit must be treated as a
hybrid § 301 suit. 6 The answer turns on whether the CBA
obligated him (through the Union) to grieve the alleged
settlement breach. We’ve recognized the presumption that
“a settlement agreement is an arbitrable subject when the
underlying dispute is arbitrable, except in circumstances
where the parties expressly exclude the settlement agree-
ment from being arbitrated.” Niro v. Fearn Int’l, Inc., 827 F.2d
173, 175 (7th Cir. 1987).
6 The applicable statute of limitations also turns on whether the plain-
tiff’s § 301 suit is properly characterized as hybrid or straightforward. See
DelCostello, 462 U.S. at 168–70.
No. 14-3563 13
Here, there’s no express opt-out in the settlement agree-
ment or in the portions of the CBA that are in the record.
This issue has not been briefed, however, so we’re reluctant
to conclude definitively that Olson was required (and failed)
to exhaust a mandatory grievance procedure. Fortunately,
we need not get caught up in this issue. Whether Olson’s
§ 301 action is straightforward or hybrid, he would have to
state a valid claim. The district court held that he had not
done so, and we agree.
C. Dismissal of the Claim for Breach of a Written Contract
Notice pleading requires the plaintiff’s complaint to al-
lege sufficient facts to state a claim for relief that is plausible
on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Facial
plausibility” means that there must be sufficient factual
content to allow the court to draw a reasonable inference
that the defendant is liable for the alleged wrong. Id. An
allegation that gives rise to an “obvious alternative explana-
tion” is not plausible. Id. at 682. We review de novo the
district court’s decision to dismiss the case for failure to state
a claim. See Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732,
736 (7th Cir. 2014).
Olson’s complaint rests on the premise that if the Union
accepted the settlement agreement on his behalf, as Olson I
held that it did, see 2014 WL 1576786, at *9, then he must be
entitled to $20,000. He ignores the inconvenient fact that the
agreement obligated him to waive his claims against Bemis,
either absolutely or (at the very least) as a condition of
payment by Bemis. The agreement—formally titled the
14 No. 14-3563
“Settlement Agreement and Release” (emphasis added)—
could not have been clearer on this point:
The Employee, for good and valuable consideration in
the gross amount of $20,000.00 does hereby absolutely
and unconditionally release and forever discharge
Employer of and from any and all grievances, suits,
claims, demands, damages, actions, and causes of ac-
tion, judgment and executions whether known or un-
known, suspected or unsuspected, whether related or
unrelated to the present dispute as to law or facts or
both, which Employee ever had, claimed to have or
has against Employer … .”
A few lines later, the settlement agreement added, “The
parties agree that they consider the Employer’s tender of any
consideration as being motivated by a desire of avoiding the
costs, inconveniences, and nuisance of additional litigation.”
In Olson I the district judge determined that the Union
had the authority to accept the settlement offer on Olson’s
behalf, even over his objection, and then concluded that the
Union used that authority to settle Olson’s grievance. 7 Id. at
*7–8. Neither of those rulings is appealable here. The only
remaining question is whether Bemis acted impermissibly in
stopping payment on Olson’s check, in light of the terms of
7 Admittedly, the settlement agreement was written as though Olson
would be party to it and would sign it. For example, it had a signature
line for him, several provisions addressed his responsibilities directly,
and the agreement gave “the Employee” seven days in which to revoke
the settlement after it was executed (though only “if he signs this
Agreement”). But the district court held in Olson I that the CBA gave the
Union the authority to accept the agreement on Olson’s behalf, without
his signature and over his objection, and that issue is not before us.
No. 14-3563 15
the settlement agreement. The judge held that Olson had
“repudiated” the agreement by failing to sign it. Ordinarily
the repudiation of a contract precedes an act that would
independently constitute a breach. See RESTATEMENT
(SECOND) OF CONTRACTS § 250 (1981). Since Bemis mailed
Olson a $20,000 check even though he had not signed the
settlement, apparently Bemis didn’t interpret the absence of
Olson’s signature as a sign of repudiation. Presumably, the
company would’ve been satisfied if Olson had cashed his
check and stayed out of court.
Regardless, Bemis’s promise to pay hinged on Olson’s
waiver of his claims against the company. If we treat Olson’s
waiver obligation as an independent contractual obligation,
then there’s no doubt that Olson materially breached the
contract by filing his hybrid § 301 suit. This excused Bemis
from any subsequent obligation it may have had under the
agreement. 8 Similarly, if we treat the waiver obligation as a
condition precedent to Bemis’s payment, then Olson failed to
satisfy that condition and Bemis never was under any obli-
gation to pay. The $20,000 payment was consideration for the
waiver of all of Olson’s claims—including those related to
8 By tendering a $20,000 check to Olson, Bemis fully performed under
the settlement agreement, at least until the time that it stopped payment.
By then Olson had already materially breached by filing his hybrid § 301
suit. If the contract implicitly imposed a continuing obligation on Bemis
not to stop payment when Olson didn’t deposit the check right away,
Bemis’s breach of that obligation was preceded by (and therefore excused
by) Olson’s incurable material breach of the agreement. See RESTATEMENT
(SECOND) OF CONTRACTS § 237 (1981) (“[I]t is a condition of each party’s
remaining duties to render performances to be exchanged … that there
be no uncured material failure by the other party to render any such
performance due at an earlier time.”).
16 No. 14-3563
his termination—and Olson chose to challenge his discharge
in court rather than take the money. He was free to make
that choice, but now he must live with the consequences.
Olson suggests that his breach was not apparent from the
face of his complaint, so the complaint shouldn’t have been
dismissed. But a court ruling on a motion to dismiss can rely
on “the complaint itself, documents attached to the com-
plaint, documents that are critical to the complaint and
referred to in it, and information that is subject to proper
judicial notice.” Cohen v. Am. Sec. Ins. Co., 735 F.3d 601, 604
n.2 (7th Cir. 2013) (quoting Geinosky v. City of Chicago,
675 F.3d 743, 745–46 n.1 (7th Cir. 2012)). Olson attached the
settlement agreement to the complaint as Exhibit A, see FED.
R. CIV. P. 10(c) (“[A]n exhibit to a pleading is a part of the
pleading for all purposes.”), and the court took judicial
notice of Olson I. Olson now questions the court’s use of
judicial notice, but that decision is reviewed only for abuse
of discretion, and court records are among the most com-
monly noticed facts. See Gen. Elec. Capital Corp. v. Lease
Resolution Corp., 128 F.3d 1074, 1081–82 (7th Cir. 1997); FED.
R. EVID. 201(b). We see no reason why the court should have
feigned ignorance of its own decision in Olson I.
In sum, the complaint, the copy of the settlement agree-
ment, and Olson I together plainly established that the
$20,000 payout was consideration for Olson’s waiver of his
legal claims, and yet Olson sued Bemis after the settlement
went into effect. The judge correctly concluded that Olson’s
complaint failed to state a facially plausible claim that Bemis
was contractually obligated to pay him.
No. 14-3563 17
D. Olson’s Other Causes of Action
Regarding Olson’s other three claims—breach of an oral
contract, equitable estoppel, and promissory estoppel—the
judge held that they were “little more than repetitions of his
claim for breach of the Settlement Agreement,” in which case
they failed as a matter of federal common law for the same
reasons, or if they were not preempted and Wisconsin state
law applied, they “likewise fail to state a claim on which
relief can be granted.”
We agree that none of Olson’s remaining claims state a
legally cognizable claim under either state or federal law.
First, Olson has pleaded no facts supporting an oral agree-
ment distinct from the written settlement signed by Bemis
and the Union; this makes his oral contract claim facially
implausible under any standard. Second, equitable estoppel
is a defense under Wisconsin law, not a cause of action, see
Murray v. City of Milwaukee, 642 N.W.2d 541, 547 (Wis. Ct.
App. 2002), and we strongly doubt that it’s an independent
cause of action under federal labor common law either. In
any case, it certainly would not apply here since neither
Bemis nor the Union misrepresented the terms of the settle-
ment agreement (and Olson had a copy). See Kennedy v.
United States, 965 F.2d 413, 417 (7th Cir. 1992) (“The tradi-
tional elements of equitable estoppel are (1) misrepresenta-
tion by the party against whom estoppel is asserted;
(2) reasonable reliance on that misrepresentation by the
party asserting estoppel; and (3) detriment to the party
asserting estoppel.”).
Finally, promissory estoppel is inapplicable under
Wisconsin law when there is a written contract. See Scott v.
Savers Prop. & Cas. Ins. Co., 663 N.W.2d 715, 729 (Wis. 2003).
18 No. 14-3563
And while it has been recognized as a federal cause of action
under § 301, see Local 107 Office & Prof’l Emps. Int’l Union v.
Offshore Logistics, Inc., 380 F.3d 832, 834 (9th Cir. 2004); Burton
v. Gen. Motors Corp., No. 1:95-cv-1054-DFH-TAB, 2008 WL
3853329, at *15–17 (S.D. Ind. Aug. 15, 2008), promissory
estoppel requires, at minimum, that the plaintiff show that
he both reasonably and detrimentally relied on a promise,
see Shields v. Local 705, Int’l Bhd. of Teamsters Pension Plan,
188 F.3d 895, 901 (7th Cir. 1999) (discussing promissory
estoppel under federal common law in the ERISA context).
Olson failed to allege any facially plausible promises other
than the ones embodied in the settlement agreement. There-
fore, none of Olson’s claims could possibly entitle him to
relief, and the court was correct to dismiss them.
AFFIRMED. | 01-03-2023 | 08-25-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2993583/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted September 22, 2015 *
Decided September 23, 2015
Before
FRANK H. EASTERBROOK, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
DIANE S. SYKES, Circuit Judge
No. 15-1164
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff-Appellee, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 12 CR 356-2
RICARDO JUAREZ,
Defendant-Appellant. Samuel Der-Yeghiayan,
Judge.
ORDER
Ricardo Juarez supplied cocaine to the Latin Kings. He was charged in federal
court with trafficking crimes and eventually pleaded guilty to a single count of
distribution. See 21 U.S.C. § 841(a)(1). The district court sentenced Juarez to 28 months’
imprisonment (amounting to time served in pretrial detention) and 3 years’ supervised
release, subject to many conditions. The court evaluated the sentencing factors in
18 U.S.C. § 3553(a) before imposing the prison sentence, but neglected to consider those
* After examining the briefs and record, we have concluded that oral argument is
unnecessary. Thus the appeal is submitted on the briefs and record. See FED. R. APP. P.
34(a)(2)(C).
No. 15-1164 Page 2
same factors in fashioning conditions of supervised release, a procedural requirement
that we emphasized shortly before Jaurez’s sentencing. See 18 U.S.C. §§ 3583(d), 3553(a);
United States v. Thompson, 777 F.3d 368, 373 (7th Cir. 2015).
Juarez argues that the district court’s failure to evaluate the § 3553(a) factors when
imposing conditions of supervised release requires that we vacate the existing
conditions and direct the court to formulate new conditions. The government concedes
that the district court erred but asks for a full resentencing to allow for reconsidering the
length of Juarez’s prison sentence, if the court so chooses.
We agree that Juarez’s sentence must be vacated because the district court did not
consider the factors in § 3553(a) in determining the conditions of supervised release.
See United States v. Falor, Nos. 14-1369 & 14-1603, 2015 WL 5117102, at *3 (7th Cir. Sept. 1,
2015); Thompson, 777 F.3d at 373. We also agree with the government that a full
resentencing is appropriate. Because the district court must reconsider the supervisory
conditions in light of the appropriate sentencing factors, it may also choose to reconsider
the length of the prison sentence. See United States v. Kappes, 782 F.3d 828, 867 (7th Cir.
2015); United States v. Raney, No. 14-3265, 2015 WL 4747943, at *11 (7th Cir. Aug. 12,
2015); Thompson, 777 F.3d at 382. On remand, the district court should ensure that the
conditions of supervised release it imposes reflect our recent decisions regarding vague
and overbroad conditions. See Kappes, 782 F.3d 828; United States v. Purham, No. 14-3424,
2015 WL 4639259 (7th Cir. Aug. 5, 2015); United States v. Sandidge, 784 F.3d 1055 (7th Cir.
2015); Thompson, 777 F.3d 368.
We note that Juarez also challenges one of the conditions in the written
judgment—that he “not possess a firearm, ammunition, destructive device, or any other
dangerous weapon”—on the additional ground that it differs from the oral
pronouncement, which omitted the phrase “any other dangerous weapon.” The district
court will be able to resolve this discrepancy on remand.
The judgment is VACATED and the case is REMANDED for resentencing. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2993584/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 14-2402
GREGORY E. RAHN, et al.,
Plaintiffs-Appellants,
v.
BOARD OF TRUSTEES OF NORTHERN
ILLINOIS UNIVERSITY, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:09-cv-03033— Frederick J. Kapala, Judge.
ARGUED APRIL 13, 2015 — DECIDED SEPTEMBER 23, 2015
Before WOOD, Chief Judge, and ROVNER, Circuit Judge, and
SPRINGMANN, District Judge.*
ROVNER, Circuit Judge. Gregory Rahn (“Rahn”) and
Genemetrix, a company in which Rahn and his wife Regina
*
Hon. Theresa L. Springmann of the Northern District of Indiana, sitting
by designation.
2 No. 14-2402
Rahn (hereinafter referred to simply as Regina in order to
avoid confusion with her husband) are principals, filed a
complaint in the district court against the Northern Illinois
University Board of Trustees (“NIU”) and individual Northern
Illinois University officers Promod Vohra, Omar Ghrayeb,
Bradley Bond, and Raymon Alden III, alleging discrimination
and retaliation in violation of Title VII, copyright infringement
and violations of due process. The district court dismissed the
due process claims with prejudice, and that decision is not
challenged in this appeal. The district court granted summary
judgment in favor of the defendants on the racial discrimina-
tion, retaliation, and copyright infringement claims, and the
plaintiffs now appeal those decisions. Because the claims are
factually distinct, with no real overlap, we will address the
facts underlying the claims separately. We review the district
court’s summary judgment decision in favor of the defendants
de novo, considering the facts in the light most favorable to the
plaintiffs. Seiser v. City of Chicago, 762 F.3d 647, 653 (7th Cir.
2014).
I.
We begin with the facts underlying the claim of racial
discrimination and retaliation. Rahn, who is white, alleged that
the defendants engaged in reverse discrimination in violation
of Title VII of the Civil Rights Act of 1964, § 701 et seq.,
42 U.S.C.A. § 2000e et seq., when they failed to hire him for a
tenure-track assistant professor position at the university based
on his race.
Rahn, who earned a PhD in Industrial Engineering from the
University of Illinois, was hired as a visiting professor at NIU
No. 14-2402 3
for the 2006-2007 school year. His wife Regina was hired as a
tenure-track assistant professor in the Department of Industrial
and Systems Engineering (“ISYE”) of the College of Engineer-
ing and Engineering Technology (“College of Engineering”) for
that same school year. During that year, a tenure-track assis-
tant professor position opened up in that Department, and
Rahn applied for that position. A search committee was
entrusted with evaluating the applicants for the position.
Regina was a member of that committee along with Dr.
Richard Marcellus, Dr. Reinaldo Moraga, Dr. Murali
Krishnamurthi and Michelle Coovert, who was a student
working as a teaching assistant for Rahn. Eighty-two appli-
cants applied for that position, and on March 5, 2007, the
committee met to consider the applicants. At that meeting, they
voted as to the qualifications of the applicants in an effort to
winnow the applicants down to a group that would proceed to
the phone interview stage.
Despite her husband’s status as one of the applicants,
Regina remained on the search committee and participated in
the voting at that meeting. Rahn received three votes at that
meeting—from his wife Regina, his teaching assistant Coovert,
and Moraga—which was sufficient to place him in the top ten
of applicants although he was not the highest vote-getter. A
number of other candidates received three votes as well, one
candidate received five votes, and the person ultimately hired
for the position, Dr. Gary Chen, received four votes at that
meeting.
Within days of that meeting, on March 9, 2007, Promod
Vohra, the dean of the College of Engineering, convened an
emergency meeting to inform the committee that Regina was
4 No. 14-2402
being removed from it based on the conflict of interest as the
wife of one of the applicants. That decision was consistent with
NIU Board of Trustees policy that provides that “[f]aculty and
administrative employees are selected for employment without
regard to relationship by blood or marriage” and that “no
individual shall initiate or participate in personnel decisions
involving initial employment, retention, promotion ... or other
direct benefit to an individual employee who is a member of
the same immediate family or immediate household [includ-
ing] an employee’s spouse ... .” Dist. Ct. Doc. 163-16, PageID
1182. Although Rahn contends that the policy applies only to
the Board of Trustees, the language including faculty and
administrative employees belies such an interpretation, and in
any case he fails to provide any support for that contention.
Coovert testified that at that emergency meeting, Vohra
was upset that Regina had been on the committee voting on
the potential candidates including her husband, and ques-
tioned committee member Moraga as to why he voted for
Rahn. Coovert also testified that Vohra stated that he would
not hire a white man into the department if qualified minority
candidates were available. Regina stated that she was listening
outside the door of the meeting, and similarly heard those
statements from Vohra, whereas Ghrayeb, Vohra and Moraga
testified that no such statements were made. For purposes of
summary judgment, however, we must take the testimony in
the light most favorable to Rahn.
In an effort to provide a more transparent process, Krishna-
murthi developed an evaluation metric to provide a structure
for comparing the candidates. That metric set forth categories
which corresponded with the requirements set forth in the job
No. 14-2402 5
description, allowing the committee members to numerically
rank each candidate in the individual categories. Once those
scores were tallied, the resulting composite score would
facilitate comparison of candidates. The search committee was
given the opportunity to provide feedback as to the proposed
metric, and once finalized the metric was used in the evalua-
tion of the candidates by the committee.
Rahn argues that the metric was designed to eliminate him
from consideration, and asserts that Coovert testified to that
effect. Coovert’s testimony, however, does not support that
argument. Coovert initially stated that she believed the metric
was designed to eliminate Rahn, but upon further questioning
she clarified that she thought the metric valued academic
experience such as publishing over industry experience, and
would therefore favor those with that academic background.
She stated that as a student she valued the industry experience
that her professors such as Rahn brought to the classroom.
That testimony does not support the argument that the metric
was a subterfuge for eliminating Rahn on racial grounds. A
university employer may properly preference academic
experience, and Rahn has not even presented any evidence that
such a preference was inconsistent with the initial description
of the position and the preferred qualifications. Moreover,
Coovert did not claim to have any personal knowledge as to
the purpose or procedure of the creation of the metric, and
there was no evidence at all that Krishnamurthi or the other
members of the search committee harbored any discriminatory
intent. Rahn also failed to produce any evidence that Vohra
had any role in the creation of the metric. In fact, the defen-
dants contend that the metric merely tracked the qualifications
6 No. 14-2402
set forth in the position description, and Rahn does not argue
otherwise.
Rahn did not make the eventual cut of candidates, and did
not proceed to the telephone stage of the process. Regina
therefore was allowed to rejoin the committee and she partici-
pated in the interviews and the vote on the final candidates.
The committee then forwarded the proposed final candidates
to Vohra, and he made the ultimate hiring decision to choose
Chen, who was not a white male.
Rahn subsequently filed a grievance contesting the decision
to hire Chen over him. NIU denied the grievance, and Rahn
pursued an EEOC complaint and then filed this suit alleging
race and gender discrimination, which he ultimately pared
down to simply a claim of race discrimination. He alleges that
under either the direct or indirect method of establishing
discrimination, he should survive summary judgment.
To prevail under the direct method, a plaintiff must
produce “either direct or circumstantial evidence that would
permit a jury to infer that discrimination motivated an adverse
employment action.” Langenbach v. Wal-Mart Stores, Inc.,
761 F.3d 792, 802 (7th Cir. 2014). Direct evidence is evidence of
discriminatory intent without resort to inference, such as an
admission of discriminatory intent often referred to as
“smoking gun” evidence. Ripberger v. Corizon, 773 F.3d 871, 877
(7th Cir. 2014); Hutt v. AbbVie Products, LLC, 757 F.3d 687, 691
(7th Cir. 2014). Here, there is no such direct evidence. Rahn
submits that the statement by Vohra regarding hiring a
qualified minority candidate over a white one is dispositive
direct evidence that he was not hired because of his race.
No. 14-2402 7
Vohra, however, did not make the decision to eliminate Rahn
from consideration. The search committee, applying the factors
deemed relevant to the job, eliminated him from consideration.
Vohra chose between the two candidates submitted to him by
the committee, but Rahn was not in that pairing. Accordingly,
the statement by Vohra is not evidence “without resort to
inference” that the hiring decision was based on his race.
Moreover, even viewed as circumstantial evidence that
discrimination motivated the decision, it is insufficient to
survive summary judgment. “Circumstantial evidence can take
a number of forms, such as suspicious timing, behavior or
comments directed at members of the protected group,
evidence showing that similarly-situated employees outside
the protected group received systematically better treatment,
and evidence that the reason the employer gave for the adverse
action was pretextual.” Langenbach, 761 F.3d at 803. Rahn does
not allege any comments by the decision-makers directed at
white candidates, and although he argues that the committee
was influenced by Vohra’s comment, he fails to cite to any
evidence in the record to support that argument. Nor is there
evidence that the reason given for the hiring decision was
pretextual. Even before the alleged statement by Vohra which
Rahn believes tainted the process, Chen received more votes
than Rahn by the committee; and at that point, the committee
also included his wife Regina. There is, in short, no evidence in
the record at all that contradicts the claim by NIU that Chen
was more qualified for the position than Rahn, and that he was
hired for that non-discriminatory reason. In addition to a
dearth of any evidence that the search committee members
were impacted by Vohra’s views in selecting candidates to be
8 No. 14-2402
sent to him, Rahn has not contested that the candidates were
sorted by applying the criteria of the metric, and as discussed
above he has failed to argue that the metric did not accurately
reflect the legitimate qualifications of the position and was
therefore a pretextual reason for the hiring determination.
Nor has he argued that the selection of Chen was not based
on that metric, or that it otherwise established that the reason
given was pretextual. In fact, the district court noted that Rahn
failed to address the defendants’ contention that Chen was
hired based on the determination that he was more qualified.
Although Rahn devoted significant time in the district court on
wide-ranging allegations unrelated to his discrimination claim,
including allegations that Vohra had committed perjury and
questions as to actions taken by the university with respect to
grading issues, Rahn did not even mention the name “Chen”
in his brief and never addressed the defendants’ argument that
Chen was chosen because he was more qualified. In fact,
although Rahn testified that he was “by far the most qualified
candidate,” he acknowledged that he was unaware of the
qualifications of Chen or the other candidates. The defendants
noted in the reply brief that Rahn had therefore waived the
argument, and Rahn then attempted to file a sur-reply without
first seeking the permission of the district court. The district
court ultimately rejected the sur-reply, but the court noted that
even in the sur-reply, Rahn did not address the argument that
Chen was chosen because he was more qualified than Rahn.
The district court granted summary judgment in favor of the
defendants, holding that Rahn had failed to contest the defen-
dants’ claim that it had a non-pretextual reason for hiring Chen
that was unrelated to race. On appeal, Rahn does not address
No. 14-2402 9
that waiver argument, and therefore cannot assert here that the
committee’s determination that Chen was more qualified was
a pretext. That dooms his claim under the indirect method as
well, because even if Rahn was able to establish a prima facie
case of discrimination under that method, he could not survive
summary judgment; the defendants set forth a legitimate
reason for choosing Chen based on the metric evaluation of his
qualifications, and Rahn has waived any argument that the
reason is pretextual. See Matthews v. Waukesha County, 759 F.3d
821, 826-27 (7th Cir. 2014).
In addition to the discrimination claim, Rahn also asserted
that NIU retaliated against him for filing his grievance by
having the NIU police force harass him and by failing to
properly investigate the grievance. The district court held that
the retaliation claim was waived because Rahn failed to
address NIU’s arguments as to that claim aside from two
sentences at the end of Rahn’s response which lacked any legal
support. On appeal, Rahn does not even address the waiver
holding, and therefore has alleged no basis to reverse the
district court on that ground. See Ripberger, 773 F.3d at 879
(perfunctory and undeveloped arguments are waived).
II.
We turn then to the copyright claims. Rahn asserts two
distinct claims of copyright infringement on appeal. The first
involves the use of a course note packet for a course in the
Department of Industrial and Systems Engineering (ISYE) of
the College of Engineering at NIU, the ISYE 100 course entitled
“Essentials of Manufacturing.” While employed as a full-time
tenured professor at NIU, Regina developed the ISYE 100
10 No. 14-2402
course notes, and those notes were utilized by a different
professor, Joe Bittorf, in teaching the course. Although Regina
initially granted him permission to use the ISYE 100 course
notes, in the Spring semester of 2007 she informed Bittorf that
she no longer wanted him to use the course notes. Neverthe-
less, the ISYE 100 course notes were used in the course through
the Spring semester of 2009. In addition to informing Bittorf
that he could no longer use the course notes, Regina had also
informed defendant Alden, the NIU Provost, by email in
January 2008, that NIU no longer had permission to use the
ISYE 100 course notes. The parties debate whether Regina’s
brief two-sentence statement in a four-page single-spaced
email to Alden was sufficient notice to NIU that it could no
longer use the ISYE 100 course notes, or whether NIU rather
than Regina was the real owner of any interest in the ISYE 100
course notes because they were developed in the scope of
Regina’s employment, but we need not address those issues.
The copyright claim fails for a more fundamental reason,
which is that the evidence establishes only that Regina Rahn
was the author of the ISYE 100 course notes, but Regina is not
a plaintiff in this case. According to appellants’ brief, Regina
was initially a plaintiff, but the district court severed her from
the suit pursuant to Federal Rule of Civil Procedure 21. The
plaintiffs here allege that the ISYE 100 course notes were
written by Gregory and Regina Rahn as principals of
Genemetrix, and assert that the University violated copyright
law in continuing to distribute the ISYE 100 course notes after
permission to do so was rescinded. The district court rejected
that argument and held that the record indicated that Regina
was the sole author of the ISYE 100 course notes. On appeal,
No. 14-2402 11
Rahn argues only that the district court ventured beyond the
arguments for summary judgment and in doing so failed to
consider the entire record. We reject this argument. The district
court’s determination was responsive to the defendants’
argument on summary judgment that Regina was the sole
author of the ISYE 100 course notes and that they were
prepared as part of her employment. Moreover, that holding
by the district court is consistent with the record.
At the outset, it is important to identify the three docu-
ments that are referenced in this claim. The copyrighted work
at the cornerstone of the claim is entitled Trifinity Six Sigma
Series TXu001018550 (“Six Sigma Series.”) There is no dispute
that the document was authored by Gregory and Regina Rahn
who are principals in Genemetrix, and that Genemetrix owns
a valid copyright in that work. A second work entitled
“Essentials for Manufacturing Systems” was purportedly
created after the Six Sigma Series by Gregory and Regina Rahn
for consulting purposes, and is a derivative work. The relation-
ship between the ISYE 100 course notes and the Essentials for
Manufacturing Systems, however, is unnecessarily muddled.
The district court characterized the ISYE 100 course notes as a
derivative of the Essentials for Manufacturing Solutions, which
was itself a derivative of the Six Sigma Series, and held that
because Regina created the ISYE 100 course packet with
authority from Genemetrix, she became the owner to the
copyright to that class note packet, citing Schrock v. Learning
Curve Int’l Inc., 586 F.3d 513, 524 (7th Cir. 2009) (the right to
claim copyright in a derivative work arises by operation of law
but may be altered by agreement). On appeal, Rahn treats the
two derivative works as the same document but does not
12 No. 14-2402
identify them as such. In fact, he identifies no evidence in the
record that would let us conclude that the ISYE 100 course
notes are in fact simply a copy of the Essentials for Manufac-
turing Systems document, and other evidence in the record
indicates at least some of the ISYE 100 course notes such as
student exercises were not part of the Essentials for Manufac-
turing Systems work. In addressing the district court’s charac-
terization of the ISYE 100 course notes as a “second deriva-
tive,” (a derivative of the Essentials for Manufacturing Systems
which was itself a derivative of the copyrighted work), the
plaintiffs merely state that the existence of a second derivative
is “not substantiated” but is irrelevant because the page of the
notes contained a copyright mark with a Genemetrix logo.
Given the centrality of those documents to the claim and to the
district court’s resolution, it is incomprehensible that at this
stage of the litigation there is any doubt as to the exact compo-
sition of the documents. Even on appeal, the plaintiffs to their
detriment fail to clarify the matter, and more importantly fail
to point to any evidence in the record that does so.
First, the plaintiffs have failed to identify evidence in the
record which would demonstrate that they authored the ISYE
100 course notes. In the fact section of the brief, the plaintiffs
initially provide no cite at all for the statement that “[t]he notes
were created by Greg and Gina as principals of GMX
[Genemetrix].” In a later similar statement, they cite to docu-
ments that do not in fact contain evidence sufficient to raise a
genuine issue of fact as to that issue. First, they cite to the cover
pages for ISYE 100 course notes labeled Essentials for Manufac-
turing Book 1, Book 2, and Book 3, but no authorship is
indicated. That is followed by three pages that appear identical
No. 14-2402 13
to each other labeled Essentials for Manufacturing Systems,
each of which provides that it is written by Gregory Rahn and
Regina Rahn and contains a Genemetrix copyright. There is no
context provided for those pages, and the exhibit does not
contain the course notes themselves. Moreover, those appear
to be the cover pages for the Essentials for Manufacturing
System derivative work, which, as we discussed, appears to be
distinct from the ISYE 100 course notes. At oral argument,
neither party could even point us to the place in the record
where we could find the ISYE 100 course notes that were the
basis of the claim. In response to our request for supplemental
briefing, the defendants stated that they were unable to find
the course notes in the record, and that only the cover pages
for the three volumes of the course notes were provided in the
record. The exhibit identified by the defendants in fact contains
only the cover pages. The plaintiffs then informed us that the
ISYE 100 course notes can be found in three different exhibits
taken together. Those exhibits contain a document entitled
Essentials for Manufacturing Systems but nowhere does it
identify it as the ISYE 100 course notes. The record does not
appear to contain both the full ISYE 100 course notes and the
Essentials for Manufacturing Systems document which would
allow comparison, and the plaintiffs have not alleged that the
two are identical. The failure of the plaintiffs to clarify the
differences, if any, between those documents is significant
given the district court’s opinion that clearly considered the
documents to be distinct. Even if the citation provided by the
plaintiffs are to the ISYE 100 course notes with the cover pages
missing, that document still does not provide us with the
complete ISYE 100 course notes because the plaintiffs concede
14 No. 14-2402
that some pages of the document are missing from the record.
The failure to clearly identify documents in the record, and to
provide supporting citations for material propositions of fact,
is a recurrent problem in this case. At a minimum, in seeking
copyright protection, the plaintiffs must clearly identify the
work at issue. The plaintiffs have failed to do so here. That
alone could warrant summary judgment, but at a minimum the
failure to identify the relevant documents in the record
precludes an argument of authorship or copyright that is based
on isolated pages of those incomplete documents. Therefore,
the pages identifying Essentials for Manufacturing Systems as
authored by Greg and Regina Rahn and copyrighted by
Genemetrix are insufficient evidence as to the authors and
copyright owners of the ISYE 100 course notes.
The only other citation that indicates Rahn as a joint author
with Regina are emails sent by Regina to the bookstore after
the conflict with NIU over the notes had already ensued, in
which she asks how many copies have been sold and refers to
the course notes as notes authored by Rahn and herself. The
plaintiffs cite to no deposition or affidavit testimony from
Regina indicating that Rahn co-authored the course notes, and
therefore has failed to produce admissible evidence to that
effect. The plaintiffs do provide two record citations for the
statement that in 2005 or 2006, “Greg and Gina allowed GMX
[Genemetrix] professional development materials to be used in
the academic curriculum at NIU for the ... ISYE 100 course,”
but upon examination those cites also fail to support that
proposition. The first cite is a statement in the affidavit by
Regina Rahn, stating that documents from Genemetrix were
used in the preparation of the course notes. That statement
No. 14-2402 15
makes no mention as to whether copyrighted material was
used, and also fails to identify Rahn as involved in the author-
ing or preparation of the notes. The other cite provided for the
factual proposition is even less helpful. That citation is to a
letter from the Interim Department Chair of the Industrial
Engineering Department to Pat Foster of the University
Bookstore, stating that Regina Rahn, as the author of the course
notes, is entitled to receive any royalties from the sale of the
notes. Once again, that fails to demonstrate any connection
between the plaintiffs and the notes, nor does it indicate that
copyrighted materials were used. In his deposition, Donald
Turk, the Manager of the University Bookstore, testified that
royalties were paid for work authored by the professors for
both copyrighted and uncopyrighted materials. Moreover, by
identifying Regina Rahn as the author of the notes, without
reference to Gregory Rahn or Genemetrix, the letter in fact
disputes the proposition that the plaintiffs were authors of the
notes. Although Regina Rahn as author of the course notes
may have an interest in preventing the unauthorized distribu-
tion of her course notes, she is not a plaintiff in this case.
Gregory Rahn and Genemetrix have failed to demonstrate any
such interest.
Nor have they presented evidence that Regina Rahn
authored the course notes in her capacity as principal of
Genemetrix. First, the course notes were prepared for class-
room use, and the preparation of such materials was a part of
the duties of professors. Significantly, in providing the course
notes to the bookstore to be copied and sold, Regina Rahn
affirmatively represented that she was the sole author and that
the course notes contained no copyrighted materials. In the
16 No. 14-2402
form submitted with the notes, Regina Rahn signed a declara-
tion which provided “I, Regina Rahn, affirm that the materials
I am submitting to be copied and sold for my class are entirely
my own original work and I have not included any copy-
righted material.” Regina acknowledged in her deposition that
the signature and representation was indeed hers. The plain-
tiffs have failed to point to evidence in the record rebutting
that representation by Regina. If there is evidence in the record
establishing that plaintiffs have a protectible interest in the
ISYE 100 course notes and that the district court erred in
determining otherwise, they have failed to identify it. As we
have oft-stated, “we will not root through the hundreds of
documents and thousands of pages that make up the record
here to make [plaintiff’s] case for him.” Corley v. Rosewood Care
Ctr., Inc. of Peoria, 388 F.3d 990, 1001 (7th Cir. 2004); Friend v.
Valley View Community Unit School Dist. 365U, 789 F.3d 707,
710-11 (7th Cir. 2015); United States v. Dunkel, 927 F.2d 955, 956
(7th Cir. 1991) (Judges are not like pigs, hunting for truffles
buried in the briefs.”). The evidence in the record identified in
the briefs is that Regina Rahn, not the plaintiffs, authored the
ISYE 100 course notes, and she represented to the bookstore
that it contained no copyrighted materials. She is neither a
plaintiff nor a defendant in this case, and the record fails to
otherwise establish a basis for this copyright claim. Accord-
ingly, the district court properly granted summary judgment
on this claim.
One copyright claim remains. Rahn alleges that the defen-
dants copied Rahn’s “Risk Management” power point presen-
tation that he prepared in order to conduct a seminar for
Exelon engineers, which was derived from plaintiffs’ Six Sigma
No. 14-2402 17
Series. We take our facts largely from the succinct factual
summary set forth by the district court. In the fall of 2006,
Kathleen Thigpen, the senior training specialist at Exelon,
contacted NIU and informed Cassandra Simmons, the outreach
coordinator for the College of Engineering, that Exelon was
interested in having an NIU professor provide training for
Exelon employees on risk management. That request arose out
of a relationship that spanned several years prior to the 2006
request, whereby Exelon would provide NIU faculty and
students with industry experience in return for training and
other support from NIU. NIU and Exelon agreed in late 2006
and early 2007 that NIU would furnish the risk management
course by its employee and that Exelon would pay NIU, and
Rahn was chosen to develop and teach that course. Rahn
subsequently developed a power point presentation for that
course using materials previously developed by Regina which
Rahn considers derivative of Genemetrix’s copyrighted
materials. Exelon sought to review the materials before
agreeing to the contract, and Rahn forwarded the presentation
to Thigpen and Yousef Alaeddin, an engineer with Exelon.
They determined that the presentation was inadequate for their
needs, finding that the 144 slides lacked any prominent
discussion of risk management. Thigpen also expressed his
dissatisfaction that Rahn included the Genemetrix logo on the
slides given that Exelon had requested that NIU provide one
of its professors to give the presentation. Thigpen therefore
informed Simmons that they did not want Rahn to teach the
risk management course.
Simmons then asked Rahn’s direct supervisor, Ghrayeb, to
review the presentation and he agreed with Exelon that risk
18 No. 14-2402
management was not a significant part of the presentation. In
addition, the dean of the College of Engineering, Vohra, also
reviewed the presentation. The Exelon course ultimately was
taught by another NIU professor, Dennis Cesarotti.
Rahn asserts that the defendants ’ use of his power point
presentation constituted a copyright violation. It is impossible
to discern the basis for this claim, however, because the
plaintiffs fail to cite to a single case in presenting this argu-
ment. The only legal citations in this portion of the argument
relate to the sections concerning the proper weight that the
district court should have given to certain affidavits in consid-
ering his copyright claim. As to the legal basis for the copyright
claim itself, the plaintiffs neither identify the relevant copyright
law nor do they identify the aspects of the law that the defen-
dants allegedly violated. Instead, they devote the entirety of
this argument to speculative assertions that Rahn’s forwarding
of the power point presentation was somehow coerced, or that
the power point was distributed to competitors within NIU.
The district court properly rejected those assertions as unsup-
ported in the record, but more fundamentally, the plaintiffs
have waived any claim as to the Exelon power point because
they have failed to cite any legal authority in support of their
argument. See Ball v. City of Indianapolis, 760 F.3d 636, 645 (7th
Cir. 2014) (plaintiff who devoted no more than three sentences
to her argument without citation to legal authority failed to
comply with Fed. R. App. P. 28(a)(8)(A) and has waived the
claim); Yasinskyy v. Holder, 724 F.3d 983, 989 (7th Cir. 2013)
(“[w]e will not entertain baseless and unsupported factual
contentions or undeveloped legal arguments”); United States v.
Lanzotti, 205 F.3d 951, 957 (7th Cir. 2000) (“perfunctory and
No. 14-2402 19
undeveloped arguments, and arguments that are unsupported
by pertinent authority, are waived”); Federal Rule of Appellate
Procedure 28(a)(8)(A).
The decision of the district court is AFFIRMED. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4291866/ | Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/06/2018 01:10 AM CDT
- 344 -
Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. DILL
Cite as 300 Neb. 344
State of Nebraska, appellee, v.
Jesse M. Dill, appellant.
___ N.W.2d ___
Filed June 22, 2018. No. S-17-991.
1. Sentences: Appeal and Error. An appellate court will not disturb a sen
tence imposed within the statutory limits absent an abuse of discretion
by the trial court.
2. Judgments: Words and Phrases. An abuse of discretion occurs when a
trial court’s decision is based upon reasons that are untenable or unrea-
sonable or if its action is clearly against justice or conscience, reason,
and evidence.
3. Sentences: Probation and Parole. When a court sentences a defendant
to postrelease supervision, it may impose any conditions of postrelease
supervision authorized by statute.
4. Rules of the Supreme Court: Records: Appeal and Error. Neb. Ct. R.
App. P. § 2-109(D)(1)(f) and (g) (rev. 2014) requires that factual recita-
tions be annotated to the record, whether they appear in the statement of
facts or argument section of a brief. The failure to do so may result in
an appellate court’s overlooking a fact or otherwise treating the matter
under review as if the represented fact does not exist.
5. Appeal and Error. An alleged error must be both specifically assigned
and specifically argued in the brief of the party asserting the error to be
considered by an appellate court.
6. ____. An appellate court does not consider errors which are argued but
not assigned.
Appeal from the District Court for Lancaster County: Lori
A. M aret, Judge. Affirmed.
Joseph D. Nigro, Lancaster County Public Defender, and
John C. Jorgensen for appellant.
- 345 -
Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. DILL
Cite as 300 Neb. 344
Douglas J. Peterson, Attorney General, and Kimberly A.
Klein for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, and
Papik, JJ.
Cassel, J.
INTRODUCTION
Jesse M. Dill appeals from a sentence imposing both impris-
onment and postrelease supervision in a criminal case. But she
assigns error only to the fees and payments required under the
postrelease supervision order. We have not previously consid-
ered the issue in this context. Because we find no abuse of
discretion, we affirm.
BACKGROUND
The district court accepted Dill’s no contest plea to a
Class IIIA felony. The court imposed a determinate sentence of
1 year’s imprisonment followed by 18 months of postrelease
supervision. The court ordered Dill to pay a number of fees
in connection with the postrelease supervision: a $30 admin-
istrative enrollment fee, a $25 monthly programming fee, and
a $5 monthly fee for chemical testing. The court also ordered
Dill to pay costs associated with any evaluations, counseling,
or treatment undertaken at the direction of her postrelease
supervision officer.
At the sentencing hearing, neither party offered any evi-
dence. Both parties disclaimed any additions or corrections to
the presentence report.
Dill’s counsel objected to a number of the postrelease
supervision conditions. With regard to the various fees Dill
was ordered to pay, counsel stated that Dill previously had
been determined to be indigent and without the financial
means to pay fees. Counsel also stated that there had “been
no further assessment in regards to her ability to pay.” The
court overruled the objections and entered a postrelease
- 346 -
Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
STATE v. DILL
Cite as 300 Neb. 344
s upervision order containing the same conditions as had been
orally announced.
Dill filed a timely appeal, and we granted her petition to
bypass review by the Nebraska Court of Appeals.
ASSIGNMENT OF ERROR
Dill assigns that the court abused its discretion by imposing
costs and fees of postrelease supervision upon her.
STANDARD OF REVIEW
[1,2] An appellate court will not disturb a sentence imposed
within the statutory limits absent an abuse of discretion by the
trial court.1 An abuse of discretion occurs when a trial court’s
decision is based upon reasons that are untenable or unreason-
able or if its action is clearly against justice or conscience,
reason, and evidence.2
ANALYSIS
Postrelease supervision is a relatively new concept in
Nebraska sentencing law.3 As such, our case law on the subject
is scant. Last year, a defendant sought to challenge the validity
of postrelease supervision conditions imposed upon him, but
we determined that because he did not challenge those condi-
tions at the sentencing hearing, he waived his challenge.4 Here,
Dill raised her objections at the time of sentencing. This appeal
presents our first opportunity to address a preserved chal-
lenge to the conditions imposed in connection with a sentence
of postrelease supervision. But before we reach Dill’s spe-
cific arguments, we examine the statutory structure concerning
postrelease supervision.
1
State v. Hunt, 299 Neb. 573, 909 N.W.2d 363 (2018).
2
Id.
3
State v. Kennedy, 299 Neb. 362, 908 N.W.2d 69 (2018). See, also, Neb.
Rev. Stat. §§ 28-105 (Supp. 2017) and 29-2204.02 (Reissue 2016).
4
See State v. Phillips, 297 Neb. 469, 900 N.W.2d 522 (2017).
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Statutory Framework
The Nebraska Probation Administration Act defines
terms pertinent to postrelease supervision.5 The definition of
postrelease supervision is “the portion of a split sentence fol-
lowing a period of incarceration under which a person found
guilty of a crime . . . is released by a court subject to conditions
imposed by the court and subject to supervision by the [Office
of Probation Administration].”6 “Probation,” which “includes
post-release supervision,” is “a sentence under which a person
found guilty of a crime upon verdict or plea or adjudicated
delinquent or in need of special supervision is released by a
court subject to conditions imposed by the court and subject to
supervision.”7 And a person sentenced to postrelease supervi-
sion is called a “[p]robationer.”8 The legislative intent is clear.
Postrelease supervision is to be treated as a form of probation,
and the usual rules of law governing probation will ordinarily
apply to postrelease supervision.
A sentence of postrelease supervision is statutorily man-
dated for certain lower-level felonies. Except when a term of
probation is required by law, statutes compel the imposition
of a determinate sentence along with a sentence of postrelease
supervision for an offender convicted of a Class III, IIIA, or IV
felony.9 But an offender convicted of one of those enumerated
felonies is not subject to postrelease supervision if he or she
is also sentenced to imprisonment for a felony with a higher
penalty classification.10 When a court sentences an offender to
postrelease supervision, the court shall specify the term of such
postrelease supervision.11
5
See Neb. Rev. Stat. §§ 29-2246 to 29-2269 (Reissue 2016 & Supp. 2017).
6
See § 29-2246(3) and (13).
7
§ 29-2246(4).
8
§ 29-2246(5).
9
See §§ 28-105(1) and 29-2204.02.
10
See 28-105(6).
11
§ 29-2263(2).
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Other statutes apply procedures of probation to postrelease
supervision. All sentences of postrelease supervision are
served under the jurisdiction of the Office of Probation
Administration and are subject to conditions imposed
under § 29-2262 and subject to sanctions authorized under
§ 29-2266.02.12 A court may revoke a probationer’s postrelease
supervision upon finding that the probationer violated one of
its conditions.13
Statute and Rule Implementing
Postrelease Supervision
The legislation that introduced postrelease supervision into
Nebraska’s statutes14 authorized the adoption of rules and
regulations governing probation, which, as we have observed,
includes postrelease supervision. The Nebraska Probation
Administration Act now defines “[r]ules and regulations”
to mean “policies and procedures written by the [Office of
Probation Administration] and approved by the Supreme
Court.”15
The act speaks broadly. It authorizes rules and regulations
•
“as may be necessary or proper for the operation of the
[Office of Probation Administration] or [Nebraska Probation
System],”16
• “for transitioning individuals on probation across levels of
supervision and discharging them from supervision consistent
with evidence-based practices,”17
• to “ensure supervision resources are prioritized for individ
uals who are high risk to reoffend,”18
12
§ 28-105(5).
13
§ 29-2268(2).
14
See 2015 Neb. Laws, L.B. 605.
15
§ 29-2246(14).
16
§ 29-2252(11).
17
Id.
18
Id.
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• for “transitioning individuals down levels of supervision
intensity,”19
• for “establish[ing] incentives for earning discharge from
supervision,”20
• “for the creation of individualized post-release supervision
plans,”21
• for governing supervision of probationers, advising courts of
situations requiring modification of conditions or warrant-
ing termination, and providing additional duties for district
probation officers,22 and
• for dealing with violations of probation imposed for misde-
meanors23 and felonies.24
In accordance with this broad authority, the probation admin-
istrator proposed—and this court adopted—a rule to address
orders of postrelease supervision.25 There is no challenge to the
constitutionality or validity of the rule in this appeal. Indeed,
Dill does not cite to or otherwise recognize the existence of the
rule. Nonetheless, we apply the rule to this appeal.
The rule dictates that the postrelease supervision be pro-
nounced at sentencing.26 The timing is logical, because
postrelease supervision is part of the sentence.27 Under the rule,
the court shall impose the term of postrelease supervision and
shall also enter a separate postrelease supervision order that
sets forth conditions under § 29-2262.28 Thus, the imposition
of conditions is not deferred to a later time.
19
Id.
20
Id.
21
§ 29-2252(19).
22
See § 29-2258.
23
See § 29-2266.01.
24
See § 29-2266.02.
25
Neb. Ct. R. § 6-1904 (rev. 2016).
26
See § 6-1904(A).
27
See, generally, State v. Phillips, supra note 4.
28
See § 6-1904(A).
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Statutes R egarding
Fees and Costs
[3] We have said that when a court sentences a defendant
to probation, it may impose any conditions of probation that
are authorized by statute.29 Because postrelease supervision
is a form of probation, the same rule necessarily follows for
postrelease supervision. We now hold that when a court sen-
tences a defendant to postrelease supervision, it may impose
any conditions of postrelease supervision authorized by statute.
Thus, the question turns to what the statutes authorize as to
such fees and payments.
As part of the governing structure, the Legislature delineated
certain fees that an adult probationer must pay. These include
(1) a one-time administrative enrollment fee of $30,30 (2) a
monthly probation programming fee of $25 for the duration of
the postrelease supervision,31 and (3) a larger monthly program-
ming fee where intensive supervision probation or participation
in non-probation-based programs or services is involved.32 The
fees imposed pursuant to § 29-2262.06 are specifically autho-
rized as a condition of probation under § 29-2262(2)(t).
As to these monthly programming fees, the statute requires
a court to waive payment in whole or in part “if after a hearing
a determination is made that such payment would constitute an
undue hardship on the offender due to limited income, employ-
ment or school status, or physical or mental handicap.”33 But
the waiver must be limited to “the period of time that the
probationer . . . is unable to pay his or her monthly probation
programming fee.”34 Thus, the statute contemplates that the
assessment of undue hardship may change during postrelease
29
State v. Rieger, 286 Neb. 788, 839 N.W.2d 282 (2013).
30
§ 29-2262.06(3)(a).
31
§ 29-2262.06(3)(b).
32
§ 29-2262.06(3)(c).
33
§ 29-2262.06(4).
34
Id.
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supervision. In other words, the monthly fee may go up
or down.
The monthly probation programming fee is separate and
apart from fees that may be imposed for tests to deter-
mine the presence of drugs or alcohol, psychological evalua-
tions, offender assessment screens, and rehabilitative services
required in the identification, evaluation, and treatment of
offenders.35 But as to such tests, evaluations, screens, and
services, the probationer shall be required to pay them only
if the “offender has the financial ability to pay.”36 There is
no suggestion in the statute that such “ability to pay” is a
static concept that cannot be reassessed during the period of
postrelease supervision.
At the time of sentencing, the court makes an initial deter-
mination regarding the existence of an undue hardship regard-
ing monthly programming fees and, if § 29-2262(2)(m) serv
ices are ordered, the ability to pay for them. Its decision is
informed by factual information gathered in connection with
the preparation of a presentence report or by evidence adduced
at the time of sentencing.
This inquiry differs from that regarding indigency for the
purpose of the right to court-appointed counsel. At the time of
a felony defendant’s first appearance before a court, the court
advises him or her of the right to court-appointed counsel if he
or she is indigent.37 Indigent means the “inability to retain legal
counsel without prejudicing one’s financial ability to provide
economic necessities for one’s self or one’s family.”38 If the
defendant asserts indigency, “the court shall make a reasonable
inquiry to determine his or her financial condition and may
require him or her to execute an affidavit of indigency.”39
35
See §§ 29-2262(2)(m) and 29-2262.06(8).
36
§ 29-2262(2)(m).
37
Neb. Rev. Stat. § 29-3902 (Reissue 2016).
38
Neb. Rev. Stat. § 29-3901(3) (Reissue 2016).
39
§ 29-3902.
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Modification
There are multiple points at which the conditions of
postrelease supervision may be modified. Prior to an indi-
vidual’s anticipated date of release from the Department of
Correctional Services or local county jail, the court shall
receive a postrelease supervision plan from the probation
office.40 Based upon the plan, “[t]he court shall consider modi-
fication to the post-release supervision order, upon applica-
tion and recommendation . . . .”41 If the court modifies the
postrelease supervision order, it must do so prior to the indi-
vidual’s anticipated date of release.42 Later, during the term of
postrelease supervision, the conditions of the court’s order may
be modified or eliminated under § 29-2263(3).43
Although the sentencing court can later modify the condi-
tions of postrelease supervision, it is important to raise any
objections to the conditions when they are first announced.
If a condition would be unlikely to promote rehabilitation or
reintegration or would be disproportionate, the alleged defi-
ciency should be brought to the sentencing court’s attention
for possible elimination or modification at the outset. With all
of this in mind, we now turn to Dill’s assigned error.
Dill’s A rguments
Dill challenges the imposition of fee-based conditions,
which she contends were excessive. She asserts that her chal-
lenge “essentially present[s] . . . a modified excessive sen-
tence case.”44 And she implicitly recognizes that our review
is for “an abuse of discretion.”45 She specifically challenges
four fees: the administrative enrollment fee of $30, program-
ming fees of $25 per month, chemical testing fees of $5 per
40
See § 6-1904(B) and (C).
41
Id.
42
§ 6-1904(D).
43
See § 6-1904(A).
44
Brief for appellant at 7.
45
Id.
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month, and unspecified fees associated with § 29-2262(2)(m)
services. The first two are governed by § 29-2262.06. The last
two fall under § 29-2262(2)(m). For the reasons that follow,
we find no abuse of discretion in the order establishing the
conditions of postrelease supervision.
Dill first complains that these fees amount to a de facto
fine for anyone on postrelease supervision. We disagree. As
discussed above, the fees are mandated by the Legislature.46
And Dill does not challenge the constitutionality of the statutes
or the validity of the rule adopted to implement postrelease
supervision. Instead, she submits a lengthy discussion of sen-
tencing philosophy.
[4] Dill fails to advance any specific argument, regarding
either undue hardship or inability to pay, tied to the record.
She refers to what might “typically” or “frequently” occur.47
But we are confined to the record before us. And her brief does
not cite to either the bill of exceptions or the presentence report
regarding facts that might support her argument. We have said
that Neb. Ct. R. App. P. § 2-109(D)(1)(f) and (g) (rev. 2014)
requires that factual recitations be annotated to the record,
whether they appear in the statement of facts or argument
section of a brief. The failure to do so may result in an appel-
late court’s overlooking a fact or otherwise treating the matter
under review as if the represented fact does not exist.48 We
decline to scour the record in search of facts that might support
a claim of undue hardship or inability to pay.
Dill also seems to argue that appointment of counsel and
waiver of appeal costs, ipso facto, dictate that postrelease
enrollment and programming fees would constitute an undue
hardship and that she lacks the ability to pay § 29-2262(2)(m)
rehabilitation expenses. But she cites no authority for this
proposition, and we are aware of none. Indeed, as we have
already outlined, separate statutes with differing standards
46
See §§ 29-2262 and § 29-2262.06.
47
Brief for appellant at 10.
48
State v. Edwards, 278 Neb. 55, 767 N.W.2d 784 (2009).
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apply to each question. We reject the notion that application of
one statutory standard mandates the same result under a differ-
ent standard prescribed by a separate statute.
As we have already observed, the statute establishing the
monthly programming fee contemplates reevaluation during
the period of postrelease supervision. Should Dill later show
that the monthly programming fee constitutes an undue hard-
ship, she has a potential remedy. And, of course, based on the
postrelease supervision plan prepared by the probation office
prior to Dill’s release from prison, the court may modify its
postrelease supervision order.49
[5,6] Dill also argues that the district court improperly del-
egated authority with respect to one of the conditions. But this
argument addresses the propriety of the court’s allowing the
postrelease supervision officer to direct Dill to “satisfactorily
attend and successfully complete any alcohol, drug, and/or
mental health evaluation, counseling, or treatment.” And Dill
did not assign this as error; rather, she assigned only that the
court “abused its discretion by imposing costs and fees of post-
release supervision.” An alleged error must be both specifi-
cally assigned and specifically argued in the brief of the party
asserting the error to be considered by an appellate court.50 An
appellate court does not consider errors which are argued but
not assigned.51 We do not consider Dill’s improper-delegation
argument as fairly within the scope of her sole assignment of
error. Accordingly, we do not address this argument.
CONCLUSION
Because the district court did not abuse its discretion in its
imposition of conditions of postrelease supervision regarding
fees and payments, we affirm its sentence.
A ffirmed.
49
See § 6-1904(B).
50
State v. Chacon, 296 Neb. 203, 894 N.W.2d 238 (2017).
51
State v. Jedlicka, 297 Neb. 276, 900 N.W.2d 454 (2017). | 01-03-2023 | 07-06-2018 |
https://www.courtlistener.com/api/rest/v3/opinions/1681872/ | 266 F.Supp. 328 (1967)
UNITED STATES of America
v.
UNITED SHOE MACHINERY CORPORATION.
Civ. A. No. 7198.
United States District Court D. Massachusetts.
April 11, 1967.
As Corrected April 18, 1967.
*329 Margaret H. Brass, W. Randolph Elliott, Robert J. Ludwig, Washington, D. C., Sp. Attys. for the United States, (Donald F. Turner, Asst. Atty. Gen., and Paul F. Markham, U. S. Dist. Atty.) for plaintiff.
Ralph M. Carson, New York City, Robert Proctor, Boston, Mass., Taggart Whipple, Louis L. Stanton, Jr., New York City, Robert D. Salinger, Boston, Mass., Davis, Polk, Wardwell, Suderland & Kiendl, of New York City, Choate, Hall & Stewart, Boston, Mass., Carter, Ledyard & Milburn, New York City, for defendant.
Thomas F. Shannon, James F. Rill, Andrew E. Zelman, Washington, D. C., for amicus curiae, National Footwear Manufacturers Association, of counsel, Collier, Shannon & Rill, Washington, D. C., Benjamin A. Trustman, John R. Hally, Boston, Mass. (of Nutter, McClennen & Fish, Boston, Mass.), amicus curiae, New England Footwear Manufacturers Association, Inc.
OPINION
WYZANSKI, Chief Judge.
The Government and United Shoe Machinery Corporation have each filed a petition for modification of this Court's decree of February 18, 1953, affirmed by the Supreme Court of the United States May 17, 1954, and subsequently modified July 12 and September 17, 1954. See United States v. United Shoe Machinery Corp., 110 F.Supp. 295 (D.Mass.), aff'd United Shoe Machinery Corp. v. United States, 347 U.S. 521, 74 S.Ct. 699, 98 L. Ed. 910.
The Government's petition seeks to have United dissolved into two companies. United seeks to have the restrictions now imposed limited to requirements of sale of any machine types offered for lease, maintenance of a reasonable commercial relationship between sale terms and lease terms, separate charges for service, and avoidance of restrictive clauses such as the full capacity clause. Both petitions rely upon the following language in paragraph 18 of the decree:
"On C Day [December 23, 1964] both parties shall report to this Court the effect of this decree, and may then petition for its modification, in view of its effect in establishing workable competition. If either party takes advantage of this paragraph by filing a petition, each such petition shall be accompanied by affidavits setting forth the then structure of the shoe machinery market and defendant's power within that market."
Threshold questions are what is the scope of this Court's power in these proceedings, what standards are to be applied in the exercise of this power, and what issues are before this Court. With respect to the first two questions an authoritative answer is given by United States v. Swift & Co., 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999. A court can modify a continuing injunction not on the basis of conditions that existed at its making, but only on the basis of new and unforeseen conditions. Moreover, the court should require a clear showing of grievous wrong. In Swift, where the Supreme Court denied a defendant's application to have a decree modified, it enunciated the criteria in the following words (286 U.S. at p. 119, 52 S.Ct. p. 464) applicable mutatis mutandis to a plaintiff's application:
"There is need to keep in mind steadily the limits of inquiry proper to the case before us. We are not framing a decree. We are asking ourselves whether anything has happened that will justify us now in changing a decree. The injunction, whether right or wrong, is not subject to impeachment in its application to the conditions that existed at its making. We are not at liberty to reverse under the guise of readjusting. Life is never static, and the passing of a decade has brought changes to the grocery business as it has to every other. The inquiry for us is whether the changes are so important that dangers, once substantial, have become attenuated to a shadow. No doubt the defendants will be better off if the injunction is relaxed, but *330 they are not suffering hardship so extreme and unexpected as to justify us in saying that they are the victims of oppression. Nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change what was decreed after years of litigation with the consent of all concerned."
Swift has been followed consistently. Morse-Starrett Products Co. v. Steccone, 205 F.2d 244 (9th Cir.); Bigelow v. Twentieth Century-Fox Film Corp., 183 F.2d 60 (7th Cir.); United States v. Lucky Lager Brewing Co. of San Francisco, 209 F.Supp. 665 (D.Utah).
Nothing in paragraph 18 of the decree departs from Swift's teaching or purports to confer upon this Court a broader power to alter its decree, or authority to apply different standards. The requirements remain (1) a clear showing of (2) grievous wrong (3) evoked by new and unforeseen conditions. Indeed if paragraph 18 gave this Court the power to alter a decree on any lesser showing the decree would not have been final and appealable to the Supreme Court.
What paragraph 18 does is to direct the parties to an issue: the decree's "effect in establishing workable competition" the phrase was unfortunate because it has no precise legal meaning. But if paragraph 18 be read against the accompanying opinion, United States v. United Shoe Machinery Corp., D.C., 110 F.Supp. 295, it is apparent that what the Court was inviting was information as to how successful the decree had been in gradually eroding United's 1953 power to monopolize the market. The opinion makes it plain that the object of the decree was during a ten year period not to restore so-called workable competition but to move toward establishing it.
The issue now raised requires that this Court first state what it knew at the time of the decree and what it then chose.
The following were among the facts of which this Court was aware in 1953. United had by far the largest financial and patent resources in the shoe machinery industry. It was the only company that offered a wide line of machine types. If United were allowed to continue leasing, even on a basis that gave shoe factories an alternative to purchase the leased machine at an equivalent price, almost all shoe factories would prefer to lease their new and more complicated machines. That preference would enable United to continue its visits to most shoe factories. It would permit United to place machines on lease on an experimental basis. It should make it difficult for any competitor to succeed in connection with the marketing of complicated expensive types of machinery for which there was a thin market unless the competitor had resources adequate to offer a long line of machine types, to accept compensation in the deferred form of rental payments, to make its lease terms the commercial equivalent of its sale terms, and to withstand the at least temporary inconvenience of having leased machines returned after a short rental period. In short, this Court was quite cognizant of the fact that permitting United to continue as a single enterprise engaged predominantly in leasing rather than selling made it almost certain that at the end of a decade, absent a strong outside challenger, United's market power would be merely diminished not destroyed.
Yet this Court chose not to dissolve United, and not to prohibit leasing, but merely to purge the leases of certain specific restrictive clauses, to require United to offer lessees the alternative of purchasing, and to require United to take certain miscellaneous steps which need not now be recited. Among the reasons that this Court made this choice were that the Supreme Court had approved the constitution of United as a single enterprise, that it had permitted United to proceed with leasing as an exclusive method of distributing machines, that United had engaged in no predatory or immoral practices, and that United owed much of its position to superior products and services, to its own inventions, and to other results of United's skill, ability, and efficiency.
Both parties have submitted requests for findings. They have been helpful in *331 directing this Court's attention to what the decree has accomplished, to what are the dynamics of the 1963-1964 [hereafter sometimes called "the present"] shoe machinery market, to the freedom of choice now enjoyed by the shoe factory users of shoe machinery, and to the freedom of competitors in the present market structure. But those topics need not be covered by this Court in detail and hence, so far as not granted herein, all requests for findings are denied.
Paragraph 18 of the decree by referring to affidavits indicated that this would be a summary proceeding. It is important not to plague anti-trust law by establishing a precedent which might lead to full scale second trials of anti-trust cases on every claim that, as shown by its effects, an outstanding decree was too lenient or too severe. The only findings which this Court deems appropriate and necessary follow in numbered paragraphs.
1. United complied fully with this Court's decree.
2. Before the 1953 decree United's share of the shoe machinery market by any measure was about 85 per cent. While in 1953 there was no specific finding with respect to United's then share of the revenue from shoe machinery sold and leased, it is a fair inference that, because of its strong position in the distribution of major machines yielding the largest revenue, United's share of the total revenue exceeded 85 per cent. In 1963 it had declined to about 62 per cent of the current shoe machinery market.
3. That market now includes machines for the manufacture of vulcanized rubber footwear because such machines are competitive with injection moulding machines and other shoe machinery, are used in conventional shoe factories, and are used for both leather-upper and fabric-upper footwear.
4. The aforesaid revenue percentage of the shoe machinery market is a far more satisfactory index of share of the market than any other suggested. That index is far more illuminating than one based on a mere count of machines in position in shoe factories without distinguishing the machines by type, or value, or yield. It is also more satisfactory than one based on the value of annual shipments, an index which disregards the payment of rentals upon or conversion prices for machines shipped in previous years. It is a better index than one computed by the use of tables with 30 classifications according to the major and minor shoe machinery processes of the pre-1953 decree period, and referred to in the 1953 opinion, 110 F.Supp. at pages 304-305, 306. Those classifications do not reflect the extent to which technological changes require that there be grouped in two over-all classifications the machines used in competitive processes for (a) lasting and (b) sole attaching. Moreover, insofar as a tabular presentation is applied to machines in position in shoe factories in 1963 it fails to recognize that, unlike the situation in 1953, machines of United origin, not necessarily being on lease, are not necessarily sources of current payments by shoe factories and are not part of the current market.
5. There are many indicia confirming the correctness of the conclusion derived from the revenue index that United has about three-fifths to two-thirds of the shoe machinery market now, that is, a shrinkage of more than a quarter of the share of the market it had in 1953. (a) Although during the last decade the number of shoes produced annually rose, and therefore it may be inferred that the value of shoe machinery in the shoe factories rose, and although the value of the dollar declined, nonetheless United's total annual revenues from shoe machines sold and leased, from the sale of parts, and from repair services in 1955 was certainly less than before the decree. Indeed the combined lease and sale figures for United shrank from $32 million in 1955 to $24 million in 1963. During the same 1955-1963 period United's 12 most important domestic competitors doubled their gross revenues. (b) United's annual earnings before taxes of the Shoe Industry Group, after elimination of proceeds from conversion sales, had dropped from over $11 million at the time the decree *332 became effective to less than $6 million at February 29, 1964. (c) United's employment declined approximately 30 per cent in its Beverly plant and 40% in its service branch. (d) Of the machines shipped in 1963 in the 30 classifications shown in the tables used in 1953, United supplied 51.7 per cent, which is a figure combining 65 per cent of so-called major machines and 42.3 per cent of minor machines. (e) Of the machines now in shoe factories about 54 per cent were of United origin, but only 47 per cent were being leased from or had been bought from United.
6. Since the decree the number of United shoe machines on lease in domestic shoe factories fell from 91 to 26 thousand. Of the machines in domestic shoe factories only 17 per cent in 1963 were on lease from United. While approximately 90 per cent of the machines shipped by United in the post-decree decade have been on lease, a substantial number of them are ultimately bought by shoe factories. The reasons that most shoe factories initially lease rather than buy machines of the expensive types are not because the lease terms are not commercially related to sale terms, but because shoemakers prefer to have the right easily to dispose of expensive machines and because they lack either the financial ability or the inclination to invest substantial capital in shoe machinery. The continuation of the pattern of leasing expensive machines is a response to the demand from the shoe-making market which has 785 enterprises, many of them of modest resources. Without leases many of them could not continue in business.
7. The decree has tended to open the market by promoting the return of United machines by customers. For example, the total returns to United by customers of so-called major machines exceeded the total shipments by more than one-third during 1955-1964. This trend promotes competition by making the shoe factory a more frequent customer for shoe machinery.
8. In the decade 1953-1963 shoe factories purchased over 53,000 machines which they had previously leased from United. Most of the conversions occurred soon after the decree. But in the tenth year over 1300 machines were converted, and in 1964 the number was 678, which was more than one quarter of the machines United leased that year. Each purchase reduces United's power by making it likely that the machine will ultimately enter the second-hand market.
9. United has faced important competition from an active second-hand market, largely of its own machines. In 1963 that market sold about $3 million in machines, which stands comparison with United's revenues of $22 million from leases and $1.06 million from sales. The second-hand market is sufficiently vigorous so that it is not unusual now for shoe factories to start in business utilizing many machines originally of United manufacture, without obtaining a single machine from United.
10. At the end of 1955-1964 period there were about 126 suppliers of new shoe machines. The pace of entry into the market in each three-year period after the decree increased: from 11 to 19 to 26, or a total of 56 companies. None of these, however, is a company offering a wide line. Indeed while United offered 115 types of machines on current terms and 24 types on application, Compo Shoe Machinery Corporation offered only 22, International Shoe Machine Corporation only 5, and most companies only 1. The small companies have shown that in many sectors of the industry a machine manufacturer can be effective in one or several parts of the industry without the need of participating in other parts.
11. The unanimous and representative testimony of shoe makers is that there now exists in the shoe machinery market sufficient competition to allow the shoe manufacturers to select machinery as they wish on the merits of the machines available and in accordance with the processes they select to meet the various style changes in the consumers' market. In particular, United is subject to constant full and free competition from competitors' machines in toe lasting, side lasting, *333 sole attaching, pulling over, and bottoming. That kind of competition reveals that several of the 18 sub-classifications of "major machines" are in competition with one another and that percentage calculations based upon each separate classification are misleading unless machines which are in competition with one another are grouped together, thus reflecting the true character of the shoe machinery market.
12. In 1953 United had and exercised power to exclude competitors from every significant classification of shoe machinery except cement sole attaching machines.
13. However, by 1963 United was not in fact exercising, and indeed was incapable of exercising, exclusionary power over the entire market. This is shown not merely by its reduced share of the market, by its altered leases, and by the growth of competition from domestic manufacturers, importers, and secondhand machinery but by the following miscellaneous indicia.
(a) With respect to the lasting and sole attaching sectors of the market cement processing, injection molding, and directmold vulcanizing had become competitive with the seven older techniques,McKay, Nail, Turn, Goodyear Welt, Stitchdown, Prewelt, and Lockstitch. Those older techniques, where United offered over 90 per cent of the machine types, declined from 55 per cent of the relevant sub-market in 1950, to 42 per cent in 1955, to 33 1/3 per cent in 1963. In the newer techniques, United does not hold a commanding position. The result has been that United cannot control competition in the lasting sector as a whole or in the sole attaching sector as a whole.
(b) Of the shoe machines in position in shoe factories only 51 per cent had been shipped by United and only 17 per cent were covered by United leases. That finding, as already noted, does not show United's share of the entire market. But, inasmuch as from other evidence it appears that United's share of so-called major machines is far higher than its share of minor machines, it follows that in minor machines as a whole, and probably in most categories of minor machines, United has no exclusionary power.
(c) Of the shoe machines shipped in 1963, United's share by value may be as little as 48 per cent, and certainly is not much over 50 per cent. Here again, that finding, as already noted, does not show United's share of the entire market, because it eliminates current revenues from machines shipped in earlier years. But, in view of other evidence indicating that United's share of so-called major machines is far higher than its share of minor machines, it follows that in minor machines as a whole, and probably in most categories of minor machines, United has no exclusionary power.
14. In 1963 there were certain sectors of the shoe machinery market in which United was without significant competition, but it does not follow that United's position in those sectors was a result of United's exclusionary power or made competition unworkable. Indeed, it is more reasonable to conclude that the want of competition was due to the absence of a challenger of adequate, but not unusual, financial resources, skill, ability, and efficiency.
15. In almost every one of the 45 of the 187 operations in domestic shoe factories where United was the sole source of supply fewer than 6 machines a year are demanded and the operation, looked at alone, is not economically attractive. What is far more important, the operation is shown to be competitive with other operations for which other sources than United supply machines. On this record, it is inferrable that, for the purpose of the anti-trust acts, the machines used in the 187 operations ought to be combined to constitute perhaps as few as 7 markets, one for each stage of shoemaking. It is not clear whether after that was done United would have a dominant position in some of the sub-markets thus constituted.
16. If United does have a dominance in some of those sub-markets such dominance is not due to "restraints of trade" in the technical sense. There is a variety *334 of causative factors such as United's financial capacity to offer lease terms commercially equivalent to sales terms on the same machine types, United's broad line of machine products manufactured in one plant (which permits United with economic advantage to supply machine types for which there is a small annual market and which also permits United to set for different types of machines terms which reflect different rates of profitability), United's constant contacts with most shoe manufacturers as a result of the large volume of machines United ships annually and the large number of leases it has outstanding, and United's excellent products, superior skill in merchandising, efficiency in administration, inventions and know-how. Every one of those factors was known to this Court when it entered its decree in 1953. New information with respect to the operation of those factors since 1953 shows that they have not individually or collectively had an unforeseen effect or worked a grievous wrong.
From the foregoing findings of fact this Court concludes that the 1953 decree has operated in the manner and with the effect intended. It has put in motion forces which, aided by new technology, have eroded United's power and already dissipated much of the effect of United's monopolization.
In some sectors of the market, competition is already flourishing. In the sectors where it is not flourishing, all artificial barriers have disappeared and the position enjoyed by United is chiefly traceable to the fact that it has not yet been challenged by a competitor of financial resources of any magnitude. United follows no practice and enjoys no significant advantage which could preclude or restrain competition by an enterprise of a size comparable with leading machinery companies in other industries, that is, with resources adequate to offer lease terms commercially equivalent to sale terms and to offer simultaneously machine types in several categories where the annual demand is too thin to be economically supplied separately. The apparent reason why no such competitor has appeared is that compared with rates of return in other machinery markets, the rate of return in the shoe machinery market is unattractive.
It cannot rightly be said that a market or a sector thereof is, in the legal sense, not open to competition where an effective challenge may be made by an enterprise of resources common in comparable fields.
While this Court now has before it the facts of the decade 1954-1963 which were not known in 1953, nothing new, aside from the updating of the data, is involved. United has not created new barriers. In 1953 the resources of United in absolute terms were substantially the same as, and in comparative terms substantially more than, they are now.
It may have been an error in 1953 not to have dissolved United rather than to allow sectors of its power to be dissipated by small competitors, and to leave other sectors of power to be effectively attacked only when a small competitor became large or a large competitor appeared. But the choice was made in 1953 for reasons already adequately explained.
What the Government is complaining of is not that the decree did not work as expected, but that working in the foreseeable and intended way the decree did not accomplish what the Government had originally prayed for and what this Court had rejected. In short, the Government petitions that the decree be reversed because this Court erred in 1953. On the authority of United States v. Swift & Co., 286 U.S. 106, 119, 52 S.Ct. 460, the Government's petition is denied.
United's petition stands no better. United wants to adjust the decree on the ground that the purposes of the decree have been accomplished and milder restraints are now in order. But the premise is unsound. The decree is still working at its long-range task of freeing the market from all consequences of United's monopolization and keeping the door wide open for the arrival of an adequately provided challenger. Until there are competitors *335 throughout the market, the decree should stand unmodified. United's petition is also denied.
Before concluding, this Court expresses its appreciation of the brief filed by amici curiae, the National Footwear Manufacturers Association and the New England Footwear Association. Their analysis of this case has greatly influenced this opinion. Their assurance that their clients, who represent substantially all the shoe manufacturers, who are among the chief intended beneficiaries of this Court's decree and who have had an unequalled opportunity daily to observe its effect in the last decade, are content with its operation and do not want it modified, gives added ground for leaving the decree undisturbed.
Petitions denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2826829/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-2063
LISA J. BARR,
Plaintiff-Appellant,
v.
BOARD OF TRUSTEES OF
WESTERN ILLINOIS UNIVERSITY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Central District of Illinois.
No. 10-cv-1199 — Michael M. Mihm, Judge.
____________________
ARGUED SEPTEMBER 29, 2014 — DECIDED AUGUST 12, 2015
____________________
Before EASTERBROOK, WILLIAMS, and SYKES, Circuit Judges.
SYKES, Circuit Judge. Lisa Barr was a tenure-track journal-
ism professor at Western Illinois University from the fall of
2007 through the spring semester 2010, when the University
declined to retain her for the next academic year. Barr con-
tends that the nonrenewal decision was in retaliation for
complaints she made in 2008 about racial discrimination at
the school. In March 2010 she sued the University alleging
2 No. 13-2063
retaliation in violation of Title VII. Service of this suit was
never perfected, however.
A few months later, in June 2010, Barr filed a second law-
suit—this time against the University’s Board of Trustees—
alleging that the decision not to renew her contract was both
retaliatory and the product of age discrimination. In the
meantime, a magistrate judge recommended that the district
court dismiss Barr’s first suit for failure to prosecute. And so
it was dismissed, with prejudice, in August 2010.
During discovery in the second case, the Board of Trus-
tees learned of Barr’s prior lawsuit. The Board promptly
amended its answer to raise res judicata as an affirmative
defense. A motion for judgment on the pleadings soon
followed. Barr responded that her first suit didn’t end in a
judgment on the merits and the claims differed in the two
cases. The district court rejected these arguments, granted
the Board’s motion, and dismissed the case on res judicata
grounds.
We affirm. A dismissal for failure to prosecute “operates
as an adjudication on the merits,” FED. R. CIV. P. 41(b), and
Barr’s two suits involved the same parties and core of opera-
tive facts. Res judicata was properly applied.
I. Background
Barr joined the faculty at Western Illinois University as
an assistant professor of journalism in the 2007–2008 aca-
demic year. As a tenure-track professor, she was subject to
annual retention evaluations through her sixth year of
teaching, at which point she could apply for tenure.
No. 13-2063 3
In 2008 Barr complained that the University refused to
hire a professor of Nigerian descent because of his race. She
contends that the University responded to this complaint by
harassing her and subjecting her to unfavorable working
conditions. On November 19, 2009, she lodged a retaliation
complaint with the Illinois Department of Human Rights.
The Equal Employment Opportunity Commission (“EEOC”)
declined to take action and in December 2009 issued a right-
to-sue letter. That same month the University informed Barr
that she would not be reappointed the following academic
year.
On March 3, 2010, just before the 90-day window to sue
closed, Barr filed a pro se complaint against the University
alleging that it violated her rights under Title VII of the Civil
Rights Act, 42 U.S.C. §§ 2000e et seq. In it she claimed that the
nonrenewal was in retaliation for her complaint about racial
discrimination at the University.1
1 Barr’s statement of her claim was labeled “Retaliation for EEOC-
protected activities” and stated that she was “[n]ot retained/allowed to
advance to PY4 of tenure track process, despite having met retention
criteria.” She elaborated:
I was non-renewed—not allowed to advance to PY4 of
tenure track process, despite having met retention crite-
ria. I was and remain an exemplary, high-achieving em-
ployee, whose immediate supervisor wanted retained
[sic].
Other employees have advanced much further than I
through the tenure track process with far less-exemplary
performance. This, I will show, was retaliation for
EEOC-protected activities.
4 No. 13-2063
Two days later Barr filed a second charge of retaliation
with the Illinois Department of Human Rights. This one
alleged that the University retaliated against her based on
her prior EEOC charge; she also claimed that her contract
was not renewed because of sex and age discrimination. On
March 30 the EEOC issued a right-to-sue notice on these
claims. On June 25 Barr filed a second suit against the Uni-
versity’s Board of Trustees alleging claims for retaliation
under Title VII and age discrimination under the Age Dis-
crimination in Employment Act of 1967, 29 U.S.C. §§ 621
et seq. In this second suit, Barr was represented by counsel.
While all this transpired, the first case languished with-
out service on the University. Accordingly, on August 4,
2010, a magistrate judge recommended that the district court
dismiss the case for failure to prosecute. The magistrate
judge noted that Barr had failed to serve the University
within the 120-day period specified in Rule 4(m) of the
Federal Rules of Civil Procedure. Indeed, after she missed
the July 1 deadline, the magistrate judge had reminded Barr
of the service requirement and ordered a status report by
July 27. Barr neither responded nor served the University, so
the magistrate judge recommended dismissal. On August 25
the district court dismissed the first suit, with prejudice, for
failure to prosecute.
As discovery proceeded in the second case, the Board of
Trustees learned about the first suit and amended its answer
to assert res judicata as an affirmative defense. The Board
then moved for judgment on the pleadings, see FED. R. CIV.
P. 12(c), arguing that res judicata blocked the second suit.
Barr objected, pointing out that when she filed her first suit,
she did not have a right-to-sue letter in hand on the claims
No. 13-2063 5
alleged in the second. She also argued that the elements of
res judicata were not satisfied.
The district court rejected these arguments, noting that
Barr easily could have amended her first complaint to
include the age- and sex-discrimination claims contained in
her second EEOC charge once the second right-to-sue letter
arrived. The court held that res judicata applied because
Barr’s first suit resulted in a final judgment on the merits
and the two cases involved the same parties and the same
core of operative facts. The court accordingly granted the
Board’s motion and entered judgment dismissing the case.
II. Discussion
We review de novo the district court’s order granting
judgment on the pleadings under Rule 12(c). FED. R. CIV.
P. 12(c); Hayes v. City of Chicago, 670 F.3d 810, 813 (7th Cir.
2012).
“Under res judicata, a final judgment on the merits of an
action precludes the parties or their privies from relitigating
issues that were or could have been raised in that action.”
Allen v. McCurry, 449 U.S. 90, 94 (1980). The aim of the
doctrine is to “relieve parties of the cost and vexation of
multiple lawsuits, conserve judicial resources, and, by
preventing inconsistent decisions, encourage reliance on
adjudication.” Id. “Res judicata promotes predictability in
the judicial process, preserves the limited resources of the
judiciary, and protects litigants from the expense and dis-
ruption of being haled into court repeatedly.” Palka v. City of
Chicago, 662 F.3d 428, 437 (7th Cir. 2011).
6 No. 13-2063
Res judicata blocks a second lawsuit if there is (1) an
identity of the parties in the two suits; (2) a final judgment
on the merits in the first; and (3) an identity of the causes of
action. Id. Of the third element, we have said that “two
claims are one for purposes of res judicata if they are based
on the same, or nearly the same, factual allegations.”
Hermann v. Cencom Cable Assocs., 999 F.2d 223, 226 (7th Cir.
1993); see also Adams v. City of Indianapolis, 742 F.3d 720, 736
(7th Cir. 2014) (“Whether there is an identity of the cause of
action depends on ‘whether the claims comprise the same
core of operative facts that give rise to a remedy.’” (quoting
Matrix IV, Inc. v. Am. Nat’l Bank & Trust Co. of Chi., 649 F.3d
539, 547 (7th Cir. 2011))); Czarniecki v. City of Chicago,
633 F.3d 545, 549 (7th Cir. 2011) (There is res judicata where
“allegations in [two lawsuits] are essentially the same.”).
There is no dispute here that the first two elements of res
judicata are satisfied. Although Barr sued the University in
the first suit and the University’s Board of Trustees in the
second, the nominal difference in the defendants has no
significance; everyone agrees there is an identity of parties.
And the first suit was dismissed for failure to prosecute,
which operates as a merits judgment. See FED. R. CIV. P. 41(b)
(involuntary dismissal for failure to prosecute “operates as
an adjudication on the merits”); see also Tartt v. Nw. Cmty.
Hosp., 453 F.3d 817, 822 (7th Cir. 2006) (holding that dismis-
sal under Rule 41(b) for failure to prosecute “amounts to a
final judgment on the merits for res judicata purposes”). The
only dispute is whether there was an identity in the causes
of action in the two suits. Barr says there wasn’t because
each suit rested on different legal theories and factual predi-
cates—as authorized by the separate EEOC right-to-sue
notices.
No. 13-2063 7
This argument is squarely foreclosed by a long line of our
decisions applying preclusion doctrine to block just this kind
of claim-splitting in the employment-discrimination context.
See, e.g., Palka, 662 F.3d at 437–38; Czarniecki, 633 F.3d at 549–
51; Hermann, 999 F.2d at 225. The basic principle underlying
these cases is that a plaintiff cannot evade preclusion by
“identify[ing] a slightly different cause of action with one
element different from those in the first, second, or third
lawsuits between the same parties arising from the same
events.” Czarniecki, 633 F.3d at 550. And the requirement to
exhaust administrative remedies is no excuse for claim-
splitting in this context. We’ve repeatedly explained that a
plaintiff in this situation—that is, a discrimination claimant
who is waiting for a right-to-sue letter on new claims that
are factually linked to an earlier suit—can easily ask the
district court to stay the first case until the EEOC letter
arrives. See, e.g., Palka, 662 F.3d at 438; Czarniecki, 633 F.3d at
550–51.
These principles apply here to preclude Barr’s second
suit. Yes, the second case is a little different from the first in
that it complains about age discrimination and presents a
different theory of retaliation. Yes, Barr needed to get her
right-to-sue letter before she could bring claims in the sec-
ond suit. But both suits arise out of the same main event: the
University’s decision not to retain Barr on its faculty.
Barr insists that the first case was about harassment, not
termination. But she’s stuck with her complaint, which, as
we’ve noted, was indeed based on her termination or “non-
renewed” status. True, it mentioned (though failed to attach)
her EEOC charge relating to harassment, but the cause of
action actually alleged in the complaint stemmed from the
8 No. 13-2063
nonrenewal of Barr’s faculty appointment. And even if her
legal theory changed between the first and second suits, both
cases alleged wrongful nonrenewal and thus shared the
same core factual basis for res judicata purposes. See, e.g.,
Palka, 662 F.3d at 437 (“[T]here is an identity of the causes of
action because the Title VII claims are premised on the
Palkas’ termination by their respective municipal employ-
ers—the same transactions at issue in their § 1983 cases.”);
Smith v. City of Chicago, 820 F.2d 916, 918 (7th Cir. 1987) (“We
have regarded as the law of this [c]ircuit that ‘[e]ven though
one group of facts may give rise to different claims for relief
upon different theories of recovery, there remains a single
cause of action.’” (quoting Lee v. City of Peoria, 685 F.2d 196,
200 (7th Cir. 1982))).
Barr argues that because her first suit was dismissed for
lack of service, the policies underlying res judicata aren’t
implicated here. She points out that the use of judicial
resources in the first case was “modest” and the University
hasn’t actually had to defend multiple rounds of litigation.
But the rule against claim-splitting applies even if the plain-
tiff’s first suit was short-lived. See Palka, 662 F.3d at 437
(explaining that claim-splitting is “a litigation tactic that res
judicata doctrine is meant to prevent”).
Finally, Barr reminds us that she filed her first suit with-
out the benefit of counsel. But she soon obtained a lawyer,
who filed the second suit two months before the first suit was
dismissed. If, as Barr claims, res judicata is a legal “gotcha
game” for unrepresented plaintiffs, the “gotcha” part ended
when Barr hired an attorney to pursue her case against the
University.
No. 13-2063 9
We close by noting that Barr’s first suit probably should
have been dismissed without prejudice. See Lowe v. City of
East Chicago, Ind., 897 F.2d 272, 275 (7th Cir. 1990). But the
remedy for that possible error was a motion under Rule 59
of the Federal Rules of Civil Procedure or an appeal. For
reasons we don’t know, Barr and her attorney pursued
neither course and instead plowed ahead with the second
lawsuit. So the dismissal of Barr’s first suit remains an
undisturbed final decision on the merits, and thus res judica-
ta precludes the second case.
AFFIRMED. | 01-03-2023 | 08-12-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2812037/ | In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-‐‑3548
RICHARD E. CRAYTON,
Petitioner-‐‑Appellant,
v.
UNITED STATES OF AMERICA,
Respondent-‐‑Appellee.
____________________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 13-‐‑cv-‐‑552-‐‑bbc — Barbara B. Crabb, Judge.
____________________
ARGUED JANUARY 22, 2015 — DECIDED JUNE 25, 2015
____________________
Before EASTERBROOK, MANION, and WILLIAMS, Circuit
Judges.
EASTERBROOK, Circuit Judge. Apprendi v. New Jersey, 530
U.S. 466 (2000), holds that facts increasing a criminal defend-‐‑
ant’s maximum permissible sentence must be established,
beyond a reasonable doubt, to the satisfaction of the trier of
fact (a jury unless the defendant agrees to a bench trial or
formally admits the facts). Harris v. United States, 536 U.S.
545 (2002), holds that facts increasing the minimum permis-‐‑
2 No. 13-‐‑3548
sible sentence may be found by a judge on the preponder-‐‑
ance of the evidence. But Alleyne v. United States, 133 S. Ct.
2151 (2013), overrules Harris and holds that facts controlling
both minimum and maximum sentences are in the jury’s
province and covered by the reasonable-‐‑doubt standard.
Richard Crayton, whose sentence became final between Har-‐‑
ris and Alleyne, contends that Alleyne’s rule applies retroac-‐‑
tively on collateral review.
A jury convicted Crayton of distributing heroin. The in-‐‑
dictment alleged that Nicole Hedges died from using Cray-‐‑
ton’s product, which if true would increase the minimum
sentence (though not constitute a new offense), but the jury
could not decide unanimously whether Hedges’s death re-‐‑
sulted from Crayton’s heroin. The district judge then found
that it did. Under 21 U.S.C. §841(b)(1)(C) this required the
sentence to be at least 20 years’ imprisonment, and that’s
what the district judge imposed. In the absence of the find-‐‑
ing that Crayton’s heroin killed Hedges, the statutory range
would have been 0 to 20 years. The judge stated that she
thought the statutory floor excessive, but she concluded that
the law required her to sentence Crayton to 20 years in pris-‐‑
on. This court affirmed. United States v. Crayton, No. 11-‐‑1820
(7th Cir. Dec. 27, 2011) (nonprecedential disposition).
Five months after denying Crayton’s petition for certiora-‐‑
ri, 132 S. Ct. 2379 (2012), the Supreme Court granted Al-‐‑
leyne’s. 133 S. Ct. 420 (2012). While Alleyne’s case was pend-‐‑
ing, Crayton filed a petition under 28 U.S.C. §2255. The dis-‐‑
trict court dismissed it without prejudice while waiting for
Alleyne—an improper procedure given the time-‐‑and-‐‑number
limits in §2255, see Rhines v. Weber, 544 U.S. 269 (2005); Pur-‐‑
vis v. United States, 662 F.3d 939 (7th Cir. 2011), though nei-‐‑
No. 13-‐‑3548 3
ther side protested. When Crayton filed another after the
Supreme Court issued its decision, the district court held
that Alleyne does not apply retroactively on collateral review.
(The parties treat Crayton’s current §2255 filing as an initial
petition, and as timely, despite the district court’s misstep in
dismissing Crayton’s first petition.)
Every court of appeals that has considered the subject
has concluded that Alleyne is not retroactive on collateral re-‐‑
view. Butterworth v. United States, 775 F.3d 459 (1st Cir. 2015);
United States v. Reyes, 755 F.3d 210, 212–13 (3d Cir. 2014);
United States v. Olvera, 775 F.3d 726 (5th Cir. 2015); Jeanty v.
Warden, FCI-‐‑Miami, 757 F.3d 1283, 1285–86 (11th Cir. 2014).
Two other circuits have said the same thing in nonpreceden-‐‑
tial opinions. Rogers v. United States, 561 F. App’x 440, 443–44
(6th Cir. 2014); United States v. Richards, 567 F. App’x 591, 593
(10th Cir. 2014) (based on In re Payne, 733 F.3d 1027 (10th Cir.
2013), which addressed §2255(h)(2)). Our circuit held in
Simpson v. United States, 721 F.3d 875 (7th Cir. 2013), that Al-‐‑
leyne does not authorize a second or successive collateral at-‐‑
tack under §2255(h)(2) because only the Supreme Court can
declare a decision retroactive for the purpose of that para-‐‑
graph. Tyler v. Cain, 533 U.S. 656 (2001). But for an initial pe-‐‑
tition, such as Crayton’s, a district judge or court of appeals
may make the retroactivity decision, and that’s what Cray-‐‑
ton asks us to do. But we conclude that the other circuits are
correct. Alleyne does not apply retroactively.
Alleyne extends Apprendi from maximum to minimum
sentences. Only once has the Supreme Court considered
whether a decision that rests on Apprendi applies retroactive-‐‑
ly on collateral review. It held in Schriro v. Summerlin, 542
U.S. 348 (2004), that Ring v. Arizona, 536 U.S. 584 (2002), is
4 No. 13-‐‑3548
not retroactive. Crayton maintains that Schriro is not disposi-‐‑
tive against him, because Ring applied Apprendi to change
(from judge to jury) the identity of the decisionmaker under
one state’s procedure for capital punishment but did not af-‐‑
fect that state’s allocation of the burden of persuasion (the
state had used the reasonable-‐‑doubt standard all along).
Crayton contends that a decision changing the burden of
persuasion, as Alleyne did, is entitled to retroactive applica-‐‑
tion under the criteria of Teague v. Lane, 489 U.S. 288 (1989).
The problem with that argument is that Apprendi itself
changed both the identity of the decisionmaker and the bur-‐‑
den of persuasion, but the Supreme Court has not declared
Apprendi to be retroactive—nor has any court of appeals. We
held in Curtis v. United States, 294 F.3d 841 (7th Cir. 2002),
that Apprendi is not retroactive under the Teague standard.
We concluded that two sorts of decisions are applied retro-‐‑
actively: those holding that the law does not (or cannot con-‐‑
stitutionally) make particular conduct criminal, and those
identifying rights “so fundamental that any system of or-‐‑
dered liberty is obliged to include them.” Curtis, 294 F.3d at
843. And we held that the changes made by Apprendi are not
in the latter category (no one thinks them to be in the “inno-‐‑
cence” category).
Throughout this nation’s history judges have based sen-‐‑
tences on findings made by a preponderance of the evi-‐‑
dence. Harris held that Apprendi had altered this approach
only for maximum sentences; Alleyne disagreed and held
that Apprendi logically implies using the jury (and the rea-‐‑
sonable-‐‑doubt standard) for minimum sentences too. But
neither Apprendi nor Alleyne concluded that findings on the
preponderance standard are too unreliable in general to be
No. 13-‐‑3548 5
the basis of a valid sentence. Judges routinely make findings,
based on a preponderance of the evidence, that dramatically
affect the length of criminal sentences.
Consider: even if Crayton’s trial had occurred after Al-‐‑
leyne, and the jury had found unanimously that Crayton’s
heroin did not kill Hedges, the judge still would have been
entitled to sentence Crayton to 20 years in prison for distrib-‐‑
uting heroin after finding by a preponderance of the evi-‐‑
dence that his product did kill Hedges. See United States v.
Watts, 519 U.S. 148 (1997). Alleyne did not overrule Watts or
recognize a fundamental principle that sentences must rest
on findings supported by proof beyond a reasonable doubt.
Instead Alleyne curtails legislatures’ ability to restrict judicial
discretion in sentencing. A legislature that wants to impose
compulsory minimum sentences must submit the discretion-‐‑
reducing facts to the jury under the reasonable-‐‑doubt stand-‐‑
ard. That principle is some distance from a rule that defend-‐‑
ants are entitled to have all important facts resolved by the
jury under the reasonable-‐‑doubt standard.
It is lawful today for a judge to increase a sentence based
on facts found on the preponderance standard. “Findings by
federal district judges are adequate to make reliable deci-‐‑
sions about punishment. See Edwards v. United States, 523
U.S. 511 (1998).” Curtis, 294 F.3d at 844. It follows, as we held
in Curtis about Apprendi itself, that Alleyne is not so funda-‐‑
mental that it must apply retroactively on collateral review.
Crayton contends that Alleyne should be applied retroac-‐‑
tively to his case, even if not to other prisoners’ cases, be-‐‑
cause the district judge made it clear that she would not
have given him a 20-‐‑year sentence but for her belief (correct
at the time of sentencing, given Harris) that a minimum sen-‐‑
6 No. 13-‐‑3548
tence may be increased by judicial findings. That is to say, in
the post-‐‑Alleyne world the judge still would have found by a
preponderance of the evidence that Crayton’s heroin killed
Hedges, but the sentence would have been under 20 years.
But all this does is show that Alleyne would have affected the
outcome, had the decision been rendered earlier; it does
nothing to change the standard for retroactivity. Under
Teague decisions apply retroactively, or they do not; the Su-‐‑
preme Court has never suggested that new procedural rules
apply retroactively to some petitioners but not others.
AFFIRMED
No. 13‐3548 7
WILLIAMS, Circuit Judge, concurring. I am not sure
whether the Supreme Court would find Alleyne to be
retroactively applicable on collateral review. But because we
as appellate courts decide the retroactivity question in the
first instance, absent direction from the Supreme Court,
Ashley v. United States, 266 F.3d 671, 673 (7th Cir. 2001), I
would like to weigh in on both the arguments for
retroactivity and the Supreme Court’s jurisprudence on the
topic. I also take issue with the majority’s reliance on the
non‐retroactivity of an earlier case. That is not dispositive.
The majority states that if “Nicole Hedges died from
using Crayton’s product,” that finding would increase the
minimum sentence but would “not constitute a new
offense.” Slip op. 2.1 Under Alleyne, that is simply not true.
Alleyne made clear that “[w]hen a finding of fact alters the
legally prescribed punishment so as to aggravate it, the fact
necessarily forms a constituent part of a new offense.” 133 S.
Ct. at 2162 (emphasis added). “Distribution of heroin” is not
the same offense as “distribution of heroin that results in
death.” We know that they are not the same offense but
instead constitute two different offenses because the statutes
provide for different statutory ranges of punishment. See 21
U.S.C. § 841(b)(1)(C).
This misconception has permeated circuit court decisions
addressing whether Apprendi and Alleyne should apply
retroactively, leading many courts to downplay the
significance of these decisions. See, e.g., Sepulveda v. United
States, 330 F.3d 55, 60 (1st Cir. 2003) (“Nothing in the
1 Perhaps this statement is a reference to the pre‐Alleyne understanding
of conviction versus sentencing, but later portions of the opinion, see slip
op. 4–5, suggest otherwise.
8 No. 13‐3548
Apprendi decision indicates to us that infringements of its
rule will seriously diminish the accuracy of convictions
(which, by definition, must take place before any such
infringement occurs).”); United States v. Sanchez‐Cervantes,
282 F.3d 664, 671 (9th Cir. 2002) (“The application of Apprendi
only affects the enhancement of a defendant’s sentence once
he or she has already been convicted beyond a reasonable
doubt.”); Goode v. United States, 305 F.3d 378, 385 (6th Cir.
2002) (“The accuracy that is improved by the Apprendi
requirement is in the better imposition of a proper sentence.
In contrast, the accuracy that is improved by the rule of
Gideon involves the basic determination of the defendant’s
guilt or innocence.”). I cannot subscribe to this view. First,
Apprendi and Alleyne are not about sentencing. They are
about the accurate determination of a defendant’s guilt of a
particular offense. If Apprendi was not clear on this point,
Alleyne clarified it. 133 S. Ct. at 2160 (stating that “because
the legally prescribed range is the penalty affixed to [a]
crime,” a fact that increases either end of the penalty range
“produces a new penalty and constitutes an ingredient of the
offense”). Second, that we, along with other circuits, found
Apprendi to not be retroactive is not dispositive of the
question of whether Alleyne is retroactive. One reason we
know that is because the Supreme Court has told us that
Gideon v. Wainwright would be retroactive, Saffle v. Parks, 494
U.S. 484, 495 (1990), without indicating that any of Gideon’s
antecedents—like Johnson v. Zerbst, 304 U.S. 458 (1938) or
Powell v. Alabama, 287 U.S. 45 (1932)—would be retroactive.
I begin with a discussion of the Supreme Court’s
retroactivity jurisprudence, which the majority does not
address. The only part of the majority’s opinion that appears
to reference any court’s standard for retroactivity is a citation
No. 13‐3548 9
to our own decision in Curtis v. United States, 294 F.3d 841
(7th Cir. 2002). Slip op. 4. The standard from the Supreme
Court is that procedural rules must be “implicit in the
concept of ordered liberty” (among other things) in order to
be retroactively applicable. Teague v. Lane, 489 U.S. 288, 307
(1989). However, Curtis framed the question as whether the
rules are “so fundamental that any system of ordered liberty
is obliged to include them.” 294 F.3d at 843 (emphasis
added). The majority repeats this language from Curtis. The
difference in phrasing may seem small, but the Supreme
Court has indicated that a rule need not be utilized by every
criminal justice system in order to be implicit in the concept
of ordered liberty in the United States. See Gideon v.
Wainwright, 372 U.S. 335, 344 (1963) (“The right of one
charged with crime to counsel may not be deemed
fundamental and essential to fair trials in some countries,
but it is in ours.”).
Under Teague, a new rule can be retroactive to cases on
collateral review only if it falls into one of two narrow
exceptions to the general rule of nonretroactivity. 489 U.S. at
311–13. Of relevance here is the second Teague exception for
new rules of criminal procedure. New rules of procedure
generally do not apply retroactively to cases that became
final before the new rule was announced, unless the new
rule is “a watershed rule of criminal procedure implicating
the fundamental fairness and accuracy of the criminal
proceeding.” Whorton v. Bockting, 549 U.S. 406, 416 (2007). To
qualify as watershed, a new rule must meet two
requirements. “Infringement of the rule must seriously
diminish the likelihood of obtaining an accurate conviction
and the rule must alter our understanding of the bedrock
procedural elements essential to the fairness of a
10 No. 13‐3548
proceeding.” Tyler v. Cain, 533 U.S. 656, 665 (2001). In my
view, Alleyne meets these requirements.
Alleyne applied a fundamental principle that dates back
at least to our nation’s founding. It has long been established
that the Constitution “protects the accused against
conviction except upon proof beyond a reasonable doubt of
every fact necessary to constitute the crime with which he is
charged.” In re Winship, 397 U.S. 358, 364 (1970). This right to
be convicted beyond a reasonable doubt is a “historically
grounded right[] of our system, developed to safeguard men
from dubious and unjust convictions.” Brinegar v. United
States, 338 U.S. 160, 174 (1949). That the government must
prove beyond a reasonable doubt every element of an
offense is “an ancient and honored aspect of our criminal
justice system.” Victor v. Nebraska, 511 U.S. 1, 5 (1994).
The reasonable‐doubt standard “plays a vital role in the
American scheme of criminal procedure.” Cage v. Louisiana,
498 U.S. 39, 39–40 (1990) (quoting Winship, 397 U.S. at 363).
“Among other things, it is a prime instrument for reducing
the risk of convictions resting on factual error.” Cage, 498
U.S. at 40. The reasonable‐doubt standard implicates the
fundamental fairness and accuracy of criminal proceedings
because “a person accused of a crime would be at a severe
disadvantage, a disadvantage amounting to a lack of
fundamental fairness, if he could be adjudged guilty and
imprisoned for years on the strength of the same evidence as
would suffice in a civil case.” Winship, 397 U.S. at 363. “[U]se
of the reasonable‐doubt standard is indispensable to
command the respect and confidence of the community in
applications of the criminal law. It is critical that the moral
force of the criminal law not be diluted by a standard of
No. 13‐3548 11
proof that leaves people in doubt whether innocent men are
being condemned.” Id. at 364. In fact, the Supreme Court has
said that the reasonable‐doubt requirement is a basic
protection “without which a criminal trial cannot reliably
serve its function.” Sullivan v. Louisiana, 508 U.S. 275, 281
(1993).
The requirement that every element of a crime—defined
as every fact that changes the statutory penalty range,
Alleyne, 133 S. Ct. at 2158—be proven beyond a reasonable
doubt improves the accuracy of the fact‐finding process,
because it reduces the risk that a person guilty of one crime
might be convicted of a more serious, and separate, crime of
which he is innocent. In fact, the reasonable‐doubt standard
is the “prime instrument” for reducing such risk. Cage, 498
U.S. at 40. In my view, the “beyond a reasonable doubt”
standard for a criminal conviction goes to the heart of
fundamental fairness and accuracy and lowering the
standard for a criminal conviction to “preponderance of the
evidence” increases the risk of an inaccurate conviction.
Factfinding based upon preponderance of the evidence,
rather than the reasonable‐doubt standard, seriously
diminishes accuracy such that there is an impermissibly
large risk of an inaccurate conviction.
As to the second requirement for a watershed rule,
Alleyne altered our understanding of the bedrock procedural
elements essential to the fairness of a proceeding by
establishing a new class of facts that constitute the “crime”
and thus must be found by the jury beyond a reasonable
doubt. We have long known that elements of the crime must
be proven beyond a reasonable doubt. But there has been
much debate about how to define “elements” versus
12 No. 13‐3548
“sentencing factors.” Alleyne changed our understanding of
what constitutes an “element” of a crime. “Much turns on
the determination that a fact is an element of an offense
rather than a sentencing consideration, given that elements
must be charged in the indictment, submitted to a jury, and
proven by the Government beyond a reasonable doubt.”
Jones v. United States, 526 U.S. 227, 232 (1999).
Allowing Crayton to be convicted of “distribution of
heroin that resulted in death” by a mere preponderance of
the evidence increased the risk of his conviction resting on a
factual error. The reasonable‐doubt standard “provides
concrete substance for the presumption of innocence—that
bedrock axiomatic and elementary principle whose
enforcement lies at the foundation of the administration of
our criminal law.” Winship, 397 U.S. at 363. Failing to apply
Alleyne (and Apprendi) retroactively creates the “troubling
possibility that a defendant has been convicted of conduct
that constitutes a less serious offense than the one for which
he is sentenced.” Coleman v. United States, 329 F.3d 77, 93 (2d
Cir. 2003) (Parker, Jr., J., concurring in the judgment). Many
judges seem untroubled by this possibility. I am not one of
them. I do not think the fact that a person is guilty of one
crime means that he has a lesser interest in, or right to, a
determination of his guilt of a different offense beyond a
reasonable doubt.
Two Supreme Court decisions suggest that new rules
which implicate the reasonable‐doubt standard like Alleyne
should be applied retroactively. In In re Winship, the
Supreme Court stated “[l]est there remain any doubt about
the constitutional stature of the reasonable‐doubt standard,
we explicitly hold that the Due Process Clause protects the
No. 13‐3548 13
accused against conviction except upon proof beyond a
reasonable doubt of every fact necessary to constitute the
crime with which he is charged.” 397 U.S. at 364. In Ivan V. v.
City of New York, 407 U.S. 203 (1972), a pre‐Teague case, the
Court unanimously made In re Winship retroactively
applicable on collateral review. In Hankerson v. North
Carolina, 432 U.S. 233 (1977), another pre‐Teague case, the
Court (again unanimously) found that Mullaney v. Wilbur,
421 U.S. 684 (1975)—which established the rule that the state
must establish all elements of a criminal offense beyond
reasonable doubt and invalidated presumptions that shift
the burden of proving elements to the defendant—was
retroactively applicable.
The majority writes that neither Apprendi nor Alleyne
concluded that findings based on the preponderance
standard are too unreliable in general to be the basis of a
valid sentence. I do not quarrel with that statement. My
quarrel is with the characterization of Alleyne as a decision
about sentencing, rather than guilt. “Each crime has different
elements and a defendant can be convicted only if the jury
has found each element of the crime of conviction.” Alleyne,
133 S. Ct. at 2162. The fundamental question here is guilty or
not guilty of what? Crayton was found guilty of “distribution
of heroin” beyond a reasonable doubt. But he was not found
guilty of “distribution of heroin that resulted in death”
beyond a reasonable doubt. These are two different offenses.
As the Supreme Court said in Alleyne, “the core crime and
the fact triggering the mandatory minimum sentence
together constitute a new, aggravated crime, each element of
which must be submitted to the jury” and proven beyond a
reasonable doubt. Id. at 2161. Facts that increase a
mandatory statutory minimum are “part of the substantive
14 No. 13‐3548
offense.” Id. “When a finding of fact alters the legally
prescribed punishment so as to aggravate it, the fact
necessarily forms a constituent part of a new offense.” Id. at
2162. The accuracy improved by Alleyne is not just in the
proper sentence. It is in the determination of guilt or
innocence with respect to the offense of distribution of
heroin that resulted in death.
While the majority mentions Schriro v. Summerlin, 542
U.S. 348 (2004), the holding of that case is of little assistance
in deciding the question here since Schriro was about jury
versus judicial fact finding where critically, the standard of
proof of beyond a reasonable doubt remained unchanged.
Furthermore, even if Alleyne was about sentencing, Schriro
“leaves little doubt that the ‘watershed rule’ can apply to a
procedural rule that only affects sentencing.” Lloyd v. United
States, 407 F.3d 608, 614 (3d Cir. 2005). We must look at
whether factfinding based upon a preponderance of the
evidence “so seriously diminishes accuracy that there is an
impermissibly large risk of punishing conduct the law does
not reach.” Schriro, 542 U.S. at 355–56. That it does. Because
the reasonable‐doubt standard is the prime instrument to
ensure accuracy of convictions, allowing a factfinder to make
determinations based upon a preponderance of the
evidence, rather than beyond a reasonable doubt, does
seriously diminish accuracy.
The majority also writes that post‐Alleyne, “the judge still
would have been entitled to sentence Crayton to 20 years in
prison for distributing heroin after finding by a
preponderance of the evidence that his product did kill
Hedges,” citing generally United States v. Watts, 519 U.S. 148
(1997). Slip op. 5. However, being entitled to do something
No. 13‐3548 15
and being required to do something are two very different
things. And the argument is a red herring because the judge
was entitled to sentence Crayton to 20 years with or without a
finding that his product resulted in death. After all, the
statutory range for “distribution of heroin” was 0 to 20 years.
She clearly did not want to sentence Crayton so high, but she
was bound to, based upon a finding by a preponderance of
the evidence that death resulted. Ironically, the judge could
not have sentenced Crayton to 241 months (20 years and 1
month), because that sentence would have violated Apprendi.
The preponderance of the evidence finding required her to
sentence Crayton to exactly 20 years.
The majority further writes that “[t]hat principle” (which
I assume is a reference to the holding of Alleyne) “is some
distance from a rule that defendants are entitled to have all
important facts resolved by the jury under the reasonable‐
doubt standard.” Slip op. 5. I am not sure what it means by
the concept of “important facts.” But the rule of Alleyne is
that defendants are entitled to have all facts that increase a
statutory minimum or maximum resolved by a jury under
the reasonable doubt standard. So if by “important facts” it
means “facts that increase a statutory minimum or
maximum,” it is wrong.
Having considered the importance of the “beyond a
reasonable doubt” standard and the ways in which Alleyne
altered our understanding of this bedrock procedural
element, I now address what is pragmatically the real
problem: the fact that the Supreme Court has never found a
new rule of criminal procedure to fall within the second
Teague exception. It has come close though. On more than
one occasion, the Court has been one justice shy of finding
16 No. 13‐3548
new rules of criminal procedure to be retroactively
applicable. See, e.g., Schriro v. Summerlin, 542 U.S. 348 (2004);
O’Dell v. Netherland, 521 U.S. 151 (1997); Sawyer v. Smith, 497
U.S. 227 (1990); see also Tyler v. Cain, 533 U.S. 656 (2001) (one
justice shy of finding that the Court had already made Cage
retroactive in Sullivan).
What the Court said is that Gideon would be such a rule,
Saffle, 494 U.S. at 495, and so I turn to Gideon for guidance.
See Gray v. Netherland, 518 U.S. 152, 170 (1996) (referring to
the Gideon rule as a “paradigmatic example” of the second
Teague exception).
With the passage of time, I hope we do not lose sight of
the context in which Gideon was decided. Gideon was
remarkable. But its holding did not come out of nowhere.
Some courts have described Gideon as cutting “a new rule
from whole cloth,” see Butterworth v. United States, 775 F.3d
459, 468 (1st Cir. 2015), unlike Apprendi and Alleyne, but I
disagree. A series of other decisions regarding the right to
counsel, due process, and incorporation of the Bill of Rights
to the states led to it—decisions which the Supreme Court
has not suggested would have met the standard for the
watershed rule exception under Teague. Prior to Gideon, the
Supreme Court had determined that the Sixth Amendment
required counsel to be provided to indigent federal
defendants. Johnson v. Zerbst, 304 U.S. 458 (1938). It had also
found that the Due Process Clause required states to provide
counsel to indigent defendants in special circumstances,
Powell v. Alabama, 287 U.S. 45 (1932), which eventually came
to include all capital cases, Hamilton v. Alabama, 368 U.S. 52
(1961), but also encompassed non‐capital cases where the
totality of facts showed circumstances requiring
No. 13‐3548 17
appointment of counsel like the personal characteristics or
complexity of the charge made a fair trial unlikely without
appointed counsel, e.g., Betts v. Brady, 316 U.S. 455 (1942).2
The Court had established that it violated due process for a
state to deny a defendant the opportunity to obtain (and the
right to be represented by) counsel of one’s own choosing.
Chandler v. Fretag, 348 U.S. 3, 9 (1954). And it had made other
Bill of Rights guarantees obligatory on the states through the
Fourteenth Amendment, including the Fourth Amendment’s
prohibition on unreasonable searches and seizures and the
Eighth Amendment’s ban on cruel and unusual punishment.
Gideon, 372 U.S. at 342.
Given these precedent cases, it is no wonder that Justice
Clark in his concurrence in Gideon noted that that case “d[id]
no more than erase a distinction which ha[d] no basis in
logic and an increasingly eroded basis in authority.” Gideon,
372 U.S. at 348 (Clark, J., concurring in the result). That
sounds familiar. See Alleyne, 133 S. Ct. at 2160 (citing Justice
Breyer’s concurrence in Harris v. United States, 536 U.S. 545
(2002), which reasoned that facts increasing the minimum
and facts increasing the maximum cannot be distinguished
“‘in terms of logic’”).
Some circuits have found that “Gideon altered our
understanding of what constitutes basic due process by
2 This particular rule—that states must provide counsel to indigent non‐
capital defendants under special circumstances—produced a long series
of Supreme Court decisions, most of which found that the defendant was
entitled to appointed representation under the circumstances. See Moore
v. Michigan, 355 U.S. 155, 159 n.7 (1957) (citing twenty‐six Supreme Court
cases discussing the principles which determine the extent to which the
constitutional right to counsel is secured in a state prosecution).
18 No. 13‐3548
establishing that representation by counsel is fundamental to
a fair trial,” while Apprendi and Alleyne “merely clarified and
extended the scope of a pre‐existing right—the right to have
all convictions supported by proof beyond a reasonable
doubt.” United States v. Mora, 293 F.3d 1213, 1219 (10th Cir.
2002). I cannot help but sense some revisionist history. Prior
to Gideon, Powell had already stated that the right to counsel
was fundamental. 287 U.S. at 68. Gideon merely clarified and
extended the scope of a pre‐existing right because the right
to counsel previously existed in federal prosecutions, special
circumstances, and state inmates prosecuted for capital
offenses.
The Supreme Court and circuit courts alike have found
that new procedural rules, despite arguably being aimed at
improving the accuracy of trial or promoting the objectives
of fairness and accuracy, do not meet the Teague standard
because they are not as “sweeping” as Gideon. See e.g., O’Dell,
521 U.S. at 167; United States v. Mandanici, 205 F.3d 519, 528–
29 (2d Cir. 2000). It seems to me that the “sweeping” nature
of Gideon is not so much a reflection of how many cases it
would have applied to retroactively, but instead a statement
about how many cases in which it would be a relevant
consideration going forward. The Supreme Court said that
Gideon was sweeping because it “established an affirmative
right to counsel in all felony cases.” O’Dell, 521 U.S. at 167.
But the right to counsel had already been established for all
federal defendants and for state defendants under certain
circumstances. Also, because of Johnson and the fact that
most states provided counsel to indigent defendants as a
matter of state law prior to Gideon, relatively few defendants
actually needed to be retried as a result of Gideon’s holding.
Most indigent defendants were already being provided with
No. 13‐3548 19
counsel prior to Gideon.3 But going forward, an assertion of
the federal constitutional right to counsel became a factor in
every criminal case. Similarly, many rules have been found
to be not as “sweeping” as Gideon because they simply are
not a factor in a significant number of cases. For example,
the rule from Crawford v. Washington, 541 U.S. 36 (2004) is
only a consideration where the government seeks to admit
testimonial hearsay. Whorton, 549 U.S. at 419; see also O’Dell,
521 U.S. at 167 (right of rebuttal afforded to defendants in a
“limited class of capital cases” was not as “sweeping” as
Gideon). That just does not come up in every criminal case.
But how to define the crime (the issue in Alleyne) does. It is
just as sweeping as Gideon.
In many ways, Alleyne is similar to Gideon in that it is the
culminating case in a long‐running debate regarding a
fundamental right. Gideon settled the debate of when our
Constitution requires that the government provide counsel
to indigent defendants. Alleyne settled the debate of how a
“crime” is defined. Each crime is composed of different
elements and a fact is an element of a crime when it alters
the legally prescribed punishment. 133 S. Ct. at 2162. It
cannot be a sufficient justification that Alleyne is not
3 Even prior to Johnson, in 1930, the Supreme Court noted that “[t]hanks
to the humane policy of the modern criminal law”, a criminal defendant
“may have counsel furnished him by the state.” Patton v. United States,
281 U.S. 276, 308 (1930). In 1955, at least thirty‐four states provided
counsel to indigent defendants in all felony prosecutions. William M.
Beaney, THE RIGHT TO COUNSEL IN AMERICAN COURTS 84–85 (1955). In
fact, “by the time Gideon was decided, only five states had a definite
policy against appointing counsel in noncapital cases.” William M.
Beaney, The Right to Counsel: Past, Present, and Future, 49 Va. L. Rev. 1150,
1156 (1963).
20 No. 13‐3548
retroactive because it has close analytic ties to Apprendi
(which is not retroactive), because Gideon meets the Teague
standard, but the Supreme Court has not suggested that
Johnson or Powell, to which Gideon has close analytic ties,
would also meet the Teague standard. Apprendi does not need
to be retroactive in order for Alleyne to be retroactive.
Obviously, applying Alleyne retroactively would mean
that the holding of Apprendi would be applied retroactively
as well. But the same is true of Gideon and its predecessors.
Applying Gideon retroactively necessarily entails that the
holdings of Johnson and Powell are applied retroactively. A
rule that counsel must be provided to all indigent
defendants in felony prosecutions subsumes the rule that
counsel must be provided to indigent state defendants in
special circumstances.
Here, the district judge was permitted to convict Crayton
of “distribution of heroin that resulted in death” in the in‐
between range of equal to or greater than a preponderance
of the evidence, but less than beyond a reasonable doubt.
While the district court did not state that she would not have
found death resulting beyond a reasonable doubt, the
government said at oral argument that if the judge had said
on the record that she found that death resulted by a
preponderance and also explicitly said she did not find it
beyond a reasonable doubt, the government’s position
would be the same. Many cases have tried and failed to have
new procedural rules declared retroactive by the Supreme
Court. But in my opinion, none of these rules were as
essential to ordered liberty as the rule that criminal
defendants must be convicted beyond a reasonable doubt.
No. 13‐3548 21
All that said, I recognize that the Supreme Court has
never found a new rule of criminal procedure to meet the
Teague standard, so I concur in the judgment here. However I
hope that the Supreme Court will find in its retroactivity
jurisprudence space on the Gideon pedestal for other new
rules, particularly those so important to our criminal justice
system as the reasonable‐doubt standard. | 01-03-2023 | 06-25-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4020526/ | FILED
NOT FOR PUBLICATION AUG 01 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-10142
Plaintiff-Appellee, D.C. No. 4:14-cr-00943-JAS
v.
MEMORANDUM*
JOSE JUAN MARTINEZ-MARTINEZ,
a.k.a. Jose Juan Martinez,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Arizona
James A. Soto, District Judge, Presiding
Submitted July 26, 2016**
Before: SCHROEDER, CANBY, and CALLAHAN, Circuit Judges.
Jose Juan Martinez-Martinez appeals from the district court’s judgment and
challenges the 36-month sentence imposed following his guilty-plea conviction for
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
attempted reentry of a removed alien, in violation of 8 U.S.C. § 1326(a). We have
jurisdiction under 28 U.S.C. § 1291, and we affirm.
Martinez-Martinez contends that the district court abused its discretion by
departing upwards on the basis of its conclusion that Martinez-Martinez’s offense
level substantially understated the seriousness of his prior convictions. Our review
of Martinez-Martinez’s challenge to the district court’s decision to depart under
note 7 of the commentary to U.S.S.G. § 2L1.2 is limited to determining whether
the court imposed a substantively reasonable sentence. See United States v.
Vasquez-Cruz, 692 F.3d 1001, 1005 (9th Cir. 2012). Contrary to Martinez-
Martinez’s argument, the above-Guidelines sentence is substantively reasonable in
light of the 18 U.S.C. § 3553(a) sentencing factors and the totality of the
circumstances, including Martinez-Martinez’s criminal history and the fact that he
attempted to reenter the country within two months of being deported. See Gall v.
United States, 552 U.S. 38, 51 (2007).
AFFIRMED.
2 15-10142 | 01-03-2023 | 08-01-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1597111/ | 581 F. Supp. 1272 (1984)
George J. PAPAS, Plaintiff,
v.
KOHLER COMPANY, INC., et al., Defendants,
v.
EWING BROTHERS, INC., Third Party Defendants.
Civ. No. 82-0196.
United States District Court, M.D. Pennsylvania.
March 26, 1984.
*1273 Kevin E. Osborne, James K. Thomas, II, Harrisburg, Pa., for plaintiff.
Timothy E. Foley, Scranton, Pa., for Kohler Co., Inc.
John M. Humphrey, Ronald Travis, Williamsport, Pa., for Bilger & Sons, Inc., t/d/b/a Oil Heat Service.
John R. Moore, Selinsgrove, Pa., for Ewing Bros., Inc.
OPINION
MUIR, District Judge.
Defendants Kohler Company (Kohler) and Bilger & Sons, Inc., (Bilger) are, respectively, manufacturer and retailer of a plumbing fitting which the Plaintiffs in this products liability action had alleged was defective. After learning that it was a defendant in this case, Bilger tendered the defense of this suit to Kohler but Kohler declined to undertake Bilger's defense. On January 18, 1984, the Court entered judgment in favor of Kohler and Bilger following trial of the case to a jury. The issue which remains for decision is whether Kohler is liable to Bilger for the attorney's fees and expenses Bilger incurred in its defense of this action. Bilger has filed a motion for summary judgment in which it asserts that it is entitled to "indemnification" in the circumstances of this case as a matter of law.
Pennsylvania law controls the issue presented by Bilger's motion. The general rule in Pennsylvania regarding indemnity is that the right to indemnification inures to a party who, although not himself at fault, becomes legally obligated to pay damages to a plaintiff who has suffered injury caused by a third party. Burbage v. Boiler Engineering & Supply Company, 433 Pa. 319, 249 A.2d 563 (1969). We assume for the sake of argument that indemnity principles are applicable to strict products liability cases as well as to negligence cases. Given this assumption, in a products liability action in which both the manufacturer and the retailer of the product are defendants, if a Court determines that the product was defectively manufactured and judgment is therefore entered against both the manufacturer and the retailer of the product, the retailer is entitled to indemnity from the manufacturer for the amount of the judgment as well as attorney's fees and costs. Thus, Bilger would have been entitled to indemnity from Kohler had Kohler and Bilger both been found liable for manufacture and sale of a defective product.
The principles discussed above do not provide the answer to the question presented in this case. No Pennsylvania case of which we are aware addresses the question of a retailer's right to recover attorney's fees and expenses in a situation where, as here, the Court finds the manufacturer and retailer free from liability in a products liability action. In Merck and Company v. Knox Glass, Inc., 328 F. Supp. 374 (E.D.Pa. 1971), Judge Van Artsdalen determined that, under Pennsylvania law, a retailer would not be entitled to "indemnification" from a manufacturer for attorney's fees and costs incurred in defending a products liability action in which both the manufacturer and retailer were found not liable.
In support of its summary judgment motion, Bilger argues that a Pennsylvania court would adopt the rule adopted by courts in other jurisdictions whereby a retailer who successfully defends a product liability action in which a manufacturer-defendant is also found not liable is entitled to recover attorney's fees and expenses from the manufacturer. See, e.g., Heritage v. Pioneer Brokerage and Sales, Inc., Alaska, 604 P.2d 1059 (1979); Pender v. Skillcraft Industries, Inc., 358 So. 2d 45 (Fla.App. 4th District 1978). Bilger does not address the Merck case which was cited by Kohler either in its initial brief or in any reply brief.
In its brief in opposition to Bilger's motion, Kohler argues that a Pennsylvania court faced with the issue in this case would decide that Bilger has no right of *1274 recovery against Kohler. Kohler first claims that Bilger would not be entitled to recovery under general principles of Pennsylvania indemnity law because no judgment was entered against Bilger. See Builders Supply Co. v. McCabe, 366 Pa. 322, 77 A.2d 368 (1951). Second, Kohler points to the Merck case, discussed above, and notes that Merck involved facts virtually identical to those involved in this case.
We agree with Kohler that Merck is persuasive authority for the proposition that Bilger is not entitled to recover its attorney's fees and expenses in this case. See Merck & Co. v. Knox Glass, Inc., 328 F. Supp. 374, 377-78 (E.D.Pa.1971). In being forced to incur expenses for attorney's fees and costs in order to defend itself in this lawsuit, Bilger is in a position no different from that of any other defendant forced to vindicate its rights in a lawsuit. Moreover, Merck is consistent with general principles of Pennsylvania indemnity law.
We recognize, as the Merck court did, that this rule puts a retailer in an unusual position in one respect. Assuming that the manufacturer is not bankrupt or otherwise unable to satisfy a judgment against it, a retailer who sells a defective product and becomes a defendant in a lawsuit in which both the manufacturer and retailer are found liable is entitled to full reimbursement for any judgment against it as well as attorney's fees and expenses. In contrast, a retailer who sells a product that is not defective but who is sued by the consumer must bear the full cost of defending the suit. In this respect, the retailer who sells a defective product is in a better position than the retailer who sells a non-defective product. Nevertheless, a manufacturer of a non-defective product who is sued in a products liability action should not be forced to pay not only for its own defense but for defense of the retailer as well. Merck & Co. v. Knox Glass, Inc., 328 F. Supp. 374, 378 (E.D.Pa.1971). For this reason and the reasons discussed in the preceding paragraph, we agree with the District Court in Merck that Pennsylvania law does not provide Bilger any right to indemnification from Kohler.
Although Kohler has not filed a cross-motion for summary judgment, it seems clear that Kohler is entitled to summary judgment on the indemnification issue. Consequently, the Court will deny Bilger's motion for summary judgment and grant summary judgment in favor of Kohler.
An appropriate order will be entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1958738/ | 631 F. Supp. 1001 (1986)
BUTCHERS' UNION, LOCAL NO. 498, UNITED FOOD AND COMMERCIAL WORKERS; the United Food & Commercial Workers International Union, AFL-CIO; United Food and Commercial Workers International Union, Local 26, AFL-CIO; United Food and Commercial Workers International Union, Local 7; and James Conley, on his own behalf and on behalf of a class of persons similarly situated, Plaintiffs-Appellants,
v.
SDC INVESTMENT, INC.; Donald E. Callhan; Les Oesterreich; Eastern Market Beef Processing Corporation; Marcus Rothbart; James Richardson; Douglas A. Hyman; Denver Lamb Company; Verner Averch; Montfort of Colorado, Inc.; Gene Meakins; Ken Montfort; Tate, Bruckner & Sykes; Alaniz, Bruckner & Sykes; Richard Alaniz; Charles Sykes; John Tate; William Bruckner; Henry Dooley; John Guay; Jim Zaporowski; Tom Blessie; John Hiatt; Steve Hiatt; George Sersantes, Defendants-Appellees.
No. CIV. S-83-325 LKK.
United States District Court, E.D. California.
March 14, 1986.
*1002 David A. Rosenfeld, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, Cal., for plaintiffs-appellants.
William B. Shubb, Diepenbrock, Wulff, Plant & Hannegan, Sacramento, Cal., for defendants-appellees SDC Inv., Inc., Donald E. Callahan, Les Oesterreich, Tate, Bruckner & Sykes, Alaniz, Bruckner & Sykes, Richard Alaniz, William Bruckner, and Charles Sykes.
Arthur T. Carter, Alaniz, Bruckner & Sykes, Lincoln, Neb., for defendants-appellees SDC Inv., Inc.; Donald E. Callahan, and Les Oesterreich.
MEMORANDUM AND DECISION
KARLTON, Chief Judge.
Plaintiffs filed suit pursuant to the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. After a Status (Pre-trial Scheduling) Conference, I permitted plaintiffs to file an amended complaint and allowed defendants to move to dismiss this complaint on any grounds other than *1003 grounds relating to the substantive contents of the RICO statute.[1] The RICO arguments were reserved because of the two RICO cases that were then pending before the United States Supreme Court.[2]
I
ALLEGATIONS OF THE SECOND AMENDED COMPLAINT
The plaintiffs are (1) labor unions who were, or would like to be, the bargaining representatives for the defendant employer, SDC Investment, Inc. ("SDC"), and (2) James Conley and Moses Esquivel, employees who seek to represent a class of employees who allegedly were injured by virtue of the conduct forming the gravamen of the complaint. Second Amended Complaint at ¶¶ 5-7.
There are three sets of defendants remaining in the action, (1) the employer defendants (SDC and its officers), (2) the lawyer defendants, and (3) the National Maritime Union defendants[3]. SDC is an employer with its principal place of business within the Eastern District of California. Callahan and Oesterreich are its president and general manager, respectively. Prior to the incidents allegedly giving rise to this action, SDC was a party to a Collective Bargaining Agreement (CBA) with plaintiff Butchers' Union Local 498 (Butchers' Union). ¶¶ 5-7. These defendants are referred to collectively as the SDC defendants.
Two law firms and their partners or employees are also named as defendants. The law firms "Alaniz, Bruckner & Sykes," and "Tate, Bruckner & Sykes" (the law firm) were legal counsel to the employer defendant SDC. Alaniz, Sykes, and Bruckner are partners, members, or employees of the law firm.[4] ¶ 18.
Defendants John Hiatt, Steve Hiatt[5] and George Sersantes are alleged to be agents, employees or representatives of the other defendants, as well as agents of the National Maritime Union which is not a party to this action. ¶¶ 13-14.
Plaintiffs allege that on April 3, 1981, SDC began operation of a slaughterhouse in Dixon, California. ¶ 17. On that same day, SDC recognized the National Maritime Union (NMU) as the bargaining representative of its employees, and two days later executed a collective bargaining agreement with NMU. Id. Plaintiffs allege that this recognition was granted so as to prevent plaintiff Butchers' Union from organizing SDC's employees and was part of a conspiracy by defendants to reduce labor costs, maximize profits for SDC, and enrich both NMU and the law firm defendants. Id. In order to accomplish these purposes, defendants SDC, Oesterreich, Callahan and the lawyers allegedly hired and paid organizers of NMU, payment to be made in the form of travel expenses, reimbursements for hotel, meals, and automobile expenses, as well as direct payment of wages. ¶ 18. Subsequent to the recognition of NMU at the SDC facility in Dixon, and continuing *1004 up to November, 1982, SDC, Callahan, and Oesterreich continued to pay money and other things of value to NMU, in violation of 29 U.S.C. § 186. ¶ 20.[6] In the transactions described, the law firm defendants are alleged to have "received substantial fees in their operations and enterprises within the meaning of RICO, 29 [sic][7] U.S.C. § 1961(4)." ¶ 34.
Plaintiffs allege that defendants' activities are in violation of the substantive RICO provisions, 18 U.S.C. § 1962(b), in that defendants have, through a pattern of racketeering activity, acquired or maintained, directly or indirectly, an interest in or control over enterprises which are engaged in or the activities of which affect, interstate commerce. ¶ 35.
Plaintiffs also allege that defendants have conducted or participated in the enterprise's affairs through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c), ¶ 36, and that defendants have conspired to violate the provisions of the RICO statute, 18 U.S.C. § 1962(d). ¶ 37. Plaintiffs allege that defendants' payments to NMU are in violation of the Labor Management Relations Act, 29 U.S.C. § 186.[8] ¶ 38. Plaintiffs also allege that for the purpose of executing their illegal scheme, defendants used the mail and wire systems in violation of 18 U.S.C. §§ 1341 and 1343. ¶¶ 39-40.[9]
Plaintiffs seek treble damages on their RICO claims, injunctive relief under the labor claim and broad injunctive relief, among other things, in the form of an order dissolving the defendant law firms and prohibiting the defendants from practicing law for twenty-five (25) years. ¶ 42.
II
DISMISSAL STANDARDS UNDER FED.R.CIV.P. 12(b)(6)
On a motion to dismiss, the allegations of the complaint must be accepted as true. *1005 Cruz v. Beto, 405 U.S. 319, 322, 92 S. Ct. 1079, 1081, 31 L. Ed. 2d 263 (1972) (per curiam). The court is bound to give the plaintiffs the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks International Ass'n v. Schermerhorn, 373 U.S. 746, 753 n. 6, 83 S. Ct. 1461, 1465 n. 6, 10 L. Ed. 2d 678 (1963). Thus, the plaintiffs need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id. See also, Wheeldin v. Wheeler, 373 U.S. 647, 648, 83 S. Ct. 1441, 1443, 10 L. Ed. 2d 605 (1963) (inferring fact from allegations of complaint). In general, the complaint is construed favorably to the pleader. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974).
So construed, the court may dismiss the complaint for failure to state a claim 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, ___, 104 S. Ct. 2229, 2233, 81 L. Ed. 2d 59 (1984), citing Conley v. Gibson, 355 U.S. 41, 45-6, 78 S. Ct. 99, 101-02, 2 L. Ed. 2d 80 (1957). In spite of the deference the court is bound to give to the plaintiffs' allegations, however, it is not proper for the court to assume that "the Union can prove facts that it has not alleged or that the defendants have violated the ... laws in ways that have not been alleged." Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519, 526, 103 S. Ct. 897, 902, 74 L. Ed. 2d 723 (1983).
III
THE MOTION
Defendants argue that this action is an attempt by plaintiffs, in the form of civil RICO claims for treble damages and injunctive relief, to litigate in this court matters that are within the exclusive jurisdiction of the National Labor Relations Board (NLRB) and which have already been disposed of under the NLRB's processes. Defendants make three specific arguments. First, they argue that plaintiffs' claims are preempted by the exclusive jurisdiction of the NLRB. Second, they argue that plaintiffs' claims are precluded by a prior NLRB settlement agreement. Third, they argue that plaintiffs' claims are barred by the statute of limitations. Only the first claim requires extended discussion.
Defendants contend that plaintiffs' purported injuries result from three acts: (1) the unlawful recognition of NMU by SDC; (2) the execution of a contract with NMU; and (3) the alleged failure of SDC to hire members of Local 498.[10] As such, defendants argue, they amount to unfair labor practices prohibited by the National Labor Relations Act (NLRA) and are subject to the exclusive jurisdiction of the NLRB. They note that the purpose of the NLRA is to protect against and provide a remedy for precisely the type of conduct alleged by plaintiffs. They rely on cases such as San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S. Ct. 773, 3 L. Ed. 2d 775 (1959), and Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S. Ct. 1909, 29 L. Ed. 2d 473 (1971). Under Lockridge, defendants argue that the court must look to the conduct being regulated, not the formal description of the governing legal standard. 403 U.S. at 292. Because adjudication of plaintiffs' RICO claim, defendants say, would require this court to ascertain whether defendants had (1) recognized NMU when it did not enjoy the support of the employees, (2) executed contracts with NMU, and (3) deliberately refused to hire members of Local 498, all questions within the exclusive jurisdiction of the NLRB, the complaint must be dismissed.
IV
LABOR LAW PREEMPTION AND EXCEPTIONS THERETO
As a general rule, NLRB jurisdiction preempts the jurisdiction of both state *1006 courts, Sears, Roebuck & Co. v. San Diego Dist. Council of Carpenters, 436 U.S. 180, 187, 98 S. Ct. 1745, 1752, 56 L. Ed. 2d 209 (1978), and federal courts. See Motor Coach Employees v. Lockridge, 403 U.S. 274, 276, 91 S. Ct. 1909, 1913, 29 L. Ed. 2d 473 (1971). As the Supreme Court has explained, unlike the doctrine of primary jurisdiction, labor law preemption ousts the courts of power to act "unless the Board determines that the disputed conduct is neither protected nor prohibited by the federal act." Sears, Roebuck & Co., 436 U.S. at 199 n. 29, 98 S. Ct. at 1758.
Consideration of defendants' arguments most usefully begins with a brief examination of the evolution of American labor law. I have previously had occasion to address Congress' attempts to balance the competing interests of management and labor. See Constar, Inc. v. Plumbers Local 447, 568 F. Supp. 1440 (E.D.Cal.1983), aff'd 748 F.2d 520 (9th Cir.1984). There, I noted that when Congress created the National Labor Relations Board to administer the National Labor Relations Act, it expressed a judgment that the norms of labor relations could best be developed and applied by a specialized administrative agency rather than by the courts. 568 F. Supp. at 1443, citing R. Gorman, Basic Text on Labor Law, 291 (1976). Thus, the Board's jurisdiction over unfair labor practices was, as originally codified, "exclusive." 29 U.S.C. § 160(a). Amalgamated Utility Workers v. Consolidated Edison Co., 309 U.S. 261, 264, 60 S. Ct. 561, 563, 84 L. Ed. 738 (1940). However, in response to the contention that labor unions had grown too powerful, Congress enacted the Labor Management Relations Act (LMRA) in 1947, which provided, in § 303, that certain unfair labor practices would give rise to a suit by employers in federal court. 29 U.S.C. § 187(b); Constar at 1443; International Longshoremen's & Warehousemen's Union v. Juneau Spruce Corp., 342 U.S. 237, 241-42, 72 S. Ct. 235, 238, 96 L. Ed. 275 (1952). In recognition of this cause of action, Congress deleted from § 160(a) the description of the NLRB's power as "exclusive." International Ass'n of Machinists v. Gonzales, 356 U.S. 617, 630 n. 17, 78 S. Ct. 923 at 930 n. 17, 2 L. Ed. 2d 1018 (1958) (Warren, C.J., with Douglas, J., dissenting). In doing so, Congress "intended to provide two remedies one directed to ending unfair labor practices [a § 8(b)(4) proceeding before the NLRB], the other to providing for recovery of damages [a § 303 suit in federal court]." Constar at 1443. In Juneau Spruce, the Supreme Court was confronted with the issue of whether a suit for damages under § 303 lies in the district courts even though the NLRB had not yet resolved the question of whether the complained of conduct constituted an unfair labor practice. The court determined that the action would lie, observing that while § 8(b)(4) and § 303 "are substantially identical in the conduct condemned ... [t]he fact that the two sections have an identity of language and yet specify two different remedies is strong confirmation of our conclusion that the remedies provided were to be independent of each other." 342 U.S. at 243-44, 72 S.Ct. at 239. Thus the NLRA, as amended by the LMRA, "represents national policy which has both administrative and conventional legal sanctions." Id. 342 U.S. at 245, 72 S. Ct. at 240. Congress has, in like manner, provided in § 301 of the LMRA, 29 U.S.C. § 185, for private rights of action brought by employees alleging discharges in violation of collective bargaining agreements, although such breaches also constitute unfair labor practices. Vaca v. Sipes, 386 U.S. 171, 179-80, 87 S. Ct. 903, 910-11, 17 L. Ed. 2d 842 (1967).
In sum, while Congress created the NLRB as a specialized administrative agency for all labor disputes, in §§ 301 and 303 it created statutory exceptions to the exclusive jurisdiction of the NLRB. In the absence of Constitutional inhibition, Congress has plenary power to allocate jurisdiction to hear labor law violations between the courts and an administrative agency. Put another way, Congress gets to make the rules and change them. Congress could, and did, create the NLRB as the exclusive forum for consideration of certain conduct, but can and does create exceptions to that *1007 exclusivity. Thus, although the Supreme Court has taught that in preemption cases "[i]t is the conduct being regulated, not the formal description of governing legal standards, that is the proper focus of concern," Lockridge, 403 U.S. at 292, 91 S. Ct. at 1920, where Congress has provided remedies for proscribed conduct independent of those available in an NLRB proceeding, the preemption doctrine has no application. Vaca v. Sipes. If Congress creates such an independent remedy, then it makes no difference that the conduct is characterized as an unfair labor practice. As the Supreme Court has explained the "preemption doctrine ... has never been rigidly applied to cases where it could not fairly be inferred that Congress intended exclusive jurisdiction to lie with the NLRB." Vaca v. Sipes, 386 U.S. at 179, 87 S. Ct. at 910. With these general principles in mind, I turn to the instant motion.
V
RESOLUTION OF THE MOTIONS
The question that is tendered in the instant motion is whether RICO, in making conduct which falls within the ambit of § 186 and the mail and wire fraud statute's predicate acts, created an additional exception to the NLRB's exclusive jurisdiction. Put another way, the question is whether in RICO Congress has created an additional remedy for conduct which is outside the ambit of the NLRB's exclusive jurisdiction, or whether the statute is preempted by the labor law.
While a consideration of general principles is important, resolution of the motion requires close attention to the particular allegations of the complaint. As the Ninth Circuit has observed, "problems arising because of concurrent jurisdiction over acts constituting simultaneously a breach of contract and an unfair labor practice [can] best be dealt with on a case by case basis." George Day Const. Co., Inc. v. United Brotherhood of Carpenters and Joiners of America, 722 F.2d 1471, 1481 (9th Cir. 1984), citing Smith v. Evening News Ass'n, 371 U.S. 195, 197-98, 83 S. Ct. 267, 268-69, 9 L. Ed. 2d 246 (1962).
A. The Section 186 Claims
I turn first to the § 186 claims. As with any question of congressional intent, analysis begins with the language of the statute and where appropriate, the legislative history. Sierra Club v. Watt, 608 F. Supp. 305, 331 (E.D.Cal.1985), citing North Dakota v. United States, 460 U.S. 300, 312, 103 S. Ct. 1095, 1102, 75 L. Ed. 2d 77 (1983).
By the plain words of the statute, Congress has provided that the violation of § 186 suffices to predicate civil liability under RICO.[11] If unambiguous, the statute's language controls interpretation, absent "a clearly expressed legislative intent to the contrary." Russello v. United States, 464 U.S. 16, 20, 104 S. Ct. 296, 299, 78 L. Ed. 2d 17 (1983) (a RICO case), quoting United States v. Turkette, 452 U.S. 576, 580, 101 S. Ct. 2524, 2527, 69 L. Ed. 2d 246 (1981) (also a RICO case), quoting Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S. Ct. 2051, 2056, 64 L. Ed. 2d 766 (1980). Following the analytical mode articulated by the Supreme Court in Juneau Spruce, the fact that § 186 a labor statute is specifically referenced in RICO "is strong confirmation of [the] conclusion that the remedies provided were to be independent of each other." 342 U.S. at 243-44. Indeed, it is hard to imagine that Congress would have made § 186 a RICO predicate act without the intention of making violations of § 186, which necessarily arise in the labor context, the basis of a RICO action brought in the district court. Because the statute appears plain on its face, recourse to the legislative history appears unnecessary. See United States v. Scotto, 641 F.2d 47, 57 (2d Cir. 1980), cert. denied, 452 U.S. 961, 101 S. Ct. 3109, 69 L. Ed. 2d 971 (1981).
*1008 The legislative history, however, buttresses the conclusion that plaintiffs' § 186 claims are not preempted by the NLRA. Sponsors of the bill that became RICO emphasized the need to end illegitimate unions and the resultant "sweetheart contracts," believing that violation of § 186 corrupts legitimate labor management relations, and leads to "labor peace [being] sold to businesses." 116 Cong.Rec. 591 (1970). See also, Comments of Senator Allott, 116 Cong.Rec. 603 (1970). Senator McClellan, discussing the infiltration of organized crime into the labor movement, explained Senate Bill No. 30 by saying:
Control of labor supply through control of unions can prevent the unionization of some industries or can guarantee sweetheart contracts in others. It provides the opportunity for theft from union funds, extortion through the threat of economic pressure, and the profit to be gained from the manipulation of welfare and pension funds and insurance contracts. Trucking, construction and waterfront entrepreneurs have been persuaded for labor peace to countenance gambling, loan sharking and pilferage. All of this, of course, makes a mockery of much of the promise of the social legislation of the last half century.
115 Cong.Rec. 5874 (1969). In the House, Representative Poff described the victimization of workers through "sweetheart" labor contracts gained through mob funding. 116 Cong.Rec. 35201 (1970). This legislative history, while it does not squarely address the issue before us, at least suggests that the drafters of RICO had, as one of their objectives, putting an end to labor racketeering in general and sweetheart contracts in particular; certainly the Act's reference to § 186 must be seen as furthering that purpose.
Thus the statute on its face clearly indicates that plaintiffs' § 186 claims are not preempted, and the legislative history seems to suggest the same conclusion. Defendants nonetheless contend that the motion must be granted. They argue that given the complaint, this court will be required to resolve labor law questions extraneous to the alleged violations of § 186 and that those issues are within the exclusive jurisdiction of the NLRB. The argument must be rejected. It is now settled that "the federal courts may decide labor law questions that emerge as collateral issues in suits brought under independent federal remedies." Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 85, 102 S. Ct. 851, 860, 70 L. Ed. 2d 833 (1982), quoting Connell Const. Co., Inc. v. Plumbers and Steamfitters Local Union No. 100, 421 U.S. 616, 626, 95 S. Ct. 1830, 1836, 44 L. Ed. 2d 418 (1975). The central question in RICO litigation is whether a violation of the statute occurred. It is true that in the instant case (and perhaps regularly) where the RICO claim is predicated on § 186 violations, labor law questions will have to be resolved, but that is simply a consequence of Congress making § 186 violations predicate acts for RICO purposes. Given the statute, the other labor law questions must be viewed as collateral, and under Kaiser and Connell, amenable to resolution in the district courts.
Defendants argue, however, that other courts have found that § 186 claims are preempted in this context. They particularly rely on American Commercial Barge Lines Co. v. Seafarers Intern. Union of North America, 730 F.2d 327 (5th Cir.1984) and Local 355, Hotel, Motel, Restaurant & Hi-Rise Employees and Bartenders Union v. Pier 66, 599 F. Supp. 761 (S.D.Fla. 1984). The argument is not persuasive.
I begin by noting that Seafarers was not a preemption case but rather involved the issue of primary jurisdiction.[12] Indeed, the court there held that § 186 "plainly" gave the federal courts the jurisdiction to restrain trust fund violations. 730 F.2d at *1009 339. Put bluntly, Seafarers does not aid defendants' cause.[13]
As defendants note, however, Pier 66 is directly on point. There, the plaintiff union alleged that the defendant employer offered its employees monetary inducements as well as other employment benefits for the purpose of obtaining the decertification of the union as the employees' exclusive bargaining agent in violation of § 302, 29 U.S.C. § 186(a)(3), and RICO, 18 U.S.C. § 1964. The court granted summary judgment to the defendant, holding that the claims presented by the union fell "squarely within those activities that are arguably subject to section 7 or section 8 of the NLRA" and were "nothing more than a charge of unfair labor practice." Id. at 764.[14]
With all due respect, I disagree. The Pier 66 court sought to distinguish its holding from Juneau Spruce on the basis that an employer has the right to sue for monetary damages under § 303 of the LMRA, 29 U.S.C. § 187, while § 302, 29 U.S.C. § 186, provides only for criminal sanctions and injunctions for a violation of its provisions. Id. at 764 n. 3. This distinction misconstrues the nature of the inquiry. RICO's predicate act requirement does not speak to the form of relief available under the predicate statute. Instead, it describes as "racketeering activities" acts indictable under certain federal statutes, among them the provisions of 29 U.S.C. § 186. 18 U.S.C. § 1964(c) itself provides monetary relief. Put another way, RICO provides for monetary damages if a defendant engaged in conduct which was indictable under § 186, thus the fact that § 186 itself does not provide for monetary damages appears simply irrelevant.[15]
For all of the reasons noted above, I find that properly pled RICO claims relying on § 186 predicate acts are not preempted by the NLRB and questions of labor law properly tendered in such a suit do not require dismissal where the suit otherwise lies.
B. The Wire and Mail Fraud Claims
Plaintiffs also allege that defendants' conduct constitutes a violation of the wire and mail fraud statutes, and that these violations constitute alternative predicate violations under 18 U.S.C. § 1961(1) sufficient to demonstrate liability for racketeering activity under RICO. Here, unlike the provisions incorporating § 186, the allegations seek to predicate liability on violations of generic statutes. Because of its generality, RICO's reference to them cannot be said to speak, by its terms, to the question of labor law preemption. Moreover, the inclusion of § 186 violations as predicate acts suggests that Congress was being selective as to what activities were being removed from the ambit of the exclusive jurisdiction of the labor law. The violation of no other labor statute constitutes a RICO predicate act.
The legislative history, although it speaks quite directly to Congressional intent that RICO provide civil remedies for labor law crimes, does not address the question of whether the mail and wire fraud statutes could be employed in that attempt, where the activities complained of are also unfair labor practices subject to the NLRB's exclusive jurisdiction. The legislative history is replete with expressions *1010 of congressional concern about the relationship of organized crime and organized labor. These concerns, however, do not aid the inquiry into whether the labor law preempts mail and wire fraud claims where RICO does not reference a labor statute and the conduct constitutes an unfair labor practice.[16]
It appears to the court that neither the language of the statute nor the legislative history resolves the issue of preemption. The Ninth Circuit has recently explained, that if there is a "lack of useful statutory or congressional guidance, the question should be resolved by the `accepted' principles of labor law preemption." Laborers Health & Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., Inc., 779 F.2d 497, 504 (9th Cir.1985). The general principle, of course, is that where a claim is arguably within the Board's jurisdiction, the claim is preempted. San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245, 79 S. Ct. 773, 779, 3 L. Ed. 2d 775 (1959). Under this mode of analysis it would appear that where plaintiff seeks to prove as predicate acts conduct indictable under the mail or wire fraud provisions, which otherwise falls within the exclusive jurisdiction to the NLRB, it is likely that the cause of action will not lie under RICO, but will be found to be preempted by the labor law.[17]
There is in the instant case, however, a second and more persuasive reason to find that the wire and mail fraud predicate claims are preempted. That reason is also drawn from Advanced Lightweight. There, the court of appeals held that the primary jurisdiction of the NLRB preempted a trust fund's suit, brought under sections 502 and 515 of the Employee Retirement Security Act (ERISA), to recover delinquent contributions from an employer accrued after a collective bargaining agreement had expired. Id. As I explain below, central to the circuit's decision was the nature of the employer's alleged liability.
The trust fund sued the employer because the employer had failed to make contributions to the fund as required under the terms of an expired collective bargaining agreement. Id. at 499. The employer would have had no obligation under ERISA, or otherwise, to make contributions except for a duty arising under the labor law. That is, the only reason that the employer might be held liable to the trust fund was because of the labor law requirement that employers maintain the status quo, i.e., continue contributions, during the collective bargaining process. Thus it was the labor law which governed the nature and scope of the employer's obligations. Under such circumstances, the Circuit held that the centrality of the effect of the labor law on evaluating the employer's liability, required that the NLRB be the body determining the issue of whether the employer's obligation existed. Accordingly, the court held that plaintiff's ERISA claims were preempted.
*1011 In like fashion, it appears in the instant case that but for the proscriptions of the labor law, defendants' conduct simply would not be either mail or wire fraud. The mail and wire fraud statutes denounce the use of the mails or wire to perpetrate a fraud, but leave to other laws the definition of what is a fraud. "Congress enacted § 1341 forbidding and making criminal any use of the mails `for the purpose of executing [a] scheme' to defraud or to obtain money by false representations leaving generally the matter of what conduct may constitute such a scheme for determination under other laws." Parr v. United States, 363 U.S. 370, 389, 80 S. Ct. 1171, 1182, 4 L. Ed. 2d 1277 (1960), quoting 18 U.S.C. § 1341. The wire fraud provision, § 1343, was patterned after § 1341 and was meant to receive a like interpretation. United States v. Louderman, 576 F.2d 1383, 1387 and n. 3 (9th Cir.), cert. denied, 439 U.S. 896, 99 S. Ct. 257, 58 L. Ed. 2d 243 (1978).
In essence then, defendants' use of the mails or wire is an indictable offense only where its purpose is the execution of a fraud. Whether the conduct constitutes a fraud is defined elsewhere by the law. Under the instant complaint, this configuration is crucial since, under plaintiffs' allegations, the only reason defendants' conduct can be alleged to be unlawful, is that it is denounced by the labor law.[18] Under Advanced Lightweight, such a claim must be viewed as preempted.
The complaint alleges that the lawyer defendants "earned and received substantial fees from the unlawful plans and schemes described," ¶ 34, and that the employer defendant, SDC, in cooperation with the lawyers, hired and made "unlawful" payments to organizers of NMU in order to cause them to influence other employees of SDC in their right to organize or bargain collectively in violation of § 186. ¶ 18 (emphasis added). This conduct is only alleged to be unlawful, by the terms of the complaint, because it violates § 186.[19] The gravamen of plaintiffs' complaint is that "the activities of defendants described above violate 29 U.S.C. § 186 in that defendants ... have paid money or other things of value to representatives of their employees ... or to a labor organization ... for the purpose of causing such employee of [sic] employees to directly or indirectly influence other employees in their exercise of their right to organize and bargain collectively to [sic] representatives of their own choosing." ¶ 38. Bluntly put, no matter how you cut the complaint, the only conceivable "fraud" is the deprivation of plaintiffs' rights under the labor law. Since defendants' liability, under the mail and wire fraud statutes, if any, is wholly dependent on the labor laws, judgment of defendants' conduct under Advanced Lightweight lies exclusively with the NLRB. For the above reasons, it is the court's view that plaintiffs' claims predicated on mail and wire fraud are preempted and must be dismissed.
For all the above reasons, the court orders:
1. Defendants' motion to dismiss the plaintiffs' claims predicated upon a violation of § 186 is DENIED;[20]
2. Defendants' motion to dismiss plaintiffs' complaint predicated upon violation of *1012 the mail and wire fraud statutes is GRANTED;
3. A Status Conference is now set for April 28, 1986, at 3:00 p.m. The parties are directed to file full status reports in accordance with Local Rule 240.
IT IS SO ORDERED.
NOTES
[1] For that reason, this opinion assumes that, except as defendants argue that such causes of action are preempted by the National Labor Relations Act, plaintiffs' complaint states a cause of action under RICO's substantive provisions. See § IV A, infra.
[2] Those cases have since been decided. Sedima, S.P.R.L. v. Imrex Co., ___ U.S. ___, 105 S. Ct. 3275, 87 L. Ed. 2d 346; American Nat. Bank & Trust Co. v. Haroco, Inc., ___ U.S. ___, 105 S. Ct. 3291, 87 L. Ed. 2d 437 (1985).
[3] Plaintiffs originally sued a number of employers located across the United States as well as the present defendants. Defendants challenged plaintiffs' First Amended Complaint on the basis of lack of personal jurisdiction and improper venue. Relative to that motion, I found that because the complaint alleged multiple conspiracies, plaintiffs had failed to meet the burden of showing that the "ends of justice" (see 18 U.S.C. § 1965(b)) required this court to exercise personal jurisdiction over defendants residing in Colorado, Michigan, and Nebraska. Order of December 20, 1984, at 16. I found, however, that there was no bar to the exercise of personal jurisdiction over the remaining defendants. Id. at 23-24.
[4] Tate, formerly named as a defendant partner of the law firm was dismissed by this court's order filed June 28, 1985.
[5] These two defendants have not been served.
[6] The allegations of the Second Amended Complaint include allegations against the former defendant employers who were dismissed from this action by the court's order of December 20, 1984. These allegations remain for factual background. These defendants have been dismissed and are no longer parties to this action. See n. 3 and Order of December 20, 1984.
[7] The court assumes that plaintiffs incorrectly cited to Title 29 instead of properly citing to Title 18. There is no Title 29 U.S.C. § 1961(4).
[8] The allegations of plaintiffs' complaint as to § 186 are: "The activities of defendants described above violate 29 U.S.C. § 186 in that defendants, and each of them, have paid money or other things of value to representatives of their employees who are employed in an industry affecting commerce, or to a labor organization or an officer or employee of and/or to an employee of the employers described above employed in an industry affecting commerce in excess of their normal compensation for the purpose of causing such employee of [sic] employees to directly or indirectly influence other employees in the exercise of their right to organize and bargain collectively to [sic] representatives of their own choosing."
Plaintiffs appear to have drafted their complaint with the statute in hand.
[9] The relevant allegations of plaintiffs' complaint as to the mail and wire fraud claims are as follows: "The above described facts are a scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations or promises; and for the purpose of executing such scheme or artifice, defendants placed in a post office or authorized depository for mail matters, some matters or things to be sent or delivered by the Postal Service, or took or received therefrom, some matter or thing; or knowingly caused to be delivered by mail according to the direction thereof, or at the place at which it was directed to be delivered by the person to whom it was addressed; some such matter or thing including but not limited to money, checks, collective bargaining agreements, N.L.R.B. documents, authorization cards, plane tickets and various other things all in violation of 18 U.S.C. Section 1341." ¶ 39.
"The above described facts are a scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations or promises and for the purpose of executing such scheme or artifice, defendants promised, transmitted or caused to be transmitted by means of wire in interstate commerce signs, signals, or sounds for the purpose of executing such scheme or artifice all in violation of 18 U.S.C. Section 1343. Inter alia, advice was given from defendant lawyers to the other defendants, including defendant union-employer-agent as to the manner by which this scheme or artifice could be carried out and accomplished." ¶ 40.
[10] Plaintiffs allege that all of these injuries resulted from payments made by the defendants in violation of § 186.
[11] "Racketeering activity" is defined as a number of substantive offenses, among them "(C) any act which is indictable under Title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) ..." 18 U.S.C. § 1961(1).
[12] For a discussion of the distinction between preemption as described in § IV, supra, and primary jurisdiction, see Sears, Roebuck & Co. v. Carpenters, 436 U.S. 180, 199 n. 29, 98 S. Ct. 1745, 1758 n. 29, 56 L. Ed. 2d 209 (1978).
[13] The circuit court did find that deferral of the question of granting injunctive relief was appropriate because an injunction would suspend the collective bargaining process without resolving the alleged illegalities. No such issues are tendered in the instant case.
[14] The court also found that the plaintiff union did not state a RICO claim because the union did not suffer an injury to its business or property within the meaning of 18 U.S.C. § 1964(c), as the only injuries alleged were "incidental damages" of attorneys fees and costs incurred by the decertification effort which, in that court's opinion, did not give rise to the type of proprietary damage for which RICO provides compensation. Id. at 765 and 764 n. 3.
[15] Defendants also rely on preemption cases arising under other statutes. Because RICO specifically makes reference to § 186, they are clearly distinguishable and need not be addressed at length.
[16] The "Statement of Findings and Purpose" of the Organized Crime Control Act of 1969 which became RICO states in relevant part that the "money and power" that organized crime obtains from illegal endeavors is "increasingly used to infiltrate and corrupt legitimate businesses and labor unions." 116 Cong.Rec. 575 (1970). Senator McClellan, one of the sponsors of the Act, quoted the President's Message on Organized Crime in support of the Act as follows: "[Organized crime] quietly continues to infiltrate and corrupt organized labor." 116 Cong.Rec. 585 (1970). Senator McClellan also noted the infiltration of labor organizations by crime figures, 116 Cong.Rec. 586 (1970). Shortly after Senator McClellan introduced the Act, Senator Hruska introduced an additional bill aimed at racketeering which, in his own words created "civil remedies for the honest businessman who has been damaged by unfair competition from the racketeer businessman. ... Patterned closely after the Sherman Act, it [the bill] provides for private treble damage suits, prospective injunctive relief, unlimited discovery procedures and all the other devices which bring to bear the full panoply of our antitrust machinery in aid of the businessman competing with organized crime. 115 Cong.Rec. 6993 (1969). See also, Blakey, G. and Golstock, R., On the Waterfront RICO and Labor Racketeering, 1980. 17 Am.Crim.L.Rev. 341, 342.
[17] Except of course where plaintiff alleges a violation of § 186. See § V A, supra.
[18] See footnote 9 for the plaintiffs' allegations.
[19] This conduct would also constitute an unfair labor practice actionable under § 8 of the NLRA, but that allegation is not made.
[20] Defendants also seek dismissal because the settlement of the NLRB actions bars this litigation, and that the litigation is barred by the statute of limitations. Both arguments must be rejected.
The effect of a previous settlement on subsequent litigation is a question of the intention of the parties. See Kodiak Oil Field Haulers, Inc. v. Teamsters Union Local No. 959, 611 F.2d 1286 (9th Cir.1980) (strike settlement bars § 301 litigation when such is intent of the parties). Examination of both the NLRB complaints and the settlement agreement itself does not clearly demonstrate the intent of the parties.
The statute of limitations for RICO actions when brought in California is three years. Compton v. Ide, 732 F.2d 1429, 1433 (9th Cir. 1984). This action was brought within the statutory period. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2832852/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 14-3668
DR. ROBERT L. MEINDERS, D.C., LTD.,
individually and as the representa-
tive of a class of similarly-situated
persons,
Plaintiff-Appellant,
v.
UNITEDHEALTHCARE, INC., et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Southern District of Illinois.
No. 3:14-cv-00548-DRH-DGW — David R. Herndon, Judge.
ARGUED MAY 20, 2015 — DECIDED SEPTEMBER 1, 2015
Before BAUER, FLAUM, and HAMILTON, Circuit Judges.
BAUER, Circuit Judge. Plaintiff-appellant, Dr. Robert L.
Meinders, D.C., Ltd., commenced this action against
UnitedHealthcare, Inc. and UnitedHealthcare of Illinois, Inc.
(collectively, “United”), in Illinois state court. United removed
the case to federal district court and filed a motion to dismiss
2 No. 14-3668
for improper venue under Federal Rule of Procedure 12(b)(3).
The district court granted United’s motion and dismissed the
case. Because the district court premised its dismissal order on
law and facts to which Meinders did not have a full and fair
opportunity to respond, we reverse and remand for further
proceedings consistent with this opinion.
I. BACKGROUND
In April 2014, Meinders filed a putative class action lawsuit
against United in Illinois state court. The complaint alleged
that, at some point in 2013, United sent him and a number of
similarly-situated persons an unsolicited “junk fax” advertising
United’s services, which violated the Telephone Consumer
Protection Act (“TCPA”), 47 U.S.C. § 227, et seq., the Illinois
Consumer Fraud and Deceptive Practices Act, 815 ILCS
§ 505/2, and amounted to common law conversion. United
removed the case to the United States District Court for the
Southern District of Illinois, on the basis of federal question
jurisdiction under 28 U.S.C. § 1331. See Mims v. Arrow Fin.
Servs., Inc., _ U.S. _, 132 S. Ct. 740, 747 (2012) (“Congress did
not deprive federal courts of federal-question jurisdiction over
private TCPA suits.”).
Once in federal court, United moved to dismiss the com-
plaint for improper venue under Rule 12(b)(3) of the Federal
Rules of Civil Procedure. United argued that Meinders had
entered into a “Provider Agreement” with a United-owned
entity, ACN Group, Inc., in 2006, which bound him to arbitrate
his “junk fax” claims in Minnesota. The Provider Agreement
provides in pertinent part:
No. 14-3668 3
In the event of any dispute arising out of or
relating to this Agreement, Provider [Meinders]
and ACN Group shall first attempt in good faith
to resolve the dispute mutually between them …
. If Provider and ACN Group are unable to
resolve a dispute by mutual agreement, then
matters in controversy may be submitted, upon
the motion of either party, to arbitration under
the Commercial Rules of the American Arbitra-
tion Association (AAA). All such arbitration
proceedings shall be administered by the AAA in
Minnesota[.]
United claimed that the alleged “junk fax” it sent to
Meinders related to the Provider Agreement, and thus fell
within the purview of the arbitration clause, because it pro-
vided Meinders with information about new technology
designed to assist United providers in recouping payments
from patients. In support of its authority to enforce the agree-
ment’s arbitration provision, United stated in a footnote, “ACN
Group, Inc. is a United-owned entity that coordinates the
provision of healthcare services by, among other specialists,
chiropractors.”
Meinders contended, in response, that United was neither
a party nor signatory to the Provider Agreement and, there-
fore, that it could not enforce the agreement’s arbitration
provision. Meinders noted that the Provider Agreement
defined the “Parties” to the agreement as only Meinders and
ACN Group, that the agreement did not mention United or
suggest that any entity affiliated with ACN Group was also a
party to the agreement, and that the arbitration clause was
4 No. 14-3668
expressly limited to disputes between Meinders and ACN
Group. Meinders also pointed out that United failed to present
evidentiary support for its claim of ownership of ACN Group
and that, even if it had, corporate ownership does not itself
confer a right upon the parent corporation to enforce an
arbitration agreement where only the subsidiary is a party to
the agreement.
United, “supris[ed]” that Meinders “raised and focused so
heavily on the signatory issue,” filed a reply brief. In its reply,
United argued for the first time that it was entitled to enforce
the Provider Agreement’s arbitration clause based on a
contractual theory of assumption. It also submitted new
evidence—the declaration of Colleen Van Ham, the President
and Chief Executive Officer of UnitedHealthcare of Illinois, Inc.
In her declaration, Van Ham stated “[o]n December 22, 2003,
ACN Group, Inc. (‘ACN’) became a wholly owned subsidiary
of United Healthcare Services, Inc.” She also stated, in support
of United’s assumption theory of enforcement, that “United
has assumed important obligations under the Provider
Agreement, such as [ACN’s] obligation to coordinate and
transmit payments to providers such as the plaintiff in this
lawsuit.”
Meinders moved to strike United’s reply or, in the alterna-
tive, for leave to file a sur-reply addressing United’s assump-
tion theory and Van Ham’s declaration. The district court
denied Meinders’ motion to strike, denied him leave to file a
sur-reply, and struck his proffered sur-reply from the record.
Without oral argument or a hearing, the district court then
granted United’s motion to dismiss for improper venue under
Federal Rule of Civil Procedure 12(b)(3). The court determined
No. 14-3668 5
that United, although not a signatory to the Provider Agree-
ment, was entitled to enforce the agreement’s arbitration clause
on the ground that it “assumed important obligations under
the Provider Agreement such as [ACN Group’s] obligation to
coordinate and transmit payments to providers such as
Meinders.” Meinders appealed.
II. DISCUSSION
Meinders raises two challenges to the district court’s
decision—one is a procedural challenge, the other goes to the
merits. We review de novo a district court’s decision to dismiss
a case for improper venue under Federal Rule of Civil Proce-
dure 12(b)(3).1 See Jackson v. Payday Fin., LLC, 764 F.3d 765, 773
(7th Cir. 2014). Insofar as the district court’s decision is based
upon factual findings, our review is guided by the clearly
erroneous standard. Fyrnetics (H.K.) Ltd. v. Quantum Grp., Inc.,
293 F.3d 1023, 1027 (7th Cir. 2002).
The Federal Arbitration Act (“FAA”) embodies a “liberal
federal policy favoring arbitration.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 131 S. Ct. 1740, 1745 (2011) (quoting
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24 (1983)). The FAA operates to place arbitration agreements
1
Because the arbitration clause in this case calls for arbitration outside the
Southern District of Illinois, Rule 12(b)(3) is the appropriate vehicle for
seeking dismissal of Meinders’ suit. Faulkenberg v. CB Tax Franchise Sys., LP,
637 F.3d 801, 808 (7th Cir. 2011) (“[W]e have held that a Rule 12(b)(3)
motion to dismiss for improper venue, rather than a motion to stay or
compel arbitration, is the proper procedure to use when the arbitration
clause requires arbitration outside the confines of the district court’s
district.”).
6 No. 14-3668
on the same footing as other contracts to ensure that judiciaries
enforce agreements to arbitrate. Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 24 (1991); Dean Witter Reynolds v. Byrd, 470
U.S. 213, 219 (1985). The relevant language of the FAA pro-
vides that an arbitration clause in a contract “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any contract.” 9 U.S.C.
§ 2.
An agreement to arbitrate is treated like any other contract.
Gibson v. Neighborhood Health Clinics, 121 F.3d 1126, 1130 (7th
Cir. 1997). A party can be forced to arbitrate only those matters
that he or she has agreed to submit to arbitration, James v.
McDonald’s Corp., 417 F.3d 672, 677 (7th Cir. 2005), and “[i]f
there is no contract there is to be no forced arbitration.” Gibson,
121 F.3d at 1130. In determining whether a valid arbitration
agreement exists between the parties, a federal court should
look to the state law that ordinarily governs formation of
contracts. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,
943 (1995); James, 417 F.3d at 677. In the present case, because
the parties have agreed that Illinois law governs the question
of whether the parties have entered into a contract, we look to
the contract law of that state.
Meinders first contends on appeal that the district court
denied him due process by entering judgment against him on
factual and legal issues to which he did not have a full and fair
opportunity to respond. After a review of the record, we agree.
As recounted above, United moved to dismiss Meinders’
case for improper venue on the basis of an arbitration provi-
sion contained in an agreement to which United was neither a
No. 14-3668 7
party nor a signatory. The general rule, of course, is that an
arbitration agreement binds only the parties to that agreement.
See EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002); Ervin v.
Nokia, Inc., 812 N.E.2d 534, 539 (Ill. App. Ct. 2004) (“‘Under
either federal or Illinois law, the right to compel arbitration
stems from an underlying contract and generally may not be
invoked by a nonsignatory to the contract.’” (quoting Caligiuri
v. First Colony Life Ins. Co., 742 N.E.2d 750, 755 (Ill. App. Ct.
2000))). This general rule is not without exception, however.
We have recognized five contract-based doctrines through
which a nonsignatory may be bound by an arbitration agree-
ment entered into by others: “(1) assumption; (2) agency;
(3) estoppel; (4) veil piercing; and (5) incorporation by refer-
ence.” Zurich Am. Ins. Co. v. Watts Indus., 417 F.3d 682, 687 (7th
Cir. 2005) (citing Fyrnetics (H.K.) Ltd., 293 F.3d at 1029).
In its opening motion, United premised its authority to
enforce the Provider Agreement’s arbitration provision on the
ground that a party to the agreement, ACN Group, was a
United-owned entity. See Reese v. Forsythe Mergers Grp., Inc.,
682 N.E.2d 208, 213 (Ill. App. Ct. 1997) (“[A] party seeking to
enforce an agreement has the burden of establishing the
existence of an agreement.”). Meinders, in opposition, pointed
out that United did not provide evidentiary support for its
claim of ownership of ACN Group and that, even if it had,
United’s “ownership theory” did not itself confer a right upon
United to enforce the agreement’s arbitration provision. See
Zurich Am. Ins. Co., 417 F.3d at 688 (“A corporate relationship
is generally not enough to bind a nonsignatory to an arbitra-
tion agreement.”). United, then, in reply argued a new legal
theory (assumption) and presented new evidence (Van Ham’s
8 No. 14-3668
declaration) not raised in its original motion. The district court
denied Meinders leave to respond and, without oral argument
or a hearing, granted United’s motion to dismiss, holding that
“United is entitled to enforce the arbitration clause of the
Provider Agreement” because it “assumed important obliga-
tions under the Provider Agreement such as [ACN Group’s]
obligation to coordinate and transmit payments to providers
such as Meinders.”
As the foregoing makes plain, the district court’s dismissal
order relied on a novel legal theory and new evidence submit-
ted in reply, to which Meinders had no opportunity to re-
spond. United attempts to defend the district court’s handling
of this case by asserting that the district court properly en-
forced Southern District of Illinois Local Rule 7.1(c). We
disagree.
District courts are entitled to “considerable discretion in
interpreting and applying their local rules,” Cuevas v. United
States, 317 F.3d 751, 752 (7th Cir. 2003), and we “will intrude on
that discretion only where we are convinced that the district
court made a mistake.” Bunn v. Khoury Enters., Inc., 753 F.3d
676, 681 (7th Cir. 2014) (internal quotation marks omitted). S.D.
Ill. L.R. 7.1(c) states, in relevant part:
Reply briefs are not favored and should be filed
only in exceptional circumstances. The party
filing the reply brief shall state the exceptional
circumstances. Under no circumstances will sur-
reply briefs be accepted.
The district court denied Meinders’ motion to strike,
holding that United’s reply brief satisfied S.D. Ill. L.R. 7.1(c)’s
No. 14-3668 9
“exceptional circumstances” requirement since “[Meinders]
memorandum in opposition raise[d] a new issue that was not
addressed in [United’s] motion and ignore[d] relevant law and
facts relating to that issue.” The court denied Meinders leave
to file a sur-reply and struck his proffered sur-reply from the
record pursuant to S.D. Ill. L.R. 7.1(c)’s strict prohibition on
sur-reply briefs.
We are hard pressed to find the “new issue” that Meinders
raised in his opposition brief on which the district court
premised its “exceptional circumstances” determination. The
only issues that Meinders’ opposition brief raised were that
United was not a signatory to the Provider Agreement and that
United’s ownership theory did not authorize it, as a non-
signatory, to enforce the agreement’s arbitration provision. At
any rate, once the district court permitted United to file its
reply brief, the court should have granted Meinders leave to
file a sur-reply responding to United’s novel assumption
theory and Van Ham’s declaration. Due process, we have
cautioned, requires that a plaintiff be given an opportunity to
respond to an argument or evidence raised as a basis to dismiss
his or her claims. See, e.g., Smith v. Bray, 681 F.3d 888, 903 (7th
Cir. 2012) (“[D]istrict courts need to ensure that they do not
base their decisions on issues raised in such a manner that the
losing party never had a real chance to respond.”); English v.
Cowell, 10 F.3d 434, 437 (7th Cir. 1993) (“The opportunity to
respond is deeply imbedded in our concept of fair play and
substantial justice.”). When strict adherence to local rules, such
as S.D. Ill. L.R. 7.1(c)’s proscription on sur-reply briefs, threat-
ens to deprive a litigant of the opportunity to respond, the
local rules must give way to considerations of due process and
10 No. 14-3668
fundamental fairness. Accordingly, we hold that the district
court deprived Meinders due process by entering judgment
against him on law and facts to which he did not have a full
and fair opportunity to respond.
As for the merits, both parties acknowledge that the
contractual theory of assumption is one through which a
nonsignatory to an arbitration agreement can enforce the
agreement. The parties disagree, however, as to whether such
an assumption occurred here. All we have in the record on this
point is Van Ham’s vague declaration stating, “United has
assumed important obligations under the Provider Agreement,
such as [ACN Group’s] obligation to coordinate and transmit
payments to providers such as the plaintiff in this lawsuit.”
Meinders raises a host of questions on appeal regarding
Van Ham’s declaration, many of which seek to determine
whether United has indeed assumed ACN Group’s obligations
under the Provider Agreement and, if so, to what extent. He
also seeks to submit testimony in response to Van Ham’s
declaration. Rather than decide the merits on the basis of
Van Ham’s bare-bones declaration, we think the more prudent
course is to allow Meinders to contest Van Ham’s declaration
and delineate the metes and bounds of United’s assumption.
Accordingly, we remand to the district court where these
factual issues may be more appropriately addressed in the first
instance. On remand, the district court should permit discov-
ery to the extent necessary to allow Meinders to submit a full
response to Van Ham’s declaration and United’s assumption
theory. Beyond that, we trust the district court to handle the
proceedings as it sees fit.
No. 14-3668 11
III. CONCLUSION
For the aforementioned reasons, we REVERSE the district
court’s dismissal order and REMAND the case for further
proceedings consistent with this opinion. | 01-03-2023 | 09-01-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2832888/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_______________________________
)
SARA WILSON, )
On behalf of herself and all )
others similarly situated, )
)
Plaintiff, )
) Civ. Action No. 14-1522 (EGS)
v. )
)
HUNAM INN, INC., et al. )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff Sara Wilson, on behalf of herself and all others
similarly situated, brings this action against Defendant Hunam
Inn, Inc., and individual Defendants Donald Eric Little, and
David Perruzza, alleging violations of the Fair Labor Standards
Act (FLSA), 29 U.S.C. § 201 et seq., and the D.C. Minimum Wage
Act (DCMWA), D.C. Code § 32-1001 et seq. Defendants move for
partial dismissal of Ms. Wilson’s complaint, or in the
alternative, for partial summary judgment. Upon consideration of
the motion, the response and reply thereto, the entire record,
and the applicable law, Defendants’ motion is DENIED.
I. BACKGROUND
Ms. Wilson is a former bartender at a D.C. nightclub
operated by Defendant Human Inn, Inc. Compl., ECF No. 1 at ¶¶ 1,
2. Human Inn, Inc. is a D.C. corporation doing business under
the names “Cobalt” and “30 Degrees.” Id. at ¶ 2. Defendant
Donald Eric Little is the sole owner and President of Human Inn,
Inc. Id. at ¶ 3; see also Defs.’ Mot., ECF No. 8-2 at ¶ 3.
Defendant David Perruzza is a corporate officer at Human Inn,
Inc., whose responsibilities include signing payroll checks.
Compl., ECF No. 1 at ¶ 4; Defs.’ Mot. at 8-2 at ¶ 4.
Ms. Wilson alleges that while employed as a bartender at
Cobalt, she was not paid minimum wage or overtime. Compl., ECF
No. 1, at ¶¶ 14, 15. Ms. Wilson alleges that her employers used
an invalid “tip pooling” arrangement to avoid paying their
employees minimum wage. Id. at ¶¶ 18, 53, 55. While under
certain circumstances the FLSA allows employers to pay “tipped
employees” at an hourly rate below the minimum wage, Ms. Wilson
argues that the tip pooling arrangement used at Cobalt failed to
meet the statutory criteria. Id. at 56. First, Ms. Wilson
alleges that under the tip pool system, she and the other
bartenders were forced to share their tips with non-tipped
employees, such as “bar backs” and “floor employees,” who do not
ordinarily receive tips from customers. Id. at ¶ 55. Second, at
some point during Ms. Wilson’s employ with Cobalt, the
nightclub’s cleaning staff was fired and Ms. Wilson and the
other bartenders were required to assume additional cleaning
duties, such as cleaning the nightclub bathrooms. Id. at ¶¶ 18-
19. Ms. Wilson argues that these additional cleaning duties
2
were not exempt from the minimum wage requirement and that the
bartenders should have been paid minimum wage for time spent
performing this work. Id. at ¶ 18. She further alleges that the
Defendants failed to provide her adequate notice that she would
be compensated under the “tipped employee” exemption to the
FLSA’s minimum wage requirement. Id. at ¶ 60. Finally, Ms.
Wilson alleges that she worked an average of 32 to 42 hours per
week, but was not compensated for overtime work. Id. at ¶ 19.
On October 21, 2014, Defendants moved for partial dismissal
of the Plaintiff’s complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), or in the alternative, for partial summary
judgment pursuant to Rule 56. Defs.’ Mot., ECF No. 8-3.
Defendants first move to dismiss Plaintiff’s complaint as to Mr.
Little and Mr. Perruzza, arguing that Mr. Little and Mr.
Perruzza are not “employers” under the FLSA or DCMWA and
therefore not liable under the law. Id. at 6-8. Second,
Defendants argue that Ms. Wilson has failed to sufficiently
plead a “willful” violation of the FLSA, and that therefore,
Plaintiff’s “third year” FLSA claims should be dismissed. Id. at
8-9.
In the alternative, Defendants move for partial summary
judgment. First, Defendants argue that Ms. Wilson never worked
more than 40 hours per week and therefore, the Court should
grant summary judgment for the Defendants on Ms. Wilson’s
3
overtime claims under the FLSA and DCMWA. Defs.’ Mot., ECF No.
8-3 at 10-11. Second, Defendants rearticulate their claims that
Mr. Little and Mr. Perruzza are not Ms. Wilson’s employers and
seek summary judgment as to themselves individually. Id. at 13-
16.
II. STANDARDS OF REVIEW
A. Motion to Dismiss
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) “tests the legal sufficiency of a complaint.” Browning
v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must
contain a “short and plain statement of the claim showing that
the pleader is entitled to relief, in order to give the
[D]efendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal quotation marks omitted). While
detailed factual allegations are not necessary, Plaintiff must
plead enough facts to “raise a right to relief above the
speculative level.” Id.
When ruling on a Rule 12(b)(6) motion, the court may
consider “the facts alleged in the complaint, documents attached
as exhibits or incorporated by reference in the complaint, and
matters about which the Court may take judicial notice.”
Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002).
The court must construe the complaint liberally in Plaintiff’s
4
favor and grant Plaintiff the benefit of all reasonable
inferences deriving from the complaint. Kowal v. MCI Commc’ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). The Court must not
accept inferences that are “unsupported by the facts set out in
the complaint.” Id. “Nor must the court accept legal conclusions
cast in the form of factual allegations.” Id. “[O]nly a
complaint that states a plausible claim for relief survives a
motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
B. Motion for Summary Judgment
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and that the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). The party seeking summary judgment 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, 322 (1986)(internal
quotation marks omitted). To defeat summary judgment, the non-
moving party must “designate specific facts showing there is a
genuine issue for trial”. Id. at 324. A dispute is “genuine”
only if a reasonable fact-finder could find for the non-moving
party; a fact is only “material” if it is capable of affecting
5
the outcome of the litigation. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986); Laningham v. U.S. Navy, 813 F.2d 1236,
1241 (D.C. Cir. 1987). In considering whether there is a genuine
dispute as to material fact, the court must draw all reasonable
inferences in favor of the non-moving party. Tao v. Freeh, 27
F.3d 635, 638 (D.C. Cir. 1994).
III. ANALYSIS
A. Ms. Wilson has sufficiently pleaded that Mr. Little and
Mr. Perruzza are her employers under the FLSA and DCMWA
Mr. Little and Mr. Perruzza argue that Ms. Wilson’s
allegations are insufficient to establish that they were her
“employers” under the FLSA or DCMWA. Defs.’ Mot., ECF No. 8-3 at
6. Accordingly, the individual Defendants seek dismissal of the
complaint. 1 The FLSA defines employer to include “any person
acting directly or indirectly in the interest of the employer in
relation to any employee. . .” 29 U.S.C. § 203(d). The DCMWA
contains nearly identical language. See D.C. Code § 32-1002
(“The term ‘employer’ includes any individual, partnership,
association, corporation, business trust, or any other person or
group of persons acting directly or indirectly in the interest
of an employer in relation to an employee. . .”). Accordingly,
courts construe the federal and local statues coterminously for
1 Hunam Inn, Inc. does not dispute that it was Ms. Wilson’s
employer.
6
purposes of determining who is liable as an employer. See
Guevara v. Ischia, Inc., 47 F. Supp. 3d 23, 26 (D.D.C. 2014);
Villar v. Flynn Architectural Finishes, Inc., 664 F. Supp. 2d
94, 96 (D.D.C. 2009).
The Supreme Court has emphasized the “expansiveness of the
Act’s definition of ‘employer.’” Falk v. Brennan, 414 U.S. 190,
195 (1973). Indeed, the definition of employer is “necessarily a
broad one in accordance with the remedial purpose of the Act.”
Morrison v. Int’l Programs Consortium, 253 F.3d 5, 11 (D.C. Cir.
2001). 2 In determining whether a party should bear liability as
an employer, courts look to the “economic reality” of the
employment relationship. Morrison, 253 F.3d at 10-11. Courts
must assess the “totality of the circumstances,” considering
factors such as whether the putative employer (1) had the power
to hire and fire the employees; (2) supervised and controlled
employee work; (3) determined the rate and method of payment,
and (4) maintained employment records. Id. at 11 (quoting
Henthorn v. Dept of Navy, 29 F.3d 682, 684 (D.C. Cir. 1994)).
2See also United States v. Rosenwasser, 323 U.S. 360, 361 (1945)
(“[t]his legislation was designed to raise substandard wages and
to give additional compensation for overtime work as to those
employees within its ambit, thereby helping to protect this
nation ‘from the evils and dangers resulting from wages too low
to buy the bare necessities of life and from long hours of work
injurious to health.’” (Quoting S. Rep. No. 75-844, at 4
(1937)).
7
An employee may have more than one employer under the FLSA.
Ventura v. Bebo Foods, Inc., 739 F. Supp. 2d 1, 5 (D.D.C. 2010).
Application of the economic reality test may demonstrate that
corporate officers, along with the corporation itself, are
liable as employers. Id. Indeed, the “overwhelming weight of
authority” considers a corporate officer with “operational
control of a corporation’s covered enterprise” an employer under
the FLSA. See Ruffin v. New Destination, 800 F. Supp. 2d 262,
269 (D.D.C. 2011) (citing Donovan v. Agnew, 712 F.2d 1509, 1511
(2nd Cir. 1983)). Further, “[o]ne who is the chief executive
officer of a corporation, has significant ownership interest in
it, controls significant functions of the business, and
determines salaries and makes hiring decisions has operational
control and qualifies as an ‘employer’ for purposes of FLSA.”
Ruffin, 800 F. Supp. 2d at 269 (citing U.S. Dep’t of Labor v.
Cole Enters., Inc., 62 F.3d 775, 778 (6th Cir. 1995)).
Ms. Wilson’s complaint alleges that the individual
Defendants were officers of Hunam Inn, Inc. with “primary
responsibility for the operation and management of the
Establishment, including establishing working conditions and
controlling the schedule and wages paid to individuals working
for Defendant Hunam Inn, Inc.” Compl. ECF No. 1 at ¶¶ 3, 4.
According to Ms. Wilson, “Defendants hired Plaintiff and all
similarly situated bartenders, had the ability to discipline
8
them, fire them, schedule them, and adjust their schedules and
wages.” Id. at ¶ 24. Further, Ms. Wilson alleges that the Cobalt
employees’ pay and “opportunity for wages and income was limited
to the pay method set exclusively by Defendants.” Id. at ¶ 26.
In moving to dismiss Plaintiff’s complaint as to themselves
individually, Defendants Mr. Little and Mr. Perruzza do not
dispute that they are corporate officers of Hunam Inn, Inc.
Defs.’ Mot., ECF No. 8-2 at ¶¶ 3, 4. Defendants’ only argument
is that Ms. Wilson’s complaint is legally insufficient because
her allegations are “nothing more than a formulaic recitation of
various prongs of the economic reality test” and that her
allegations are “insufficient to raise Plaintiff’s right to
relief above a speculative level.” Id., ECF No. 8-3 at 7.
Mr. Little is the owner of Hunam Inn, Inc. Compl., ECF No.
1 at ¶ 3. A Defendant’s ownership interest in an employer
corporation, while not dispositive of employer status under the
FLSA, certainly raises a plausible inference that the individual
possessed the requisite “operational control” over the covered
entity. See Ruffin, 800 F. Supp. 2d at 269; Villar, 664 F. Supp.
2d at 97 (D.D.C. 2009).
As Vice President of Hunam Inn, Inc., Mr. Perruzza is a
corporate officer. Corporate officers are liable as employers
under the FLSA as long as the officer acts, or has the power to
act, on behalf of the corporation vis-à-vis its employees. See
9
Donovan, 712 F.2d at 1511 (citing Donovan v. Sabine Irrigation
CO., Inc., 695 F.2d 190, 194 (5th Cir. 1983) (abrogated on other
grounds)); see also Finke v. Kirtland Cmty College Bd. of
Trustees, 359 F. Supp. 2d 593, 598-599 (E.D. Mich. 2005).
In sum, Ms. Wilson alleges that Mr. Little and Mr. Perruzza
supervised Ms. Wilson’s working conditions and controlled her
schedule and wages. Compl., ECF No. 1 at ¶¶ 3, 4. They had the
ability to hire and fire the corporation’s employees and to set
their wages and schedules. Id. at ¶¶ 24, 26. These allegations
are sufficient to state a plausible claim under the economic
reality test. Accordingly, Defendants’ motion to dismiss the
complaint as to Mr. Little and Mr. Perruzza is denied.
B. Given the fact-intensive nature of the willfulness
inquiry, dismissing Ms. Wilson’s “third-year” claim prior
to discovery would be premature
Defendants argue that Plaintiff has failed to allege facts
capable of supporting an inference of willfulness and seek
dismissal of the complaint as to her “third year” claims. Defs.’
Mot., ECF No. 8-3 at 8-9. Ms. Wilson claims that the Defendants’
failure to pay minimum wage for non-exempt work, failure to
provide notice of the use of the tipped-employee exemption, and
failure to allow bartenders to retain their tips in full
demonstrate a “willful violation” of the applicable law, thereby
entitling her to a third year of damages. Compl., ECF No. 1 ¶¶
62, 67.
10
The FLSA contains a two-year statute of limitations on
actions to enforce its provisions, but allows a three-year
limitations period for a “cause of action arising out of a
willful violation.” 29 U.S.C. § 255. A violation is willful
where the employer “either knew or showed reckless disregard for
the matter of whether its conduct was prohibited by the
statute.” McLaughlin v. Rickland Shoe Co., 486 U.S. 128, 133
(1988); see also Saint-Jean v. District of Columbia, 846 F.
Supp. 2d 247, 255 (D.D.C. 2012). Courts have found willful
violations in cases where the Defendant knew the FLSA applied,
but made no effort to ascertain whether their payroll practices
complied with the law. See Ayala v. Tito Contractors, -- F.
Supp. 3d --, No. 13-CIV-1603, 2015 WL 968113, at *3 (D.D.C. Mar.
4, 2015).
The determination of willfulness for purposes of the FLSA
is necessarily fact-specific. Figueroa v. District of Columbia,
923 F. Supp. 2d 159, 167 (D.D.C. 2013). As such, the issue of
willfulness is often left to the ultimate trier of fact. See
Figueroa, 923 F. Supp. 2d at 167; Youngblood v. Vistronix, Inc.,
No. 05-CIV-21, 2006 WL 2092636, at *5 (D.D.C. July 27, 2006);
Wright v. U-Let-Us Skycap Servs., 648 F. Supp. 1216, 1218
(D.Colo. 1986). Indeed, some courts consider determination of
the willfulness issue wholly inappropriate at the motion to
dismiss stage. Acosta Colon v. Wyeth Pharm. Co., 363 F. Supp. 2d
11
24, 29 (D.P.R. 2005); see also Hunter v. Sprint Corp., 453 F.
Supp. 2d 44, 54 (D.D.C. 2006)(“a determination about the
applicable statute of limitations cannot precede a determination
that the employer is, in fact, liable.”). Other courts have
allowed a Plaintiff’s complaint to survive a 12(b)(6) motion so
long as the Plaintiff’s complaint contains an allegation of
willfulness and the facts of the complaint, taken as a whole,
“support more than an ordinary FLSA violation.” Mitchell v. C &
S Wholesale Grocers, Inc., No. 10-CIV-2354, 2010 WL 2735655 at
*12 (D.N.J. July 8, 2010).
The Court finds it plausible on the facts alleged that Ms.
Wilson will be able to demonstrate a willful FLSA violation.
Here, Plaintiff alleges a fairly elaborate tip pooling scheme
wherein Defendants (1) fired those employees to whom they would
have to pay minimum wage, such as the cleaning staff, (2)
required their bartenders to perform cleaning duties, for which
the bartenders were neither tipped nor paid minimum wage, and
(3) required the bartenders to share their tips with non-tipped
employees. Compl., ECF No. 1 at ¶¶ 16-23. As Defendants
acknowledge, the ultimate merits of Plaintiff’s minimum wage
claim will turn on whether the scheme employed by Defendants
complied with the FLSA’s “tipped employee” exemption. Defs.’
Mot., ECF No. 8-3 at 12. Defendants maintain that their policy
is compliant. Id. at 2 n.2, 12.
12
The Court need not comment on the propriety of the
Defendants’ tip pooling scheme for purposes of ruling on this
motion. Regardless of the ultimate outcome on that issue, Ms.
Wilson alleges that Defendants never notified her that
Defendants would be using the tipped employee exception to the
FLSA’s minimum wage requirement, 3 and she alleges that she was
never paid overtime for work performed in excess of 40 hours per
week. 4 Id. at ¶¶ 16, 60. Discovery on these allegations will
inform the determination of whether or not these violations were
willful. Accordingly, Defendants’ motion to dismiss Plaintiff’s
third-year claims is denied.
C. Ms. Wilson is entitled to discovery on her overtime
claims
The Defendants argue that they are entitled to summary
judgment on Ms. Wilson’s overtime claims because, according to
Defendants, Ms. Wilson never worked more than 40 hours per week.
Defs.’ Mot., ECF No. 8-3 at 10. In support of this contention,
Defendants attach a declaration from Steven Smith, payroll
manager for Hunam Inn, Inc., and a series of photocopies
purporting to be Plaintiff’s time records. Id. at 8-4, 8-5. In
3 The FLSA includes a notice requirement for employers intending
to use the “tipped employee” exemption to the minimum wage
requirement. 29 U.S.C. § 203(m).
4 Under the FLSA, all employers are required to pay time and a
half for each hour in excess of forty hours per week that an
employee works. 29 U.S.C. § 207.
13
his declaration, Mr. Smith provides that “[e]ach week the bar
managers provide me with time records of the bartenders,” and
that “[a]ccording to the time records, Ms. Wilson never worked
more than 40 hours in a workweek in the time period reflected in
the records.” Id., ECF No. 8-4 at ¶¶ 2-3. The attached records
do not reflect Plaintiff working in excess of 40 hours per week
during any workweek reflected in the records. Id., ECF No. 8-5.
Plaintiff argues that she needs discovery to test the veracity
of Mr. Smith’s claims and the accuracy of the purported time
records. Pl.’s Op. at 18.
Generally, courts are reluctant to consider a motion for
summary judgment prior to discovery. Convertino v. Dep’t of
Justice, 684 F.3d 93, 99 (D.C. Cir. 2012) (“summary judgment is
premature until all parties have had a full opportunity for
discovery”)(internal citations and quotation marks omitted);
Americable Int’l v. Dep’t of Navy, 129 F.3d 1271, 1274 (D.C.Cir.
1997)(“summary judgment ordinarily is proper only after the
[P]laintiff has been given adequate time for
discovery”)(internal citations and quotation marks omitted).
Upon review of the parties’ filings, the Court concludes
that Defendants’ motion for summary judgment is premature. Ms.
Wilson should be allowed to develop her claims through
discovery. Further, Rule 56(c) requires that an “affidavit or
declaration used to support or oppose a [summary judgment]
14
motion must be made on personal knowledge. . . .” Mr. Smith’s
declaration that Ms. Wilson never worked more than 40 hours per
week is not based on personal knowledge, rather Mr. Smith
acknowledges that his statements are made based on records
provided to him by the bar manager. Defs.’ Mot. 8-4. Mr. Smith
expresses no opinion as to the accuracy of the purported
records, how the records were completed or maintained, or
whether Plaintiff was allowed to report all the time she worked.
Ms. Wilson is entitled to discovery to test the accuracy and
authenticity of Defendant’s exhibits. 5 Accordingly, Defendant’s
Motion for Summary Judgment as to Ms. Wilson’s overtime claims
will be denied without prejudice as premature.
D. Ms. Wilson is entitled to discovery on whether the
individual Defendants are her employers under the FLSA
and DCMWA
As stated above, Ms. Wilson has plausibly stated a claim
against Mr. Little and Mr. Perruzza under the economic reality
5 Defendants make much of the fact that Plaintiff’s Rule 56(d)
Declaration is silent as to her overtime claims. Defs.’ Rep.,
ECF No. 11 at 15-17. Defendants argue that by failing to address
this point in her declaration, Plaintiff has effectively
conceded her lack of overtime work as undisputed. Id. at 15.
Such a result is unnecessary. “[D]istrict courts should construe
motions that invoke [Rule 56(d)] generously, holding parties to
the rule’s spirit rather than the letter.” Conventino, 648 F.3d
at 99; see also Richie v. Vilsack, 287 F.R.D. 103, 106-07
(D.D.C. 2012)(denying Defendant’s summary judgment motion and
allowing Plaintiff to proceed to discovery on both her
discrimination and retaliation claims, even where Plaintiff’s
Rule 56(d) declaration was silent as to her retaliation claims).
15
test. Further, in light of the broad policy of allowing both
parties an adequate opportunity for discovery prior to ruling on
a motion for summary judgment, Defendants’ motion is premature
at this time. Should the evidence ultimately reveal that
defendants are not, in fact, Ms. Wilson’s employers, defendants
remain free to renew their motion for summary judgment upon the
close of discovery. Accordingly, Defendants’ motion for summary
judgment as to Mr. Little and Mr. Perruzza will be denied
without prejudice.
IV. CONCLUSION
For the foregoing reasons, Defendants’ Motion to Partially
Dismiss Plaintiff’s Complaint or, in the alternative, for
Partial Summary Judgment is DENIED. An appropriate order
accompanies this Memorandum Opinion.
Signed: Emmet G. Sullivan
United States District Judge
September 1, 2015
16 | 01-03-2023 | 09-01-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1958422/ | 840 F. Supp. 920 (1993)
Gail A. LAREAU and Michael Lareau, Individually, and as Parents and Next Friends of Ashley Lareau and Christopher Lareau, Plaintiffs,
v.
Larry K. PAGE, M.D.; American Cyanamid Company; Sequa Corporation; Chromalloy Pharmaceutical, Inc.; Forest Pharmaceutical Laboratories, Inc.;[1] Tenneco Inc.; and Tennessee Gas Pipeline Company, Defendants.
Civ. A. No. 90-11629-Y.
United States District Court, D. Massachusetts.
December 27, 1993.
*921 *922 Joan A. Lukey, Mark G. Matuschak, Hale & Dorr, Boston, MA, for Gail A. Lareau and Michael Lareau.
Lionel H. Perlo, Ficksman & Conley, John D. Cassidy, Ficksman & Conley, Boston, MA, for Larry K. Page.
Rebecca J. Benson, Thomas J. Sartory, Ronald B. Shwartz, Goulston & Storrs, Boston, MA, for American Cyanamid Co. and Tennessee Gas Pipeline Co.
Lawrence G. Cetrulo, Kevin E. Young, Peabody & Arnold, Michael J. Grace, Burns & Levinson, Boston, MA, for Sequa Corp. and Chromalloy Pharmaceuticals, Inc.
Mark E. Cohen, McCormack & Epstein, Boston, MA, for Forest Pharmaceutical Laboratories, Inc.
MEMORANDUM AND ORDER
YOUNG, District Judge.
In this action the plaintiff, Gail Lareau, her husband Michael Lareau, and their children, Christopher and Ashley, allege a variety of personal injury and product liability claims against Dr. Larry K. Page and six corporate defendants. Gail Lareau brings claims for negligent rendition of medical care, negligent infliction of emotional distress, and violations of the Massachusetts Consumer Protection Act, Mass.Gen.L. ch. 93A, against Dr. Page. Gail Lareau also alleges causes of action in negligence, breach of warranty, failure to warn, negligent infliction of emotional distress, and violations of Mass.Gen.L. ch. 93A against the corporate defendants. Her husband and children bring claims against all the defendants for loss of consortium, including loss of companionship and affection, negligent infliction of emotional distress, and violations of Mass.Gen.L. ch. 93A.
Dr. Page and the corporate defendants Sequa Corporation ("Sequa") and Chromalloy Pharmaceutical, Inc. ("Chromalloy") moved for summary judgment, arguing that Gail Lareau's claims are barred by the relevant statutes of limitation, and that the other plaintiffs' claims, being derivative, fail in turn. The plaintiffs opposed the motions, contending first that, at the time of the accrual dates suggested by the defendants, Gail Lareau was not on notice of her injury, and second, that there are separate accrual dates for the claims advanced by the minor children and Michael Lareau. This Court, disagreeing entirely with the plaintiffs' first contention, agreeing only in part with the second, and recognizing that the evidentiary record submitted by the parties presented no material factual dispute, granted the defendants' motions on all claims advanced by Gail, Michael, and Ashley Lareau, and granted in part and denied in part the motions concerning the claims advanced by Christopher Lareau.
While the Court was considering the statute of limitations issue, the pharmaceutical companies moved for summary judgment on the ground of the learned intermediary rule. After further pre-trial proceedings, this Court allowed this motion on the eve of trial.
Christopher Lareau's claim for loss of consortium against Dr. Page survived all these rulings. After an ably-presented five day trial, the ten person[2] jury answered "No" to *923 the question "Do you find that any negligence on the part of Dr. Page caused injury to Mrs. Lareau?" Consonant with the judgment of the jury and the rulings of the Court, the clerk thereupon entered judgment for all the defendants on all of the plaintiffs' claims. Christopher Lareau promptly moved for a new trial. After hearing, the Court denied that motion on December 20, 1993.
This memorandum explains these rulings.
I. UNDISPUTED FACTS THE SUMMARY JUDGMENT RECORD
In March, 1970, Gail Lareau (then Melanson) was admitted to Children's Hospital in Boston and referred to Dr. Larry K. Page, a neurosurgeon. Dr. Page performed a craniotomy and drained a left frontal cerebral abscess, injecting a small amount of Thorotrast, a radioactive contrast dye, to facilitate post-operative observation of the abscess cavity.
Post-surgery, Mrs. Lareau remained healthy for some years, married Michael Lareau and gave birth to their first child, Christopher. On June 13, 1984, she arrived at the Burbank Hospital in Fitchburg complaining of severe headaches. On admission she was found to be having a grand mal seizure. Her attending physician, Dr. Richard Cornell, noted that the CAT scan taken on admission revealed a "large calcified mass in the left brain due to the old lesion." In the discharge summary, Dr. Cornell also noted "a density overlying the lateral aspect of the left frontal sinus ... due to retained contrast placed at the time of removal of her brain abscess, rather than calcification." Mrs. Lareau herself never saw these reports.
Upon her discharge from Burbank Hospital, Mrs. Lareau was referred to Dr. Edwin G. Fischer, a neurosurgeon at Boston's Children's Hospital. Two weeks after her consultation with Dr. Fischer, Mrs. Lareau received a letter dated July 6, 1984, in which he warned her that there was "a theoretical possibility" that "the Thorotrast that was left following the treatment of your brain abscess" could "induce a tumor in surrounding brain tissue over a total period of about 20 years." Dr. Fischer recommended surgical removal. In her deposition testimony, Mrs. Lareau said Dr. Fischer's recommendation had come as a "big shock," both because her understanding at the end of their meeting had been that "everything was fine," and because she had never before heard the word Thorotrast.
On September 12, 1984, she went for a second opinion from Dr. R. Michael Scott, a neurosurgeon at New England Medical Center who, while confirming the existence of the Thorotrast residue, declined to recommend surgery unless his own research on Thorotrast turned up "good evidence that a problem really does exist." Mrs. Lareau, after consulting with Dr. Cornell, decided not to go ahead with surgery on "just a theoretical possibility."
Mrs. Lareau continued to see Dr. Fischer, returning in September, 1985 and again in March, 1987 for cranial CAT scans and consultations. Both scans indicated the presence of the Thorotrast, and no indication of tumor formation. In 1986, Ashley Lareau was born. In a letter dated November 11, 1988, Dr. Fischer informed Mrs. Lareau of a recently reported case in which a tumor had been found twenty-one years after Thorotrast had been used during brain surgery. Cautioning Mrs. Lareau that "... this is sufficient cause for us to reconsider things and obtain a new scan ...," he urged her to come in as soon as possible. Mrs. Lareau went to see Dr. Fischer in March, 1989. She described that visit as having been prompted by her worsening "headaches," and said Dr. Fischer reported that "everything looked fine according to my scan" and once again recommended surgery to remove the Thorotrast, this time referring to the report of brain cancer in the literature.
Mrs. Lareau maintains it was not until June 16, 1989, when she watched a report on the dangers of Thorotrast on the ABC News program 20/20 that she discovered the harm done to her by the defendants' actions. Mrs. Lareau stated that after the program "[she] was an emotional wreck" and began to suffer worsening headaches and painful "pulling" sensations allegedly attributed to her emotional *924 distress. In the spring of 1990, she went to the Massachusetts General Hospital ("MGH") to see a new neurologist, Dr. Amy Pruitt, who referred her to a neurosurgeon, Dr. Robert Ojemann.[3] Mrs. Lareau had surgery to remove the Thorotrast on August 13, 1990, shortly after having begun legal action against Dr. Page and the corporate defendants. The surgical report revealed a calcified mass caused by the Thorotrast, a Thorotrast "granuloma." Post-surgery, Mrs. Lareau suffered painful cranial swelling and exhaustion, and was unable to leave her house. Her emotional distress, the accompanying worsening headaches, and the surgery have affected her relationship with her husband, Michael. Both Ashley and Christopher Lareau have suffered emotional problems relating to their mother's condition, and Christopher has received necessary psychological counselling concerning such emotional problems.
Neither Sequa nor Chromalloy ever distributed or manufactured Thorotrast. Chromalloy is and always has been an independent and wholly-owned subsidiary of Chromalloy American Corporation which, in turn, is an independent and wholly-owned subsidiary of Sequa. The plaintiffs allege that Chromalloy, as a result of a merger, succeeded to the Thorotrast-related liabilities of Fellows Medical Manufacturing Company, Inc. which, for a limited period of time, manufactured and distributed Thorotrast and, apparently, was the only company so engaged. Because the Court must examine the record "in the light most favorable to ... the party opposing the motion," Poller v. Columbia Broadcasting Sys. Inc., 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458 (1962), Sequa and Chromalloy recognize that, on this motion, the Court must accept as true the plaintiffs' allegations that Sequa and Chromalloy are liable, as successor corporations, for Thorotrast-related liabilities of Fellows Medical Manufacturing Company, Inc.
Assuming, arguendo, that the Thorotrast prescribed by Dr. Page was manufactured by a company for whose actions the defendants might be liable, the Thorotrast would have been distributed sometime between November 18, 1966 and the end of November, 1968 by Fellows-Testagar Co., a Division of Fellows Medical Manufacturing Company, Inc. ("Fellows-Testagar"). This is so because: (1) Mrs. Lareau received the Thorotrast on March 31, 1970; (2) Thorotrast was not distributed for human use in the United States from about June 2, 1964 until about November, 1966, when the FDA approved a New Drug Application; (3) Fellows-Testagar ceased manufacturing and distributing Thorotrast for human use in 1968; and (4) Thorotrast manufactured in the 1960s had a "shelf-life" of five years. Therefore, given the product's "shelf-life" and distribution history, the Thorotrast prescribed to Mrs. Lareau must have been manufactured after March 31, 1965, and must have been distributed after November, 1966 and before December 1, 1968.[4]
From November 18, 1966 until it ceased distributing Thorotrast in 1968, Fellows-Testagar's warnings had three components: (1) each vial of Thorotrast had a warning label ("vial label"); (2) the carton in which the vials were packaged had a warning label ("package label"); and (3) a seven page insert was included in each carton ("package insert").[5]
*925 The FDA specifically approved the labels used by Fellows-Testagar, and the labelling of Thorotrast remained unchanged throughout the 1966-1968 period.
II. ANALYSIS
A. Statutes of Limitation: The Discovery Rule.
In cases brought in federal courts on the basis of diversity jurisdiction, state statutes of limitation apply. Fidler v. Eastman Kodak Co., 714 F.2d 192, 196 (1st Cir.1983) ("Fidler I"). All of the claims advanced by the plaintiffs here have either three-year (personal injury, Mass.Gen.L. ch. 260 § 2A, breach of warranty, Mass.Gen.L. ch. 106 § 2-318) or four-year (consumer protection, Mass.Gen.L. ch. 260 § 5A) statutes of limitation.
Massachusetts courts apply the "discovery rule" in both negligence and products liability actions, Fidler v. E.M. Parker Co., 394 Mass. 534, 544-45, 476 N.E.2d 595 (1985) ("Fidler II"), as well as in actions brought under the Consumer Protection Act, Mass.Gen.L. ch. 93A. Riley v. Presnell, 409 Mass. 239, 242-43, 565 N.E.2d 780 (1991). Under the discovery rule, the plaintiff's cause of action does not accrue until she knows or reasonably should have known that she was injured at the defendant's hands. Fidler I, 714 F.2d at 199, citing Franklin v. Albert, 381 Mass. 611, 619, 411 N.E.2d 458 (1980). The plaintiff need not have knowledge of the "full extent" of her injury for the statute to commence to run. Olsen v. Bell Tel. Lab., Inc., 388 Mass. 171, 175, 445 N.E.2d 609 (1983). Moreover, once she has notice of the "likely cause" of her injury, under Massachusetts law
... the potential litigant has the duty to discover from the legal, scientific and medical communities whether the theory of causation is supportable and whether it supports a legal claim. Thus on notice, [her] cause of action is no longer inherently unknowable.
Fidler I, 714 F.2d at 199. Therefore, once in possession of facts sufficient to put her on notice of the likely cause of her injury, Mrs. Lareau had a "duty to discover" if she had a viable claim, and bring it within the relevant statutory limitations period. When limitations defenses are raised, the plaintiff must prove that her claims are not barred. Franklin, 381 Mass. at 619, 411 N.E.2d 458.
B. Application of the Discovery Rule to Gail Lareau's claims.
Gail and Michael Lareau filed their claims on June 17, 1990. In order to defeat a statutory bar, those counts with three-year limitations must not have accrued earlier than June 17, 1987, and those with four-year limitations, no earlier than June 17, 1986. The defendants argue that Mrs. Lareau was put on notice of her injury and its "likely cause" in 1984, either when tests during hospitalization for the seizure revealed the mass *926 on her brain, or when she received the July, 1984 letter from Dr. Fischer warning of the "theoretical possibility" that the Thorotrast residue could develop into a tumor. The defendants contend that this information was no different from the information Mrs. Lareau received in 1989 or 1990; that the "calcified mass" first identified by Dr. Cornell was allegedly the same formation as the "thorotrast granuloma" removed from Lareau by the MGH surgeons in 1990; and that the risks associated with it were no less "theoretical" than they were when Dr. Fischer described them.
Mrs. Lareau denies that she was on notice either of the injury she had suffered or its likely cause in 1984, and argues that Dr. Fischer's letter, which mentioned only a "theoretical possibility" of tumor formation, actually served to obfuscate the fact that she had already been harmed by the defendants' actions. She contrasts Dr. Fischer's "theoretical possibility" language to the notice provided to the patient by the doctor in Fidler I, which the Court had pointedly described as "not neutral, ambiguous, hypothetical, or phrased in terms of mere possibility." 714 F.2d at 200. Mrs. Lareau firmly denies that either Dr. Fischer's letter or her hospital treatment informed her of any connection between the Thorotrast residue and her active medical problems, and that anybody in 1984, or in 1990 for that matter, specifically characterized the mass in her brain as a "granuloma," the term used in the medical literature to describe a formation created by residual Thorotrast. Mrs. Lareau argues that she had no notice of cognizable injury until 1989 when she became emotionally distressed by the 20/20 report and began to suffer worsening headaches.[6] This Court disagrees.
From Dr. Fischer's July, 1984 letter, Mrs. Lareau knew that she had residual Thorotrast in her brain and that Dr. Fischer was concerned enough about the danger of its presence to recommend surgical removal. Thereafter, she continued to monitor the Thorotrast, returning to Dr. Fischer in 1985 and 1987 for CAT scans and consultations. Moreover, the physicians who finally operated on her in 1990 agreed with Dr. Fischer's appraisal when recommending surgery and there is no evidence that Dr. Fischer's avoidance of the term "granuloma" led them to confuse the issue in any way.[7]
The only change evidenced in the record is in Mrs. Lareau's appreciation of the risk. Nevertheless, her reluctance to credit Dr. Fischer's warning even when reinforced by Dr. Scott's second opinion does not toll the statutes of limitation. Even when a plaintiff is "incompetently advised" or the "medical community ... divided on the crucial issue of negligence," notice of the harm and its likely cause activates the plaintiff's duty to investigate and the cause of action accrues. Fidler I, 714 F.2d at 199, quoting United States v. Kubrick, 444 U.S. 111, 123-24, 100 S. Ct. 352, 360, 62 L. Ed. 2d 259 (1979); see also Pitts v. Aerolite SPE Corp., 673 F. Supp. 1123, 1128 (D.Mass.1987), aff'd, 841 F.2d 23 (1st Cir.1988) (even when a physician was unresponsive to the plaintiffs' causation theory, the plaintiffs were on notice and had further duty to investigate).[8] Thus, Mrs. Lareau's decision to listen to Dr. Scott instead of Dr. Fischer does not dispel the consequences of her knowledge of harm and its likely cause.[9]
*927 Application of the Massachusetts discovery rule here leads inexorably to the conclusion that Mrs. Lareau should have known about her injury as early as July, 1984. Therefore, the defendants' motions for summary judgment are granted on all claims advanced by Mrs. Lareau.
C. Application of the discovery rule to the claims of Michael, Christopher and Ashley Lareau.
1) Claims for Loss of Consortium.
When a spouse suffers personal injury as a result of the negligence of a third party, the other spouse may recover damages from the third party for loss of consortium. Olsen, 388 Mass. at 176, 445 N.E.2d 609, quoting Diaz v. Eli Lilly & Co., 364 Mass. 153, 167-68, 302 N.E.2d 555 (1973). In Ferriter v. Daniel O'Connell's Sons, Inc., 381 Mass. 507, 413 N.E.2d 690 (1980), the Massachusetts Supreme Judicial Court extended this cause of action to minor children who can show they are dependent on the injured parent. "This dependence must be rooted not only in economic requirements, but also in filial needs for closeness, guidance, and nurture." Id. at 516, 413 N.E.2d 690.
Although in the great majority of jurisdictions, consortium claims are derivative of the personal injury claim brought by the injured family member, in Massachusetts the rule is that they are generally independent. Olsen, 388 Mass. at 176-77, 445 N.E.2d 609. Massachusetts courts follow this principle of independence, for example, in refusing to reduce consortium awards in proportion to the contributory negligence of an injured spouse. Feltch v. General Rental Co., 383 Mass. 603, 608, 421 N.E.2d 67 (1981); see also Morgan v. Lalumiere, 22 Mass.App.Ct. 262, 493 N.E.2d 206, rev. denied, 398 Mass. 1103, 497 N.E.2d 1096 (1986) (no reduction of consortium award even when injured spouse was more than 50% responsible for the accident which injured her).
Logically, therefore, "[a]lthough a cause of action for loss of consortium in most cases would accrue at the same time as would the action for personal injuries, this may not always be true.... Since the causes of action are independent, the date of accrual of each action must be determined separately." Olsen, 388 Mass. at 176-77, 445 N.E.2d 609. Here, Mrs. Lareau's claim accrued upon receipt of Dr. Fischer's letter of July 6, 1984 and her complaint was not filed until well after the running of all applicable statutes of limitation. The same is not true, however, of the claims of her husband and children. Drawing all inferences in their favor as this Court is required to do when evaluating the defendants' motion for summary judgment, the claims of her husband and children did not accrue until June 16, 1989 when, after watching the 20/20 television program, Mrs. Lareau became an "emotional wreck" and her family first began to suffer the effects of the loss of her consortium. Their claims, filed in 1990, are thus comfortably within the relevant statutes of limitation. The problem if it is a problem is the somewhat anomalous situation that results since the loss of consortium claims all accrued well after Mrs. Lareau's own claims had been extinguished by the running of the statute of limitations. In this situation, the policy favoring the treatment of family members as individuals with separate injuries collides with the policies behind the creation of statutes of limitation policies that grant repose to potential defendants after an appropriate period and encourage plaintiffs to bring actions before the evidence has gone stale. Olsen, 388 Mass. at 175, 445 N.E.2d 609. Massachusetts courts have not yet conclusively resolved this tension; the key cases in which consortium actions have fallen along with the underlying actions all feature identical accrual dates for the claims. *928 See, e.g., Olsen, 388 Mass. at 177, 445 N.E.2d 609; Gore v. Daniel O'Connell's Sons, Inc., 17 Mass.App.Ct. 645, 648, 461 N.E.2d 256 (1984).
a. The husband's claim Michael Lareau
The defendants argue that this Court need not linger over this interesting issue since a persuasive decision in this district has already resolved the point. See Tauriac v. Polaroid Corp., 716 F. Supp. 672 (D.Mass.1989) (Tauro, J.). In that case, the plaintiffs brought a claim for which no cause of action existed, and the court ruled that "a consortium claim may be brought only when the claimant's spouse has a valid tort claim." Id. at 673. Here, in contrast, Mrs. Lareau has a variety of valid claims which are barred by a variety of statutes of limitation. This is a very different situation. The Tauriac decision is persuasive, however, in its prediction that the Massachusetts Supreme Judicial Court, if faced with the issue would "refuse[] to extend the parameters for consortium claims." Id. at 674.
Undaunted, the defendants argue that the Massachusetts Supreme Judicial Court has already faced and resolved this issue in Fidler II, 394 Mass. at 547, 476 N.E.2d 595, favoring the policies motivating the limitation of actions over those behind the independent status of consortium claims. In that case, the plaintiff, whose product liability suit had been barred by the First Circuit decision in Fidler I, supra, brought her claims in the Massachusetts Superior Court. Her husband filed in the Superior Court a loss of consortium claim, a claim that had not appeared in the earlier, federal action. Justice Fine of the Superior Court statutorily barred the husband's claims along with those of his wife. The Supreme Judicial Court concurred with her disposition of the case, albeit on different grounds, ruling that the husband was precluded from raising this consortium claim in the Superior Court where it was "pervasively related" to issues already decided in federal court. In spite of the fact that the husband had not been a party to the prior federal action, the Supreme Judicial Court considered it was vindicating the importance of the "policy of repose" which was "especially significant when the spouse of a nonprevailing litigant seeks to litigate a claim related to the spouse's alleged injuries." Fidler II at 547, 476 N.E.2d 595.
The Fidler II holding, of course, rested on the "pervasive relationship" between the wife's substantive claim and the husband's loss of consortium claim since the husband "stood on the same footing" as his wife regarding the accrual of his cause of action. The Supreme Judicial Court noted that
[w]hen a person with a family relationship to one suffering personal injury has a claim for loss to himself resulting from the injury, the determination of issues in an action by the injured person to recover for his injuries is preclusive against the family member, unless the judgment was based on a defense that is unavailable against the family member in the second action.
Restatement (Second) of Judgments § 48(2), quoted in Fidler II at 547, 476 N.E.2d 595 (emphasis added). In affirming the dismissal of the husband's claim, the Supreme Judicial Court thus enforced policies of "judicial economy and of affording litigants repose," without abandoning the "technically independent" status of the loss of consortium claim. Id. at 548, 476 N.E.2d 595.
The logic of Fidler II is impeccable. The limitations defense to the wife's substantive claim, upheld in Fidler I, necessarily defeated the husband's loss of consortium claim, as a matter of logic, since the two claims accrued at the same time.[10]
*929 In the present case, however, Mrs. Lareau's claim accrued in 1984 but her husband's loss of consortium claim did not accrue until 1989. While his injury arises out of the same alleged negligence and breach of warranty, no "pervasive relationship" of circumstances exists as it did in Fidler II. Applying the logic used by the Restatement (Second) of Judgments to a situation in which both parties' claims are part of the same action, it becomes apparent that the defense used to bar Mrs. Lareau's claim does not work at least not in precisely the same way against that of her husband. Even so, the tension between the competing policies referred to above must come to resolution.
Therefore, in the somewhat unique circumstances of this case, the Court predicts that the Massachusetts Supreme Judicial Court would, if faced with the circumstances presented here, bar the husband's loss of consortium claim, and this Court so rules. This ruling is grounded on two independent approaches.
First, the Court rules that, in light of the dicta in Fidler II favoring the policy of repose, unless there exists some legislative mandate to the contrary, "a [spousal loss of] consortium claim may be brought only when the claimant's spouse has a valid [and enforceable] tort claim." Reworking Chief Judge Tauro's holding in Tauriac, 716 F.Supp. at 673. The reasoning behind this rule is found in Olsen, 388 Mass. at 175, 445 N.E.2d 609, which this Court paraphrases and applies to the circumstances here as follows:
[Statutes of limitations are] vital to the welfare of society.... They promote repose by giving security and stability to human affairs. Franklin v. Albert, supra [381 Mass.] at [618, 411 N.E.2d 458], quoting Wood v. Carpenter, 101 U.S. [(11 Otto)] 135, 139 [25 L. Ed. 807] (1879). [They also] encourage plaintiffs to bring actions within prescribed deadlines when evidence is fresh and available. Franklin v. Albert, supra, citing United States v. Kubrick, 444 U.S. 111, [100 S. Ct. 352, 62 L. Ed. 2d 259] (1979). [To treat the loss of consortium claim entirely apart from the limitations period applicable to the underlying tort action] would create an unacceptable imbalance between affording plaintiffs a remedy and defendants the repose that is essential to stability in human affairs. [Treating the two independent causes of action entirely separately effectively would destroy] the fixed time period of statutes of limitations.... Under the rule proposed by [Michael Lareau], there seldom would be a prescribed and predictable period of time after which a claim would be barred.
Second, this Court rules as matter of law that Mrs. Lareau's failure to act on the causes of action she should have known she possessed from July, 1984 through June, 1989, when her husband's loss of consortium commenced, was an omission of care toward the marital relationship that supersedes the risks created by the negligence and breach of warranty alleged here and extinguishes the proximate cause essential to recovery upon those allegations.
Accordingly, the defendants shall have summary judgment on the claims of Mrs. Lareau's husband, Michael Lareau.
b. The daughter's claim Ashley Lareau
The issues raised by the loss of consortium claims brought by the children, Christopher and Ashley Lareau, are somewhat different and deserve separate consideration. Christopher Lareau was born about a year and a half before Mrs. Lareau's cause of action accrued. Ashley Lareau was born approximately two years after the accrual date. Citing Angelini v. OMD Corp., 410 Mass. 653, 575 N.E.2d 41 (1991), the defendants argue that claims for loss of consortium by children not conceived at the time of their parent's injury are disallowed, and since Mrs. Lareau was injured in 1970, well before either of the children were conceived, both childrens' claims are barred. The defendants read too much into Angelini.
*930 In that case, the Supreme Judicial Court considered whether a child who was a nonviable fetus when his father was injured could sue for loss of parental consortium. It viewed the issue in light of Massachusetts cases allowing suit by children conceived before a parent's wrongful death, and asked why there was any need to distinguish between children born before a parent was injured and those born after:
The answer is that, after a parent is negligently injured by a defendant, he or she may continue having children for many years. If no restriction is placed on the class of children who are eligible to recover for loss of parental consortium, a defendant may become liable for the loss of consortium several years, perhaps even decades, after the injury to the parent. As a matter of policy, however, it is important to limit the duration of the liability.
Angelini at 657-658, 575 N.E.2d 41.[11] Since the Angelini decision necessarily bars actions by children conceived after the cause of action of the parent should have been known, Ashley Lareau has no viable claim here and summary judgment shall enter for the defendants.
c. The son's claim Christopher Lareau
The issue is not so clear regarding Christopher's claim. In Angelini, the parent's injury was not at any time "inherently unknowable" and the Supreme Judicial Court did not need to consider the discovery rule. This Court, however, must face this issue. In light of the Angelini court's concern with the voluntary act of the parent in conceiving children post-injury, this Court rules that the Massachusetts decisions can best be harmonized by incorporating the discovery rule where applicable so that children, conceived before the parent's cause of action accrues, will be able to bring an action for loss of consortium. The Angelini decision, therefore, presents no obstacle to the survival of Christopher Lareau's loss of consortium claim.
But so what? Even if Christopher Lareau's claim is not barred by Angelini, at first blush it would appear to be defeated by the reasoning this Court has employed to bar Michael Lareau's claims as matter of Massachusetts common law. Not so. Under Mass. Gen.L. ch. 260, § 7, the Massachusetts legislature has expressed its policy of tolling the statutes of limitation on the claims of a minor child until he reaches the age of majority. This legislative mandate governs here. The claims of Christopher Lareau survive the bar of the statutes of limitation.
2) The Remaining Claims.
What has already been said is sufficient to dispose of all the claims of Michael and Ashley Lareau and summary judgment shall enter for the defendants on all those claims due to the bar of the statutes of limitation.
The claims of Christopher Lareau survive. These are claims for loss of consortium, negligent infliction of emotional distress, and violation of Mass.Gen.L. Ch. 93A, § 9.
*931 D. Christopher Lareau's Claim for Negligent Infliction of Emotional Distress.[12]
"The evolution of the tort of negligent infliction of emotional distress, as reflected in the developing case law, illustrates the difficulty courts have had in administering claims for damages based upon emotional or mental disturbance." Michelle I. Schaffer, Comment, Tort Law Negligent Infliction of Emotional Distress, 78 Mass.L.Rev. 99 (1993) ("Case Comment"). The Massachusetts courts have expanded this tort from one requiring physical impact, Spade v. Lynn & Boston R.R., 168 Mass. 285, 47 N.E. 88 (1897), to one requiring "physical harm ... manifested by objective symptomatology and substantiated by expert medical testimony." Payton v. Abbott Labs, 386 Mass. 540, 556, 437 N.E.2d 171 (1982). Recently, in Sullivan v. Boston Gas Co., 414 Mass. 129, 137-38, 605 N.E.2d 805 (1993), the Supreme Judicial Court refined (some would say diluted) the Payton test to require simply that plaintiffs "corroborate their mental distress claims with enough objective evidence of harm to convince a judge that their claims present a sufficient likelihood of genuineness to go to trial." One commentator concludes from Sullivan that "it appears that medical testimony may no longer be required to substantiate the claimed distress." Michelle Schaffer, Case Comment at 101.
In view of these developments, this Court necessarily concluded that the medically diagnosed separation anxiety suffered by Christopher qualifies as compensable mental distress. Nevertheless, the Court also concluded that the injury suffered by Christopher was not, as matter of law, proximately caused by any negligence on the part of Dr. Page. While it is reasonably foreseeable that the negligent injection of Thorotrast into a seventeen year old woman could result in the eventual loss of consortium by her children, it is simply not reasonably foreseeable that, nineteen years after the injection, Christopher's mother would be subject to a hyped-up television report entitled "Sentenced to Death" and would thereby be rendered such an "emotional wreck" as would cause separation anxiety on the part of her then seven year old son.
E. The "Learned Intermediary" Rule.
As noted above, wholly apart from the motion for summary judgment on the ground of the statutes of limitation, the pharmaceutical companies filed on the eve of trial an additional motion for summary judgment based upon the "learned intermediary" rule. On this point, both sides primarily conjure with the same two cases MacDonald v. Ortho Pharmaceutical Corp., 394 Mass. 131, 475 N.E.2d 65 (1985) and Garside v. Osco Drug, Inc., 976 F.2d 77 (1st Cir.1992) (applying Massachusetts law). Although neither case is factually apposite, the two decisions, taken together, frame the discussion as they set forth the Massachusetts law pertaining to the "learned intermediary" defense.
`[A] manufacturer may be absolved from blame because of a justified reliance upon ... a middle-man.' This exception is applicable only in the limited instances in which the manufacturer's reliance on an intermediary is reasonable. In such narrowly defined circumstances, the manufacturer's *932 immunity from liability if the consumer does not receive the warning is explicable on the grounds that the intermediary's failure to warn is a superseding cause of the consumer's injury, or, alternatively, that, because it is unreasonable in such circumstances to expect the manufacturer to communicate with the consumer, the manufacturer has no duty directly to warn the consumer.
The rule in jurisdictions that have addressed the question of the extent of a manufacturer's duty to warn in cases involving prescription drugs is that the prescribing physician acts as a `learned intermediary' between the manufacturer and the patient, and `the duty of the ethical drug manufacturer is to warn the doctor, rather than the patient, [although] the manufacturer is directly liable to the patient for a breach of such duty.'
MacDonald, 394 Mass. at 135-36, 475 N.E.2d 65.[13]
Recognizing the theoretical applicability of the learned intermediary defense, and that "the common law duty [to warn] ... is to a large degree coextensive with the regulatory duties imposed by the FDA,"[14] Christopher Lareau, nevertheless, argues that summary judgment is inappropriate since, first, "[w]hether a particular warning measures up ... is almost always an issue to be resolved by a jury; few questions are `more appropriately left to a common sense lay judgment than that of whether a warning gets its message across to an average person,'" MacDonald, 394 Mass. at 140, 475 N.E.2d 65 quoting Ferebee v. Chevron Chem. Co., 552 F. Supp. 1293, 1304 (D.D.C.1982), aff'd, 736 F.2d 1529, cert. denied, 469 U.S. 1062, 105 S. Ct. 545, 83 L. Ed. 2d 432 (1984), and second, that the pharmaceutical companies cannot meet the complex presumption-burden shifting framework found in Garside, 976 F.2d at 81.
Christopher's arguments fail. Garside is, of course, factually distinguishable since there it was undisputed that the defendant pharmaceutical company failed to warn the defendant physician. Garside, 976 F.2d at 81 n. 6. Here, in contrast, there is no genuine issue of material fact but that the required warnings accompanied the Thorotrast when shipped out by the manufacturer (although it is equally undisputed that Dr. Page never saw them). Despite the factual differences, however, this Court agrees, as it must, that the presumption-burden shifting framework established by the Court of Appeals must be followed here despite the fact that no Massachusetts appellate court has, as yet, explicated it in this fashion.
Here, however, there is not the slightest competent evidence that the warnings Christopher says were unreasonable would have affected the standard of care of the average neurosurgeon practicing in the year 1970. In contrast, the Garside record was replete with an affidavit from a comptent physician tracing the proximate cause of the injury in question to the allegedly inadequate warning. Garside, 976 F.2d at 79. It appears here that Christopher is looking to the videotaped deposition of John H. Heller to fill this void. Dr. Heller's qualifications are nowhere stated in the record before the Court, although it appears that he was the physician upon whom the 20/20 television report principally relied. This Court has scrutinized the record with care and, drawing all inferences in favor of Christopher, is unable to find as a premise fact, see Fed. R.Evid. 104(a), that Dr. Heller is competent to testify to the adequacy of warnings made to neurosurgeons in 1970. He is not himself a neurosurgeon and has never, in the course *933 of his professional practice, ever dealt with the medical decisions that faced Dr. Page here. Without this testimony there is, on this record, nothing to suggest that the warnings actually made were not adequate to put the average neurosurgeon on notice of the risks involved in using Thorotrast. Since the adequacy of the warnings actually made is not here impugned, the Garside presumption-burden shifting mechanism does not come into play, and summary judgment must be entered for the pharmaceutical companies on this issue.
Alternatively, analysis of another line of Massachusetts cases also supports summary judgment for the pharmaceutical companies upon the learned intermediary rule, at least upon the breach of warranty claim. In Massachusetts, a product liability breach of warranty claim is the functional equivalent of the cause of action upon strict liability found in the Restatement (Second) of Torts § 402A (1965). Back v. Wickes Corp., 375 Mass. 633, 640, 378 N.E.2d 964 (1978). Under Restatement (Second) of Torts § 402A, comment k, the pharmaceutical companies could not be held strictly liable upon the undisputed facts of record here.
According to comment k, there are some products, especially drugs, which are quite incapable of being made safe for their intended and ordinary use, and yet the marketing and use of which is justified because they may avert an otherwise inevitable death. Such a drug, properly prepared, and accompanied by proper directions and warnings, is not defective, nor is it unreasonably dangerous. The seller of such a drug [such as Thorotrast] is not to be held to strict liability for unfortunate consequences attending its use merely because he has undertaken to supply the public with the drug.
Restatement (Second) of Torts § 402A, comment k. Taking the Supreme Judicial Court at its word, this Court therefore rules that under the common law of Massachusetts as well, summary judgment as to the product liability claim must enter for the defendant pharmaceutical companies.
F. The Motion for a New Trial.
Only one of Christopher Lareau's grounds for a new trial warrants comment. He complains that the Court abused its discretion by setting and adhering to time limits for the trial of this case. The contention is without merit.
District courts may impose reasonable time limits on the presentation of evidence. Johnson v. Ashby, 808 F.2d 676, 678 (8th Cir.1987). We agree with the Seventh Circuit that, `in this era of crowded district court dockets federal district judges not only may but must exercise strict control over the length of trials, and are therefore entirely within their rights in setting reasonable deadlines in advance and holding the parties to them....' Flaminio v. Honda Motor Co., 733 F.2d 463, 473 (7th Cir.1984).
Borges v. Our Lady of the Sea Corp., 935 F.2d 436, 442-43 (1st Cir.1991).
Establishing time limits for the trial of cases is, in fact, an integral part of the Cost and Delay Reduction Plan adopted for the District of Massachusetts on November 18, 1991. Cost and Delay Reduction Plan, District of Massachusetts, Rule 5.03(a). The procedure for establishing such time limits is expressly set forth in Local Rule 43.1(a). Indeed, setting time limits for trials is a required element of the Final Pre-Trial Conference agenda in this district. Local Rule 16.5(E)(11)(c). What's more, it is generally known that most of the judges in this district do, in fact, set time limits for trials and this session in particular follows the rule. Federal Court Judicial Forum '93, 11 (MCLE, 1993). The value of pre-set time limits tailored to the trial of particular cases is becoming increasingly apparent. Agreed upon time limits are an extraordinarily valuable focusing mechanism which promote cleaner trials directed to the matters genuinely in dispute, tend to eliminate those perennial redundancies which so frustrate and madden juries, and constitute perhaps the single most valuable technique available to a trial judge for scheduling a busy trial session.
The comments of Professor Arthur Miller, Reporter for the District of Massachusetts Cost and Delay Reduction Plan, explain the *934 rationale for the rule and how it is expected to function:
Time limits provide an incentive to make the best possible use of the limited time allowed for trial of the case. If the parties are not able to agree upon time limits for the trial, the court, after inviting submissions from the parties, may prescribe presumptive limits that are subject to modification for good cause shown. The parties will have an incentive to agree upon a schedule of time limits since those that the court otherwise will impose may not serve the parties' mutual interests in achieving a shorter, less expensive, and better quality trial.
Because presumptive allotments of time probably will be stated as a total number of hours, each party will be free to allocate time as that party chooses among different uses as long as its total allotment is not exceeded. By not allocating times for particular witnesses or proceedings, the proposal avoids the increased cost and delay associated with proceedings to reallocate time whenever the presumptive allotments are not appropriate to the case.
An explicit purpose of this provision is to create an incentive for using trial time exclusively on issues material to a disposition on the merits. The court should construe Rule 5.03 equitably and flexibly so that any party who makes proper use of time throughout the trial should be assured that an extension will be allowed if more time is needed to present all its evidence adequately.
Cost and Delay Reduction Plan, District of Massachusetts, Reporter's Comment to Rule 5.03.
These are precisely the procedures followed in this case. At the final pre-trial conference, trial counsel themselves agreed that the trial would take five days and the Court announced it would be holding counsel to that agreement. It was only on the morning of the first day of trial that the plaintiffs senior trial counsel (not present at the final pre-trial conference due to a conflicting trial engagement) announced that she sought more time to present her case. Thereafter, she objected in an appropriate and timely fashion to the Court's adherence to the agreed upon time limits. Moreover, senior trial counsel presented her case on behalf of Christopher Lareau in an efficient and direct manner with no wasted motion. Nevertheless, the Court would not extend the time limits earlier agreed to.
Christopher Lareau now complains that adherence to the time limits forced counsel to forego playing the videotape deposition of Dr. Joseph Heller. Counsel offers to prove that
Dr. heller (sic) would have testified, among other things, about the history of Thorotrast. He would have described the dangers of the product and how it was generally known by the 1950's that the use of Thorotrast in man was improper. Dr. Heller would have testified about the government regulation of Thorotrast and how it came about. No other witness was qualified to testify to these matters.
Plaintiff's Memorandum In Support of His Motion For A New Trial, ¶ 4 at 6.
This Court properly exercised its discretion to adhere to time limits counsel had themselves fixed. In addition to the general considerations discussed above supportive of the Local Rule, the offer of proof claims far too much. Here, this Court has already found on the undisputed summary judgment record and pursuant to Fed.R.Evid. 104(a), that Dr. Heller was not qualified to testify that "it was generally known by the 1950's that the use of Thorotrast in man was improper," at least insofar as that testimony was sought to bear on the standard of care required to be provided by a neurosurgeon in 1970. While Dr. Heller was no doubt qualified to testify to the history and government regulation of Thorotrast, these matters were peripheral at best, and perhaps irrelevant, to the trial of this loss of consortium action. The remaining matter the dangers of Thorotrast was amply covered by the plaintiff's trial expert, an eminent professor of neurosurgery. Even though Dr. Heller was qualified to testify on the matter, his testimony would have been cumulative. Accordingly, the time limit upheld here fell well within the "wide latitude" accorded a district court in the management of its caseload. United *935 States v. Cassiere, 4 F.3d 1006, 1017 (1st Cir.1993); United States v. Tracy, 989 F.2d 1279, 1285 (1st Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 2393, 124 L. Ed. 2d 294 (1993); United States v. Sutton, 970 F.2d 1001, 1005 (1st Cir.1992); Borges v. Our Lady of the Sea Corp., supra, at 441.
III. CONCLUSION
For all the foregoing reasons, judgment properly entered for the defendants upon the plaintiffs' claims. Christopher Lareau's motion for a new trial is denied.
NOTES
[1] Although named in the original complaint, the plaintiffs' amended complaint dropped Forest Pharmaceutical Laboratories, Inc. as a defendant. This action is, therefore, dismissed without prejudice as to Forest Pharmaceutical Laboratories, Inc.
[2] The local rules in this district provide for civil juries of not less than six. Local Rule 48.1. This Court routinely empanels ten persons on a civil jury and sends them all to deliberate, Cabral v. Sullivan, 757 F. Supp. 107, 108 (D.Mass.1991), aff'd in part, rev'd in part, 961 F.2d 998 (1st Cir.1992), since the best available studies show that the small group dynamics of juries function best in the ten to fourteen person range. See, e.g., G. Thomas Mustermann, A Comparison of the Performance of Eight- and Twelve-Person Juries (Williamsburg, Va.: National Center for State Courts, 1990).
[3] Lareau also consulted by phone with Dr. Joseph Heller, the purported expert who appeared on 20/20, who reviewed her records and suggested that she consider having the Thorotrast removed.
[4] There is no evidence that Dr. Page used Thorotrast whose expiration date had lapsed. Therefore, there is no evidence that the Thorotrast used was manufactured or distributed prior to June 2, 1964.
[5] The package label stated in pertinent part:
WARNING: This is a very dangerous drug ...
WARNING: Read package insert thoroughly before using this drug ...
WARNING: For use only when this drug has a unique clinical usefulness, and there is substantial evidence of limited life expectancy by reason of disease or advanced age. For indications, dose, and administration, see the enclosed insert....
Any patient who receives this drug should be notified of its chronic (or long term) toxicity....
The vial label further warned:
WARNING: THIS IS A VERY DANGEROUS DRUG.
[Instructions to Administering Physician:] Read package insert thoroughly before using, for indications, dosage, and administration.
The package insert stated in relevant part:
CAUTION: THIS IS A VERY DANGEROUS DRUG READ INSERT THOROUGHLY BEFORE USING THIS PRODUCT....
Any physician who administers this drug should be informed of its chronic (or longterm) toxicity, and should obtain informed consent from the patient since THOROTRAST is a very dangerous drug....
CAUTION: THOROTRAST shall be used only by and under the supervision of Certified Radiologists....
THOROTRAST is a violent tissue sclerosing agent and a natural radio-active emission material. Its half life is approximately 1.34 × 1010 years....
WARNING:
For use only when this drug has a unique clinical usefulness, and when there is substantial evidence of limited life expectancy by reason of disease or advanced age.
THOROTRAST should not be used in body cavities except in special circumstances where there are definite indications for the utilization of its unique opacification qualities. THOROTRAST should not be allowed to remain in body cavities but should be removed insofar as feasible following the procedure.
INDICATIONS:
The use of THOROTRAST is restricted to only those cases where other less hazardous techniques are inapplicable ...
ADVERSE REACTIONS:
Adverse reactions and sequelae include local granulomata, and ... neoplasm ... [as well as specific forms of cancer].
[6] To support her contention that no actionable harm, and thus no cause of action, existed in 1984, Mrs. Lareau looks to Payton v. Abbott Labs, 386 Mass. 540, 437 N.E.2d 171 (1982), in which the court held that DES daughters who had not developed vaginal cancer could not collect damages for emotional harm alone without related physical injuries. Payton involved no statutory bar, however, and thus does not aid the Lareaus here.
[7] In fact, the record shows no evidence of a new CAT scan having been taken prior to surgery in 1990; the letter in which Dr. Pruitt refers Mrs. Lareau to Dr. Ojemann refers to the CAT scans taken previously; neither her letter nor Dr. Ojemann's reply uses the term "granuloma."
[8] Like Mrs. Lareau here, the plaintiffs in Pitts also claimed that they first learned of the connection between insulation material installed in their home and symptoms suffered by family members by watching 20/20.
[9] In Fidler I, the First Circuit suggested that a possible, if inapplicable, argument would have been that the cause of action was "inherently unknowable" until the occurrence of a scientific "breakthrough." 714 F.2d at 200. Mrs. Lareau contends that Dr. Page claimed in his deposition that he was not aware of the dangers of Thorotrast until 1988, so that evidence of a dispute as to the state of medical knowledge on the question exists, precluding summary judgment for the defendants. This is not the thrust of the Fidler I dictum. Here, the articles submitted by Mrs. Lareau herself, however, demonstrate that research had revealed the risk of tumors and other Thorotrast-related dangers as early as 1965, and based on these, the Court concludes that Dr. Fischer's recommendation was grounded in information available to the medical community in 1984.
[10] The First Circuit, deciding a similar case four years earlier, went even further. In Roy v. Jasper Corp., 666 F.2d 714, 718 (1st Cir.1981), the Court, applying New Hampshire law, precluded a wife's later filed loss of consortium claim where the husband's substantive claim had been defeated by a statute of limitations bar, commenting in dicta that spousal consortium actions are "fundamentally derivative of the first spouse's personal injury action." The First Circuit carefully distinguished its action in Roy from a relevant New Hampshire case which had refused to apply res judicata in dismissing a consortium action. A similar gesture would have been needed if the case had arisen under Massachusetts law. In Diaz v. Eli Lilly & Co., 364 Mass. 153, 302 N.E.2d 555 (1973), the court referred to an early case establishing the separateness of a husband's consortium action from his wife's underlying claim in these terms: "thus the fact that she has been previously defeated in her negligence action against the same defendant was irrelevant to the husband's action and could not be used therein to support a plea of res judicata." Id. at 157, 302 N.E.2d 555.
[11] The plaintiff argues that Angelini provides no bar to Ashley's suit, and presents a copy of a Superior Court memorandum by Justice William C. O'Neill denying a motion to dismiss the negligence and loss of consortium claims of two children conceived after their mother's doctor allegedly failed to administer RHOGAM during a previous pregnancy. Ullian v. Cooney, Civil No. 12-123-92 (Worcester Superior Court, Aug. 19, 1992). Relying on a case from the Indiana Court of Appeals, Justice O'Neill there noted that the injuries produced were just the sort RHOGAM was designed to prevent and were, therefore, foreseeable.
While it is true that, in the absence of applicable appellate decisions, this Court is bound in a diversity case to apply Massachusetts law as consistently declared by the Massachusetts Superior Court, the "great trial court of the Commonwealth," Irwin v. Commissioner of the Dep't of Youth Servs., 388 Mass. 810, 815, 448 N.E.2d 721 (1983) (Lynch, J.); Pinnick v. Cleary, 360 Mass. 1, 41 n. 3, 271 N.E.2d 592 (1971) (Tauro, C.J.); McArthur Bros. Co. v. Commonwealth, 197 Mass. 137, 139, 83 N.E. 334 (1908) (Rugg, C.J.), the reasoning in Ullian is fact specific to the unique properties of RHOGAM and cannot be stretched to be made applicable to this case. This Court is thus free to explore the issue as set forth in the text.
[12] The Court allowed the defendants' motion for summary judgment on this point but later, in the midst of Christopher Lareau's trial against Dr. Page, see infra, vacated this ruling as to Dr. Page when it became apparent that the interests of justice would be served thereby and, instead, directed a verdict in Dr. Page's favor on this point at the close of all the evidence. The Court's reasoning remains the same.
The interests of justice that impelled this move are as follows: during the charge conference in the ensuing trial, it became apparent that the loss of consortium claim covers only the loss to Christopher of those intangible aspects of the parental role as were allegedly damaged by Dr. Page's alleged negligence toward Mrs. Lareau. That claim does not cover the direct pain and suffering visited on Christopher due to the injury to his mother. That loss, if compensable at all, is compensated under a theory of negligent infliction of emotional distress. See Lareau v. Page, Civ. No. 90-11629-Y, transcript, November 5, 1993 (charge conference) and November 9, 1993 (charge) (D.Mass.1993). Since all aspects of Christopher's losses had been presented to the jury, it seemed appropriate to give him the benefit of the full trial record as to Dr. Page even though the propriety of the Court's ruling as to the other defendants rests on the summary judgment record.
[13] The MacDonald case, while clearly establishing the learned intermediary defense under Massachusetts law, declined to follow it in a case involving oral contraceptives. Id. at 138-39, 475 N.E.2d 65. This Court predicts that the Supreme Judicial Court will not further limit the learned intermediary defense, especially in cases such as the Thorotrast involved here, since its use was limited to highly complex, life-threatening situations wherein the judgment and skill of the neurosurgeon are paramount. Accordingly, the learned intermediary defense is available here, if applicable upon the undisputed facts of record.
[14] It is here undisputed that the warnings accompanying the Thorotrast complied in every respect with the regulations issued by the FDA and, indeed, were expressly approved by that agency. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2841358/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
UNITED STATES OF AMERICA )
)
v. ) Criminal Action No. 13-200 (RWR)
)
JEROME COBBLE, )
)
Defendant. )
______________________________)
MEMORANDUM OPINION AND ORDER
Defendant Jerome Cobble moves for a judgment of acquittal,
or in the alternative, a new trial on his conviction for
conspiracy to launder monetary instruments. Defendant Cobble’s
Mot. for a J. of Acquittal, or in the Alternative, a New Trial,
ECF No. 390 (“Cobble’s Mot.”). The government opposes, arguing
that Cobble was properly convicted of conspiracy to launder
monetary instruments, and that it is not in the interest of
justice to grant Cobble a new trial. United States’ Mem. in
Opp’n to Def. Jerome Cobble’s Mot. for J. of Acquittal, or in
the Alternative, a New Trial, ECF No. 400 (“Gov’t Opp’n”).
Because a rational trier of fact viewing all the trial evidence
most favorably to the government could find beyond a reasonable
doubt that Cobble conspired to launder monetary instruments, and
because Cobble does not present circumstances compelling a new
-2-
trial in the interest of justice, Cobble’s motion will be
denied.
BACKGROUND
Jerome Cobble was indicted on one count of conspiracy to
distribute and possess with intent to distribute one hundred
grams or more of heroin and marijuana, in violation of 21 U.S.C.
§ 841(a)(1), 841(b)(1), and 846, and one count of conspiracy to
launder monetary instruments, in violation of 18 U.S.C.
§ 1956(h). Superseding Indictment, ECF No. 259. 1 After a jury
trial, Jerome Cobble was acquitted of the drug conspiracy count
and found guilty of conspiring to launder monetary instruments.
Cobble and Jermaine Washington, an admitted veteran drug
dealer, shared a uniquely close relationship; although actually
cousins, they were raised in the same household by Cobble’s
mother as brothers from a young age. Gov’t Opp’n at 6-7;
Cobble’s Mot. at 5, 7. Cobble maintained a relationship
throughout Washington’s various stints of incarceration. Gov’t
Opp’n at 6-7. In or about July 2012, Washington reached out to
Cobble to help Washington purchase a new vehicle. Gov’t Opp’n
at 9-10; Cobble’s Mot. at 5. Washington had been using a Nissan
Altima that was titled in Cobble’s name. Cobble’s Mot. at 6.
1 He was also charged with one count of conspiracy to commit
wire fraud, in violation of 18 U.S.C. § 1349. That count was
severed prior to trial and remains pending. See 11/12/2014
Minute Entry.
-3-
He wanted to trade it in, though, since it had been damaged in a
car accident and thus had become “under water” on the loan.
Gov’t Opp’n at 9; Cobble’s Mot. at 6. Washington shopped around
the Washington, D.C. area for a vehicle to purchase, ultimately
settling on a Lexus SUV at a car dealership in Vienna, Virginia.
Gov’t Opp’n at 9; Cobble’s Mot. at 5-6. Washington made a down
payment to the dealership of approximately $3,000. He
testified, and the government did not refute, that the $3,000
came from the proceeds of gambling in Atlantic City, New Jersey.
Gov’t Opp’n at 9; Cobble’s Mot. at 6. The Lexus SUV was titled,
registered, and insured in Cobble’s name. Cobble’s Mot. at 5.
Washington testified that he and Cobble agreed that Washington
would deposit the monthly loan payments for the Lexus SUV into
Cobble’s bank account. Gov’t Opp’n at 9. The Lexus SUV was
stolen, though, before any initial loan payment was made.
Cobble’s Mot. at 6.
At trial, during cross-examination of Washington by
Cobble’s counsel, Washington engaged in an unsolicited,
emotional, and inconsolable diatribe expressing his regret for
getting Cobble “caught up” in this matter. Gov’t Opp’n at 26;
Cobble’s Mot. at 18-20.
-4-
The jury found Cobble guilty of conspiring to launder
monetary instruments, and Cobble now timely moves for a judgment
of acquittal or a new trial. 2
DISCUSSION
I. MOTION FOR A JUDGMENT OF ACQUITTAL
Federal Rule of Criminal Procedure 29 requires “the court
on the defendant’s motion [to] enter a judgment of acquittal for
any offense for which the evidence is insufficient to sustain a
conviction.” Fed. R. Crim. P. 29(a). “The motion for judgment
of acquittal may be granted where ‘there is no evidence upon
which a reasonable mind might find guilt beyond a reasonable
doubt.’” United States v. Gray-Burriss, Criminal Action No. 10-
178 (RWR), 2013 WL 460220 at *1 (D.D.C. Feb. 6, 2013) (quoting
United States v. Byfield, 928 F.2d 1163, 1165 (D.C. Cir. 1991)).
“The evidence must be viewed in the light most favorable to the
government.” Id. (same).
The statute criminalizing conspiring to launder monetary
instruments, 18 U.S.C. § 1956(h), provides that “[a]ny person
who conspires to commit any offense defined in this section or
section 1957 shall be subject to the same penalties as those
prescribed for the offense the commission of which was the
2 Cobble initially moved for a judgment of acquittal after
the close of the government’s evidence, and again immediately
after the verdict was returned by the jury. The Court reserved
ruling on both of those motions.
-5-
object of the conspiracy.” In order to sustain Cobble’s
conviction, there must be sufficient evidence such that a
rational trier of fact could have found beyond a reasonable
doubt that Cobble (1) agreed to commit a money laundering
offense, and (2) knowingly and voluntarily participated in that
agreement. See United States v. Broughton, 689 F.3d 1260, 1280
(11th Cir. 2012) (“[U]nder 18 U.S.C. § 1956(h), only two
elements of a conspiracy need be proven: (1) agreement between
two or more persons to commit a money-laundering offense; and
(2) knowing and voluntary participation in that agreement by the
defendant.”); see also United States v. Farrell, Criminal Action
No. 03-311-1 (RWR), 2005 WL 1606916 at *8 (D.D.C. July 8, 2005)
(“[The defendant] stands convicted of a conspiracy to commit
money laundering in which the government’s required proof
included simply the existence of the unlawful agreement and [the
defendant’s] willful joinder in it.”). A defendant knowingly or
willfully participates in the conspiracy when he knows and
intends to further its purpose. See United States v. Fuchs, 467
F.3d 889, 906 (5th Cir. 2006) (“To establish conspiracy to
commit money laundering, the government must prove (1) that
there was an agreement between two or more persons to commit
money laundering and (2) that the defendant joined the agreement
knowing its purpose and with the intent to further the illegal
-6-
purpose.”); United States v. Wittig, 575 F.3d 1085, 1103 (10th
Cir. 2009) (same).
There are two money laundering offenses that Count Two of
the indictment alleges that Cobble conspired to commit with the
Lexus purchase. One is using illegal drug proceeds to promote
illegal drug sales, in violation of 18 U.S.C.
§ 1956(a)(1)(A)(i). The other is using illegal drug sale
proceeds to conceal and disguise the source of drug sale
proceeds, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). Cobble
argues that “the government has utterly failed to show any
effort or intent to disguise that illegal funds formed any part
of the transaction,” and therefore no rational trier of fact
could find beyond a reasonable doubt that Cobble is guilty of
conspiracy to launder monetary instruments. Cobble’s Mot. at
17.
Cobble attacks only one potential purpose for the money
laundering conspiracy - - disguising or concealing the source of
the proceeds. But since the indictment charged him with two
potential purposes, either if proven is sufficient to uphold the
conviction. At trial, the government elicited testimony,
primarily from Washington, that Washington sold and distributed
heroin both before and after purchasing the Lexus SUV, Cobble’s
Mot. at 13-14, and presented evidence that Washington on various
occasions used a vehicle to deliver narcotics to buyers.
-7-
Cobble’s Mot. at 14 n.3. This evidence along with evidence of
Cobble’s close relationship with Washington could lead a
rational trier of fact to infer that Cobble knew that the
purpose of buying the Lexus SUV was for Washington to continue
to be able to distribute drugs - - satisfying the proof of
conspiring to violate § 1956(a)(1)(B)(i). Accordingly, Cobble’s
motion for a judgment of acquittal will be denied.
II. MOTION FOR A NEW TRIAL
Federal Rule of Criminal Procedure 33 provides that “[u]pon
the defendant’s motion, the court may vacate any judgment and
grant a new trial if the interest of justice so requires.” Fed.
R. Crim. P. 33(a). The defendant must carry the burden in
demonstrating that a new trial is “in the interest of justice.”
United States v. Machado-Erazo, 986 F. Supp. 2d 39, 44 (D.D.C.
2013) (citing United States v. Mangieri, 694 F.2d 1270, 1285
(D.C. Cir. 1982)). “However, a new trial should be granted only
if the error was not harmless and affected the defendant’s
substantial rights.” Id. (citing United States v. Walker, 899
F. Supp. 14, 15 (D.D.C. 1995)). Once an error affecting a
defendant’s substantial rights is uncovered, the government
bears the burden of proving that the error was harmless. See
United States v. Simpson, 430 F.3d 1177, 1183-1184 (D.C. Cir.
2005) (explaining that when a defendant timely objects to an
alleged error in the district court the harmless error standard
-8-
applies and “[t]he government bears the burden of proving that
prejudice did not result from the error.”). The decision to
grant a new trial is “committed to the sound discretion of the
trial judge, and is subject to reversal only for abuse of
discretion or misapplication of the law.” Machado-Erazo, 986 F.
Supp. 2d at 44 (quoting United States v. Reese, 561 F.2d 894,
902 (D.C. Cir. 1977)) (internal quotation marks and alterations
omitted).
Cobble requests a new trial “based on the testimony and
demeanor of Jermaine Washington.” Cobble’s Mot. at 17.
Essentially, Cobble argues that Washington’s unsolicited rant
prejudiced the jury and placed Cobble in a “’can’t win’
position.” Id. at 21. While dramatic, Washington’s unsolicited
outburst expressed Washington’s remorse for getting Cobble
involved in the legal jeopardy that brought Cobble to trial. It
is also not extraordinary that a testifying government informant
would yield incriminating testimony or evidence, be it on direct
examination or cross-examination. That outburst did not rise to
a level that warrants a new trial. United States v. Bamberger,
456 F.2d 1119, 1128 (2d Cir. 1972) (“Courtroom outbursts and
disruptions . . . although regrettable and deplorable, cannot be
seized upon in and of themselves as justifications for
retrials.”). Accordingly, Cobble’s motion for new trial will be
denied.
-9-
CONCLUSION AND ORDER
Because sufficient evidence was presented at trial such
that a rational factfinder could find beyond a reasonable doubt
that Cobble conspired to launder monetary instruments, and
Washington’s unsolicited outburst is not a sufficient basis for
finding that a new trial is in the interest of justice, it is
hereby
ORDERED that Cobble’s Motion for a Judgment of Acquittal
or, in the Alternative, a New Trial [390] be, and hereby is,
DENIED.
SIGNED this 2nd day of September, 2015.
/s/
________________________
RICHARD W. ROBERTS
Chief Judge | 01-03-2023 | 09-03-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4166769/ | IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
BONITA BLEACHER,
Plaintiff,
V. C.A. NO. N16C-10-178 CEB
)
)
)
)
)
)
BIKASH BOSE, M.D., )
CHRISTIANA CARE HEALTH )
SERVICES, INC., a Delaware )
Corporation and NEUROSURGERY )
CONSULTANTS, P.A., )
)
)
Defendants.
Submitted: April 19, 2017
Decided: May 3, 2017
Defendant Bikash Bose, MD. ’s
Motz`on to Disqualzfv Plaintijj"s Counsel.
GRANTED.
Robert J. Leoni, Esquire, SHELSBY & LEONI, Stanton, Delaware. Attorney for
Plaintiff.
Dawn C. Doherty, Esquire, Norman H. Brooks, Esquire and Brett Norton, Esquire,
MARKS, O’NEILL, O’BRIEN, DOHERTY & KELLY, P.C., Wilmington,
Delaware. Attorneys for Defendants Bikash Bose, M.D. and Neurosurgery
Consultants, P.A.
Richard Galperin, Esquire and Ryan T. Keating, Esquire, MORRIS JAMES, LLP,
Wilmington, Delaware. Attorneys for Christiana Care Health Services, Inc.
BUTLER, J.
In this case, Plaintiff Bonita Bleacher (“Plaintiff’), represented by Robert
Leoni, Esq. (“Leoni”) of the law firm of Shelsby & Leoni has sued Doctor Bikash
Bose, M.D. (“Bose”) for medical negligence. Discovery has not yet commenced
Bose, through his counsel, has filed a motion to disqualify Plaintiffs chosen
law firm. Bose alerts us that Leoni’s partner, Gilbert Shelsby, Esq. (“Shelsby”)
previously represented Bose in defense of a medical malpractice action captioned
McCusker v. Neurosurgery, PA.[ We are told that the McCusker case, filed in
2001, Was litigated through trial in 2005 and resulted in a $3.6 million verdict
against Doctor Bose. Shelsby represented Bose throughout the litigation and Was,
and remains, a law partner With Leoni. Bose says it is “beyond the pale for a firm
to achieve an unsuccessful trial result and then sue their client for that result.”2
In defense of his position that this does not present a conflict of interest,
Leoni states that he never met Bose, did not participate in his representation in the
McCusker matter and none of the current staff at Shelsby & Leoni - except for
Shelsby - had any involvement With the McCusker case.
Leoni’s relies heavily on a DelaWare Superior Court opinion bearing
remarkable similarities to the instant dispute. In Fernandez v. St. Francis Hospital,
Inc., the plaintiff, represented by Gilbert Shelsby, sued a Doctor Wiercinski for
1 The litigation Was filed in U.S. District Court in DelaWare. l:01-cv-0089l-KAJ .
2 Def. Motion at 2.
medical malpractice Doctor Wiercinski had been represented in a previous
medical malpractice action by Shelsby.3 On Wiercinski’s motion to disqualify
Shelsby from continued representation of the Plaintiff in the action against his
former client, the Court ruled that since both actions Were medical negligence
actions, there Was a “substantial relationship” between the prior representation and
the contemplated relationship, and Shelsby Was therefore precluded from
representing Fernandez.
None of this is particularly provocative as far as it goes. The McCusker case
and this case are both medical negligence matters, there seems little doubt that,
since the McCusker case Went through full discovery and trial, Shelsby Would have
been exposed to client confidences connected With Bose’s medical practices.
Leoni does not seriously argue otherwise.4
But the Court in Fernandez Went a step further. Commenting that “neither
party has submitted compelling arguments on this issue,” the Court stepped into
the thorny question of “imputed disqualification” of the Shelsby & Leoni law firm
and noted that “Rule l.lO(c) carves out an exception to imputed disqualification
3 2009 WL 2393713 (Dei. super Aug. 3, 2009).
4 Leoni argues that Shelsby Would not be conflicted in representing the plaintiff here because the
previous representation of Bose Was a long time ago. He points to no case suggesting there is a
temporal limit to the conflict and even if there Was, it is hard to imagine it Would save his
argument here. Notably, he does not even argue that confidential communications Were not
shared between Bose and Shelsby during his representation in McCusker. The Rule, and the
Court, presumes there Were such communications and that is as far as the “substantial
relationship” question need go.
2
when “the personally disqualified lawyer is timely screened from any participation
in the matter.”5 In light of the exception in subsection (c), the Court held that
Shelsby could essentially pass off the representation to his partner Leoni and so
long as they undertook to screen off any likelihood of confidential information
being shared, Leoni could represent the plaintiff in a case where Shelsby could not.
Here, Shelsby and Leoni have tendered affidavits to the Court promising to
keep Shelsby’s McCusker confidences in confidence. They promise a “cone of
silence” to wall off client confidences.6 Leoni says that is all that is required
under Fernandez, the case with which he and his firm have such familiarity
The Court has taken a long look at the Fernana’ez decision. With due
respect to our learned brothers and sisters on the bench, who, like the Court in
Fernandez, labor under the difficulty of parties who do not always “submit
937
compelling arguments on the issues, we think Ferncma'ez incorrectly applied
Rule l.lO(c) instead of Rule l.lO(a).
5 Fernandez, 2009 WL at *5.
6 The Court presumes that the proposed “cone of silence” is not the one used by Max and the
Chief` for “secret” communications In 5 seasons, that cone ncver worked. See Get Smart (NBC
television broadcast 1965-1970). A better functioning “cone of silence” does indeed have some
currency in cases arising under Rule l.lO(c). See generally Nemours Foundation v. Gilbane,
Aetna, Federal Ins. C0., 632 F. Supp. 418, 428-29 (D. Del. 1986).
7 Fernandez, 2009 WL at *4.
The Delaware Lawyers’ Rules of Professional Conduct, Rule l.lO deals with
“Imputation of Conflicts of Interest: General Rule.” Rule l.10(a) states that:
Except as otherwise provided in this rule, while lawyers are associated
in a firm, none of them shall knowingly represent a client when any
one of them practicing alone would be prohibited from doing so by
Rules l.7 or l.9, unless the prohibition is based on a personal interest
of the prohibited lawyer and does not present a significant risk of
materially limiting the representation of the client by the remaining
lawyers in the firm.8
So, it is clear that if Shelsby would be barred from representation of the
Plaintiff in this matter, his firm is likewise barred. This “imputed conflict” is
firmly embedded in Delaware law. And it is quite clear that given his prior
representation of the Defendant in this lawsuit, Shelsby would be barred from
representing the Plaintiff here. As noted above, Leoni does not seriously argue
otherwise.
Rule l.lO has two exceptions to the general rule of imputed disqualification:
l) when a lawyer leaves his firm, the firm can represent clients adverse to the
former lawyer’s clients, Subject to some limits, and 2) when a lawyer arrives at a
new firm after a case has been filed where the new lawyer has a conflict with the
ongoing representation
Rule l.lO(c), relied on by the Court in Fernandez, says:
8 Del. Lawyers' R. Prof. Conduct Rule l.lO.
(c) When a lawyer becomes associated with a firm, no lawyer
associated in the firm shall knowingly represent a client in a matter in
which that lawyer is disqualified under Rule l.9 unless:
(l) the personally disqualified lawyer is timely screened f`rom
any participation in the matter and is apportioned no part of the fee
therefrom; and
(2) written notice is promptly given to the affected former
client.9
The important distinction between Rule l.lO(a) and l.lO(c) - aside from the
fact that they apply to different situations - is that Rule l.lO(c) provides a
mechanism for the firm to continue the “conf`licted” representation by screening off
the new lawyer. That is the remedy applied in Fernanclez. But that remedy is not
available for conflicts arising under Rule l.10(a). Here, Shelsby and Leoni were
partners during the previous representation of Bose and they continue to be
partners in this lawsuit against Bose. The remedy of “screening off’ applies only
in the case of a migrating attorney under Rule l.10(c), not in cases of a long
standing partnership, which are governed by Rule l.lO(a).
Having dissected these rules, the outcome is obvious: Shelsby would have a
conflict in representing the Plaintiff in this action pursuant to the “substantial
relationship” test of Rule l.9. As such, his law partner Leoni is equally conflicted
by application of Rule l.lO(a).
9 Del. Lawyers' R. Prof. Conduct Rule l.lO(c) (emphasis added).
5
Defendant’s motion is therefore GRANTED. Attorney Leoni should
counsel the Plaintiff on getting new representation Barring the filing of a
substitution of counsel, the Court would ask that Mr. Leoni advise the Court in
writing in 45 days of the status of the client’s efforts.
Judge %les E. Butl%r/ | 01-03-2023 | 05-08-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2997880/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-4091
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
AMIN W. WILLIAMS,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 03 CR 65—John C. Shabaz, Judge.
____________
ARGUED FEBRUARY 15, 2005—DECIDED JUNE 9, 2005
____________
Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.
ROVNER, Circuit Judge. Amin Williams pleaded guilty to
unlawfully possessing a firearm following a felony con-
viction, see 18 U.S.C. § 922(g)(1), and the district court
sentenced him to a prison term of 115 months. Amin now
challenges the constitutionality of the felon-in-possession
statute as applied to his possession of a firearm, which he
characterizes as “purely intrastate possession.” He also
mounts a Sixth Amendment challenge to his sentence based
on the fact that the district judge made certain findings as
to the nature and extent of his criminal history as well as
the circumstances of his offense that increased the sentenc-
2 No. 03-4091
ing range called for by the U.S. Sentencing Guidelines. We
affirm Williams’ conviction, finding no merit to his con-
stitutional challenge to the felon-in-possession statute. As
for Williams’ sentence, although we find no plain error in any
of the court’s sentencing findings, we shall direct a limited
remand to the district court so that the court may deter-
mine whether it would be inclined to sentence Williams
differently knowing that the Sentencing Guidelines are
advisory rather than mandatory. See United States v.
Paladino, 401 F.3d 471, 483 (7th Cir. 2005).
I.
On September 25, 2002, police in the city of Madison,
Wisconsin were notified that a fight had occurred during
which someone had brandished a gun. Police officers were
directed to an apartment to which one of the suspected
combatants had fled. They conducted a search of the prem-
ises with the lessee’s consent and discovered a loaded,
Smith and Wesson .44 magnum revolver with a scope, con-
cealed beneath the drawer of the kitchen’s oven. The gun
had been reported stolen to the Madison police four days
earlier. Williams was present in the apartment at that time
of the search but identified himself to the officers using an
alias and a false date of birth. After the police spoke with
witnesses to the altercation and ascertained Williams’ true
identity, he was taken into custody and charged under state
law with resisting or obstructing an officer based on his
attempt to disguise his identity. The investigation into the
altercation proved to be inconclusive. However, a sub-
sequent examination of the gun by the Wisconsin State
Crime Laboratory revealed prints matching Williams’ right
and left index fingers, left middle finger, and left thumb.
On May 19, 2003, Special Agent Jason Salerno of the
federal Bureau of Alcohol, Tobacco, Firearms and Explosives
interviewed Williams. Williams told Salerno that he had
No. 03-4091 3
been staying at his aunt’s apartment, which is where the
revolver was found, since January 2001. Williams admitted
that he had handled and had access to the revolver, which
he believed his friends had stolen. He also admitted that he
had previously been convicted of felony offenses in both
Illinois and Wisconsin.
On June 4, 2003, a federal grand jury returned a one-
count indictment charging Williams with unlawfully pos-
sessing a firearm after having previously been convicted of
a felony offense, in violation of 18 U.S.C. § 922(g)(1). The
indictment alleged that the firearm “ha[d] previously trav-
eled in and affected interstate commerce.” R. 2. That
allegation was based on the fact that the revolver had been
manufactured in Massachusetts.
Pursuant to a written plea agreement, R. 27, Williams
offered a plea of guilty to the indictment on September 18,
2003. In the course of the hearing on that plea, the Assistant
United States Attorney (“AUSA”) made a brief oral proffer
of the evidence that the government would have presented
to establish Williams’ guilt at trial. See Fed. R. Crim. P.
11(b)(3). Among other things, she noted that “Mr. Williams
told Agent Salerno his friends had stolen the revolver and
shown it to him. Williams admitted handling the revolver
and having access to it.” R. 41 at 18. At the conclusion of
the proffer, the district judge asked Williams whether he
agreed with the facts that the AUSA had outlined, and
Williams responded that he did. Id. Finding that there was
an adequate factual basis for Williams’ guilty plea, the
district court accepted the plea and adjudged him guilty. Id.
at 22.
A probation officer conducted a pre-sentence investigation
and prepared a report (“PSR”) recommending that Williams’
base offense level under the Sentencing Guidelines be set at
24, based on the nature of his offense and two prior con-
4 No. 03-4091
victions for offenses that constituted crimes of violence. See
U.S.S.G. § 2K2.1(a)(2) (Nov. 2001).1 The PSR also proposed
a two-level enhancement to that base offense level because
the Smith and Wesson revolver had been stolen. See
U.S.S.G. § 2K2.1(b)(4). Three levels were to be deducted for
Williams’ acceptance of responsibility, id. § 3E1.1, resulting
in an adjusted offense level of 23. The probation officer
assigned Williams a criminal history of Category VI, based
on five prior adult convictions and two juvenile adjudica-
tions of delinquency—all sustained before his 21st birth-
day—and in view of the fact that Williams had committed
the instant offense while on probation and less than two
years following his release from prison on a prior sentence.
See id. § 4A1.1. For an offense level of 23 and criminal
history category of VI, the Sentencing Guidelines specified
a sentencing range of 92 to 115 months.
Williams made no objections to the PSR, see R. 38 at 2-3,
and at sentencing the district court adopted the probation
officer’s recommended findings as to the fact that the gun
that Williams possessed had been stolen and as to the
nature and extent of Williams’ criminal history, id. at 4-5.
After listening to the parties’ respective positions as to
sentencing, the court ordered Williams to serve a sentence
of 115 months, the maximum sentence called for by the
Guidelines. Id. at 9. “The Court is even in this day and age
shocked at the violence, drugs and criminal activity that
this defendant was involved with ever since his age of 13
and believes that this criminal record and his continued
violation of the law does require a sentence at the top of the
guideline range.” Id. at 8.
1
The district court sentenced Williams using the November 2001
version of the Guidelines. See R. 38 at 4.
No. 03-4091 5
I.
A. Commerce Clause Challenge to Section 922(g)(1)
Williams first challenges the constitutionality of the felon-
in-possession statute as it applies to his possession of the
Smith and Wesson revolver. Williams posits that because
he possessed the gun solely within the State of Wisconsin,
and because the record reveals no substantial connection
between his possession of the gun and interstate commerce,
Congress had no authority under the Commerce Clause, see
U.S. Const. Art. I, § 8, cl. 3, to reach his possession of the
gun. See United States v. Lopez, 514 U.S. 549, 115 S. Ct.
1624 (1995) (holding that Gun-Free School Zones Act of
1990, which proscribed possession of a firearm within 1000
feet of a school, exceeded congressional authority under
Commerce Clause because it reached conduct that did not
substantially affect or have a meaningful connection with
interstate commerce). Williams did not make this argument
below, so our review is solely for plain error. E.g., United
States v. Rogers, 89 F.3d 1326, 1338 (7th Cir. 1996).2
As Williams himself acknowledges, our precedents fore-
close his argument; indeed, Williams indicates that he is
making the argument solely to preserve it for Supreme Court
review. It suffices to note that we have held repeatedly that
section 922(g)(1), because it requires proof that the defen-
dant possessed a firearm “in or affecting commerce,”
2
Although Williams did not expressly reserve the right to appeal
his conviction in the written plea agreement, we have previously
treated an attack on the constitutionality of section 922(g)(1)
as one that is jurisdictional in nature and therefore cannot be
waived. United States v. Bell, 70 F.3d 495, 496-97 (7th Cir. 1995).
In any event, the government has not argued that Williams
waived any attack on his conviction by pleading guilty and has
therefore waived any claim of waiver. See, e.g., United States v.
Murphy, 406 F.3d 857, 860 (7th Cir. 2005).
6 No. 03-4091
represents a valid exercise of congressional authority under
the Commerce Clause. E.g., United States v. Olson, ___ F.3d
___, 2005 WL 1163676, at *5 (7th Cir. May 16, 2005) (citing
United States v. Lemons, 302 F.3d 769, 772 (7th Cir. 2002)).
We have also held that so long as the firearm crossed state
lines at any point prior to the defendant’s possession of the
gun, his possession is “in or affecting commerce.” E.g., id.
(citing Lemons, 302 F.3d at 772-73); United States v. Harris,
394 F.3d 543, 551 (7th Cir. 2005).
B. Findings as to Criminal History
As we noted above, Williams’ criminal history affected the
calculation of his sentencing range in two ways. First, the
determination that two of Williams’ prior convictions were
for crimes of violence resulted in a higher base offense level.
See U.S.S.G. § 2K2.1(a)(2). Second, the nature and extent of
his prior criminal history placed him in the highest criminal
history category. In both respects, Williams’ prior convic-
tions increased his sentencing range substantially. In
pleading guilty, Williams admitted to one of his prior
convictions, which was necessary to establish his status as
a convicted felon who was prohibited from possessing a
firearm. R. 41 at 18-19; see § 922(g)(1); see also, e.g., United
States v. Gilbert, 391 F.3d 882, 883 (7th Cir. 2004). He did
not otherwise formally acknowledge the breadth and nature
of his criminal record, however (although, as we have noted,
he posed no objections to the PSR). Had Williams’ criminal
history been disregarded at sentencing with the exception
of the one prior conviction he acknowledged, his base
offense level likely would have been 20, see § 2K2.1(a)(4)(A),
his adjusted offense level would have been 19, and with a
criminal history category of II (for the two criminal history
points assigned to the admitted conviction), the sentencing
range specified by the Guidelines would have been 33 to 41
months.
No. 03-4091 7
Relying on Apprendi v. New Jersey, 530 U.S. 466, 120
S. Ct. 2348 (2000), Williams contends that unless admitted
by a defendant, the fact and nature of any prior convictions
that expose him to a higher penalty must be determined by
a jury rather than by the sentencing judge. Apprendi held
that (with one exception we are about to discuss) any fact
that increases the penalty beyond the statutory maximum
otherwise prescribed for the offense must be proven to a jury
beyond a reasonable doubt. No aspect of Williams’ criminal
history exposed him to a higher statutory minimum or max-
imum penalty. However, as we have discussed, the extent
and nature of his history did have the effect of increasing
the sentencing range under the Guidelines. And the Supreme
Court’s subsequent opinions in Blakely v. Washington, 124
S. Ct. 2531 (2004), and United States v. Booker, 125 S. Ct.
738 (2005), extended Apprendi’s rationale to sentencing
regimes like (and including) the U.S. Sentencing Guidelines.
Williams thus contends that the sentencing judge was
barred from making an independent assessment of his crim-
inal history when its findings boosted his sentencing range.
This was not an argument that Williams made below, so the
error, if any, in the district court’s findings as to his criminal
history must be a plain one in order for us to disturb those
findings. E.g., United States v. Dumes, 313 F.3d 372, 385
(7th Cir. 2002).3
However, the Supreme Court has excluded a defendant’s
criminal history from the range of facts that must, if not ad-
mitted, be proven to a jury before the defendant is subject
to increased penalties. Two years before it decided Apprendi,
the Court in Almendarez-Torres v. United States, 523 U.S.
224, 118 S. Ct. 1219 (1998), held that the existence of a
prior conviction need not be alleged in the indictment or
proven to a jury as an element of the offense, but rather
3
In his plea agreement, Williams did reserve the right to appeal
his sentence. R. 27 ¶ 10.
8 No. 03-4091
may be determined by the judge at sentencing, even if the
prior conviction increases the statutory maximum sentence
that may be imposed on the defendant. The defendant in
Almendarez-Torres had pleaded guilty to illegally reen-
tering the United States following deportation in violation
of 8 U.S.C. § 1326(a), and pursuant to section 1326(b)(2), an
individual convicted of this crime is subject to a higher
maximum sentence (20 years as opposed to two) if his
deportation followed a conviction for an aggravated felony.
In view of the penalty increase that the statute called for,
the defendant asserted that the prior felony conviction must
be alleged in the indictment and otherwise treated as an
element of the offense. But the majority in Almendarez-
Torres rejected this view, concluding that Congress had not
intended to treat the prior conviction as an element of the
crime, 523 U.S. at 229-39, 118 S. Ct. at 1224-28, and that
the Constitution did not require it to be treated as such, id.
at 239-47, 118 S. Ct. at 1228-33. The court pointed out that
it is a sentencing judge’s obligation in every case to consider
the defendant’s criminal history. Id. at 230, 118 S. Ct. at
1124 (citing, inter alia, U.S.S.G. §§ 4A1.1, 4A1.2). The
existence of a prior conviction for an aggravated felony was
“as typical a sentencing factor as one might imagine,” the
court reasoned. Ibid. As such, that factor could be deter-
mined by the judge rather than a jury. Id. at 243-44, 118 S.
Ct. at 1230-31.
Whatever commonalities a prior conviction might have
with factors that the Court has since held must be proven
to a jury, the Court’s opinions in Apprendi, Blakely, and
Booker have left the holding of Almendarez-Torres undis-
turbed. The Court in Apprendi specifically excluded the fact
of a prior conviction from the rule it established for other
facts that increase the statutory penalties to which a
defendant is exposed. 530 U.S. at 488-90, 120 S. Ct. at
2361-62. Both Blakely and Booker echo Apprendi on this
point. Blakely, 124 S. Ct. at 2536; Booker, 125 S. Ct. at 748,
No. 03-4091 9
756. Likewise, the Court’s recent opinion in Shepard v.
United States, 125 S. Ct. 1254 (2005), decided after Booker,
acknowledges the continuing validity of Almendarez-Torres.
See id. at 1262-63 (plurality), and id. at 1269-70 (dissent).
Therefore, the district court did not plainly err in making
findings with respect to Williams’ criminal history, be they
findings as to the fact of his prior convictions or as to the
nature of those convictions. However much in tension the
holding of Almendarez-Torres may be with the holdings of
Apprendi, Blakely, and Booker, see Shephard, 125 S. Ct. at
1264 (Thomas, J., concurring) (“Almendarez-Torres . . . has
been eroded by this Court’s subsequent Sixth Amendment
jurisprudence, and a majority of the Court now recognizes
that Almendarez-Torres was wrongly decided”), the Su-
preme Court has yet to overrule Almendarez-Torres. Until
it does, the district court does not violate a defendant’s Sixth
Amendment right to a jury trial by making findings as to
his criminal record that expose him to greater criminal
penalties. See, e.g., United States v. Lechuga-Ponce,
___ F.3d ___, 2005 WL 1163609, at *1 (7th Cir. May 17,
2005) (“the fact of a prior conviction need not be proven
beyond a reasonable doubt”); United States v. Carpenter,
406 F.3d 915, 917 (7th Cir. 2005) (“a sentencing court is
entitled to classify and take into account the nature of a
defendant’s prior convictions, provided that the judge does
not engage in factfinding about what the accused did”)
(emphasis in original).
C. Finding that the Gun Was Stolen
We come finally to Williams’ contention that the district
court violated his Sixth Amendment right to a jury trial
when it determined that the gun he possessed was stolen
and enhanced his offense level by two levels based on that
finding. See U.S.S.G. § 2K2.1(b)(4). Booker holds that a
defendant has a Sixth Amendment right to have a jury
10 No. 03-4091
determine based on proof beyond a reasonable doubt any
fact that has the effect of increasing a mandatory sentenc-
ing range. 125 S. Ct. at 748-54, 755-56. The finding that the
Smith and Wesson revolver was stolen did have the effect
of increasing Williams’ sentencing range.
The government contends that there was no Booker
violation, because Williams had admitted that the gun was
stolen. See Booker, 125 S. Ct. at 756 (“Any fact (other than
a prior conviction) which is necessary to support a sentence
exceeding the maximum authorized by the facts established
by a plea of guilty or a jury verdict must be admitted by the
defendant or proved to a jury beyond a reasonable doubt.”)
(emphasis ours). As we noted previously, the AUSA noted
in her Rule 11 proffer that Williams told Special Agent
Salerno that he believed his friends had stolen the gun, and
Williams acknowledged the accuracy of that proffer.
Williams replies that this was not sufficient to constitute an
admission for purposes of the Sixth Amendment, given that
the court in questioning Williams about the basis for his
plea did not specifically ask him whether the gun was
stolen. It is no surprise that the court omitted to question
Williams on this point, as the ownership of the gun was not
an element of the offense with which Williams was charged,
in the sense of establishing either his guilt or the statutory
range of penalties, nor was the fact that the gun was stolen
alleged in indictment. We add that whether or not the gun
was stolen was not a matter addressed in the written plea
agreement executed by the parties. Cf. United States v.
Castillo, 406 F.3d 806, 823 (7th Cir. 2005) (defendant in
plea agreement specifically conceded conduct forming basis
for application of enhancement for obstruction of justice).
We may put that point aside, however. Whether or not the
district court’s finding as to the gun being stolen was based
on a genuine admission by Williams is not dispositive of his
Sixth Amendment claim. For the Supreme Court in Booker
No. 03-4091 11
chose to solve the Sixth Amendment problem posed by the
Sentencing Guidelines not by precluding judges from making
factual determinations for purposes of sentencing, but by
severing and excising, inter alia, the statutory provision
rendering the Guidelines obligatory, 18 U.S.C. § 3553(b)(1).
125 S. Ct. at 764-65. Thus, while district courts are still
required to consult the Guidelines, make findings as to the
pertinent Guidelines factors, and take the resulting Guide-
lines sentencing range into consideration in deciding how to
sentence a defendant, the Guidelines no longer bind
sentencing judges in their selection of a reasonable sen-
tence, but are only advisory. Id. at 767.4
This is where the error occurred in sentencing Williams.
The district court sentenced Williams in November 2003,
more than a year before the Supreme Court decided Booker
and at a time when the Guidelines still were considered to
be binding. Thus, after making findings as to the pertinent
sentencing factors, the court sentenced Williams within the
resulting Guidelines range without realizing that it had the
discretion to sentence outside of that range even if, for
example, the circumstances did not meet the relatively
narrow criteria for a departure from the Guidelines. See 18
U.S.C. § 3553(b)(1); U.S.S.G. § 5K2.0. In retrospect, with
the benefit of the Supreme Court’s decision in Booker, we
now know that it was error to treat the Guidelines as bind-
ing, and because Williams’ case was pending on direct re-
view when Booker was decided, he may claim the benefit of
its remedial holding. Booker, 125 S. Ct. at 769;
4
Aside from the asserted Sixth Amendment error, we can find no
other defect in the district court’s finding that the Smith and
Wesson revolver was stolen. Even if Williams did not genuinely
admit as much for Sixth Amendment purposes, he never contested
the accuracy of the government’s assertion that he told Agent
Salerno the gun was stolen, nor did he object to the PSR’s
proposed finding that the gun was stolen.
12 No. 03-4091
United States v. Schlifer, 403 F.3d 849, 853 (7th Cir. 2005);
see also Castillo, 406 F.3d at 823 (recognizing that Booker
error may occur even in the absence of judicial fact-finding,
where district court treats Guidelines as mandatory)
(quoting United States v. White, 406 F.3d 827, 835 (7th Cir.
2005)).
But because Williams did not make a Sixth Amendment
objection below, he must not only establish error, but plain
error, in order to obtain relief. See Booker, 125 S. Ct. at 769.
In particular, he must show that the mistake in treating the
Guidelines as obligatory affected his substantial rights.
Fed. R. Crim. P. 52(b); United States v. Lee, 399 F.3d 864,
866 (7th Cir. 2005). In other words, we have to know
whether the district court might have sentenced Williams
to a lesser prison term had it known that the Guidelines
were advisory. United States v. Paladino, supra, 401 F.3d
at 481-82. The fact that the court chose a sentence at the
top of the Guidelines range does not by itself rule out this
possibility, as the court made that selection believing that
its discretion was confined to the range specified by the
Guidelines. Id. at 482; see also United States v. Della Rose,
403 F.3d 891, 907 (7th Cir. 2005). And on review of the
record, we can find no other clue suggesting that the court
would have sentenced Williams to at least 115 months had
it realized that it had the discretion to impose a sentence
outside of the Guidelines range. See Lee, 399 F.3d at 866-67.
As we cannot divine whether the sentencing judge might be
inclined to sentence Williams more leniently under a
discretionary scheme, we must remand the case to the
district court so that it can make that determination. See
Paladino, 401 F.3d at 483. If, after due consideration, the
court indicates that it would be inclined to impose a lesser
sentence on Williams, then prejudice will have been estab-
lished, and we shall vacate the sentence to allow resen-
tencing. Della Rose, 403 F.3d at 908 (citing Paladino, 401
F.3d at 484). On the other hand, if the court concludes that
No. 03-4091 13
it would be inclined to sentence Williams to the same (or a
longer) term knowing that it has broader discretion after
Booker, then the only step left for us to take will be to
consider whether Williams’ sentence was plainly erroneous
in the sense of being unreasonable. Id. (citing Paladino, 401
F.3d at 484).
III.
Finding no plain constitutional error in the application of
18 U.S.C. § 922(g)(1) to Williams’ possession of a handgun
that was manufactured in another state, we AFFIRM his
conviction. We also find no plain error either in the court’s
findings as to the extent and nature of Williams’ criminal
history or in its finding that the revolver Williams pos-
sessed was stolen. However, because the court sentenced
Williams believing that the Sentencing Guidelines were
binding rather than mandatory, we order a limited REMAND
so that the district court may determine whether it would
be inclined to sentence Williams to a lesser prison term
knowing that it has the discretion to do so after Booker. We
retain appellate jurisdiction pending the outcome of this
remand.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-9-05 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2995160/ | United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
August 14, 2001
Before
Hon. RICHARD D. CUDAHY, Circuit Judge
Hon. JOHN L. COFFEY, Circuit Judge
Hon. FRANK H. EASTERBROOK, Circuit Judge
Nos. 99-3777, 99-3844, 99-3877 &
00-4295
GREAT LAKES DREDGE & DOCK COMPANY, Appeals from the
Plaintiff, Counterdefendant- United States District
Appellee, Court for the Northern
District of Illinois,
v. Eastern Division.
CITY OFCHICAGO, et al., No. 94 C 2579
Defendants, Counterplaintiffs- Joan B. Gottschall,
Appellees, Judge.
v.
COMMERCIAL UNION INSURANCE COMPANY, et al.,
Defendants-Appellants.
.
Order
The opinion of this court issued on August 10, 2001, is
amended to include case number 99-3777. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2995170/ | United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
August 7, 2001
Before
Hon. HARLINGTON WOOD, JR., Circuit Judge
No. 00-2854
ROBERT J. TEZAK, Appeal from the United States District Court
Petitioner-Appellant, for the Northern District of Illinois, Eastern
Division.
v.
No. 96 C 7936
UNITED STATES OF AMERICA,
Respondent-Appellee. Wayne R. Andersen,
Judge.
ORDER
The following is before the court: GOVERNMENT’S UNOPPOSED MOTION TO
CORRECT OPINION, filed August 7, 2001, by counsel for the government.
IT IS ORDERED that the motion is GRANTED and this court’s opinion dated July 11,
2001, is MODIFIED as follows:
1. At page 6 of the slip opinion, first full paragraph, fourth sentence, “John Bays,” and “and
a good friend of Tezak.” are removed.
2. At page 6 of the slip opinion, first full paragraph, fifth sentence, “Bays” is replaced with
“who”.
3. At page 6 of the slip opinion, first full paragraph, the fourth sentence shall now read:
“Tezak stated that he was approached by another prominent member of the Republican party in Joliet
who was the focus of a grand jury investigation and who asked Tezak to destroy subpoenaed records
which were housed in the PIC building.”
4. At page 22 of the slip opinion, second full paragraph, the third sentence, “Bays was the
target of the investigation involving the subpoenaed documents which were destroyed in the PIC
arson.” is removed. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1596932/ | 581 F.Supp. 933 (1984)
MERRILL LYNCH COMMODITIES INC., Plaintiff,
v.
RICHAL SHIPPING CORPORATION and Aristidis I. Alafouzos, Defendants,
v.
MERRILL LYNCH INTERNATIONAL BANK (PANAMA) and Merrill Lynch, Pierce, Fenner & Smith (Hellas) Ltd., Counterclaim Defendants.
No. 82 Civ. 8226 (JMC).
United States District Court, S.D. New York.
February 21, 1984.
*934 Rogers & Wells, New York City (William F. Koegel, Joseph A. Post and Peter L. Thoren, New York City, of counsel), for plaintiff and counterclaim defendants.
Haight, Gardner, Poor & Havens, New York City (John J. Reilly, Sheila T. Cain, Barbara A. Ritomsky, New York City, of counsel), for defendants.
MEMORANDUM AND ORDER
CANNELLA, District Judge.
Plaintiff's and third-party defendants' motions for a stay of this action pending arbitration and for an order compelling parties to proceed to arbitration are granted. 9 U.S.C. §§ 3, 4.
Plaintiff's and third-party defendants' motions for a protective order and an order dismissing counterclaims against third-party defendants are denied without prejudice. Fed.R.Civ.P. 26(c); 12(b)(2), (6).
FACTS
On July 26, 1982, defendant Richal Shipping Corporation ["Richal"], a Liberian corporation with its principal place of business *935 in Athens, Greece, executed a Commodity Account Agreement in connection with Account No. XXX-XXXXX ["075 Account"], with plaintiff Merrill Lynch Commodities Incorporated ["MLC"], a Delaware corporation with its principal place of business in New York. The parties agreed to arbitrate their disputes pursuant to an arbitration agreement signed on behalf of Richal by Aristides I. Alafouzos ["Alafouzos"], a Greek citizen.[1] Alafouzos also executed a Continuing Guaranty with respect to the 075 Account on July 26, 1982 that provided in part: "This shall be a continuing Guaranty for such indebtedness which [Richal] shall incur to you, in accordance with the rules and customs of any exchange upon which [its] orders are executed and in accordance with any special agreements now or hereafter existing between you and [Richal]."
Richal used the 075 Account to engage in foreign exchange transactions. On October 6, 1982, MLC liquidated the 075 Account as a result of Richal's refusal to meet new margin demands requested by MLC. A debit balance of $1,062,820.40 remaining in the 075 Account after its liquidation was offset on November 5, 1982 by a transfer of $1,000,000 to MLC from a Richal account maintained for the benefit of MLC with Merrill Lynch International Bank Ltd. ["MLIB"]. By letter dated November 16, 1982, MLC served an arbitration demand upon Richal. By letter dated December 3, 1982, Richal elected arbitration under the rules of the American Arbitration Association but maintained that Alafouzos was not a party to the arbitration agreement and that the foreign currency transactions were not within the scope of the agreement. By letter dated December 6, 1982, MLC claimed that Richal failed to comply with selection provisions of the arbitration agreement and instead, elected arbitration pursuant to the rules of the New York Stock Exchange.
Three lawsuits have been instituted between the parties. On October 8, 1982, Richal commenced proceedings against Merrill Lynch, Pierce, Fenner & Smith (Hellas) Ltd. in the Greek courts. Following a hearing, the action was dismissed on January 11, 1983. A second lawsuit was commenced by Richal against MLIB on November 17, 1982 in British courts which is still pending. The instant action was commenced by MLC against Richal and Alafouzos on December 10, 1982 seeking recovery of the $62,820.40 debit balance remaining in the 075 Account which was not offset by the MLIB transfer. Defendants have counterclaimed for damages arising from the liquidation of the 075 Account.
On May 17, 1983, the Commodity Futures Trading Commission ["CFTC"] amended its arbitration regulations to become effective on August 15, 1983. On August 8, 1983, MLC sent Richal a notice which provided for a revised arbitration agreement that incorporated the CFTC amendments.[2] The section that set out the proposed arbitration terms included the following provision:
If you signed the Arbitration Agreement when you opened your account and wish to be bound by the terms of this new agreement you need not respond to this notice. If, however, you signed the Arbitration Agreement before and DO NOT wish to be bound by the terms of this new agreement, sign the form below and return it in the enclosed envelope *936 within 30 days. By doing so, you will not only reject the new agreement, you will not be subject to or bound by the former agreement which will be null and void as of August 15, 1983. Your failure to respond within 30 days will be presumed as an indication that you accept the terms of the new agreement and agree to be bound by it (emphasis in original).
On September 1, 1983, Richal and Alafouzos elected not to be bound by the new arbitration provisions and now maintain that the original arbitration agreement is null and void ab initio. MLC asserts that the notice applied only to "new" arbitration agreements or to those accounts in which a previous arbitration agreement had not been invoked as of August 15, 1983.
DISCUSSION
9 U.S.C. § 3 ["Section 3"]
This Court is empowered under Section 3 of the Federal Arbitration Act [the "Act"] to stay proceedings when issues are referrable to arbitration pursuant to a written agreement.[3]See Bernhardt v. Polygraphic Co., 350 U.S. 198, 201, 76 S.Ct. 273, 275, 100 L.Ed. 199 (1956); Ocean Industries, Inc. v. Soros Associates International, Inc., 328 F.Supp. 944, 947 (S.D. N.Y.1971); see also Paine Webber Jackson & Curtis, Inc. v. Chase Manhattan Bank, N.A., 728 F.2d 577 at 580 (2d Cir.1984) (arbitration of disputes not incorporated in a written agreement). Pursuant to Section 3 the Court may only consider (1) whether there exists an agreement to arbitrate and (2) its scope. See Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 1806, 18 L.Ed.2d 1270 (1967); Netherlands Curacao Co. v. Kenton Corp., 366 F.Supp. 744, 746 (S.D.N.Y.1973). "The question of whether a dispute between the parties is covered by the arbitration agreement is for the courts to decide." Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 63 (2d Cir.1983).
It is not contested that an enforceable arbitration agreement existed at the time of the disputed transactions; rather, Richal argues that the issues raised by these transactions are outside the scope of the agreement. Richal maintains that it was misled as to the scope of the underlying Commodity Account Agreement covered by the arbitration agreement and contends that the 075 Account was not to be used for foreign currency transactions.[4]
In deciding whether to stay this action, the Court must determine whether the arbitration clause is broad enough to include the claims made by MLC. See United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960); Coudert v. Paine Webber Jackson *937 & Curtis, 705 F.2d 78, 81 (2d Cir.1983).[5] The arbitration agreement covers "transactions" relating to Richal's "account". All transactions between MLC and Richal were based upon the contractual relationship entered into on July 26, 1982. It is evident that issues involving the foreign exchange transactions, regardless of whether they were made pursuant to the 075 Account or Account No. XXX-XXXXX derive from this relationship.[6] For this reason, the Court finds that the claims at issue are within the ambit of the arbitration agreement and hereby stays this proceeding. See Downing v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 725 F.2d 192 at 195 (2d Cir. 1984).
9 U.S.C. § 4 ["Section 4"]
Under Section 4 of the Act, the Court is instructed to order arbitration to proceed upon being satisfied that (1) the making of the agreement for arbitration or (2) the failure to comply therewith is not in issue.[7]See Prima Paint Corp. v. Flood & Conklin Manufacturing Co., supra, 388 U.S. at 403, 87 S.Ct. at 1805; Prudential Lines, Inc. v. Exxon Corp., supra, 704 F.2d at 62 & n. 14. Defendants argue that their failure to arbitrate is in issue because the Commodity Account Agreement was allegedly limited to trading subject to the Commodities Exchange Act ["CEA"], 7 U.S.C. §§ 1-24 and that the currency transactions at issue are not regulated by the CEA.[8] This argument is without merit. Richal signed a Corporate Authorization to Trade Commodities ["Corporate Authorization"] empowering MLC to buy or sell commodities that did not refer to CEA regulations. The Corporate Authorization is clearly part of the July 26, 1982 agreements covered by the arbitration agreement. Foreign currency transactions are commodities transactions, see CFTC v. American Board of Trade, Inc., 473 F.Supp. 1177, 1182 (S.D.N.Y.1979) and, therefore, are subject to the arbitration agreement.[9] Moreover, pursuant to Section 4 the Court is limited to determining only "whether a party refused to arbitrate, not whether it rightfully refused.... A *938 contrary conclusion, permitting the court to evaluate the `rightfulness' of a party's refusal to arbitrate, would be at odds with the limited scope of judicial inquiry authorized by section 4." Conticommodity Services v. Philipp & Lion, 613 F.2d 1222, 1227 (2d Cir.1980) (citations omitted); see Trafalgar Shipping Co. v. International Milling Co., 401 F.2d 568, 572 (2d Cir. 1968).[10]
In the instant dispute, there is (1) no claim of fraud in the inducement or (2) any other factual issue concerning the existence of an arbitration agreement. See Prima Paint Corp. v. Flood & Conklin Manufacturing Co., supra, 388 U.S. at 406, 87 S.Ct. at 1807. Having determined the existence of the arbitration agreement and a failure to comply therewith, the Court orders the parties to proceed to arbitration.
CFTC Amendments
Defendants argue that the arbitration agreement is invalid because it does not comply with the August 15, 1983 amendments to CFTC arbitration regulations. Although the arbitration agreement, the dispute, the request to arbitrate and the instant motion predate the amended regulations, defendants rely on Curran v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 622 F.2d 216 (6th Cir.1980), aff'd, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982) and Ames v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 567 F.2d 1174 (2d Cir. 1977), to support the argument that the CFTC amendments are retroactive.
The CFTC regulations at issue were promulgated pursuant to 7 U.S.C. § 7a(11), which limits the foreign currency transactions it governs to those involving sales "for future delivery conducted on a board of trade." 7 U.S.C. § 2.[11] There is no dispute that the transactions at issue are forward rather than future transactions, see SEC v. G. Weeks Securities, 483 F.Supp. 1239, 1244 (W.D.Tenn.1980), modified on other grounds, 678 F.2d 649 (6th Cir.1982), and were not conducted on a board of trade.[12] Clearly, if the transactions do not need to comply with CEA requirements, then the controlling arbitration agreement is not affected by CFTC regulations. See Shearson Hayden Stone, Inc. v. Scrivener, 671 F.2d 680, 684-85 (2d Cir.1982). Because the transactions were not within the scope of the CEA, the arbitration agreement remains valid and enforceable.
Assuming arguendo that CEA jurisdiction existed, the Court would not give retroactive effect to the CFTC amendments. The instant dispute varies significantly from situations where CFTC amendments have been retroactively applied. See Curran v. Merrill Lynch, Pierce, Fenner *939 & Smith, supra, 622 F.2d at 228.[13] The purpose of the August 15, 1983 CFTC regulations are designed to "encourage the use of arbitration as a means of dispute resolution by participants in the commodity futures and options markets." 48 Fed.Reg. 22,136 (May 18, 1983). Thus, because the new regulations are designed to supplement existing rights rather than remedy existing hardships, the Court declines to give them retroactive effect. See Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 621, 11 L.Ed.2d 576 (1964); see also Arkoosh v. Dean Witter & Co., 571 F.2d 437, 438-39 (6th Cir.1978) (no retroactive effect to November 29, 1976 CFTC amendments because untimely assertion of rights resulted in manifest injustice); Ames v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 567 F.2d at 1181 (Meskill, J., dissenting) (CFTC amicus curiae brief states November 29, 1976 CFTC amendments were not intended to extend to pre-existing arbitration agreements).
August 8, 1983 Notice
Relying on MLC's August 8, 1983 notice that existing arbitration agreements "will be null and void as of August 15, 1983," defendants assert that plaintiff waived its right to seek arbitration on the disputed transactions. Defendants contend that the MLC announcement and their response terminate rights pursuant to the arbitration agreement, including rights vested prior to the announcement. For the reasons set forth below, the Court rejects this contention.
Citing Casey v. Kastel, 237 N.Y. 305, 312, 142 N.E. 671, 673 (1924) and Zogby v. State, 53 Misc.2d 740, 743, 279 N.Y.S.2d 665, 668 (N.Y.Ct.Cl.1967), defendants maintain that the generally accepted definition of "null and void" is void ab initio. The interpretation of "null and void" in these cases was narrowly construed and both courts ruled that the term "null and void" is susceptible to a "more limited meaning" than void ab initio. See Matter of New York & Long Island Bridge Co. v. Smith, 148 N.Y. 540, 547, 42 N.E. 1088, 1090 (1895); see also Ewell v. Daggs, 108 U.S. 143, 148-49, 2 S.Ct. 408, 411-12, 27 L.Ed. 682 (1883) ("null and void" can give rise to antecedent rights and obligations).
Plaintiff's contention that the "null and void" provision applies solely to disputes arising after August 15, 1983 is supported by the facts and circumstances of this action. The language of the notice must be construed in light of reasonable business practices designed to preserve "sanity of end and aim." Outlet Embroidery Co. v. Derwent Mills, 254 N.Y. 179, 183, 172 N.E. 462, 463 (1930). Because MLC intended to retain its option to arbitrate against Richal,[14] the Court interprets the notice as preserving MLC's antecedent rights. See Oil Trading Associates, Inc. v. Texas City Refining, Inc., 201 F.Supp. 846, 849 (S.D.N.Y.1962); Brown v. McGraw-Hill Book Co., 25 A.D.2d 317, 320, 269 *940 N.Y.S.2d 35, 38 (1st Dep't 1966), aff'd, 20 N.Y.2d 826, 285 N.Y.S.2d 72, 231 N.E.2d 768 (1967). Moreover, in view of the "overriding federal policy honoring arbitration [dictating that waiver] is not to be lightly inferred," Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.1968); see Southland Corp. v. Keating, ___ U.S. ___, ___, 104 S.Ct. 852, 858, 79 L.Ed.2d 1 (1984), the Court finds that the original July 26, 1982 arbitration agreement remains in effect. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11, 94 S.Ct. 2449, 2452-53, 41 L.Ed.2d 270 reh'g denied, 419 U.S. 885, 95 S.Ct. 157, 42 L.Ed.2d 129 (1974); China Union Lines, Ltd. v. American Marine Underwriters, Inc., 458 F.Supp. 132, 135 (S.D.N.Y.1978).[15]
Alafouzos
The remaining question is whether Alafouzos, as guarantor of Richal, must participate in the arbitration.[16] It is clear that nonsignatories to a contract containing an arbitration clause may be deemed parties thereto, through ordinary contract principles, for purposes of the Act. See Interbras Cayman Co. v. Orient Victory Shipping Co., 663 F.2d 4, 7 (2d Cir.1981); McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519, 523-24 (2d Cir.1980). In construing the scope of a guarantee, the Second Circuit has stated:
The determination of whether a guarantor is bound by an arbitration clause contained in the original contract necessarily turns on the language chosen by the parties in the guaranty. We are aided in our construction of the language here by prior decisions which make clear that where an arbitration clause is applicable by its own terms to all disputes and is not limited to those arising between the [contract signatories], the agreement to arbitrate binds "not only the original parties, but also all those who subsequently consent to be bound by [the terms of the contract]."
Compania Espanola de Petroleos, S.A. v. Nereus Shipping, S.A., 527 F.2d 966, 973 (2d Cir.1975), cert. denied, 426 U.S. 936, 96 S.Ct. 2650, 49 L.Ed.2d 387 (1976) (quoting Lowry & Co. v. S.S. Le Moyne D'Iberville, 253 F.Supp. 396, 398 (S.D.N.Y.1966), aff'd, 372 F.2d 123 (2d Cir.1967)).
In the instant dispute, the arbitration agreement covers "any controversy arising out of or relating to [Alafouzos'] account" and the Continuing Guaranty states unequivocally that Alafouzos guarantees any indebtedness that Richal may incur "in accordance with any special agreements" between MLC and Richal.[17]*941 The arbitration agreement is sufficiently broad to bind Alafouzos and the Court concludes that the references in the Continuing Guaranty explicitly adopt the conditions of the Commodity Account Agreement, including the arbitration agreement, all signed by Alafouzos. See Compania de Espanola de Petroleos, S.A. v. Nereus Shipping, S.A., supra, 527 F.2d at 973-74; Antco Shipping Co. v. Sidermar, S.p.A., 417 F.Supp. 207, 217-18 (S.D.N.Y.1976), aff'd, 553 F.2d 93 (2d Cir.1977); Midland Tar Distillers, Inc. v. M/T LOTOS, 362 F.Supp. 1311, 1313 (S.D.N.Y.1973); Lowry & Co. v. S.S. Le Moyne D'Iberville, supra, 253 F.Supp. at 398-99.[18]
Counterclaims/Discovery
Because the third-party complaint is clearly within the ambit of the arbitration agreement and should be resolved in the arbitration proceeding, the Court denies the counterclaim dismissal motion without prejudice. See Schulman Investment Co. v. Olin Corp., 458 F.Supp. 186, 188 (S.D.N.Y. 1978). The motion for a protective order is denied without prejudice. 9 U.S.C. § 7; see Commercial Solvents Corp. v. Louisiana Liquid Fertilizer Co., 20 F.R.D. 359, 361 (S.D.N.Y.1957).
CONCLUSION
Plaintiff's and third-party defendants' motion for a stay of this action pending arbitration and for an order compelling Richal and Alafouzos to proceed to arbitration are granted. 9 U.S.C. §§ 3, 4.
Plaintiff's and third-party defendants' motion to dismiss counterclaims is denied without prejudice. Fed.R.Civ.P. 12(b)(2), (6).
MLC is directed to send a letter to Richal within five (5) days of the date of this Memorandum and Order describing the available options for arbitration pursuant to the July 26, 1982 arbitration agreement. This letter may incorporate the increased options available under the August 15, 1983 CFTC amendments.
The Clerk of the Court is directed to prepare and enter Judgment dismissing the action without prejudice.
SO ORDERED.
NOTES
[1] The arbitration agreement, dated July 26, 1982, provides that:
Any controversy arising out of or relating to my account, to transactions with you for me or to this agreement or the breach thereof, shall be settled by arbitration in accordance with the rules, then in effect, of the contract market upon which the transaction giving rise to the claim was executed or the New York Stock Exchange, Inc. as as [sic] I may elect. If I do not make such election by registered mail addressed to you at your main office within five days after demand by you that I make such election, then you make such election. Judgment upon any award rendered by the arbitrations may be entered in any court having jurisdiction thereof.
[2] The notice was sent by Merrill Lynch Futures, Inc., the recently adopted name of plaintiff Merrill Lynch Commodities, Inc. ["MLC"]. Because plaintiff changed its name after the commencement of the action, the Court will continue to refer to plaintiff as MLC.
[3] Section 3 of the Federal Arbitration Act, 9 U.S.C. § 3 reads:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
[4] Defendants claim that they were "specifically led to believe that the Commodity Account Agreement and related documents signed by Richal on July 26, 1982 would not apply to foreign currency transactions." See Defendants' Memorandum of Law in Opposition to the Motions of the Plaintiff and the Counterclaim Defendants for a Protective Order, for a Stay Pending Arbitration and an Order Compelling Arbitration, and for an Order Dismissing Certain Claims at 11 (filed June 24, 1983) [hereinafter "Defendants' Memorandum in Opposition"]. The only facts supporting this contention are alleged statements made to Richal after trading on Account No. XXX-XXXXX ["075 Account"] had commenced. See Declaration of Athanassios C. Tsoukalas, ¶ 13 (filed June 24, 1983). This contention is explicitly disputed by plaintiff, see Declaration of Alexander Moraitakis, ¶¶ 8, 13, 15 (filed Aug. 12, 1983) [hereinafter "Moraitakis Declaration"] and impliedly by defendants' counsel. See Affidavit of John J. Reilly, ¶¶ 2, 3 (filed Oct. 7, 1983).
[5] Courts liberally construe the scope of arbitration clauses. See Coudert v. Paine Webber Jackson & Curtis, 705 F.2d 78, 81 (2d Cir.1983); Coenen v. R. W. Pressprich & Co., 453 F.2d 1209, 1212 (2d Cir.), cert. denied, 406 U.S. 949, 92 S.Ct. 2045, 32 L.Ed.2d 337 (1972).
[6] See Moriatakis Declaration, ¶¶ 8, 11, 13. Defendants' contention that the foreign exchange transactions were conducted solely between Richal Shipping Corporation ["Richal"] and Merrill Lynch International Bank, Inc. ["MLIB"] and bypassed the 075 Account is clearly erroneous. See Defendants' Memorandum in Opposition at 17. Although MLIB was involved with Richal's foreign exchange transactions, it acted as a conduit to the currency markets by executing individual orders on behalf of MLC. See Affidavit of James H. Hohorst, ¶¶ 3-5 (filed Apr. 12, 1983). Richal's account at MLIB was opened for the benefit of MLC and the 075 Account. See Affidavit of William F. Koegel, ¶ 5 (filed Apr. 12, 1983).
[7] Section 4 of the Federal Arbitration Act, 9 U.S.C. § 4 provides in pertinent part:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days' notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure.
The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.
[8] See Defendants' Memorandum in Opposition at 15-17.
[9] Defendants allege that Commodities and Exchange Act ["CEA"] regulations affecting the 075 Account can be inferred from the Commodity Account Agreement. Assuming arguendo that CEA regulations applied to the 075 Account and that the foreign currency transactions are outside the ambit of the CEA, see 7 U.S.C. § 2, the arbitration agreement would still apply to the transactions. See Shearson Hayden Stone, Inc. v. Scrivener, 671 F.2d 680, 684-85 (2d Cir.1982).
[10] Defendants also maintain there are disputed issues of fact concerning the making of the arbitration agreement. Relying on A/S Custodia v. Lessin International, Inc., 503 F.2d 318 (2d Cir.1974) and Interocean Shipping Co. v. National Shipping & Trading Corp., 462 F.2d 673 (2d Cir.1972), defendants assert an evidentiary hearing is required before the Court can compel arbitration pursuant to 9 U.S.C. § 4. Defendants' contention is misplaced. "[A] federal court may consider only issues relating to the making and performance of the agreement to arbitrate." Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 1806, 18 L.Ed.2d 1270 (1967); see Manes Organization, Inc. v. Standard Dyeing and Finishing Co., 472 F.Supp. 687, 690 n. 4 (S.D.N.Y.1979). In Interocean Shipping Co. v. National Shipping & Trading Corp., supra, 462 F.2d 673, the Second Circuit directed that in order to prove a genuine issue of fact with respect to an arbitration agreement, a party must make "an unequivocal denial that the agreement had been made" and produce evidence to substantiate the denial. Id. at 676 (quoting Almacenes Fernandez, S.A. v. Golodetz, 148 F.2d 625, 628 (2d Cir.1945)). Moreover, the Supreme Court has described such an issue as one where a party was fraudulently induced to enter the agreement to arbitrate. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., supra, 388 U.S. at 406, 87 S.Ct. at 1807.
[11] Although defendants argue that the CFTC regulations are controlling, they also assert that the foreign exchange transactions were not commodity transactions within the purview of the CEA.
[12] See Defendants' Memorandum in Opposition at 19-21; Supplemental Reply Memorandum of the Plaintiff and the Counterclaim Defendants at 5 (filed Oct. 14, 1983).
[13] Retroactive effect was mandated for November 29, 1976 CFTC amendments designed to assure that pre-dispute arbitration agreements were voluntarily entered into and were not preconditions to doing business with commodities trading firms. See Ames v. Merrill Lynch, Pierce, Fenner & Smith, 567 F.2d 1174, 1178 (2d Cir.1977). These amendments were "protections" against involuntary contractual obligations. Id. at 1179; see Curran v. Merrill Lynch, Pierce, Fenner & Smith, 622 F.2d 216, 228 (6th Cir.1980), aff'd, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982).
[14] "Contractual obligations are fixed solely by the parties, and the language of a business contract must be construed in the light of what a businessman would reasonably expect to give or receive, to perform or suffer, under its terms." Shirai v. Blum, 239 N.Y. 172, 179, 146 N.E. 194, 196 (1924). Plaintiffs had three weeks to comply with a July 22, 1983 Commodities Futures Trading Commission no-action letter requiring brokerage firms to inform each customer through uniform notices about the amended regulations. MLC was forced to notify thousands of worldwide customers and was unable to identify and send separate letters to those customers involved in arbitration proceedings. See Declaration of Don L. Horwitz, ¶¶ 6-8 (filed Sept. 27, 1983). Furthermore, statements of rescission made under conditions of haste or stress must be carefully scrutinized. See S & L Paving Corp. v. MacMurray Tractor, Inc., 61 Misc.2d 90, 95, 304 N.Y.S.2d 652, 659 (N.Y.Sup. Ct.1969).
[15] Defendants' reliance on the New York Uniform Commercial Code ["N.Y.U.C.C."] (McKinney 1964) for their contentions is not supported by applicable statute. N.Y.U.C.C. § 2-720 provides that: "Unless the contrary intention clearly appears, expressions of `cancellation' or `rescission' of the contract or the like shall not be construed as a renunciation or discharge of any claim in damages for an antecedent breach." Moreover, the official comment to N.Y.U.C.C. § 2-720 states that the section is "designed to safeguard a person holding a right of action from any unintentional loss of rights by the ill-advised use" of ambiguous business terms. The official comment further states that "[o]nce a party's rights have accrued they are not to be lightly impaired by concessions made in business decency and without intention to forego them." Cf. Marlene Industries Corp. v. Carnac Textiles, Inc., 45 N.Y.2d 327, 333-34, 380 N.E.2d 239, 242, 408 N.Y.S.2d 410, 413 (1978) (waiver of litigation rights).
[16] The Commodity Account Agreement, the Continuing Guaranty and the arbitration agreement were all signed by Aristidis I. Alafouzos ["Alafouzos"] on behalf of Richal Shipping Corp. ["Richal"] or in his individual capacity. Handwritten notations underneath the signatures indicating that the documents were signed by "I. Alafouzos" are incorrect. See Defendants' Memorandum in Opposition at 31.
[17] Defendants rely on Taiwan Navigation Co. v. Seven Seas Merchant Corp., 172 F.Supp. 721 (S.D.N.Y.1959), for the contention that no obligation to arbitrate was created by the Continuing Guaranty. See Defendants' Memorandum in Opposition at 29. The Court notes that Alafouzos waived notice of "any obligations incurred under [the Continuing Guaranty]." Moreover, in Compania Espanola de Petroleos, S.A. v. Nereus Shipping, S.A., 527 F.2d 966, 973-74 (2d Cir.1975), cert. denied, 426 U.S. 936, 96 S.Ct. 2650, 49 L.Ed.2d 387 (1976), the Second Circuit held that a nonsignatory guarantor was bound by an arbitration agreement and distinguished Taiwan Navigation Co. v. Seven Seas Merchant Corp., supra, because (1) the arbitration clause was limited to disputes between "Owners and Charterers"; and (2) the guaranty was limited strictly to "performance". In the instant dispute, the arbitration agreement applies to all controversies relating to the 075 Account and the Continuing Guaranty secures Richal's indebtedness in accordance with all agreements.
[18] In determining who is bound by an arbitration agreement, federal courts look to state contract principles. See McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519, 524 (2d Cir.1980); Farkar Co. v. R.A. Hanson DISC., Ltd., 441 F.Supp. 841, 845 (S.D.N.Y.1977), rev'd on other grounds, 583 F.2d 68 (2d Cir.1978); Wells Fargo Bank v. London Steam-Ship Owners' Mutual Insurance Association, Ltd., 408 F.Supp. 626, 629 (S.D.N.Y.1976). The Court's determination that Alafouzos is bound by the arbitration agreement is supported by New York law. See Madawick Construction Co. v. Travelers Insurance Co., 307 N.Y. 111, 118, 120 N.E.2d 520, 527 (1954); Calvin Klein Co. v. Minnetonka, Inc., 88 A.D.2d 503, 504, 449 N.Y.S.2d 729, 731 (1st Dep't 1982); National Recreational Products, Inc. v. Gans, 46 A.D.2d 618, 619, 359 N.Y.S.2d 803, 804 (1st Dep't 1974). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2998802/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 04-1507 & 04-1535
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
RODNEY MCLEE and
VICKI MURPH-JACKSON,
Defendants-Appellants.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 CR 635—Charles P. Kocoras, Judge.
____________
ARGUED FEBRUARY 22, 2005—DECIDED FEBRUARY 2, 2006
____________
Before KANNE, WOOD, and SYKES, Circuit Judges.
SYKES, Circuit Judge. A jury convicted Rodney McLee
of cocaine conspiracy and related drug-trafficking crimes
and also two firearms offenses. McLee’s wife and
codefendant, Vicki Murph-Jackson, was convicted with him
on the drug charges. Both received lengthy prison sen-
tences. Their appeals have been consolidated, and numer-
ous trial and sentencing errors are alleged. McLee argues
the evidence was insufficient to convict him on the firearms
charges. Both defendants contend that certain evidence
predating the conspiracy was erroneously admitted, that
their right of cross-examination was erroneously restricted,
and that the government’s wiretap evidence should have
2 Nos. 04-1507 & 04-1535
been excluded. They also argue that factual findings made
by the district court at sentencing were clearly erroneous.
Finally, McLee challenges his sentence under United States
v. Booker, 543 U.S. 220 (2005). We affirm the defendants’
convictions and order a limited remand as to both defen-
dants in accordance with United States v. Paladino, 401
F.3d 471 (7th Cir. 2005).
I. Background
Trial evidence established that McLee and Murph-
Jackson were intimately involved in all aspects of a large-
scale cocaine distribution operation run from the south side
of Chicago by a man named Kevin Turner. Turner and other
subordinate members of the conspiracy were indicted along
with McLee and Murph-Jackson. Turner pleaded guilty to
the conspiracy charge and testified against McLee and
Murph-Jackson under the terms of his plea agreement.
Others charged in the conspiracy— Steve Brown, Dymica
Hilt, and Kevin Turner’s brother Prince Turner, Jr.—also
entered into plea agreements with the government and
testified for the prosecution.
Testimony established that upon Turner’s release from
federal prison on drug-related charges in 1996, he quickly
resumed his previous occupation as a seller of cocaine.
Turner enlisted the services of his friend McLee and later
McLee’s girlfriend and future wife, Murph-Jackson, both of
whom participated in the operation by delivering drugs to
customers, packaging and storing drugs for later delivery,
and collecting money from customers. Specifically, Turner
testified that he would purchase large quantities of cocaine
from his suppliers—as much as 50 kilograms a month—and
store it at the home occupied by McLee and Murph-Jackson.
McLee and Murph-Jackson, sometimes assisted by others,
would weigh and divide the cocaine into smaller amounts
and package it for future sale. McLee also cooked cocaine
Nos. 04-1507 & 04-1535 3
into crack. When Turner arranged a sale with a purchaser,
he would contact McLee and either McLee or Murph-
Jackson would deliver the drugs, collect the money, and
hold it until arrangements could be made for its trans-
fer to Turner.
McLee and Murph-Jackson were paid a salary by Turn-
er for their services. McLee was originally Turner’s right-
hand man and the person trusted to have control over the
cocaine during the period between purchase and sale.
However, toward the end of 1998, when Turner became
convinced that McLee was skimming cocaine for sale to
his own customers, McLee was demoted from his “man-
agerial” position and replaced in this capacity by Murph-
Jackson. From this point until the conspirators were
arrested in 2002, McLee still packaged drugs, made deliver-
ies, and collected money, but did so under the supervision
of his wife.
Two or three times a week from late 1997 to July of 1999,
Turner sold cocaine in a wholesale fashion to another drug
dealer named Vernon Everett. Everett testified that on
some occasions McLee would deliver cocaine he had ordered
from Turner, often accompanied by Murph-Jackson. On
other occasions Everett would travel to various locations
controlled by Turner where Everett would witness McLee
weighing out the drugs and/or standing guard over the
process with a handgun tucked in the waistband of his
pants. On one occasion, Everett and Turner met at a
designated location and it was Murph-Jackson, unaccompa-
nied by McLee, who showed up to deliver the kilogram of
cocaine Everett had ordered.
In an event not directly related to the drug conspiracy, on
May 19, 1998, Officer Ramirez of the Chicago Police
Department was dispatched to a location on the south
side of the city in response to a complaint of a man wielding
a handgun. When the officer arrived on the scene, he saw
4 Nos. 04-1507 & 04-1535
about ten men congregated together on the sidewalk. One
of the men, later identified as McLee, held what the officer
described as a .45-caliber, blue steel handgun in his hand.
When McLee saw the squad car approaching, he put the
gun into the waistband of his pants and fled through a
series of residential backyards. McLee was the only one
of the group to flee upon seeing the police.
Officer Ramirez drove around the block and caught up
with McLee less than a minute after he had fled. The officer
ordered McLee to the ground and searched him but did not
find a gun. After McLee had been handcuffed and trans-
ferred to the custody of another officer, Ramirez searched
the path by which McLee had fled and discovered a loaded
.45 handgun lying in the grass in one of the yards McLee
had crossed during his flight. At the time of this incident,
McLee was a convicted felon. Turner testified that he had
been with McLee earlier that same day and McLee was
carrying a black gun with a brown handle that Turner had
given to him. Turner testified that McLee “often” carried a
firearm on drug transactions “to secure himself and secure
me.”
At some point during 2001, Murph-Jackson and McLee
separated and McLee moved out of the couple’s home in the
Chicago suburb of Calumet City, leaving Murph-Jackson
and her children as the only regular daily residents of the
home. In the summer of 2001, a confidential informant
identified Kevin Turner as a drug trafficker to agents
employed by the Drug Enforcement Administration
(“DEA”). Using information provided by the informant, the
DEA made three controlled cocaine buys from Turner in
2001.
Agents then applied for and received court authoriza-
tion to wiretap two telephones used primarily by Turner. A
total of 1,800 calls were subsequently intercepted, and 51 of
those calls were presented to the jury at trial, both
Nos. 04-1507 & 04-1535 5
in transcribed and audio forms. DEA Special Agent
Wise testified that the intercepted telephone calls were
monitored by DEA agents and simultaneously recorded onto
magneto-optical disks located at the DEA offices in down-
town Chicago. When the period of wiretap authorization
expired, the disks were placed into an evidence bag, sealed,
and delivered to the Chief Judge of the District Court for
the Northern District of Illinois.
Law enforcement authorities brought an end to Kevin
Turner’s drug-dealing enterprise on February 21, 2002.
On that day a Chicago police officer working with the
DEA in the ongoing investigation was detailed to a team
maintaining surveillance of McLee. The officer watched
McLee leave a tavern and enter a waiting vehicle driven
by Murph-Jackson. The officer then followed that vehicle for
several blocks until it parked on a city street for a rendez-
vous with three men in another car. The officer observed
McLee get out of Murph-Jackson’s car and hand a plastic
bag to the driver of the second vehicle. McLee then returned
to his wife’s car and they left the scene. Another officer in
the surveillance team followed the second car as it, too, left
the area; a third officer in a marked squad car was eventu-
ally instructed to pull the second car over. The driver was
identified as Juan Martinez. Martinez consented to a search
and police recovered the plastic bag that had been trans-
ferred by McLee. It contained $47,060 in cash. Turner later
identified Martinez as his principal supplier of cocaine
during the latter stages of the conspiracy.
Officers were then dispatched to Murph-Jackson’s
Calumet City residence and waited there until she arrived
home. Murph-Jackson consented to a search of the home. In
the attic officers found a blue, plastic storage box containing
37 one-kilogram “bricks” of cocaine and a loaded 9mm
Beretta handgun. Officers also recovered approximately
3 kilograms of cocaine and 403 grams of crack from Murph-
Jackson’s bedroom. At trial Turner testified that he and
6 Nos. 04-1507 & 04-1535
McLee had delivered the blue storage container to the
Calumet City home earlier in the month. Murph-Jackson’s
fifteen-year-old daughter, however, offered conflicting
testimony on this point; she said that Turner, unaccompa-
nied by McLee, brought the blue storage box to the home.
McLee was charged with conspiracy to deliver cocaine and
crack, possession of cocaine and crack with intent to deliver,
possession of a firearm in furtherance of a drug-trafficking
crime, use of a telephone to facilitate a narcotics offense,
and felon in possession of a firearm, contrary to 21 U.S.C.
§§ 846, 841(a)(1), 843(b), and 18 U.S.C. §§ 924(c)(1), 922(g).
Murph-Jackson was charged with the three drug crimes and
the drug-related firearms offense. McLee was convicted by
a jury on all counts. Murph-Jackson was convicted of the
drug charges but acquitted on the § 924(c) drug-related
firearms offense. McLee was sentenced to a total of 322
months in prison, and Murph-Jackson received a sentence
of 262 months.
II. Discussion
A. Gun Possession in Furtherance of a Drug Crime
The jury found McLee guilty of possession of a firearm
in furtherance of a drug-trafficking offense, contrary to
18 U.S.C. § 924(c)(1) and (2). The gun in question was
the 9mm Beretta found with the cocaine in the blue storage
box in the attic of Murph-Jackson’s home. McLee argues
there was insufficient evidence to prove possession because
he was not living in the home at the time of the search and
there was no evidence that he ever had actual physical
possession of the gun.
A challenge to the sufficiency of the evidence carries
a “daunting” burden. United States v. Hicks, 368 F.3d 801,
804 (7th Cir. 2004). The evidence is viewed in the light most
favorable to the prosecution, and the verdict must be upheld
Nos. 04-1507 & 04-1535 7
if any rational trier of fact could have found the essential
elements of the crime beyond a reasonable doubt. Id. at 804-
05. We will overturn a conviction based upon insufficient
evidence “only if the record is devoid of evidence from which
a reasonable jury could find guilt beyond a reasonable
doubt.” United States v. Curtis, 324 F.3d 501, 505 (7th Cir.
2003).
McLee is correct that the government presented no
evidence that he ever possessed the Beretta on his person
or that he was living in Murph-Jackson’s Calumet City
home at the time the gun was found. But neither of these
facts was necessary to a conviction on this count. Construc-
tive possession may be established through evidence
demonstrating that the defendant had the power and
intention to exercise dominion and control over the firearm,
either directly or through others. United States v. Walls,
225 F.3d 858, 864 (7th Cir. 2000); United States v. Thomas,
321 F.3d 627, 636 (7th Cir. 2003). If there was sufficient
evidence from which the jury could conclude that McLee
had the intent to exercise dominion and control over the
gun, it makes no difference that McLee was no longer living
in the home and no one testified to seeing him with the gun.
Viewed in the light most favorable to the verdict, the
pertinent evidence adduced at trial established that
McLee and Murph-Jackson played prominent roles in the
Turner drug conspiracy, storing cocaine purchased by
Turner, packaging it, delivering the drugs to customers, and
collecting large sums of money. The evidence further
established that McLee often carried a gun in the course
of carrying out these duties as a member of the conspir-
acy. The Beretta was found in the storage box with
37 kilograms of cocaine in the attic of the home where much
of this activity was taking place. McLee, together with
Turner, had delivered the storage box to the resi-
8 Nos. 04-1507 & 04-1535
dence before its eventual discovery by police.1 Testimony
also established that although McLee and Murph-Jackson
were separated at the time the gun was seized, McLee
was often observed by surveillance officers coming and
going from the Calumet City home during the pertinent
time frame—including earlier in the day on which the
search was performed.
A reasonable jury could infer from this evidence that
the gun belonged to or was controlled by either McLee or
Turner. Either inference provides a sufficient basis for
McLee’s conviction. If the jury concluded that the gun
was McLee’s, or under his control, the government had
directly proven his constructive possession of the weapon.
If the jury alternatively concluded that the gun be-
longed to Turner, or was under his control, McLee’s convic-
tion is sustainable under the Pinkerton doctrine,2 pursuant
to which a defendant may be found guilty of violating
§ 924(c) if a coconspirator possessed a gun in furtherance of
the drug conspiracy and it was reasonably foreseeable to the
defendant that his accomplice would do so. See United
States v. Chairez, 33 F.3d 823, 826-27 (7th Cir. 1994) (“If
the government proved beyond a reasonable doubt that [the
defendant] was a member of a conspiracy at the time that
it was reasonably foreseeable that a member of a conspiracy
used or carried the firearm in furtherance of the conspiracy,
then [the defendant] might be found guilty of violating
§ 924(c).”); see also United States v. Goines, 988 F.2d 750,
774 (7th Cir. 1993); United States v. Carson, 9 F.3d 576, 591
1
Drawing inferences in favor of the verdict, and not second-
guessing the jury’s credibility determinations, we can only assume
that the jury credited Turner’s testimony that he and McLee
delivered the box together, rather than the testimony of McLee’s
stepdaughter that Turner delivered the box alone.
2
The doctrine takes its name and derives its authority from
Pinkerton v. United States, 328 U.S. 640 (1946).
Nos. 04-1507 & 04-1535 9
(7th Cir. 1993). The jury was instructed as to McLee’s
potential Pinkerton liability with respect to this count of the
indictment. We conclude that the evidence was sufficient to
sustain McLee’s conviction for violating § 924(c).
B. Felon in Possession of a Firearm
McLee’s conviction for being a felon in possession of a
firearm involves a different gun—the one Officer Ramirez
saw in McLee’s hands on May 19, 1998, and which he
recovered from a yard McLee traversed during the ensuing
foot chase. McLee challenges the sufficiency of the evidence
on this count, arguing that nothing connected him to the
specific gun recovered by Officer Ramirez.3 McLee relies
solely on a perceived discrepancy between the characteris-
tics of the firearm described and found by the officer and
Turner’s description of the gun he saw in McLee’s posses-
sion earlier on the same day.
Turner testified that he was with McLee on the day in
question and saw McLee in possession of a “black gun with
a brown handle.” The gun recovered by Officer Ramirez and
shown to the jury was described by Ramirez as being made
of “blue steel.” This discrepancy is not enough to disturb the
jury’s verdict. Evidence is not reweighed on appeal. United
States v. Bowman, 353 F.3d 546, 552 (7th Cir. 2003).
Resolution of this sort of evidentiary inconsistency is
exclusively for the jury. Even if we indulge the assumption
that Turner’s recollection was accurate on this specific
point, there is absolutely nothing preventing a rational fact
finder from concluding that McLee had his hands on two
3
Unlike the § 924(c) charge discussed above, a felon in possession
charge pursuant to § 922(g) may not be proven by way of
the Pinkerton doctrine of vicarious coconspirator liability.
United States v. Walls, 225 F.3d 858, 864-66 (7th Cir. 2000).
10 Nos. 04-1507 & 04-1535
guns on the day in question, given the testimony that
McLee regularly armed himself in connection with his role
in the drug conspiracy.
More important is the sufficiency of Officer Ramirez’s
testimony that he observed McLee with a .45-caliber pistol
in his hand, saw McLee stick the gun in his pants and run,
observed the route by which McLee was attempting to
flee, and within minutes of McLee’s arrest found a .45-
caliber handgun along the very same route McLee had
traveled. This evidence is sufficient to sustain McLee’s
conviction for being a felon in possession of a firearm.
C. Evidence of Preconspiracy Criminal Conduct
The indictment concerned itself with the drug-trafficking
enterprise that Kevin Turner initiated upon his release
from federal prison in 1996.4 The activity that had origi-
nally landed Turner in prison was, itself, a drug-trafficking
operation. Over the defendants’ objection, the district court
permitted Turner to offer limited testimony that McLee had
assisted him in drug-dealing activity that predated the time
frame alleged in the indictment.5 Specifically, as a prelude
to his testimony concerning the conspiracy charged in the
indictment, Turner testified that he originally started
selling cocaine in 1988, and that McLee—his friend since
childhood—had assisted him by “brokering transactions,”
“going to get customers,” and delivering money during the
period 1988-1990.
4
Count One of the indictment charged that the conspiracy
lasted from “in or about 1996, until on or about February 21,
2002.”
5
McLee also complains about the admission of preconspiracy
testimony offered by witnesses other than Turner, but our re-
view of the record reveals that only Turner testified to any activity
by McLee that occurred prior to 1996.
Nos. 04-1507 & 04-1535 11
Immediately prior to this line of questioning, the court
instructed the jury as follows: “I will instruct the jury
that this is prior to the period charged in the indictment.
But you may consider it as background information. And its
relevance has to do with the relationship of the parties, but
it is not directly relevant to the charges in this case.” The
court also included the following instruction in its closing
instructions to the jury: “You have heard evidence of acts of
. . . Rodney McLee other than those charged in the indict-
ment. You may consider this evidence only on the question
of the relationship of the participants. You should consider
this evidence only for this limited purpose.”
McLee argues that the admission of Turner’s testimony
was erroneous because it was not “inextricably intertwined”
with the charged offense and thus should have been
excluded as impermissible “other crimes” character evidence
pursuant to FED. R. EVID. 404(b).6 The district court did not
abuse its discretion in admitting this testimony. United
States v. Hite, 364 F.3d 874, 881 (7th Cir. 2004) (evidentiary
rulings are reviewed for abuse of discretion). Evidence of
uncharged criminal activity does not implicate the charac-
ter/propensity prohibition of Rule 404(b) if the evidence is
“intricately related” to the facts and circumstances of the
charged offense. United States v. Gougis, Nos. 04-1345, 04-
1508 & 04-1535, 2005 WL 3534195 (7th Cir. Dec. 27, 2005);
United States v. Lahey, 55 F.3d 1289, 1295 (7th Cir. 1995);
United States v. King, 126 F.3d 987, 995 (7th Cir. 1997).
Evidence falls within this doctrine—also referred to as the
“inextricably intertwined” doctrine—if it helps to complete
6
FED. R. EVID. 404(b) provides in pertinent part: “Evidence of
other crimes, wrongs, or acts is not admissible to prove the
character of a person in order to show action in conformity
therewith. It may, however, be admissible for other purposes, such
as proof of motive, opportunity, intent, preparation, plan, knowl-
edge, identity, or absence of mistake or accident . . . .”
12 Nos. 04-1507 & 04-1535
the story of the crime on trial, if its absence would create a
chronological or conceptual void in the story of the crime, or
if it is so blended or connected that it incidentally involves,
explains the circumstances surrounding, or tends to prove
an element of the charged crime. Gougis, 2005 WL 3534195,
at *5; Hite, 364 F.3d at 881; United States v. Ojomo, 332
F.3d 485, 489 (7th Cir. 2003); United States v. Senffner, 280
F.3d 755, 764 (7th Cir. 2002).
Here, Turner’s testimony helped to complete the story
of how the conspiracy between Turner and McLee began
and filled what would otherwise have been a chron-
ological and conceptual void in the jury’s understanding
of the genesis and nature of their relationship. The evidence
explained why Turner anointed McLee as the most trusted
member of his inner circle almost immediately upon being
released from federal prison and reentering the drug trade.
The court’s limiting instructions, both before the jury heard
this testimony and at the close of the case, properly circum-
scribed the purpose for which the evidence was admitted.
Admission of this evidence was not error.
D. Admission of Hearsay from Nonconspirators
McLee and Murph-Jackson argue that the district court
erred in admitting testimony under the exception to the
hearsay rule for statements made by coconspirators. FED. R.
EVID. 801(d)(2)(E).7 This argument is woefully undeveloped.
McLee cites numerous pages of the trial transcript and then
baldly asserts that somewhere on these pages we may find
hearsay that either predates the conspiracy or that came
7
The entirety of the argument section of Murph-Jackson’s brief
states: “All issues raised and arguments presented in his brief
by co-defendant, Rodney McLee, applicable to this co-defen-
dant, Vicki Murph-Jackson are hereby adopted.”
Nos. 04-1507 & 04-1535 13
from witnesses who were not coconspirators. He makes no
attempt to identify the particular statements he would like
to put at issue or how any particular statement was prejudi-
cial to his defense. He wraps up his one-page argument by
acknowledging that standing alone, admission of this
supposed hearsay was harmless, but that when viewed in
combination with Turner’s preconspiracy testimony dis-
cussed above, the hearsay created “a false image about the
amount of drugs McLee was involved in.”
The weakness of this argument is difficult to over-
state. First, “it is not the obligation of this court to research
and construct the legal arguments open to parties, espe-
cially when they are represented by counsel.” United States
v. Holm, 326 F.3d 872, 877 (7th Cir. 2003). In any event,
our cursory examination of the transcript pages cited by
McLee reveals that on none of these pages is any witness
testifying about either McLee or Murph-Jackson. Nor was
there any objection, leaving only plain error review. We
decline to undertake that analysis on so undeveloped an
argument.
E. Limitation on Cross-Examination
One of those originally charged in the indictment was
Prince Turner, Sr., father of Kevin and Prince Turner, Jr.
Approximately five weeks prior to trial, the government
dropped all charges against Prince Turner, Sr. Two weeks
later, the government moved in limine to preclude the
defendants from “making any arguments based on the
government’s decisions not to charge other individuals
who conceivably could have been charged and to dismiss the
indictment as to Prince Turner, Sr.” The defendants
apparently did not respond to this motion. Based on events
that transpired during the trial, it appears that the motion
was granted, although the parties have not provided us
with any record of the court’s ruling. During cross-examina-
14 Nos. 04-1507 & 04-1535
tion of Prince Turner, Jr.—who, like his brother Kevin,
pleaded guilty and testified pursuant to a plea agree-
ment—the district judge made the following statement at a
sidebar conference:
And I want to make it plain now to everybody if there
is any mention before this jury about his father’s
charges and later dismissal, I will hold that lawyer in
contempt. That is off limits based on a pretrial ruling.
We are not going to deviate from that. And these
questions do not elicit any additional probative value as
to his motive and bias and court the danger that we are
going to get into his father’s case. It is entirely proper
to ask, as has been asked by counsel, about his father’s
participation and did he do this and do that. There is
nothing wrong with that. But the charges that were
dismissed are decisions by the U.S. Attorney’s office and
do not add anything to this case and are not properly
before this jury.
McLee and Murph-Jackson argue on appeal that the
district court inhibited their right to confront the witnesses
against them about a possible motivation for their testi-
mony—specifically, they suggest that Kevin and Prince
Turner, Jr., agreed to plead guilty and testify in exchange
for the dismissal of charges against their father. The
government responds that the charges against Prince
Turner, Sr., were dismissed before the Turner brothers
decided to plead guilty and cooperate with the prosecution,
and there is not a shred of evidence from which to infer any
connection between the dismissal of the charges and their
agreement to testify.
The Sixth Amendment guarantees a defendant the
right to cross-examine witnesses, and “the exposure of a
witness’ motivation in testifying is an important function of
the constitutionally protected right of cross-examination.”
Delaware v. Van Arsdall, 475 U.S. 673, 678-79 (1986).
Nos. 04-1507 & 04-1535 15
However, the right of cross-examination is not unfettered,
and trial judges have broad discretion to impose reasonable
limits on cross-examination based on concerns about
“harassment, prejudice, confusion of the issues, the wit-
nesses’ safety, or interrogation that is repetitive or only
marginally relevant.” United States v. Cameron, 814 F.2d
403, 406 (7th Cir. 1987) (quoting Van Arsdall, 475 U.S. at
679). Moreover, we have held that once a witness has been
exposed through cross-examination as having a motive to
lie, a district court enjoys greater freedom to limit cross-
examination that merely seeks to add additional layers of
motivation to those already established:
[O]nce this core function [of the Sixth Amendment] is
satisfied by allowing cross-examination to expose a
motive to lie, it is of peripheral concern to the Sixth
Amendment how much opportunity defense counsel gets
to hammer that point home to the jury. The trial court
may preclude “cumulative and confusing cross-examina-
tion into areas already sufficiently explored to permit
the defense to argue personal bias and testimonial
unreliability.”
....
“When reviewing the adequacy of a cross-examination,
the question is whether the jury had sufficient infor-
mation to make a discriminating appraisal of the
witness’s motives and bias.”
United States v. Nelson, 39 F.3d 705, 708 (7th Cir. 1994)
(quoting United States v. Robinson, 832 F.2d 366, 373 (7th
Cir. 1987) and United States v. DeGudino, 722 F.2d 1351,
1354 (7th Cir. 1983)).
Here, there was no shortage of cross-examination expos-
ing the Turner brothers’ motive to lie. The jury heard
exhaustive detail about the brothers’ plea agreements and
knew that those plea bargains could have influenced them
to testify for the prosecution in an effort to obtain more
16 Nos. 04-1507 & 04-1535
favorable sentencing recommendations. Kevin Turner was
questioned about his agreement to plead guilty and testify
in order to avoid a possible life sentence. The defense was
permitted great leeway to ask, repeatedly and in various
ways, whether Turner would “do anything”—including give
false testimony—to avoid the possibility of life in prison.
The same testimony was elicited from Prince Turner,
Jr.—that he struck a deal to testify as a means of eliminat-
ing the possibility of life imprisonment. The jury had more
than enough information to make a “discriminating ap-
praisal” of the Turner brothers’ motives for testifying
against McLee and Murph-Jackson.
Given that the possible biases of Kevin and Prince
Turner, Jr., were exposed and explored, the district court
was within its discretion to exclude evidence of the
U.S. Attorney’s charging decisions regarding their father.
There is no evidence suggesting a link between the dis-
missal of the charges against the father and the plea
agreements of the sons; any inference of bias on this basis
would have been entirely speculative. If the defense had
been permitted to invite such speculation by the jury, the
prosecution may well have felt compelled to present evi-
dence explaining its decision to dismiss the charges against
Prince Turner, Sr.—a potentially misleading diversion the
district court justifiably chose to avoid.
F. Necessity of Wiretaps
Prior to trial, McLee and Murph-Jackson moved to
suppress the evidence obtained from wiretaps on Kevin
Turner’s telephones on the ground that the govern-
ment failed to show, when applying for judicial authoriza-
tion to conduct the surveillance, that the wiretaps were
“necessary” pursuant to 18 U.S.C. § 2518(1)(c). Specifically,
the defendants argued that the government had amassed
“more than enough” evidence to indict them prior to
Nos. 04-1507 & 04-1535 17
obtaining the wiretap order, thus rendering the wire-
tap unnecessary to the prosecution. The motion was
denied and they challenge the denial on appeal.
The statute in question provides a checklist of informa-
tion that must be included in an application for an order
authorizing the interception of telephonic communica-
tions. Subsection (1)(c) requires: “[A] full and complete
statement as to whether or not other investigative proce-
dures have been tried and failed or why they reason-
ably appear to be unlikely to succeed if tried or to be too
dangerous.”8
This section of the statute was not intended to ensure
that wiretaps are used only as a last resort in an inves-
tigation, but rather that they are “not to be routinely
employed as the initial step” in a criminal investigation.
United States v. Thompson, 944 F.2d 1331, 1340 (7th Cir.
1991) (quoting United States v. Giordano, 416 U.S. 505, 515
(1974)). The rule in this circuit is that the government’s
burden of establishing compliance with § 2518(1)(c) “is not
great,” and that the requirement of exhausting “other
investigative procedures” prior to obtaining a wiretap is
“reviewed in a practical and common-sense fashion.” United
States v. Plescia, 48 F.3d 1452, 1463 (7th Cir. 1995); United
States v. Zambrana, 841 F.2d 1320, 1329 (7th Cir. 1988);
United States v. Anderson, 542 F.2d 428, 430 (7th Cir.
1976). To receive a wiretap order, the government need not
demonstrate that prosecution would be impossible without
it or that evidence possibly sufficient for indictment could
not conceivably be obtained through other means. Plescia,
8
The statute goes on to state that a judge may enter an ex parte
order authorizing the interception of wire, oral, or electronic
communications if he or she finds, among other things, that
“normal investigative procedures have been tried and have
failed or reasonably appear to be unlikely to succeed if tried or
to be too dangerous.” 18 U.S.C. § 2518(3)(c).
18 Nos. 04-1507 & 04-1535
48 F.3d at 1463. We have upheld the “necessity” of wiretap
orders on the basis that investigators were “having trouble
fingering other members of the conspiracy,” United States
v. Farmer, 924 F.2d 647, 652 (7th Cir. 1991), and that the
wiretaps “allowed the government to ascertain the extent
and structure of the conspiracy.” Plescia, 48 F.3d at 1463.
A finding of necessity is reviewed for abuse of discretion,
with great deference given to the determination made
by the issuing judge. Zambrana, 841 F.2d at 1329-30.
The affidavit supporting the issuance of the wiretap order
in this case stated that traditional investigative techniques
had met with “some success” but that tapping Turner’s
telephones had become necessary because investigators had
been unable, through the use of traditional techniques, to
establish the identities of all those participating in the
conspiracy. The truth of this assertion was borne out by
subsequent events—the identity of Juan Martinez, Turner’s
primary supplier of cocaine and an indicted coconspirator,
was learned only through the intercepted telephone commu-
nications. Further, the record demonstrates that the roles
played by Murph-Jackson and Steve Brown in the conspir-
acy were revealed to investigators only after they listened
in on Turner’s telephone calls. Despite McLee’s assertion to
the contrary, the fact that the government may have been
able to indict him in the absence of evidence obtained
through the use of a wiretap does not preclude a finding of
necessity under § 2518(1)(c). The government’s demon-
strated need for a wiretap as a means of identifying all
coconspirators and the roles they occupied in the structure
of the conspiracy is sufficient for a finding of “necessity”
under the statute.
G. Admissibility of Wiretap Evidence
In another pretrial motion, McLee and Murph-Jackson
sought to suppress the evidence obtained through the taps
Nos. 04-1507 & 04-1535 19
on Turner’s telephones on the basis that the government
failed to seal the original recordings of the intercepted calls,
which they claim is required by 18 U.S.C. § 2518(8)(a). The
motion was denied by the district court and the argument
is renewed on appeal.
The statute on which the defendants’ argument is pre-
mised provides as follows:
The contents of any wire, oral, or electronic communica-
tion intercepted by any means authorized by this
chapter shall, if possible, be recorded on tape or wire or
other comparable device. The recording of the contents
of any wire, oral, or electronic communication under
this subsection shall be done in such way as will protect
the recording from editing or other alterations. Immedi-
ately upon the expiration of the period of the order, or
extensions thereof, such recordings shall be made
available to the judge issuing such order and sealed
under his directions.
....
Duplicate recordings may be made for use or disclo-
sure pursuant to the provisions of subsections (1) and
(2) of section 2517 of this chapter for investigations.
18 U.S.C. § 2518(8)(a). McLee and Murph-Jackson con-
tend that this statute requires the government to present
the district court with the “original” recordings for seal-
ing and that the recordings that were sealed in this case
run afoul of the statutory requirements because they
were not the “originals.”
The record reflects that the intercepted phone calls in this
case were processed in the following manner: Telephone
calls being monitored by the DEA’s Chicago office—from all
ongoing wiretap investigations, not just this one—are
initially directed to a single computer hard drive located in
that office. This hard drive, according to the government’s
20 Nos. 04-1507 & 04-1535
terminology, is a “buffer” or “temporary holding site” for all
intercepted communications. Although the storage capacity
of the hard drive buffer is “relatively large and thus typi-
cally would not fill to capacity,” the system is designed to
overwrite previously stored audio with new audio in the
event the drive becomes filled to capacity.
When a telephone call enters this system, the buffer: 1)
stores the actual audio of the telephone call in an encoded
form; 2) generates “session data” comprised of a session
number, date, start time, and end time; and 3) generates
“pointers” for the call, described by the government as “a
decoding map that the system can later use to decode
the encoded audio portion on the hard drive buffer.” The
hard drive buffer initially stores the session data and
pointers separately from the audio but then merges the
three pieces of information by automatically writing from
the buffer onto a magneto-optical disk. The information
on the disk is thus comprised of the encoded audio, session
data, and the pointers necessary to decode the audio. There
is no “editing or alteration function” in this system.
The magneto-optical disks relevant to the wiretap or-
der in this investigation were presented to the district court
for sealing pursuant to the statute. McLee and Murph-
Jackson argue that § 2518(8)(a) required the government to
deliver the hard drive buffer to the court for sealing because
the buffer is the true “original recording” of the intercepted
call.
The primary purposes of § 2518(8)(a) are to “ensure the
reliability and integrity of evidence obtained by means
of electronic surveillance” and “limit[ ] the Government’s
opportunity to alter the recordings.” United States v. Ojeda-
Rios, 495 U.S. 257, 263 (1990). As applicable to this case,
the statute requires that intercepted communications be
recorded “on tape or wire or other comparable device” in
such a way “as will protect the recording from editing or
other alterations,” and that “such recordings” be made
Nos. 04-1507 & 04-1535 21
available to the judge issuing the surveillance order and
sealed under his direction. Despite the strenuous efforts of
McLee and Murph-Jackson to convince us otherwise, the
word “original” appears nowhere in the statute. Moreover,
their argument ignores every detail of the procedure used
by the government for recording the intercepted calls.
McLee argues that “anyone familiar with computers
knows that a computer hard drive leaves lasting records
that can allow a technician to decipher any alterations
or tampering” and “anyone with editing software and a
CD burner knows that alteration of a CD’s content can be
done seamlessly and with little or no trail of alteration.”
McLee presented no evidence to this effect in the district
court, and these suppositions conflict with the record
evidence regarding the sophisticated capture and pres-
ervation system used by the government. This unsupported
attempt to equate the government’s wiretap recording
system with the functions commonly used on home comput-
ers is unpersuasive. In the complete absence of any counter-
vailing evidence, we must accept the accuracy of the govern-
ment’s description of the attributes of its computer system,
including the absence of any editing or alteration function.
McLee and Murph-Jackson assert that because the
intercepted calls are routed to the buffer prior to being
written onto the magneto-optical disk, it is the buffer, and
not the disk, that constitutes the “device” on which the
communications are recorded and must be sealed pursu-
ant to § 2518(8)(a).9 This argument ignores the fact that the
buffer is a temporary holding site for the audio portion of
the call and generates the “session data” and the “pointers”
that identify and decode the encoded audio. The magneto-
9
The defendants do not argue that the sealed disks contained
recordings that differed in any way from the data that was
initially stored on the hard drive buffer.
22 Nos. 04-1507 & 04-1535
optical disk is therefore the first storage medium from
which a comprehensible call can be replayed to a listener.
In other words, even if it were possible for the hard drive
buffer to be removed from the system and sealed by the
court (a topic on which the parties do not comment), it is not
apparent that the object being sealed would be capable of
reproducing any recognizable human voices without
transfer to another medium.
Finally, the fact that the government’s interception
system is designed to overwrite existing audio from the
buffer in the event it fills to capacity makes it clear that the
disk, not the buffer, is the secure storage medium for
intercepted recordings that must be submitted for seal-
ing under § 2518(8)(a). The motion to suppress the wire-
tap evidence was properly denied.
H. Drug Quantity Determination
McLee argues that the district court committed clear
error when it found, for purposes of sentencing, that he was
responsible for more than 150 kilograms of cocaine and 1.5
kilograms of crack.10 Post-Booker, the clear error standard
of review continues to apply to factual findings made by the
district court for purposes of determining the applicable
advisory sentencing guidelines range. United States v.
Julian, 427 F.3d 471, 489 (7th Cir. 2005). In a drug conspir-
acy each conspirator is responsible not only for drug
10
With respect to this issue, Murph-Jackson’s brief once again
states only that she “adopts” the arguments made by McLee to the
extent that they apply to her. The trouble here is that McLee
makes no arguments applicable to Murph-Jackson, and he ar-
gues only that the evidence against him was insufficient to
sustain the court’s drug quantity attribution. Murph-Jackson
has therefore not properly raised any argument on appeal
with respect to factual findings made in the course of sentencing.
Nos. 04-1507 & 04-1535 23
quantities directly attributable to him but also for amounts
involved in transactions by coconspirators that were
reasonably foreseeable to him. United States v. Paters,
16 F.3d 188, 191 (7th Cir. 1994).
McLee’s attack on the district judge’s factual findings
is specious. The judge presided over a two-week trial in
which no fewer than four members of the conspiracy and
one major purchaser of cocaine testified at length regarding
McLee’s complete and total immersion in all aspects of a
drug-trafficking operation that purchased and distributed
between 10 and 50 kilograms of cocaine a month for a
period of approximately six years. According to
Kevin Turner, McLee was “involved in every drug trans-
action,” either in the capacity of delivering drugs, storing
drugs, packaging drugs, collecting money from customers,
delivering money to Turner, or acting as Turner’s body-
guard. Other testimony established McLee as the bag
man for the $47,060 delivery to the conspiracy’s cocaine
supplier and as a participant in the delivery of the 37
kilograms of cocaine discovered in Murph-Jackson’s attic,
the final transactions before the conspiracy was interrupted
by arrests.
With respect to the crack amounts, Turner and Steve
Brown, another member of the conspiracy, testified that
Brown would purchase an eighth or a quarter kilogram of
cocaine per week from Turner, often delivered to Brown
by McLee, and cook the cocaine into crack. Brown testified
that in the first half of 2001 he began purchasing his
cocaine directly from McLee in quantities of a half ounce to
an ounce at a time. Turner also testified that he recalled six
or seven occasions in 1998 when he was present
and witnessed McLee cooking an eighth of a kilogram of
cocaine into crack. The evidence also established the seizure
of 400 grams of crack from Murph-Jackson’s home.
At sentencing the district court found that McLee “was so
intricately related to the conspiracy and to the main
24 Nos. 04-1507 & 04-1535
conspirator, if you will, that it would be unreasonable not to
saddle him or charge him with the drugs that the evidence
suggested this conspiracy was responsible for.” This was not
clear error.
I. Mandatory Guidelines Application
McLee and Murph-Jackson were sentenced under the now
unconstitutional mandatory sentencing guidelines system.
Booker, 543 U.S. 220. In supplemental briefing McLee
requested resentencing; Murph-Jackson did not file a
supplemental brief after the Supreme Court’s decision in
Booker. Neither preserved the issue in the district court, so
review is for plain error. Paladino, 401 F.3d at 481.
Whether the error is plain in this context depends on
whether the district court would have imposed a more
lenient sentence had the court not believed it was bound by
the guidelines. Id. at 483. Where the record is unclear on
this point, we retain jurisdiction and remand for a state-
ment of the district court’s views. Id. at 484.
The sentences imposed in this case were at the low end of
very high guidelines ranges, and the judge made sev-
eral comments at sentencing explaining that he was
inhibited by the sentencing guidelines from imposing lesser
sentences. Regarding Murph-Jackson, the judge said: “I just
tell the family members of Ms. Murph-Jackson that what-
ever my thoughts [on sentencing] would be, if we had a
different sentencing scheme or structure, do not really
matter because I am bound to the guidelines. And there is
nothing I can do to change that.” Regarding both defen-
dants, he said: “I do not have a free hand, as I told everyone
here, and especially his family, in either Rodney’s case or
Vicki’s case. I have virtually no hand at all, if you want to
know the truth.” The court also characterized the sentences
imposed as being very long, and stated, with respect to
McLee, “I do not even pretend I am being merciful by giving
Nos. 04-1507 & 04-1535 25
the low end of the guideline range.” Although Murph-
Jackson did not specifically request resentencing in light of
Booker, we will order a limited remand pursuant to
Paladino for both defendants. See United States v. Murphy,
406 F.3d 857, 862 (7th Cir. 2005).
The defendants’ convictions are AFFIRMED. We retain
jurisdiction and order a limited REMAND in accordance with
the procedure outlined in Paladino.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—2-2-06 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/8569594/ | *299TEXTO COMPLETO DE LA SENTENCIA
Víctor Meléndez Morales (apelante o Meléndez Morales) apela la Sentencia dictada el 19 de diciembre de 2002 por el Tribunal de Primera Instancia, Sala Superior de San Juan (TPI), mediante la cual desestimó sumariamente la acción que contra el Estado Libre Asociado de Puerto Rico y la Policía de Puerto Rico (ELA), había instado para cobrar las horas extras que había acumulado en exceso de la jomada regular de trabajo, mientras era miembro de la Policía de Puerto Rico (Policía). '
El ELA sometió su alegato, por lo que con el beneficio de la comparecencia de ambas partes, resolvemos.
I
Tal y como lo estimó el TPI, no existe controversia alguna sobre los siguientes hechos:
Meléndez Morales era un alto oficial de la Policía con el rango de Teniente Coronel y ocupaba la posición de Comandante de Área de San Juan. Este cargo tiene entre las responsabilidades asignadas: la dirección, supervisión, coordinación y control de la operación de campo, operación de investigaciones criminales, servicios de relaciones con la comunidad y las funciones administrativas de la oficina.
El 9 de diciembre de 1992, el Superintendente de la Policía le aprobó una licencia de tiempo compensatorio por 3,190 horas extras trabajadas y no cobradas, de acuerdo con las disposiciones establecidas en la Orden General 86-7 vigentes para esa fecha denominada, "Normas y Procedimientos Para el Pago de Horas Extras de Miembros de la Fuerza". No obstante, Meléndez Morales cesó de trabajar para la Policía el 15 de marzo de 1993 mientras disfrutaba de la licencia por tiempo compensatorio de las horas trabajadas en exceso de su jomada regular de trabajo. A esa fecha había laborado para la Policía por 30 años.
Al día siguiente de su renuncia a la Policía, el 16 de marzo de 1993, Meléndez Morales comenzó a trabajar para el Municipio de Carolina. Se le autorizó la transferencia de 60 días de vacaciones, 90 días por enfermedad y 6 horas acumuladas.
Luego de realizar gestiones extrajudiciales con el mismo fin, el 1 de junio de 1999, Meléndez Morales instó la acción en cobro contra el ELA. Alegó, esencialmente, que la Policía le adeudaba el pago de 3,190 horas extras trabajadas en exceso de la jomada laboral hasta la fecha terminación de su empleo y que tenía derecho al pago conforme las disposiciones de la Ley Núm. 88 del 7 de julio de 1985.
El ELA contestó la demanda y planteó que Meléndez Morales no tenía derecho al remedio que solicitaba. Oportunamente presentó una moción para que se desestimara sumariamente la acción. Adujo, principalmente, que Meléndez Morales no tenía derecho a acumular horas trabajadas en exceso de la jomada laboral, debido a que ocupaba una posición con funciones administrativas y de supervisión, que lo privaba del derecho a recibir paga por horas extras trabajadas. Meléndez Morales se opuso, quedando la cuestión sometida.
En la fecha antes indicada, el TPI accedió a desestimar la demanda, por los fundamentos aducidos por el ELA. Determinó, esencialmente, que Meléndez Morales ocupaba el puesto de Comandante de Área de San Juan al cesar en la Policía y que éste era un puesto administrativo y de supervisión al que no le aplicaba las disposiciones que autorizan a los empleados a que se le paguen las horas extras trabajadas.
Al apelar la sentencia antes indicada y en su alegato, Meléndez Morales le imputa al TPI haber incidido al dictaminar sumariamente que no tenía derecho a cobrar el tiempo compensatorio que no disfmtó; al interpretar *300que la Ley Núm. 88 del 7 de julio de 1985 y la Orden General 86-7 no autorizaban a pagarle al apelante las horas extras que acumuló en exceso de la jomada legal de trabajo, y al resolver que fueron actuaciones ilegales que no generan derecho que justifique el remedio que el apelante solicita que el Superintendente, Ledo. Pedro A. Toledo, le hubiese pagado a otros oficiales con funciones administrativas y de supervisión el tiempo compensatorio acumulado.
Por su íntima relación, consideraremos conjuntamente los primeros dos señalamientos de error y, separadamente, el tercero.
II
El TPI desestimó sumariamente la reclamación que formulara Meléndez Morales al concluir como cuestión de derecho que por ser éste un Teniente Coronel de la Policía y ejercer las funciones administrativas y de supervisión de su cargo, estaba exento de la aplicación de aquellas disposiciones que le reconocen a los policías el derecho a que se les compense las horas extras trabajadas en exceso de la jomada regular de trabajo.
Apoyó, principalmente, esta decisión en las siguientes fuentes:
“1. El Artículo 18 de la Ley Núm. 26 del 22 de agosto de 1974, la Ley de la Policía vigente al 15 de marzo de 1993, fecha en que el apelante terminó de laborar para la Policía. Esta no le reconocía a los miembros de la Policía que prestaban servicios de naturaleza administrativa, ejecutiva y de supervisión, entre otros, el derecho a que se le pagaran a razón de tiempo y medio, las horas que trabajaran en exceso de la jornada regular de trabajo de 8 horas diarias o de 40 horas semanales.
2. La Sección 19.2 del Reglamento de Personal de la Policía de Puerto Rico aprobado el 4 de mayo de 1981 por el Superintendente de ese cuerpo.
3. La Orden General 86-7 emitida el 28 de abril de 1986 por el Superintendente de la Policía en esa fecha.
4. En la naturaleza y atribuciones de los rangos en la policía, según definidos en el artículo 12 de la Ley Núm. 53 del 10 de junio de 1996, 25 L.P.R.A. see. 3111, la actual Ley de la Policía.
5. La definición de las funciones del puesto de Comandante de Área incluidas en la Orden General Número 86-10 emitida por el Superintendente de la Policía. ”
El Artículo 18 de la Ley Núm. 26 del 22 de agosto de 1974, definía la jomada legal de trabajo de un miembro de la Policía y a quien aplican estas disposiciones, en los siguientes términos:
“Jornada de trabajo:
(a) La jomada legal de trabajo de la Policía de Puerto Rico será no mayor de ocho (8) diarias, ni mayor de cuarenta horas a la semana. Los miembros de la Policía que presten servicios de naturaleza administrativa, ejecutiva u de supervisión y los que estén sometidos a cursos de entrenamiento ofrecidos o auspiciados por la Policía, estarán excluidos de las disposiciones de este inciso, correspondiendo al Superintendente de la Policía la fijación de sus respectivos horarios de trabajo, tanto diaria como semanalmente y la concesión de días libres.
(b) Todo miembro de la Policía que trabaje en exceso de la jomada legal establecida en el inciso (a) de esta sección, tendrá derecho a que se les pague las horas trabajadas en exceso de tal jomada a razón de tiempo y medio.
*301(c) El jefe de la unidad de trabajo llevará un registro de asistencia para cada miembro de dicha unidad en el que se registrarán las horas regulares y extras trabajadas por dichos miembros, certificará semanalmente el total de horas trabajadas por cada miembro y expresará el nombre del oficial que autorizó a trabajar horas en exceso de la jornada legal de trabajo y la justificación para así autorizarlas, cuando así fuere el caso. Corroborada la certeza de la información contenida en dicha certificación, el miembro de la Policía vendrá obligado afirmar dicho registro de asistencia. ” (Énfasis nuestro)
En segundo término y en armonía con la anterior disposición, la Sección 19.2 del Reglamento de Personal de la Policía de Puerto Rico aprobado el 4 de mayo de 1981 por el Superintendente de la Policía para la administración de su personal, establecía lo siguiente:
“Jornada de Trabajo para Miembros de la Fuerza;
1. Excepto en los casos de fuerza mayor o emergencia que más adelante se disponen, la jornada legal de trabajo de la Policía de Puerto Rico será no mayor de ocho (8) horas diarias y no más de cuarenta (40) horas a la semana. Sujeto a lo que más adelante se dispone, los miembros de la Policía de Puerto Rico que prestan servicio de naturaleza ejecutiva, administrativa, o en oficina, y los que estén sometidos a cursos de entrenamiento ofrecidos por la Policía o auspiciados por dicho Cuerpo, estarán excluidos en(sic) las disposiciones de este inciso, correspondiendo al Superintendente la fijación de sus respectivos horarios de trabajo, tanto diaria como semanalmente y la concesión de días libres.
2. Si por cualquier razón algún miembro de la Policía de Puerto Rico trabajare en exceso de la jornada legal aquí establecida, se le concederá licencia compensatoria a razón de un (1) día por cada ocho (8) horas trabajadas. Dicha licencia compensatoria se concederá en la fecha más próxima posible dentro de un año, a partir de la fecha cuando hubieren sido trabajadas. ” (Énfasis nuestro.)
En tercer término, el 28 de abril de 1986, la Policía aprobó la Orden General 86-7. En ésta reiteró que los miembros de la Policía en funciones administrativas y ejecutivas no acumulaban horas extras. Disponía que el personal exento era aquél cuyas funciones y condiciones de trabajo corresponden a la de un Ejecutivo, Administrativo o Profesional, según se definen estos términos; que los límites fijados para la jomada de trabajo dispuestas para la Policía de Puerto Rico no serán aplicables a dicho personal, por lo que están excluidos de las disposiciones referentes a la acumulación y pago de horas extras.
A tales fines, dispuso que un ejecutivo es cualquier empleado que reúna los siguientes requisitos:
“a. Que tenga por deber primordial la dirección de la Policía de Puerto Rico o de una subdivisión de la misma.
b. Que usual y regularmente dirija el trabajo de dos (2) empleados o más de una subdivisión de la Policía de Puerto Rico.
c. Que tenga autoridad de emplear y despedir empleados, o cuyas sugerencias o recomendaciones sobre el empleo, despido, mejoramiento, ascenso o cualquier otro cambio en el status de éstos pueda recibir especial consideración;
d. Que usual y regularmente ejerza facultades discrecionales. ”
En cuarto lugar, el Artículo 12 de la Ley Núm. 52 del 10 de junio de 1996, supra, dispone en cuanto a los rangos lo siguiente:
*302
“(a) Los rangos de los miembros de la Policía serán los siguientes:
(1) Cadete- Miembro de la Policía...
(2) Agente de la Policía - Miembro de la Policía...
(3) Sargento- Agente de la Policía que haya sido ascendido a Sargento luego de haber aprobado los exámenes, cumplido con los requisitos conforme a la reglamentación establecida por el Superintendente y que como mínimo posea un Grado Asociado, otorgado por un colegio o universidad certificada o acreditada por el Consejo de Educación Superior de Puerto Rico. El rango de Sargento constituye la primera línea de supervisión en el sistema uniforme de rangos en la Policía de Puerto Rico.
(4) Teniente Segundo...
(5) Teniente Primero...
(6) Capitán...
(7) Inspector...
(8) Comandante...
(9) Teniente Coronel - Comandante que haya ascendido al rango de Teniente Coronel mediante designación hecha por el Superintendente con la confirmación del Gobernador, según la sec. 3104(e) de este título y que como mínimo posea una Maestría o su equivalente, otorgado por un colegio o universidad certificada o acreditada por el Consejo de Educación Superior de Puerto Rico.
(10) Coronel...’’. (Énfasisnuestro.)
Ahora bien, tal y como indica el TPI, estas disposiciones de ley y reglamentarias que excluyen al personal ejecutivo y administrativo del pago por horas extras, no son únicas de la Policía de Puerto Rico. Este principio es el mismo adoptado en la Ley de Salario Mínimo de Puerto Rico, Ley Núm. 96 de 26 de junio de 1956, y en la Ley de Horas y Días de Trabajo de Puerto Rico, Ley Num. 379 de 15 de mayo de 1948, según enmendada, 29 L.P.R.A. see. 271 et. seq., que excluye a los ejecutivos, administradores y profesionales del término empleado. Almodóvar v. Margo Farms Del Caribe, Inc., 148 D.P.R. 103 (1999). Igual disposición se incluye, además, en la Ley Federal de Normas Razonables del Trabajo, 29 U.S.C. sec. 201 et. seq., Santiago v. CORCO, 114 D.P.R. 267, 268 (1983).
Analizadas desapasionadamente, es evidente de las disposiciones legales, reglamentarias y administrativas antes citadas, que los miembros de la fuerza policíaca que prestan servicio de naturaleza ejecutiva, administrativa, o de oficina, principalmente los oficiales como los Tenientes Coroneles, están excluidos de las disposiciones que autorizan el pago de las horas extras acumuladas al resto del personal.
Desde el rango de sargento, la primera línea de supervisión en el sistema uniforme de rangos que opera en la Policía, la supervisión y las funciones administrativas forman parte del cargo. En el caso de un Teniente Coronel en funciones de Comandante de Área, como el apelante, es absurdo plantear que no realiza funciones administrativas o de supervisión.
El Reglamento de Personal de la Policía define Área como la organización operacional de mayor envergadura que tiene la Policía en términos geográficos y divide toda la extensión territorial de Puerto Rico en *303nueve (9) áreas que están dirigidas cada una por un Comandante de Área, nombrado por el Superintendente de la Policía.
En cuanto al puesto de Comandante de Área, la Orden General Número 86-10 emitida por el Superintendente de la Policía que obra en el expediente define sus funciones. En ésta, se describen los deberes del aludido cargo, los cuales incluyen: la dirección, supervisión, coordinación y control de la operación de campo, operación de investigaciones criminales, servicios de relaciones con la comunidad y las funciones administrativas de oficina.
Tales exclusiones del beneficio laboral deben interpretarse restrictivamente, debido a que extender la exclusión a aquellos empleados que no estén claramente incluidos en ella constituye "un abuso del proceso de interpretación o una frustración de la voluntad expresada por el pueblo". Calderón v. Esso Standard Oil Co., 92 D.P.R. 129 (1965); Piñan v. Mayagüez Sugar Co., 84 D.P.R. 89, 97 (1961); Sierra, Comisionado v. Llamas, 73 D.P.R. 908, 916 (1952).
III
Como resolvió el TPI y bien señala el ELA, durante el tiempo que acumuló las horas por las cuales reclama compensación, el Apelante ostentaba el rango de Teniente Coronel en el puesto de Comandante del Área de San Juan. Según las funciones descritas en la Orden General Número 86-10, tenía la dirección, supervisión, coordinación y control de la operación de campo, operación de investigaciones criminales, servicios de relaciones con la comunidad y las funciones administrativas de oficina. Conforme concluyó el TPI en su sentencia, el apelante ejercía esas funciones al dirigir las operaciones de campo de una de las nueve comandancias de área en las que está dividido todo Puerto Rico.
Claramente, las disposiciones de la ley y el Reglamento, excluyen de la definición de la jomada legal de trabajo, a los miembros de la fuerza policíaca que prestan servicios de naturaleza ejecutiva, administrativa, supervisión o de oficina. Así, están exentos de las disposiciones que le permiten acumular horas extras y reclamar su pago en tiempo compensatorio o efectivo.
En esas circunstancias, coincidimos con el TPI que al apelante no se le pueden pagar las horas extras que reclama porque las funciones que ejercía en su puesto y los deberes de su rango están excluidos de las disposiciones que definen la jomada regular de trabajo para los miembros de la Policía. Ello no está en controversia. Como cuestión de realidad, en la declaración jurada que prestó el 30 de enero de 2003 y que sometió en apoyo de la moción de reconsideración que presentó para que el TPI reexaminara la sentencia apelada, Meléndez Morales indicó que las 3,190 horas acumuladas fueron por trabajos que realicé en el campo en labores de protección y seguridad durante altas horas de la noche y madrugadas, “dando respaldo al personal en la calle, destacando contingentes e inspeccionando puesto de trabajó”, aunque en otra parte expresó que no realizó funciones ejecutivas o administrativas.
Los primeros dos errores no se cometieron.
IV
Por último, en su alegato y en apoyo a su reclamo, el apelante argumenta que en circunstancias similares a la suya, otros Superintendentes le han pagado horas extras acumuladas, al momento de la terminación de sus empleos, a otros oficiales de la policía. Sostiene también que ya un Superintendente le había autorizado que se le compensara las horas extras mediante la concesión de tiempo compensatorio. Somete que el TPI incidió al resolver que constituyó un ejercicio de la discreción del Superintendente, Pedro A. Toledo, concederle el pago de tiempo compensatorio a otros coroneles y al Superintendente Auxiliar; al resolver que esas concesiones fueron nulas y, que la revocación dispuesta en 1992 por el Superintendente, Ledo. Pedro A. Toledo, en 1992 y durante el periodo de transición fue ilegal porque no se le notificó. Se refiere a que el Superintendente Toledo *304revocó la autorización que el Superintendente Betancourt y Lebrón le dio al apelante para que éste cobrara el tiempo compensatorio acumulado. Finalmente, sostiene que una vez el ELA reconoció y comenzó a pagarle al apelante el tiempo compensatorio que éste había acumulado, el derecho a recibir ese pago subsistía, aun después que Meléndez Morales se retirara.
Coincidimos con el TPI que estos planteamientos son inmeritorios en derecho. Conocido es que a las agencias de gobierno no les aplica la doctrina de los actos propios o impedimento. Del Rey v. Junta de Planificación, 107 D.P.R. 348 (1978); Mendoza v. Asociación, 94 D.P.R. 564 (1967). Cuando una agencia comete un error en la aplicación de la ley, dicha actuación no es válida. E.L.A. v. Rivera, 88 D.P.R 196 (1963); Infante v. Tribunal Examinador de Médicos, 84 D.P.R. 308 (1967).
La Policía no está obligada a perpetuar un error, por el hecho de que antes haya pagado mal a otros policías. En otras palabras, no está obligada a pagarle al demandante, en contra del derecho que antes hemos expuesto. Tampoco está obligada a liquidar en efectivo el balance de horas extras que el apelante no pudo disfrutar, porque optó por renunciar antes de terminar de disfrutar de los días compensatorios que erróneamente y contra derecho que le habían concedido y aceptar un puesto en el Municipio de Carolina.
Acceder a lo que solicita Meléndez Morales, sería convalidar indirectamente el mismo acto ilegal de autorizarle el pago de las horas extras en tiempo compensatorio, pues como cuestión de ley y reglamento, el apelante no tenía derecho tampoco a tiempo compensatorio.
Desde esa perspectiva, la autorización del entonces Superintendente Betancourt y Lebrón para que el apelante disfrutara del tiempo compensatorio acumulado, no podía gozar de una presunción de legalidad. Debido a ello, el ELA no tenía que aportar prueba alguna para refutarla.
De rigor es señalar que el 10 de junio de 1996 se aprobó la Ley Núm. 53, supra. Esta ley estableció un nuevo orden para el Cuerpo de la Policía y derogó la Ley Núm. 26, supra. El Artículo 10, 25 L.P.R.A. See. 1309, recoge lo establecido en la derogada Ley Núm. 26, supra, y reiteró la anterior política pública de que no se le permite acumular horas extras a los miembros de la Policía que presten servicios de naturaleza administrativa, ejecutiva y de supervisión. Los demás miembros de la Policía que trabajen en exceso de la jomada establecida, tienen derecho a que se les pague las horas trabajadas en exceso de tal jomada a razón de tiempo y medio. Dispuso, además, que todo miembro de la Policía que trabaje en exceso de la jomada legal tendrá la opción de sustituir el pago en metálico de las horas extras a que tenga derecho por su equivalente en tiempo compensatorio. 3 L.P.R.A. sec. 1309(a). Claro está, contempla que los miembros de la Policía vendrán obligados a trabajar en exceso de la jomada legal de trabajo aquí establecida, tan sólo en los siguientes casos: (1) En caso de fuerza mayor o emergencia, tales como terremotos, incendios, inundaciones, huracanes, períodos eleccionarios, motines y cualesquiera otros que fueren declarados como tales por el Gobernador; y (2) cuando por necesidad del servicio y para beneficio del servicio público, ello fuere necesario, según lo determine el Superintendente. 25 L.P.R.A. see. 1309 (c).
El 10 de noviembre de 1997, la Policía enmendó la Orden General Núm. 86-7, a los efectos de incorporar las disposiciones de la Ley Num. 53, supra, y excluir a todo oficial con rango de Sargento en adelante del pago de horas extras y tiempo compensatorio.
Por los fundamentos antes expuestos, se confirma la sentencia sumaria apelada.
Lo acordó el Tribunal y lo certifica la Secretaria General.
Aida Ileana Oquendo Graulau
Secretaria General
*305ESCOLIOS 2004 DTA 111
1. La Policía de Puerto Rico es un administrador individual, como tal, con sujeción a las disposiciones de la Ley de Personal y otras aplicables, y tiene la responsabilidad de administrar directamente y con cierta autonomía todo su personal. Carle García v. Supte. de la Policía, 114 D.P.R. 667, 671 (1983). Véase también Torres Arzola v. Policía de Puerto Rico, 117 D.P.R. 204, 210 (1986).
2. La Ley de Personal del Servicio Público, Ley Núm. 5 del 14 de octubre de 1975 (Ley 5), 3 L.P.R.A. see. 1301 et seq., designó a la Policía como un administrador individual de su personal. 3 L.P.R.A. see. 1343. Como tal, está facultado para aprobar y administrar un Reglamento de Personal para la Policía que regirá los asuntos de su personal. 3 L.P.R.A. see. 1347. | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2998007/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued July 5, 2005
Decided July 12, 2005
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. RICHARD A. POSNER, Circuit Judge
Hon. FRANK H. EASTERBROOK, Circuit Judge
No. 04-2795
KAMRAN Q. MALIK, Petition for Review of an Order of the
Petitioner, Board of Immigration Appeals
v. No. A77-958-103
ALBERTO R. GONZALES, Attorney
General of the United States of America,
Respondent.
ORDER
Pakistani native Kamran Malik applied for asylum alleging that he faced
persecution based on his membership in the Muslim League party, whose
government was overthrown by a military coup in 1999. The Immigration Judge
denied his petition for asylum and withholding of deportation, determining that
Malik did not meet his burden of proof because his airport interview and later
testimony were inconsistent. The Board of Immigration Appeals summarily
affirmed, and we now deny Malik’s petition for review of the BIA’s decision.
Malik destroyed his credibility from the start, arriving at the Los Angeles
airport from Pakistan in May 2001 with a passport and visa bearing another
individual’s name. After immigration officials stopped him, Malik admitted that
the travel documents were not his. During an airport interview with an
No. 04-2795 Page 2
immigration official, Malik initially explained that he sought employment so that
he could support his family in Pakistan. The money Malik hoped to earn would go
toward his two sisters’ dowries and paying back the $20,000 his parents borrowed
from private individuals to send him to United States. When asked whether he had
any fear or concern about being returned to Pakistan or whether he would be
harmed, Malik stated only that he would not be able to pay back the loan and
feared what the private lender would do to him and his family; he mentioned no
fear of persecution.
Malik then changed his story in a credible-fear interview, asserting for the
first time that he faced persecution if he were returned to Pakistan based on his
political beliefs. Malik attested that he was the general secretary of the student
branch of the local Muslim League party in the district of Gujrat. In 1999, the
government of the Muslim League was overthrown by General Musharraf and its
leaders imprisoned. Malik organized a rally to protest their imprisonment, at
which officers arrested him. According to Malik, officers tortured him for 12 days
until his parents bribed the officers to release him. Fearing police would never
leave him alone, Malik fled to the United States.
Malik claimed during the credible-fear interview that he decided to tell
officials about his fear of persecution after talking at the detention center to fellow
Pakistanis who reassured him that if he told “all the truth,” he would not be sent
back to Pakistan. He later applied for asylum and withholding of deportation with
allegations consistent with his credible-fear interview. He explained in the
application and at the hearing that he did not tell the immigration officials at the
airport about the persecution because he was “in distress” from his long journey to
the United States and feared that he would be deported if he told officials he was
seeking asylum.
To corroborate his account, Malik submitted a copy of his Muslim League
membership card, and copies of the 2001 police report and arrest warrants. The IJ
entered the copy of the membership card into the record despite concerns that the
original card was never presented to verify its authenticity. The IJ, however,
sustained the government’s objection to the other documents based on Malik’s
failure to comply with 8 C.F.R. § 3.33 (now 8 C.F.R. § 1003.33), which required the
attachment of an English translation and certification by the translator.
Based on the inconsistencies between his airport interview and his later
testimony at the hearing, the IJ determined that Malik did not establish a
“persuasive claim to asylum.” And Malik’s explanation for lying during his airport
interview was not “altogether convincing.” The IJ also questioned the authenticity
of the copy of the Muslim League membership card, and noted Malik’s failure to
supply other documents corroborating his membership. Malik appealed the IJ’s
No. 04-2795 Page 3
decision, and the BIA summarily affirmed under 8 C.F.R. § 1003.1(a)(7), and so the
IJ’s decision becomes that of the BIA for purposes of judicial review. See Georgis v.
Ashcroft, 328 F.3d 962, 966-67 (7th Cir. 2003).
It is difficult to parse any substantive argument from Malik’s petition. As
best we can discern, Malik asserts that the IJ erroneously discounted his credibility
based on the inconsistencies between the story he told the immigration officials at
the airport and his testimony at the hearing. Malik seems to suggest that the IJ
should have excused his failure to inform the immigration officials at the airport
about his fear of persecution if returned to Pakistan because he “was in a confused
mental state, it was a long arduous journey,” and he was afraid he would be sent
back. If an IJ finds a petitioner’s testimony not credible, the petitioner must
present “a convincing explanation of the discrepancies or extrinsic—and
credible—corroborating evidence.” Capric v. Ashcroft, 355 F.3d 1075, 1086 (7th Cir.
2004). But, as in this case, an explanation that presents only an alternative
interpretation of the evidence alone is insufficient to overturn an IJ’s credibility
finding. See Krouchevski v. Ashcroft, 344 F.3d 670, 673 (7th Cir. 2003); Ahmad v.
INS, 163 F.3d 457, 461 (7th Cir. 1999.)
Malik also seems to argue that the IJ should have found his testimony
credible based on corroborating evidence in the record establishing that he faced
persecution if returned to Pakistan. In particular, Malik claims that his testimony
“is bolstered” by his membership card in the Muslim League, arrest warrants
(which the IJ did not permit into the record), and the 2002 Department of State
country report for Pakistan. Yet his brief does not discuss why these documents
should have swayed the IJ to believe his testimony at the hearing over his airport
interview. And we see no reason that the documents should have; Malik destroyed
his credibility at the start by presenting a fraudulent passport, and his divergently
inconsistent stories did nothing to resuscitate that lost credibility.
Because Malik has not established that he faces persecution if returned
Pakistan, we deny the petition. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2998014/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3716
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
RONALD E. BLAKE,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 02 CR 30086—G. Patrick Murphy, Chief Judge.
____________
ARGUED FEBRUARY 15, 2005—DECIDED JULY 11, 2005
____________
Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.
BAUER, Circuit Judge. A grand jury indicted Ronald
Blake on two counts of distributing cocaine base in violation
of 21 U.S.C. § 841(a)(1) and 21 U.S.C. § 841(b)(1)(B), and a
petit jury convicted him on one of the counts. The conviction
elevated Blake to career offender status under § 4B1.1 of
the Sentencing Guidelines, and the district court sentenced
Blake to 360 months’ imprisonment, the lowest sentence in
the applicable range. On appeal, Blake challenges his
conviction on the basis of selective prosecution and seeks a
remand for resentencing under United States v. Booker, 125
S.Ct. 738 (2005). We affirm Blake’s conviction and order a
2 No. 03-3716
limited remand with respect to his sentence pursuant to
United States v. Paladino, 401 F.3d 471 (7th Cir. 2005).
I. Background
Hope Kurtz, a white woman, was arrested at the Relax
Inn in Granite City, Illinois on July 3, 2002. She had the
following items in her possession when arrested: several
bags of marijuana; one ounce (28 grams) of cocaine; $1,500
in cash; and a gun. The arresting officers told Kurtz that
she would not be prosecuted if she cooperated with them by
making controlled buys from her supplier. Kurtz agreed to
cooperate and identified Blake, an African-American, as her
supplier. She informed the police that Blake supplied her
with both cocaine and cocaine base every two to three days.
On four or five occasions, Blake fronted Kurtz three or four
ounces of cocaine base.
Kurtz agreed to make two controlled buys from Blake at
his residence in Cahokia, Illinois. The first buy was coordi-
nated by the Metropolitan Enforcement Group of Southern
Illinois (“MEGSI”). Kurtz called Blake to arrange the buy
and then made the buy on July 5, 2002, under constant
visual surveillance by law enforcement. Kurtz purchased 25
grams of crack on that occasion, a relatively large quantity
that prompted the DEA to investigate.1 Under the super-
vision of agents from the DEA and MEGSI, Kurtz made a
second buy from Blake on July 9, 2002. Kurtz wore a wire
on the second occasion, which recorded her conversation
with Blake as she bought 27.8 grams of crack. Blake was
1
Though the jury’s acquittal on Count I indicates that it did not
believe that the first controlled buy took place, we include it in our
facts because our focus on a selective prosecution claim is on the
information the government had in its possession when it decided
to prosecute.
No. 03-3716 3
arrested that same day and charged with two counts of
distributing more than five grams of cocaine base in viola-
tion of 21 U.S.C. § 841(a)(1) and 21 U.S.C. § 841(b)(1)(B).
On April 4, 2003, a jury convicted Blake on Count II for
the second controlled buy, but acquitted him on Count I,
which involved the first controlled buy. In light of the con-
viction on Count II, a prior state drug conviction, and a
prior conviction for assault of a federal officer, the district
court concluded that Blake was a career offender under
U.S.S.G. § 4B1.1 and sentenced him to 360 months. The
only issues Blake raises on appeal are selective prosecution
and Booker error.
II. Discussion
A. Selective Prosecution
Blake requests dismissal of the indictment or a remand to
the district court for discovery due to selective prosecution
on the basis of race. Blake’s theory is that the government’s
failure to prosecute Kurtz—a white woman found with
drugs, $1,500 in cash from drug sales, and a gun—coupled
with its prosecution of him—an African-American man who
sold Kurtz 52.8 grams of cocaine base—amounts to race-
based selective prosecution. Blake seizes on comments
made by the district judge to support his claim. For exam-
ple, after the jury returned its verdict and was dismissed,
the judge made the following observation on the record:
It was very difficult for this jury. I mean, everyone in
here knows what the problem was. You got a young
white girl who admitted to selling five ounces of cocaine
a week and she’s not prosecuted. And this guy is. It’s
not—that’s a hard swallow.
Tr. April 4, 2003, at 3. The judge made a similar remark at
sentencing:
4 No. 03-3716
I noted on the record when the jury went out, I knew
they would have a hard time because we had a case
where the so-called snitch was a white crack whore who
was found with more dope than what the defendant was
convicted of. Now I mentioned that because that is just
simply the case.
Sentencing Tr. at 13. In response, the government asserts
that Blake waived the argument by failing to raise it before
trial and, even if the argument was preserved, it is without
merit.
Courts generally presume that prosecutors faithfully
and lawfully discharge their constitutional duties and, in
the ordinary case, prosecutors have significant discretion to
determine whether or not to prosecute. United States v.
Armstrong, 510 U.S. 456, 464 (1996). That discretion is, of
course, “subject to constitutional constraints.” Id. (citation
omitted). Notably, “the decision to prosecute may not be
based on ‘an unjustifiable standard such as race, religion,
or other arbitrary classification.’ ” Id. (quoting Oyler v.
Boles, 368 U.S. 448, 456 (1962)). To establish selective pros-
ecution on an arbitrary classification such as race, a
claimant must demonstrate that the prosecutorial policy
“had a discriminatory effect and that it was motivated by a
discriminatory purpose.” Id. at 465 (citation omitted). “To
establish a discriminatory effect in a race case, a claimant
must show that similarly situated individuals of a different
race were not prosecuted.” Id.
We begin with the government’s contention that Blake
waived his selective prosecution claim by failing to raise it
before trial. According to the government, Blake did not
raise selective prosecution until five months after trial in a
motion alleging ineffective assistance of counsel. The govern-
ment is correct that selective prosecution claims must be
raised before trial. United States v. Jarrett, 705 F.2d 198,
204 (7th Cir. 1983); FED. R. CRIM. P. 12(b). However, Blake
No. 03-3716 5
did raise the issue in a pre-trial motion to dismiss the indict-
ment based on the government’s allegedly unconstitutional
plea bargaining tactics and selective prosecution. R. 42. Even
though the focus of the motion was on the government’s plea
bargaining tactics, Blake also cited to Armstrong, the
leading Supreme Court case on selective prosecution, for the
proposition that “the decision to prosecute may not be based
on an unjustifiable standard such as race, religion, or other
arbitrary classification.” At a pre-trial hearing, the district
judge denied the motion, explaining that the argument was
without merit unless Blake had some evidence that the deci-
sion to prosecute was based on race. R. 51. Consequently, we
reject the government’s argument that Blake did not raise
selective prosecution before trial and proceed to the merits
of the appeal.
As noted above, Blake’s argument centers on the govern-
ment’s failure to prosecute Kurtz. Blake contends that not
only was Kurtz similarly situated to him such that she
should have been prosecuted, she was more culpable than
him in that she admitted to selling approximately 24 ounces
of cocaine and possessing a gun while Blake was only con-
victed of selling 27.8 grams of crack. This argument suffers
from a number of faults. First, and most importantly, Kurtz
and Blake were not similarly situated. Blake was Kurtz’s
supplier; Kurtz was a user who likely only sold drugs to
support her habit. The government differentiates between
users and suppliers in thousands of drug prosecutions every
year, and this case was no different. Even though Kurtz did
sell drugs, there does not appear to be any question that
Blake was further up the drug chain than she. Indeed, the
local police promised Kurtz that she would not be prose-
cuted if she cooperated with them, Kurtz agreed and
identified Blake as her supplier, and her controlled buys
from Blake confirmed her story. In light of the foregoing
circumstances, including Kurtz’s valuable assistance to the
government, the government had good reason to differenti-
ate between Blake and Kurtz.
6 No. 03-3716
Blake also takes an artificially narrow view of his culp-
ability. When comparing himself to Kurtz, Blake limits his
focus to the quantity of drugs that the jury found him re-
sponsible for rather than considering all of the information
that the prosecution had when it decided to prosecute.
During two controlled buys, Blake supplied Kurtz with over
50 grams of crack in the span of three days. Those deals
substantiated the information that Kurtz had given the
government, namely that Blake had been supplying her with
cocaine and cocaine base every few days for several months.
If it was true that Blake had been supplying Kurtz with
drugs, it was doubtful that she was the only person in the
community that he was supplying. The government also
knew that Blake had a prior conviction for possession and
transportation of more than three pounds of cocaine, which
suggested that Blake was not merely a novice or a user. The
jury did not hear any evidence about Blake’s prior involve-
ment in the drug trade because the district judge excluded
everything except the two controlled buys as unduly
prejudicial under FED. R. EVID. 404(b), but the prosecution
was aware of it and it gave them additional reason to
conclude that Blake and Kurtz were not similarly situated.
Because we see no constitutional problem with the govern-
ment’s decision to prosecute Blake and its decision to forego
prosecution of Kurtz, we reject Blake’s selective prosecution
theory.
B. Sentencing
Blake’s 360-month sentence was driven by the district
court’s determination that he qualified as a career offender
under the Sentencing Guidelines. In his sentencing brief,
Blake asserts that the district judge made factual findings
that run afoul of the Sixth Amendment as interpreted by
Booker and its progeny. But this argument ignores the prior
convictions exception to the Booker/Apprendi rule: “Any
No. 03-3716 7
fact (other than a prior conviction) which is necessary to
support a sentence exceeding the maximum authorized by
the facts established by a plea of guilty or a jury verdict
must be admitted by the defendant or proved by a jury
beyond a reasonable doubt.” Booker, 125 S.Ct. at 756 (em-
phasis added); Almendarez-Torres v. United States, 523 U.S.
224 (1998). Nevertheless, Blake is entitled to a limited
remand because “the mere mandatory application of the
Guidelines—the district court’s belief that it was required
to impose a Guidelines sentence—constitutes error.” United
States v. White, 406 F.3d 827, 835 (7th Cir. 2005). While
some cases present circumstances that obviate the need for
a limited remand, United States v. Lee, 399 F.3d 864 (7th
Cir. 2005), the following statement by the district judge in
the instant case indicates that he may have given Blake a
lighter sentence had he known the Guidelines were merely
advisory:
Well, I think it is obvious I take no joy, pleasure or
satisfaction whatsoever in imposing this sentence on
Mr. Blake. Mr. Blake deserves a sentence. He should
be—he has some time coming, but I am constrained by
what is here. I will commit him to the custody of the
Bureau of Prisons for a term of 360 months, which is
the least amount of time I can give him.
Sentencing Tr. at 7.
A further consideration for the district judge on limited
remand is the Supreme Court’s recent holding that sen-
tencing courts considering factual issues related to prior
convictions are “generally limited to examining the statu-
tory definition, charging document, written plea agreement,
transcript of plea colloquy, and any explicit factual finding
by the trial judge to which the defendant has assented.”
Shepard v. United States, 125 S.Ct. 1254, 1257 (2005);
United States v. McGee, et al., 2005 WL 1324815 (7th Cir.
June 5, 2005) (directing district court to consider the effect
8 No. 03-3716
of Shepard on limited remand). Police reports or complaint
applications are not appropriate sources to consult when
making such determinations. Id. One of Blake’s objections
at sentencing was that his prior convictions amounted to
one conviction under U.S.S.G. § 4B1.1 because they were
related. The district court disagreed, apparently relying on
Blake’s presentence report. We have reviewed Blake’s pre-
sentence report, which states that the information related
to his prior convictions came from “court records.” Blake
PSR at 8. Considering that Blake pleaded guilty to the two
prior convictions, the category of “court records” presumably
includes charging documents, written plea agreements, and
transcripts of plea colloquies—all sources of “conclusive
significance” under Shepard—but it may extend beyond
that into sources that are not authorized by Shepard.
Shepard, 125 S.Ct. at 1262. This possible Shepard problem
provides an additional basis to direct a limited remand with
regard to Blake’s sentence. If the district judge states that
he relied on sources that are now improper under Shepard,
that the portion of the presentence report he relied on in
resolving Blake’s objection was based on an improper
source, or that he would have imposed a different sentence
had he known the Guidelines were advisory, then we will
vacate the original sentence and remand for resentencing.
Paladino, 401 F.3d at 484. If the judge informs us that
there was no Shepard problem and that he would reimpose
the original sentence even under an advisory sentencing
regime, “we will affirm the original sentence against a
plain-error challenge provided that the sentence is reason-
able . . . .” Id.
III. Conclusion
For the reasons stated herein, we AFFIRM Blake’s con-
viction and order a LIMITED REMAND with respect to his
sentence.
No. 03-3716 9
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-11-05 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2998562/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued November 1, 2005
Decided December 1, 2005
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
Hon. ANN CLAIRE WILLIAMS, Circuit Judge
No. 04-3867
FEI FENG WENG, Petition for Review of an Order of the
Petitioner, Board of Immigration Appeals
v. No. A76-525-955
ALBERTO GONZALES,
Respondent.
ORDER
Fei Feng Weng, a native of China’s Fujian Province, petitions for review of a
final order of removal. The Board of Immigration Appeals concluded that Weng did
not credibly establish that he suffered past persecution or had a well-founded fear
of future persecution. Weng argues that the adverse credibility determination is
based on minor inconsistencies that do not go to heart of his claim. Because
substantial evidence supports the BIA’s decision, we deny the petition for review.
No. 04-3867 Page 2
I.
Weng entered the United States at Orlando International Airport on May 19,
2000, and immediately requested asylum, claiming that he feared returning to
China because he would be forcibly sterilized under China’s family planning
policies.1 *During his initial interview, see 8 U.S.C. § 1225(b)(1), he stated that he
and his wife already had one child, a daughter, and “the government will not let us
have anymore.” He asserted that his wife “had an IUD” and “they were coming to
get me to sterilize me.” He also stated, “My wife was made sterile and they want to
do it to me.” One month later, a credible-fear assessment was conducted. When
asked why he left China, Weng stated that in April 2000 government officials forced
his wife to abort their second child. Because his wife had “bad health” after the
abortion, Weng asserted, “she could not be sterilized so they wanted to sterilize me.”
He stated that five family planning officials who “wanted to arrest” him came to his
house to take him to be sterilized. Weng stated that he was able to run away after
fighting off the two officials who were holding him down. He hid with relatives
until he left China.
Weng first appeared before an IJ on September 20, 2000, for a preliminary
hearing. The hearing took place in New York City at Weng’s request. After being
asked several times without providing a clear answer, Weng told the IJ that he
lived in New York City with a female cousin and that he did not have a job. The IJ
1
We are seeing a marked increase in the number of asylum claims from
Chinese nationals (both male and female) who object to what is referred to as
China’s coercive family planning policies. Mr. Weng’s was just one of three
scheduled for oral argument on November 1, 2005. Because these claims seem to be
coming to us with greater frequency, we asked counsel for the government, N.
Christopher Hardee, to check and see if the Department of Homeland Security
(DHS) has noticed this increase. Mr. Hardee has responded to our request and we
thank him for his attention to this matter.
In his letter to us, Mr. Hardee states that the DHS “does not report the
number of coerced family planning claims filed by asylum applicants in public
reports of immigration statistics. However, the Headquarters Asylum Division,
which is part of DHS, Citizen and Immigration Services, Office of International
Affairs, has advised that during fiscal year 2005, with respect to asylum
applications filed with DHS (but not including asylum applications filed for the first
time in removal proceedings), 2,445 asylum applications based on China’s family
planning policies were adjudicated. Of these adjudications, DHS granted 1,277
applications, revoked one grant, denied six applications, and referred 1,153 to
immigration judges.”
No. 04-3867 Page 3
ordered Weng to bring his cousin to the next hearing. Weng then stated that his
cousin actually lived in Indiana while he occupied her New York apartment, and
that she continued to support him by having a friend in New York bring him
money. At the next hearing, on November 20, 2000, Weng’s attorney opened the
hearing by confessing to the IJ that “everything” Weng said at the last hearing
“except for possibly his name” was untrue. Counsel stated that a snakehead, or
paid smuggler, told Weng what to say if he came to court, and that Weng was
nervous and “did not explain everything the way he wished.” In fact, Weng had
been living and working in Indiana for about two months at the time of the first
hearing, and the female cousin he had described did not exist. The IJ again had
trouble eliciting answers from Weng regarding his residence and workplace. Weng
did not know his address in Indiana. He admitted that he had lied at the previous
hearing—of course, he was under oath at that time—and apologized to the IJ. Weng
then conceded removability as charged in the Notice to Appear.
The IJ in New York City held a third hearing on March 28, 2001. At that
time Weng submitted his written application for asylum, withholding of removal,
and relief under the Convention Against Torture. In his affidavit supporting the
application, Weng stated that his wife became pregnant in early 2000 and went into
hiding because the couple did not have permission to have a second child but
wanted to have a son. When Weng’s wife missed her quarterly checkup, family
planning officials came to the couple’s home looking for her. Officials “often” came
to the house “to give [them] a hard time” and told Weng that they would “take” him
if they could not “take” his wife. The couple “had no choice” and Weng’s wife was
forced to terminate the pregnancy. The IJ asked Weng whether his statement was
complete and accurate, and Weng answered that it was. The IJ then agreed to
transfer the case to Chicago.
Weng appeared with a new attorney for a preliminary hearing before the IJ
in Chicago on November 1, 2001, and a merits hearing was scheduled for
September 11, 2002. At his merits hearing Weng testified that his wife
involuntarily submitted to an IUD insertion after the birth of the couple’s daughter.
The IUD later “fell off” accidentally and Weng’s wife became pregnant. Weng
testified that he and his wife were “devout” Christians and did not want to abort
the baby, so his wife went to hide with relatives. Nevertheless, after about three
months authorities found Weng’s wife at the couple’s home and forced her to have
an abortion. Weng testified that after the abortion, family planning officials
demanded that his wife have another IUD inserted and that he be “subject to a
sterilization operation.” When asked why officials would require his sterilization
given his wife’s IUD insertion, Weng stated that officials wanted to penalize the
couple for hiding the pregnancy. Weng testified that he left China to avoid being
sterilized. He stated that he feared returning because “they would detain me and
No. 04-3867 Page 4
forcefully make me go through the sterilization operation” and also subject him to
“physical force”and “abuse.”
The IJ denied all forms of relief upon concluding that Weng was not credible.
The IJ cited the inconsistencies between Weng’s testimony and his initial interview,
credible-fear assessment, and affidavit, including Weng’s “eleventh-hour” claim to
be a devout Christian, and the “preposterous” story about escaping from five
government officials that Weng recounted only during his credible-fear assessment.
The IJ also doubted that Weng’s wife’s IUD “fell out” accidentally, that she had
been forced to abort her second pregnancy, that Weng rather than his wife was the
target of sterilization efforts, and that Weng had been smuggled out of China rather
than leaving with a valid passport. The IJ also noted—twice—that Weng’s
testimony that his father was a fisherman contradicted his earlier statement that
his father worked “on a boat.”
Weng appealed to the BIA, which dismissed the appeal and issued a brief
opinion. The BIA also concluded that Weng was not credible, citing three
inconsistencies in Weng’s testimony regarding events it deemed central to his claim.
First, Weng asserted in his credible-fear interview that he escaped from five
government officials who had come to arrest and forcibly sterilize him, but never
mentioned this incident during prior or subsequent proceedings. Second, Weng did
not repeat in other proceedings the assertion made during his credible-fear
interview that government officials intended to sterilize his wife following her
forced abortion. Finally, the BIA noted that Weng never mentioned his wife’s
forced IUD insertion in either his initial interview or credible-fear assessment
although he discussed it at his hearing. Weng appeals.
II.
We will uphold a decision of the BIA if it is supported by reasonable,
substantial, and probative evidence in the record considered as a whole and the
evidence does not compel the contrary result. INS v. Elias-Zacarias, 502 U.S. 478,
481 (1992); Balogun v. Ashcroft, 374 F.3d 492, 498 (7th Cir. 2004). To qualify for
asylum Weng must show that he suffered past persecution or that he has a well-
founded fear of future persecution on account of a protected ground. See 8 U.S.C.
§ 1101(a)(42)(A); Li v. Gonzales, 416 F.3d 681, 685 (7th Cir. 2005). The statutory
section defining the protected grounds has been specifically amended to account for
applicants who allege persecution based on coercive family planning policies. See 8
U.S.C. § 1101(a)(42)(B); Lin v. Ashcroft, 385 F.3d 748, 751 (7th Cir. 2004). An
applicant’s credible testimony in itself may be sufficient to establish asylum
eligibility. See Hussain v. Ashcroft, 424 F.3d 622, 629 (7th Cir. 2005); Capric v.
Ashcroft, 355 F.3d 1075, 1085 (7th Cir. 2004). However, when the testimony is
found not to be credible, the applicant must provide a convincing explanation of the
No. 04-3867 Page 5
discrepancies or extrinsic and credible corroborating evidence. Jamal-Daoud v.
Gonzales, 403 F.3d 918, 922 (7th Cir. 2005); Capric, 355 F.3d at 1086.
In this case there is little in the record to support Weng’s claim apart from
his testimony. Although Weng at his hearing introduced several documents
(marriage and birth certificates, a baptismal certificate, and record of a quarterly
physical examination of his wife), these were not admitted into the record because
Weng did not produce them in a timely manner; the IJ accepted them “for
identification purposes” only.2**Thus Weng can succeed only if he undermines the
adverse credibility determination. See Krouchevski v. Ashcroft, 344 F.3d 670, 673
(7th Cir. 2003). An adverse credibility determination must be supported by specific,
cogent reasons that bear a legitimate nexus to that finding. Balogun, 374 F.3d at
498; Jamal-Daoud, 403 F.3d at 922.
Weng challenges the decisions of both the IJ and the BIA, arguing that they
based the adverse credibility determinations upon minor inconsistencies that do not
go to the heart of his claim. Weng also faults the IJ for ignoring evidence and using
information outside the record to discredit his testimony. The IJ’s decision,
however, is not before us. When the BIA independently reviews the record and
issues its own opinion, this court reviews only the BIA’s decision. E.g., Korniewjew
v. Ashcroft, 371 F.3d 377, 383 (7th Cir. 2004). Here the BIA “agreed” with the IJ
that Weng was not credible but, instead of adopting the IJ’s decision, provided
different reasons. To the extent Weng aims his arguments at the IJ’s decision,
which is admittedly problematic,3***they will not be discussed.
Weng argues that the BIA’s reasons for discrediting him do not relate to
discrepancies that are material to his central claim—that he will be forcibly
sterilized, and possibly beaten, if returned to China. See Uwase v. Ashcroft, 349
F.3d 1039, 1043 (7th Cir. 2003). Weng first takes issue with the BIA resting its
2
In his opening brief, Weng incorrectly represents that these documents are
part of the administrative record.
3
The IJ’s opinion is not very well reasoned. For example, the IJ relied on
inconsistencies that were immaterial, and in some cases, nonexistent, as in his
finding Weng’s hearing testimony that his father was a fisherman inconsistent with
earlier statements that his father worked on a boat. The IJ also injected his
personal opinions into the hearing; for example, he concluded that an IUD cannot
be accidentally displaced without explaining the basis of his knowledge. He also
essentially accused the Chinese government of surreptitiously supporting the illegal
migration of Chinese nationals because of the “money that is sent back to China
through the Chinese diaspora.”
No. 04-3867 Page 6
credibility determination on his failure to mention in his initial interview, affidavit
and hearing testimony his escape from five government officials who had come to
arrest and forcibly sterilize him. Weng asserts that this omission “does not alter
that fact that [his] wife was forced to have an abortion and an IUD inserted against
her will” and “does not alter the fact that authorities attempted to sterilize Weng
against his will.” Similarly, Weng states that his failure to repeat in his asylum
application and hearing testimony his assertion that officials intended to sterilize
his wife is a minor inconsistency that “does not alter” his claim. Here Weng relies
mainly on assertions of fact rather than legal arguments in challenging the BIA’s
reasoning. These assertions, however, do little to undermine the adverse credibility
determination because this court will not supersede the BIA’s factfinding simply
because an alternative finding could also be supported by substantial evidence.
Krouchevski, 344 F.3d at 673.
More importantly, the first two omissions cited by the BIA are not, as Weng
contends, minor inconsistencies unrelated to the heart of the claim. With respect to
the first omission, it is reasonable to expect an asylum applicant to describe the
most invasive or severe events when asked to discuss mistreatment. See Capric, 355
F.3d at 1090; Pop v. INS, 270 F.3d 527, 532 (7th Cir. 2001). A contentious
encounter with five officials who attempted to haul him off to be sterilized would be
highly relevant to Weng’s claim that he has a well-founded fear of
persecution—namely, forcible sterilization—in China. But he failed to mention it
in his initial interview, affidavit, and hearing testimony. Likewise, Weng failed to
discuss in his affidavit and hearing testimony his earlier allegation that family
planning officials intended to sterilize his wife—a detail that would be probative of
his claim that the couple was targeted by family planning officials. These
omissions bear on Weng’s credibility. See Korniejew, 371 F.3d at 384 (upholding
adverse credibility determination where applicant did not discuss in hearing
testimony earlier statement that she had been kidnaped and held overnight); Oforji
v. Ashcroft, 354 F.3d 609, 614 (7th Cir. 2003) (upholding adverse credibility
determination where applicant stated in hearing testimony, but not in earlier
proceedings, that her husband had been arrested and killed for political reasons);
Pop, 270 F.3d at 532 (upholding adverse credibility determination where applicant
omitted from two asylum applications claim that she was beaten and her home
raided).
Weng also contends that the BIA’s conclusion that he testified inconsistently
about his wife’s forced IUD insertions is erroneous because the BIA mistakenly
stated that he had not mentioned these incidents in his initial interview. It is true
that Weng mentioned in his asylum interview that his wife “had an IUD,” although
he did not claim that one had been forcibly inserted. And, as the BIA correctly
stated, Weng did not mention his wife’s IUD at all during his credible-fear
assessment. Weng focused on his fear of sterilization in both of these interviews.
No. 04-3867 Page 7
This court has noted that the addition of new factual claims that were not originally
set forth can be viewed as evidence that an applicant is not a reliable and truthful
witness. Oforji, 354 F.3d at 614. Particularly when viewed in the context of the
record as a whole, see Elias-Zacarias, 502 U.S. at 481, Weng’s sporadic discussion of
the alleged forcible IUD insertions detracts from his credibility.
Finally, Weng asserts that he established eligibility for relief under the
Convention Against Torture because returning emigres are routinely imprisoned
and fined in China. Weng’s argument is too conclusory to merit attention, and in
any event he did not present it in his brief to the BIA, so it is waived. See Huang v.
Gonzales, 403 F.3d 945, 951 (7th Cir. 2005).
Because substantial evidence supports the BIA’s decision, we DENY Weng’s
petition for review. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3524274/ | Action for attorney fee. On October 9, 1929, George Kimmie was injured while in the service of the Terminal Railroad Association. On December 19, 1929, he employed attorney Charles P. Noell to prosecute his claim for damages against the railroad company. The written contract of employment fixed said attorney's fee at forty per cent of the amount collected by suit or otherwise. In other words, it was a contingent fee contract.
On January 14, 1930, Mr. Noell filed suit against the company, alleging that Kimmie was injured as a result of the negligence of the company. On a trial of the case Kimmie had judgment for $20,000, *Page 415
which was reversed and the cause remanded by this court. [Kimmie v. Railroad Assn., 334 Mo. 596, 66 S.W.2d 561.] On a second trial Kimmie had judgment for $60,000, which was reduced byremittitur in the trial court to $35,000. On November 12, 1935, the judgment for $35,000 also was reversed and the cause remanded for another trial. [Kimmie v. Railroad Assn., 337 Mo. 1245,88 S.W.2d 884.]
On February 7, 1935, the Grievance Committee of the Bar Association of St. Louis filed, in the St. Louis Court of Appeals, a petition for the disbarment of Mr. Noell. On June 5, 1935, the court appointed a special commissioner to hear the evidence and report finding of facts and conclusions of law. The commissioner made report as directed. The Court of Appeals adopted as its opinion said report and entered judgment suspending Mr. Noell from the practice of law for two years from June 30, 1936. [In re Noell, 96 S.W.2d 213.]
Although under suspension Mr. Noell was in conference with Kimmie and the attorney for the company in July, 1936, with reference to a settlement of the case. The negotiations continued for a number of days. Even so, the effort to settle was unsuccessful. In this situation and on September 10, 1936, Kimmie called the attention of Mr. Noell to the judgment of the Court of Appeals suspending him from the practice of law, and also called his attention to the fact that he could not, during the suspension, represent him as attorney. He then engaged the services of another attorney. Thereafter negotiations for a settlement were renewed. Finally, and with the consent of Kimmie, the case was settled for $15,000.
On January 25, 1937, and with the consent of Kimmie and the company, judgment was entered in the circuit court as follows:
"Judgment by consent between plaintiff and defendant in sum of $15,000, said sum to be paid to the Clerk of the Circuit Court, City of St. Louis. Satisfaction of judgment acknowledged in open court by plaintiff. As Charles P. Noell has heretofore acted as attorney for plaintiff, said sum of $15,000 is to be paid to the Clerk of the Circuit Court of the City of St. Louis, so that it may be determined by the Court what lien, if any, the said Charles P. Noell has in and against said fund for alleged attorney's fees. It is hereby ordered that notice be given to the said Charles P. Noell by the Sheriff of the City of St. Louis and the Sheriff of St. Louis County, Mo., and that the said Charles P. Noell be directed to come into court within ten days from the service of said notice upon him or upon any member of his said family at his home upon whom lawful service can be obtained, and assert and have the Court determine what lien he has, if any, in or to the distribution of said fund on account of an alleged attorney's lien."
[1] Under this judgment Mr. Noell pleaded in two counts for an attorney fee. The first count was on the contract for forty per cent *Page 416
of the amount collected by suit or otherwise. The second count was on quantum meruit. In the motion for a new trial Mr. Noell presented certain constitutional questions. The said questions are not mentioned in Mr. Noell's brief and must be considered abandoned. However, on the trial there was evidence under the second count tending to show that the value of his services as attorney was in excess of $7500. For this reason we have appellate jurisdiction.
In this connection it should be stated that certain physicians petitioned in the cause for allowance of claims for services rendered in connection with the trials of the case. The petitions were denied. The physicians filed motions for a new trial, which were overruled. The ruling of the court on the question is not for review, for they did not appeal.
It also should be stated that during the trial Mr. Noell asked leave to amend both counts of the claim to include money advanced by him to and on behalf of Kimmie. The court refused to permit the amendment.
At the close of all the evidence and in due course, the court found in favor of Kimmie and denied the claim of Mr. Noell for an attorney's fee under both counts. Claimant Noell appealed.
[2] I. Claimant presents four assignments of error. Assignments Nos. 1, 2 and 4 are directed at the refusal of the court to permit claimant to amend both counts of his claim to include advancements of money to Kimmie pending the litigation, and to include the payment of expenses by claimant incident to the litigation.
We think the court correctly ruled the question. The rights of claimant, if any, must be determined under Section 11716, Revised Statutes 1929, which follows:
"The compensation of an attorney or counselor for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client's cause of action or counterclaim, which attaches to a verdict, report, decision or judgment in his client's favor, and the proceeds thereof in whosoever hands they may come; and cannot be affected by any settlement between the parties before or after judgment."
Clearly this section limits the lien to fees of an attorney for services as such.
Furthermore, the consent judgment above set forth limits claimant's rights, if any, to a lien for services as attorney. Claimant cites McGowan v. Parish, 237 U.S. 285; Lindsay v. Hotchkiss, 195 Mo. App. 563, 193 S.W. 902, and Wylie v. Coxe, 15 How. (56 U.S.) 415, 14 L. Ed. 753. Those cases are not in point. They are distinguishable on the facts. Furthermore, the question of the court's ruling on claimant's right to amend his claim in the manner above *Page 417
set forth is not for review for the reason claimant did not renew his exception to said ruling in the motion for a new trial.
[3] II. Claimant next contends that he should be allowed the reasonable value of the services rendered by him in the case before he was suspended from the practice of law.
He admits that if "he willfully abandoned his contract or wrongfully refused to perform the same, obviously he would not be entitled to a fee upon the contract or in quantum meruit." We have so ruled in Kreitz v. Egelhoff, 231 Mo. 694, 132 S.W. 1124; Helm v. Wilson, 4 Mo. 41.
It also has been ruled that an attorney forfeits all rights to payment for services by abandoning his client without just cause before the termination of the services for which he was restrained. [Taylor v. Perkins, 183 Mo. App. 204, 170 S.W. 409.]
The Courts of Appeals further ruled as follows:
"The law in this State is as claimed by counsel for defendant, that if a single engagement of service is had for a specified time, or to do a specified thing, then there can be no recovery if the plaintiff quits the service without cause and of his own fault, before the expiration of the time. If he agrees to complete a certain service and quits without cause and without the fault of his employer, he cannot recover." [Dempsey v. Dorrance, 151 Mo. App. 429, 132 S.W. 33.]
"It is the rule, if the attorney's compensation is stipulated, and he, without just cause, abandons his client before the proceeding for which he was retained has been conducted to its termination, he forfeits his right to payment for services rendered." [Young v. Lanznar, 133 Mo. App. l.c. 138, 112 S.W. 17.]
"Where one contracts for an indefinite time until a particular service is accomplished, he cannot recover where he willfully and without cause abandons the work before the expiration of the time for the performance of the service; and this rule is especially applicable to the engagement of attorneys with their clients." [Blanton v. King, 73 Mo. App. 148.]
Thus it appears that this review is reduced to the question of whether or not claimant, in view of his suspension from the practice of law, is entitled to a lien for legal services on the $15,000 in the registry of the court. The question was considered in the case of In re Woodworth, 85 F.2d 50 (C.C.A.2d. Cir.), the facts of which are correctly stated by respondent as follows:
"An attorney had gone into bankruptcy. He had previously been retained to bring suits for tax refunds and had agreed to do so on a contingent fee basis of one-third of any recovery. He commenced a suit in the New York State Supreme Court, and after the case had been placed on the calendar and before it was reached for trial the attorney had been disbarred in July, 1935. A petition in bankruptcy was filed against him May 18, 1935, and a trustee was appointed *Page 418
July 8, 1935. The plaintiff in the suit brought by the attorney then applied in the State court for an order for the substitution of new attorneys in place of the disbarred bankrupt, and for an order requiring his trustee in bankruptcy to turn over to the new attorneys all pleadings relative to the suit. The trustee in bankruptcy then secured a stay by a petition filed with the Referee in Bankruptcy, asking that an attorney's lien be established against the papers to secure compensation for the services the bankrupt had rendered, contending that the lien was an asset of the bankrupt's estate. He asked that before the papers were released the amount of compensation due the bankrupt attorney for professional services be determined by the Court on a quantum meruit basis and that it be paid to the trustee. The Referee granted this, but the court below reversed the Referee's order and dismissed the trustee's petition. This action of the trial court was affirmed on appeal."
In the court's opinion (l.c. 50) it was ruled as follows: "Appellant concedes that the attorney, not having performed, may not recover on the contract. Nevertheless, he claims that the reasonable value of the services on a quantum meruit basis must be fixed and paid before the papers in the suit are released from the lien supposedly given by Section 475 of the Judiciary Law of the State of New York (L. 1909, c. 35, Consol. Laws N.Y., c. 30).
"The attorney's lien on the papers in a suit is given, not by statute, but by the common law. Assuming, despite Villar Co. v. Conde, 30 F.2d 588 (C.C.A. 1), that the trustee succeeded to the bankrupt's rights under this contract, certainly he has no greater rights than the attorney himself would have. In the present circumstances the attorney would have no lien whatsoever. If he had unjustifiably abandoned the case, he would thereby have forfeited his lien. [In re H____ Attorney, 93 N.Y. 381; In re Rieser, 137 A.D. 177, 121 N.Y.S. 1070; Halbert v. Gibbs,16 A.D. 126, 45 N.Y.S. 113; Fargo v. Paul, 35 Misc. 568,72 N.Y.S. 21; Eisenberg v. Brand, 144 Misc. 878, 259 N.Y.S. 58.] In the case last cited the court said: `The attorney has a right to quit, too (although honor bound to stay), but he is severely penalized. When he withdraws, he breaks the charm that sustained his lien. He himself has destroyed the relationship necessary to support that equitable right that insured payment of his fee.'
"If voluntary withdrawal without justification destroys the attorney's lien, then withdrawal by reason of disbarment would have the same effect.
"The attorney's incapacity follows from his own wrongful act."
The question also was considered in Egan v. Waggoner,41 S.D. 239, 170 N.W. 142, the facts of which also are correctly stated by respondent as follows: "It was held that where an attorney, for one-half of a contingent fee agreed upon, undertook to assist other *Page 419
attorneys in the prosecution of a claim to final judgment, and such attorney was disbarred shortly after the successful trial in the court below and shortly after the filing of a brief in the appellate court and before argument, he was not entitled to the full sum agreed upon under his contract, for his own wrong had made it impossible for him to fully execute that contract."
The opinion in said case ruled as follows: "Any disability which renders a contract for legal services impossible of performance annuls the contract. [6 C.J. 676; Corson v. Lewis,77 Neb. 446, 109 N.W. 735.]
"It follows that immediately upon the entry of the decree of disbarment, every contract of employment as attorney, entered into by respondent, was annulled. Such annulment was brought about by his own wrongdoing, and was therefore as much of a voluntary annulment of his contracts of employment as attorney as though he had expressly refused to perform such contracts, or had accepted an office which disqualified him to perform his contracts. Having annulled his contract, he certainly was not entitled to any compensation for services rendered by appellants thereafter in the performance of those duties which he had contracted to assist in performing."
On failure to recover on the contract, the attorney then sought to recover on a basis of quantum meruit, and Egan, in the meantime having been adjudicated a bankrupt, one Davenport, as trustee in bankruptcy, was substituted as plaintiff. This second case is reported as Davenport v. Waggoner et al., 49 S.D. 592, 207 N.W. 972, 45 A.L.R. 1126.
On this second appeal the Supreme Court of South Dakota held that the attorney could not recover any compensation for services which had been rendered prior to his disbarment. It was ruled as follows:
"By the decision on the former appeal (Egan v. Waggoner, supra) the following propositions at least have been established between the parties, and have become the law of the case upon this appeal: First, that the contract between Egan and appellants was terminated by the disbarment of Egan; second, that upon such disbarment Egan was left in the same position with regard to this contract as though he had voluntarily, wrongfully, so far as appellants are concerned, and without any just cause, abandoned the same; third, that at the time of said disbarment he had not substantially performed said contract upon his part, and was not entitled to invoke the rule of substantial performance and thereby recover upon the contract.
"Accepting the law of the case as established on the former appeal, and bearing in mind the essential nature of a contingent fee contract, the question is whether or not an attorney, who has partly, but not substantially, performed a contract for the rendition of personal services, for a compensation payable only in the event of final and *Page 420
successful termination, who has willfully and intentionally abandoned said contract without cause before completion, can recover for services rendered prior to such abandonment, and, if so, upon what basis?
"The trial court, by its instructions to the jury, allowed recovery on the contract for the part performance and endeavored to apportion consideration in the contract to the part performed. This was manifestly improper. The contract was one entire contract, and was not subject to being thus divided. So far as Egan was concerned, he was employed, not by the client of appellants, but by the appellants themselves; their client thereto consenting. His employment was to assist them by the rendition of personal services until the final termination of the C. case, upon a contingent fee, and such contract was entire and not severable or divisible, and, having abandoned said contract before the C. case was terminated, without just cause, as settled by the former appeal, we believe the sounder rule to be that by such abandonment he forfeited all right to payment for any services previously rendered. [See Fry v. Miles, 59 Alt. 246, 71 N.J. Law, 293; Troy v. Hall, 47 So. 1035, 157 Ala. 592; Cahill v. Baird, 70 P. 1061, 7 Cal. Unrep. 61; Holmes v. Evans,29 N.E. 233, 129 N.Y. 140; Matheny v. Farley, 66 S.E. 1060,66 W. Va. 680; Dempsey v. Dorrance, 132 S.W. 33, 151 Mo. App. 429; Crye v. O'Neal (Tex. Civ. App.), 135 S.W. 253.]"
The opinion in the Davenport case has been approved in In re Woodworth, 15 F. Supp. 291, and in 45 A.L.R. 1156. We also think that the Davenport case was well ruled.
In the instant case the claimant, as a result of misconduct, could not continue as the attorney for Kimmie. The misconduct for which he was suspended, was voluntary conduct on his part. In other words, his suspension was equivalent to a voluntary abandonment of his contract of employment, and for that reason he cannot recover for services, and he has no lien on the $15,000 fund in the registry of the court.
The judgment should be affirmed. It is so ordered. All concur. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3516915/ | The county prosecuting attorney of Forrest County made an affidavit before the circuit clerk charging appellant with a misdemeanor. The affidavit was duly filed in the county court, and the clerk of that court forthwith issued a capias for the arrest of the appellant. The warrant was executed by the sheriff, and appellant gave bond for his appearance.
When the next term of county court came on, appellant failed to appear and was tried in his absence and convicted. He prosecutes an appeal on the contention that the capias for his arrest was issued by the clerk of the county court without any order therefor by the county judge, and for this reason was invalid, so that the court acquired no jurisdiction over the person of appellant. We are of the opinion that the point is not well taken.
Section 2964, Code 1930, which has been in our statutes since early days, reads as follows: "The style of all processes shall be, `The state of Mississippi,' and it shall not be necessary that any process bear teste in the name of any judge or of any term of the court, but all process, except where otherwise provided, shall be issued and signed by the clerk of the court, with the seal of his office affixed, and shall bear date of the day on which the same shall be issued." The term "process" includes the ordinary warrant for arrest, 50 C.J., p. 443, 34 Words and Phrases, Perm. Ed., p. 160, and certainly so when taken in connection with Section 1218, Code 1930, which opens with the sentence that "the process for arrest on an indictment shall be a capias," etc. Time out of mind, *Page 675
the warrants for the arrest of persons charged by indictment have been issued in this state by the clerks, as of course.
Section 694, Code 1930, so far as here pertinent, reads as follows: "The said county court shall have jurisdiction of and shall proceed to try all charges of misdemeanor which may be preferred by the district attorney or by the county prosecuting attorney on affidavit sworn to before the circuit clerk of the county; and prosecutions by affidavit are hereby authorized in misdemeanor cases under the same procedure as if indictments had been returned in the circuit court and same had been transferred to the county court." Inasmuch as the affidavit of the district attorney or county prosecuting attorney in the institution of a prosecution for misdemeanor in the county court takes the place of an indictment in the circuit court, the process on the charge of misdemeanor so made is a capias to be issued by the clerk of the county court under the general statute first above copied. See also first paragraph, Section 696, Code 1930.
Appellant relies on Martin v. State, 190 Miss. 32, 199 So. 98. The case is not in point. There the clerk attempted to act as a conservator of the peace, not as the clerk of his court.
The other assignments urged by appellant have been considered, but none of them present grounds for a reversal.
Affirmed. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3516919/ | Byrd Clopton, a partnership composed of Alonzo L. Byrd and Bettison W. Clopton, filed a declaration in the circuit court, alleging that on October 16, 1924, there had been awarded a written contract by the Mississippi river commission to construct certain specific levee work at and for the price of thirty-eight cents per cubic yard; that said Byrd Clopton sublet or assigned said contract to Mullen Junkin, a partnership composed of William C. Mullen, and William J. Junkin, in writing, by which said Mullen Junkin were to take over and construct said work at a price so as to give Byrd Clopton two cents per cubic yard profit as compensation for their contract. It was alleged in the declaration that the Mississippi river commission did not object to said subletting or assignment, but acquiesced therein, and that the plaintiffs performed their part of the contract sued on, and that the defendants failed and refused to perform their part of the contract, whereupon the Mississippi river commission performed the work in the place of the defendants and plaintiffs, and that by reason of said fact the plaintiffs lost and were damaged to the extent of two cents per cubic yard on one hundred eighty-seven thousand cubic yards, or the sum of three thousand seven hundred and forty dollars. The contract was not made an exhibit to the declaration as originally filed, and a demurrer was sustained thereto, but the plaintiffs amended the declaration making a copy of said contract an exhibit to the declaration. To this amended declaration the defendants interposed a demurrer which was overruled. Thereupon the defendants pleaded the general issue, and a trial was had. The plaintiffs introduced evidence in support of the declaration, among other things, setting up that the Mississippi river commission knew of said assignment of the contract; that they had a copy of it; that they did not object to it; and *Page 220
that they accepted the defendants as subcontractors. The defendants introduced no evidence, and the court below granted the plaintiff's request for a peremptory instruction.
Among the provisions in the contract between plaintiffs, the original contractors, and the Mississippi river commission was an article or clause reading as follows: "Article 12. Neither this contract, nor any interest therein shall be transferred to any other party or parties, and in case of such transfer the United States may refuse to carry out this contract either with the transferer or the transferee, but all rights of action for any breach of this contract by the contractors are reserved to the United States." This provision in the contract is substantially that of Revised Statutes U.S., section 3737; U.S.C.A., title 41, section 15, which reads as follows: "No contract or order, or any interest therein, shall be transferred by the party to whom such contract or order is given to any other party, and any such transfer shall cause the annulment of the contract or order transferred, so far as the United States are concerned. All rights of action, however, for any breach of such contract by the contracting parties, are reserved to the United States."
It is the contention of appellants that because of that clause in the contract, and because of the statute, the contract between plaintiffs and defendants was void, and would not support a right of action, and that, consequently, the circuit court erred in not sustaining the demurrer, and also in giving a peremptory instruction.
We think the clause in the contract is for the benefit of the United States government, and that the government may or may not, at its option, permit an assignment of a contract originally let, and that this view is sustained by the case of Dulaney v.Scudder (C.C.A.), 94 F. 6, and the authorities cited therein. It is true that in the Dulaney v. Scudder case the contract was fully performed, and that in the case before us the contract had not been *Page 221
fully performed. We think that, before parties can set up defenses to a contract of this kind, the parties must have requested the United States, or the commission or other body making the contract on behalf of the United States, to consent to such assignment, and if the United States refused to have either forfeited the contract, or insisted upon performance by the original contractor and notify the other party of such refusal. Had this been done, then the defendants might have interposed the defense, but in the case before us the evidence is to the effect that the Mississippi river commission, having charge of the contract on behalf of the United States, acquiesced and consented to the assignment, and, therefore, such defense cannot prevail.
In case of a contract such as that involved in the case before us, it is the duty of both parties to an assignment or subletting to use their offices and influence to procure consent to an assignment of subletting of a contract, and neither will be permitted to set up nonassignability without the consent of the government, unless he has done what was in his power to procure such assignment. Neither the statute, nor the contract itself, absolutely prohibits an assignment of a contract, but only prohibits assignments when done without the consent of the government, reserving the right of the government to dissent from such assignment.
We are, therefore, of opinion, that the court correctly overruled the demurrer interposed to the amended declaration, and that the court was correct in granting the peremptory instruction for the plaintiffs. The judgment is affirmed.
Affirmed. *Page 222 | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3516920/ | The appellant sued the appellee in replevin for the possession of an automobile. In support of its claim thereto it introduced evidence disclosing that the automobile was owned by Myer Shelby and sold by him to his wife. This sale was evidenced by a written unrecorded conditional sale contract signed by both Shelby and his wife describing several promissory notes executed by Mrs. Shelby covering the purchase money, reserving title to the automobile in Shelby until all the notes were paid, and providing that on default of the payment of any of the notes all of them should become due. These notes and the contract were assigned for value by Shelby to the appellant. This suit was instituted after default in the payment of one of the notes.
When the appellant rested its case, its evidence was excluded, and the jury were directed to, and did, render a verdict for the appellee.
The ruling of the court below is sought to be upheld under section 2522, Code 1906, Hemingway's Code 1927, section 2190, which provides that: "A transfer or conveyance of goods and chattels, or lands, or any lease of lands, between husband and wife, shall not be valid as against any third person, unless the transfer or conveyance be in writing and acknowledged and filed for record as a mortgage or deed of trust is required to be; and possession of the property shall not be equivalent to filing *Page 279
the writing for record, but, to affect third persons, the writing must be filed for record."
This contention will be considered in two aspects:
First, we will assume for the purpose of the argument that the appellant's right to the automobile rests upon the mere conveyance thereof from Shelby to his wife, and the execution of a lien thereon by the wife to secure the purchase money thereof.
An examination of the cases in which this court has heretofore dealt with this statute will disclose that the third persons against whom an unrecorded conveyance between husband and wife is void are such as claim an interest in, or right to, the property conveyed through or against the husband or wife, as the case may be, which claim would be valid in event the conveyance had not been made. Groce v. Phoenix Insurance Co., 94 Miss. 201, 48 So. 298, 22 L.R.A. (N.S.) 732. In this aspect of the case, therefore, the unrecorded conveyance of the automobile is valid against the appellee, unless and until it shall appear that his possession of the automobile is based on a claim thereto which would be valid had the sale from Shelby to his wife not been made.
Second, but the appellant's claim to the automobile does not rest upon a mere sale thereof by Shelby to his wife, and the execution of a lien thereon by the wife. The assignment of the conditional sale contract by Shelby to the appellant recites that: "The foregoing conditional sale contract between the buyer mentioned therein and the undersigned, the seller, and the property therein described, and all the right, title and interest therein of the undersigned are hereby sold, assigned and transferred to Federal Credit Company, its successors or assigns." This language, it will be observed, includes not only the conditional sale contract, but also the right, title and interest of Shelby in the property therein described. Shelby, therefore, not only assigned the conditional sale contract *Page 280
to the appellant, but transferred to it any interest he might have in the automobile, which transfer must prevail against the appellee unless and until it shall appear that he is in possession of the automobile under a claim thereto superior to that which Shelby transferred to the appellant.
Reversed and remanded. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3516921/ | Appellee sued appellant in the circuit court of Pearl River county to recover two thousand dollars paid by him to appellant for twenty shares of its six dollar preferred stock, which appellee purchased relying upon certain alleged false and fraudulent representations, promises, and guaranties with reference thereto made to him by the *Page 119
agents of the appellant who sold him the stock. There was a verdict and judgment in favor of the appellee for the amount sued for, and appellant has appealed.
The declaration, as finally amended, was in two counts. The first count charged, in substance, that in order to obtain funds with which to enlarge and carry on its business, the appellant adopted a fraudulent scheme to beguile the general public into purchasing its stock by representing that after it received the purchaser's money, it would issue and deliver to him "preferred stock in said defendant corporation in a sum equal to the amount of money received by defendant from such persons, and would guarantee to pay such persons six per cent. per annum on such money, and to refund such money or any part thereof to such persons, at any time they desired to have the same refunded to them, and as further inducement to such persons to withdraw their said funds from bank and turn the same over to defendant in exchange for said stock, said defendant falsely and fraudulently represented to such persons that there was no difference in having their money in bank on savings and having the same with defendant, insofar as being able to obtain or withdraw the same for use at any time, if and when such persons should desire to use the same; when, in point of fact, all of said representations and pretended guaranties were then and there false and untrue and defendant knew the same were false and untrue at the time and had no intention of carrying out and performing the same or any part thereof."
It was further charged that in pursuance of the said fraudulent scheme, and with the intent to defraud the appellee out of two thousand dollars, which he then had in bank on savings account at four per cent interest per annum, the agents of appellant falsely and fraudulently represented to him that if he would purchase two thousand dollars worth of its stock, the appellant would "guarantee to pay plaintiff six per cent per annum on *Page 120
said two thousand dollars and to refund to plaintiff said money or any part thereof at any time plaintiff should desire to have the same refunded to him, and in connection with the aforesaid fraudulent intent and purpose on the part of defendant then and there and thereby to cheat, swindle and defraud plaintiff out of his two thousand dollars the said defendant further falsely and fraudulently represented to plaintiff at the same time that there was no difference in plaintiff having the money in the bank to savings account and in having the same with defendant, insofar as being able to obtain or withdraw the same for use at any time, if and when plaintiff might desire to use the same."
It was further averred that none of such representations and pretended guaranties were true, and the defendant knew the same were not true, and had no intention at the time or afterwards of carrying out or performing the same or any part thereof; that all said representations and pretended guaranties were material, but were made by the defendant to the plaintiff with the fraudulent intent and purpose of causing the appellee to believe the same to be true, and thereby inducing him to act upon the same; that plaintiff did believe the same to be true, and was thereby induced to purchase said stock; and that appellant appropriated the purchase price thereof to its own use with no intention on its part, at the time or afterwards, of refunding said money or any part thereof to appellee, if and when he should desire to use the same and request a refund thereof.
It was further averred that after appellee purchased the said stock, appellant paid six per cent per annum thereon until October 1, 1933; that on December 30, 1933, it notified appellee in writing that it would not pay the quarterly dividend then due; that thereupon appellee, desiring to use said money, undertook to avail himself of the representations and guaranties of appellant that it would refund the same to him at any time *Page 121
he might desire to have it refunded; that he then called upon appellant to refund his money, and offered therewith to return the certificates of stock to appellant, and tendered the same; but that appellant refused to return his money and advised him that it would not refund same, and had no intention of returning it or any part thereof; that appellee then and there and thereby for the first time discovered the alleged fraud; and that he then promptly elected to rescind the contract of sale by suing therein for such rescission.
The second count of the declaration adopted the language of the first, and averred further that the sale of said stock, under the facts alleged, was in violation of chapter 97, Laws 1916 (the Blue Sky Law then in force), and constituted misrepresentations of material facts concerning such stock, and was fraudulent within the meaning of said statute, as construed by the Supreme Court of the state. This count sought recovery of the said sum of two thousand dollars, with interest, but did not ask for an allowance of attorney's fees, in accordance with the provisions of the said act of 1916.
A motion to transfer the cause to the chancery court was overruled, and after the declaration was amended by filing a second count, a demurrer to this count was interposed and overruled. Thereupon a motion for continuance on account of surprise and unpreparedness to plead to the second count having been overruled, the appellant filed pleas of the general issue to each count of the declaration, and gave notice thereunder of evidence which it would offer to sustain special defensive matters therein set forth.
This notice set forth that the stock certificates expressly provided that the said stock was subject to the charter and by-laws of appellant, and that upon receipt of the stock certificates sued on, appellee was "charged with knowledge of all the provisions thereof, and of the charter and by-laws of appellant, and of the rights, privileges, *Page 122
restrictions and liabilities arising out of appellee's ownership of stock in the appellant company; and that it was the right and duty of appellee to inform and acquaint himself therewith; that under the charter and by-laws, of which appellee so had notice, appellant was without right to purchase or acquire its own stock, except only so far as may be permitted by law, and then only out of surplus and net profits at such price as may be fixed by the board of directors or the executive committee thereof; and that preferred stock, such as that held by appellee, could not be redeemed except upon the affirmative vote of a majority of the holders of the common stock of appellant company; and that the matter of dividends on the stock were likewise controlled and governed by the terms of the certificate, and charter and by-laws of the company, of all of which appellee was charged with notice immediately upon receipt of his certificates; and that the alleged representations, promises or guaranties, with reference to dividends or redemption or repurchase of the stock, or refund of the price paid, were not made; but, if made, were unauthorized and were inconsistent with the charter and by-laws, and the certificates of stock and were with reference to matters controlled entirely by the provisions of the charter and by-laws of appellant, and were such representations as appellee was legally bound to know there was no right to make, and on which appellee had no right to rely."
It was further set forth that if "the alleged representations and guaranties were made (which appellant denied) then immediately upon receipt of the certificates of stock by appellee, appellee was charged with knowledge, and was then and there legally bound to know that the same were inconsistent with the provisions of the charter and by-laws of the appellant, and the terms of the certificate governing the rights, liabilities and status of appellee as a stockholder of appellant company, and then and there had notice and knowledge of the alleged *Page 123
fraud, and was then and there bound to determine, as of the time of the receipt by appellee of the certificates of stock, whether he would affirm the transactions, and retain the stock, with its benefits and liabilities, or rescind; that appellee failed, within a reasonable time after such notice and knowledge, to rescind the transaction, and ratified and affirmed the transaction, with such knowledge, by continuing to hold and retain the shares of stock as his own property, and to receive and enjoy the benefits thereof, and to receive and retain the dividends thereon, while appellant was continuing to carry on its operations, and incurring obligations and liabilities to creditors and to the public at large, in the course of the discharge of its duties as a public service corporation, upon the faith that appellee was then and there satisfied and willing to continue and remain as a stockholder in the company; and that thereby appellee was and is estopped as against the appellant and its creditors and the public at large, to repudiate the purchase of the stock and his obligations and liabilities incurred as the owner thereof."
Appellant also gave notice that it would offer evidence to show that, on account of business depression, it was forced to suspend payment of dividends on said preferred stock; and that all of appellant's current income is required to operate its business and maintain its properties, and that it does not have income or assets or credit available to obtain funds to meet the demands of appellee and other preferred stockholders for the return of money paid for preferred stock, and to do so would render appellant insolvent and incapacitated to discharge its duty to the public; that it is contrary to the laws and public policy of the state for a corporation to permit any of its capital stock to be withdrawn or diverted from its purposes, or to declare dividends that would render it insolvent; and that appellant is prohibited by statute from doing acts contrary to said laws and public policy, and that to comply with the demands of appellee and others *Page 124
similarly situated would be contrary to the statutes and public policy of the state, wholly ultra vires and void, and would render appellant insolvent.
In response to this notice, the appellee filed a counter notice denying the contentions of appellant, and also averring that he did not read the stock certificates until he discovered the alleged fraud; that the print on the certificates was so small that it could only be read with the aid of a magnifying glass; that after he discovered the alleged fraud, he had the same read to him with a magnifying glass, but asserted that nothing in the said certificates put him on notice that the alleged representations made to him were in conflict with appellant's charter and by-laws. It was also charged that the majority of the holders of the common stock under the charter and by-laws of appellant had the right at any time to vote to redeem stock such as that held by appellee; and that he had the right to assume that a majority of the holders of the common stock had authorized the redemption of the stock at the time the agent selling it made the alleged representations to him.
Notice under the general issue to the second count set forth substantially the same matters as the notice under the general issue filed to the first count, with the additional averments that neither appellant nor its agents who sold said stock made any misrepresentations of any material facts concerning the same, and that such representations, if any, as were made by appellant and its agents, were made in good faith, and that while appellant made no contract or guaranty as to dividends, other than expressed in said stock certificate and charter and by-laws, appellant did honestly expect to pay such dividends as provided for therein. It was therein further set forth that: "While it made no guaranty or promise to refund the purchase price of such stock at any time, nor to repurchase such stock at any time, or price, it did then and there maintain a resale bureau *Page 125
through which it could and did resell such preferred stock for its stockholders from time to time at the then market price, less a handling charge, or brokerage fee of two dollars per share; that at the time of the sale of such stock to plaintiff, such preferred stock of defendant was in demand by the public; that the price of said stock on the market showed no material fluctuations; that the defendant, through such resale bureau was able readily to resell for any and all stockholders who requested it, such of their stock as they desire to dispose of, and on very short notice; that the existing conditions of the market for the stock, and the past record and experience of the company, and its financial condition, and earnings, and its prospects and expectations fully justified the expectations that through such resale bureau any of its stockholders who might need or desire to dispose of their stock, could do so promptly, and readily. That defendant has continuously, a long while prior to the sale to plaintiff, and continuously thereafter, maintained and does now maintain such resale bureau for such stock, but that economic conditions became such that there was and is no market for such stock at anything like its true value; that speculators acquired from holders of such stock at sacrifice prices, certain blocks of it, and put it on the market at such low prices as to destroy the chance to realize anything like the real value of the stock and rendered it impossible for defendant to resell for such of its stockholders, who, due to the depression, desired, or found it necessary to dispose of their said stock at any price this defendant could recommend to such stockholders; and that defendant has found it impossible to resell said stock for the large number of stockholders who have desired and requested that their said stock be converted into cash. That while defendant did not agree nor promise, nor represent that it would repurchase the stock of any stockholder, nor refund to any stockholder the money paid for such stock, but nevertheless, as long as the *Page 126
market made it possible so to do, defendant aided large numbers of its stockholders to convert their stock into cash, through such resale bureau, and stands ready, and willing to do so for all stockholders at all times, provided such stock can be sold at prices satisfactory to such stockholders, and at all."
By counter notice appellee replied that said stock was in demand only on account of the alleged false and fraudulent representations concerning the same, that the appellant knew it could resell said stock only by making such false and fraudulent representations as were made to appellee, and that the market therefor was destroyed by appellant's failure and refusal to refund the money paid therefor to the purchasers thereof.
There is no substantial dispute in the facts shown by the evidence. R.B. Jordan, an agent of the appellant in the sale of its preferred stock, testified that, during the selling campaign, monthly meetings of the agents and employees of the appellant were held usually at Hattiesburg, Mississippi; that these meetings were for the purpose of instructing the agents in methods to be used in making sales of this stock, and that they were usually presided over by the appellant's vice president and general manager, and that its division manager and other officers were usually, or frequently, present; that at these meetings, these officers instructed them to use three selling points, the language of the witness in respect to this matter being: "They told us that we had three strong selling points. One was that their money was safe, and second, that it paid a higher rate of interest than an ordinary savings account, and third, that they could get their money whenever they wanted it, and those were the three strong selling points they said we should talk."
He further testified that they were instructed to guarantee to purchasers six per cent on their investments, and to represent to them that they could get their money back whenever they wanted it, and that if at any time *Page 127
they were in a hurry for a refund of their money, they could take their certificates to the Gulfport office of the company and get their money. He also testified that in selling this stock, the above-stated selling points were used by him and other agents, and that he knew that appellant maintained some kind of sales organization at Gulfport. On cross-examination, this witness was asked the following question: "Was it explained to you or did you have any definite information about how a person would get his money back if he wanted to sell his stock; whether or not they would take it up and resell it to somebody else or what would be done with it?" The response to this question was: "They didn't say anything about reselling it."
On cross-examination this witness was examined at length in reference to certain sales literature, and there was offered in evidence as exhibits to this testimony the literature in question, including a pamphlet called the "Tell and Sell" book. This "Tell and Sell" book contained the statement that: "No definite date is fixed for the redemption of this stock. Money invested in stock is invested on a partnership basis. It is not loaned to the company. It is intended that the money should remain in the property, which is permanent, and thus be kept continually at work. If the company calls in or redeems the stock, which it reserves the right to do, it agrees to pay one hundred ten dollars and accrued dividend per share," and that the stock might be resold at any time through a resale bureau maintained by the company; but this book and other sales literature was not furnished to prospective purchasers of the stock.
Appellee testified that he had two thousand dollars on savings deposit in a bank, drawing four per cent interest; that he was approached by appellant's local manager at Poplarville, Mississippi, and R.B. Jordan, an employee of that office, in reference to a purchase of appellant's preferred stock; that they represented to him that *Page 128
an investment of his money in this stock was a better proposition than that of a bank, because it was bigger than a bank, was growing all the time, and that he could get his money at any time he wanted it. Upon being asked whether they told him how he could get his money out of the stock, he replied: "Yes, sir; just take the certificates and carry them to Gulfport and they would cash them and they said, `or if you don't have time to do that, just go to the office here and Mr. Bostick will send them in for you and they will send your money back.'"
He further testified that they represented to him that a six per cent dividend on the stock was guaranteed, and that he believed these representations, and relied and acted thereon; that he had no reason to suspect that the representations were untrue, or would not be carried out, until he received notice, on or about January 1, 1934, that the quarterly dividend due on that date would not be paid; that upon receipt of this notice, he at once tendered his stock to appellant and demanded a refund of the purchase price thereof, and on being notified by the president of the appellant company that the sale would not be rescinded and the purchase price of the stock refunded, he promptly filed this suit.
Other than the exhibits offered during the cross-examination of appellee's witness R.B. Jordan, the appellant offered no evidence. At the conclusion of the evidence, both sides requested peremptory instructions, which were refused, and thereupon the cause was submitted to the jury upon instructions granted to the appellee.
The appellant contends that the representations relied on reduced themselves to two contractual promises: (1) A promise to pay dividends in the future; and (2) a promise or representation that in future, if and when appellee desired his money back, he could obtain it, the same as he could get it back if it were in a bank, and that *Page 129
the peremptory instruction requested by it should have been granted for the reason that these alleged contractual promises were not shown to have been made with an undisclosed intention of not performing them.
There is authority holding, and for the purpose of this decision only we will assume, that a guaranteed dividend on preferred stock does not in legal effect guarantee a payment in any event, but only in the event the dividends are earned; and that, consequently, appellee was not entitled to rescind the contract by reason of the breach of the promise to pay dividends in the future.
It is the settled rule that a contractual promise, made with the undisclosed intention of not performing it, is fraud. American Law Institute Restatement, Contracts, section 473; Gross v. McKee, 53 Miss. 536; White v. Stewart, 166 Miss. 694,145 So. 747; Palmetto Bank Trust Co. v. Grimsley, 134 S.C. 493,133 S.E. 437, 51 A.L.R. 42, and authorities cited in the note attached to the report of this case in 51 A.L.R. The appellant does not controvert this rule, but contends that, "as to the promise the representation that in the future, whenever appellee desired his money back, he could apply for it and get it back, and in that particular his investment was like having his money on deposit in a savings account in bank," the proof fails to show an undisclosed intention of not performing it. It is contended, on the contrary, that the fact, as shown by the evidence, that during the time intervening between the purchase of the stock by appellee and his offer to rescind, other parties did surrender their stock and receive their money back, and that the appellant maintained a bureau for the resale of stock, is evidence tending to show an intention to perform the promise.
We do not so construe the probative values of these facts. It is shown that at the time the stock in question was purchased by the appellee, and throughout the period intervening before the filing of this suit, the appellant *Page 130
did, in fact, maintain in Gulfport, Mississippi, a resale bureau, through the medium of which the stock of any shareholder might be resold, provided there was any market or any demand for such stock. Manifestly, sales of stock through this bureau to the buying public must of necessity have been made at the market price existing at the time the stock was offered for sale, and the existence of this bureau afforded no assurance to stockholders of a return of all their investment. The promise made to appellee, as shown by the uncontradicted proof, was to return him his entire investment at any time he desired a refund of his money. He did not part with his savings upon a promise on the part of the appellant that it would at any time endeavor to resell his stock for him through a resale bureau, or that his money would be refunded by it, provided it could first resell it at par or par and accrued dividends. When the fact developed, as set forth in appellant's pleadings, that there was no market for this stock except at such low prices as to practically destroy the investment, the activities of the resale bureau became a poor substitute for an enforceable promise to refund the money invested in such stock; and it may well be assumed that promises to proposed small investors to aid them in the future in an effort to resell at the prevailing market price would not be nearly so fruitful of sales as an absolute promise to refund the entire purchase price at any time the purchaser wanted his money. An intention to refund at any time the purchaser desired his money is not shown by proof of an intention to do a wholly different thing, which might or might not result in a return of the money, and which, in the case at bar, has resulted in the purchaser being wholly unable to secure his money or any part thereof.
The reasonable and necessary inferences to be drawn from the pleadings and proof in this case lead to the inevitable conclusion that when apparent refunds were made, it was, in fact, accomplished by a resale of the shareholder's stock, and that when resales for the amount *Page 131
which appellant had obligated itself to refund became impossible, it refused to make further refunds. We think the pleadings and the proof in support thereof clearly show that the appellant had no intention of performing the promise which the uncontradicted proof shows was actually made to appellee at the time he purchased the stock; but that its real purpose and intention was to do a wholly different and inadequate thing, that is, to merely aid purchasers in the resale of their stock by the maintenance of a bureau for that purpose. This substitute for the announced purpose and intention upon which the appellee relied when he parted with his money could only be effective as long as there existed a ready market for the stock at or above par, and did not relieve the appellant of its assumed obligation to refund to appellee the amount he had invested in the stock when he desired his money. Consequently, we think the appellee is entitled to recover the sum so invested, unless he is precluded from so doing by reason of some elements of laches, ratification, or estoppel.
The appellant contends, however, that the promise or obligation to refund the money invested, or repurchase the stock, "at any time" the purchaser desired his money, means within a reasonable time after the purchase; and since appellee retained the stock for nearly four years before offering to rescind and demanding the return of his money, he cannot now recover. In support of its contention that the words "at any time" as used in contracts of this character mean within a reasonable time, the appellant relies on the cases of Grace Securities Corporation v. Roberts,158 Va. 792, 164 S.E. 700, and Kaplan v. Reid Bros., 104 Cal. App. 268,285 P. 868. Each of these cases held that in a contract to repurchase stock at any time, the words "at any time" mean within a reasonable time; but that what is a reasonable time in which to exercise the option depends upon the facts and circumstances of the particular case. And in the Grace Securities Corporation Case, supra, it was held that an *Page 132
exercise of the option more than two years after the purchase was within a reasonable time, while in the Kaplan Case, supra, wherein the company agreed that it would, at any time, on thirty days' notice, return to the purchaser the par value of the stock, with accrued dividends, it was held that a delay of six years was not unreasonable. Also in the case of Vickrey v. Maier, 164 Cal. 384,129 P. 273, 274, the Supreme Court of California had under consideration a contract for the repurchase of stock "at any time after six months," and held that a delay in making a demand of more than four years after the lapse of the six-month period was not unreasonable.
In the case at bar there are no facts or circumstances which would indicate that either party intended or contemplated a prompt exercise of the right to demand a refund of the money invested. On the contrary, the use of the words "at any time" and the very purpose of the sale of the stock indicated an intention of the parties that the right need not be promptly exercised, and having in view all these facts, we think that in so far as the effect and application of the words "at any time" were concerned, the demand for a return of the money was made within a reasonable time. Furthermore, in view of the fact that appellee acted promptly after receipt of notice that the quarterly dividends due January 1, 1934, would not be paid, which was the first circumstance to create dissatisfaction and cause appellee to desire a return of his money, the holding of the New York Court of Appeals in the case of Fitzpatrick v. Woodruff, 96 N.Y. 561, applies here. In that case, the plaintiff purchased bonds in reliance upon an oral agreement on the part of the defendant that if "at any time" the plaintiff became dissatisfied with them, the defendant would take them back on thirty days' notice and return the money paid with interest. Interest on the bonds was paid semiannually for about two and one-half years, when default was made in the payment thereof, and thereupon plaintiff *Page 133
gave the required notice of thirty days and, at the expiration of that time, tendered back the bonds and demanded a refund of the money paid, with interest. While recognizing the general rule that where the time within which an option is to be exercised is not limited or fixed by the agreement, then such option must be exercised within a reasonable time, the court held that since no reason had existed for dissatisfaction up to the time the interest was refused, under these circumstances, the demand was within a reasonable time, and within the above-stated rule.
It is further contended that on receipt of the stock certificates, the appellee was charged with notice of their contents and recitals, and since these certificates did not contain on the face thereof the agreement alleged to have been made, he was under the duty at once, or within a very limited time, to elect whether he would rescind, or keep the stock as permanent investment. We recognize the principle of law that a purchaser of personal property who desires to rescind the sale on account of fraud or mistake is required to act with reasonable promptness after he discovers the fraud or mistake, or is chargeable with notice thereof; but we do not concur in the view that upon receipt of certificates of stock which did not contain the alleged agreement on the part of appellant to refund the purchase money at any time appellee desired, he was thereby chargeable with notice that the promises or representations were untrue, or were made without intention of performing.
Although it has been held that in the absence of fraud in the making of a contract, a party thereto who retains the contract in his possession must be held to a knowledge of the conditions thereof, although he may not have read it, but relied upon the representations of an agent as to the provisions thereof, Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 609, yet the very basis of the case at bar is fraud in the procurement of the contract. *Page 134
In the case of Nash Mississippi Valley Motor Co. v. Childress,156 Miss. 157, 125 So. 708, 709, wherein the basis of the suit was alleged false and fraudulent representation in procuring a contract of sale, the court said: "A purchaser has a right to rely upon the representations of a seller as to facts within the latter's knowledge, and the seller cannot escape responsibility by showing that the purchaser upon inquiry, might have ascertained that such representations were not true. Contributory negligence is not a defense to an action based on fraud. If a false statement is made by one who may be fairly assumed to know what he is talking about, it may be accepted as true, without question and without inquiry, although the means of correct information are in reach. Ferguson v. Koch, supra [204 Cal. 342,268 P. 342, 58 A.L.R. 1176]; Gannon v. Hausaman, 42 Okla. 41,140 P. 407, 52 L.R.A. (N.S.) 519; King v. Livingston Mfg. Co.,180 Ala. 118, 60 So. 143; Fosburg v. Couture, 126 Wash. 181, 217 P. 1001, 1002."
Aside from any question as to the effect of recitals printed on a certificate of stock in type so small as not to be readable without the aid of a magnifying glass, as the uncontroverted proof here is, under the rule announced in the Childress Case, supra, the fact that the appellee had in hand the means of correct information and did not read it, but relied on false and fraudulent representations of the seller's agent, does not relieve the seller of responsibility. This is said in reference to the fact that the stock certificates did not contain the alleged agreement to refund at any time, but it applies equally to the affirmative recitals of the certificates. In addition to that, however, we find nothing in the recitals of the certificates that would charge the appellee with notice of the falsity of the promises and agreements which induced him to purchase the stock, or that such a contract on the part of the appellant was ultra vires.
In the lengthy recitals attached to and forming a part *Page 135
of the stock certificates, the corporation expressly reserved the right, upon the affirmative vote of the majority of the common stock outstanding, to redeem the six dollars preferred stock upon the payment therefor of one hundred ten dollars, plus all accumulated and unpaid dividends. But this right to redeem reserved to the corporation would not charge the purchaser of stock with notice that the right to redeem the particular stock at par had not been granted by the common stockholders, or that his promised option to call his stock and demand his money at any time would not be recognized. Since, as we hold, there was nothing to charge the appellee with notice of the alleged fraud, or to put him on inquiry, until he was notified on January 1, 1934, that the dividend then accrued would not be paid, his failure to demand a rescission before that time did not affect his rights, upon receipt of this notice he at once offered to rescind, and upon being met with refusal promptly filed this suit. Under these circumstances, there was no default or delay which precludes recovery.
Appellant also seems to contend that since it was organized under the laws of the state of Maine, and the stock certificates issued to appellee contained the provision that it was issued subject to the laws of Maine, upon receipt of the certificates, appellee was charged with notice and knowledge of the laws of that state affecting the issuance of the stock, and the binding force of the alleged agreement to refund, or redeem the stock at any time. As touching this contention numerous statutes of the state of Maine are cited and quoted in the brief of counsel for the appellant, as well as in the dissenting opinion herein, but it is not pointed out wherein any of these statutes have any bearing upon the question involved, except probably those hereinafter noted.
Section 20 of chapter 56 of the Revised Statutes of Maine 1930 provides that no preferred stock shall be "called in or retired if thereby the property and assets *Page 136
of the corporation shall be reduced below the amount of its outstanding debts and liabilities." There is not a scintilla of proof in this record showing or tending to show that the retirement of the stock sold under the alleged agreement would reduce appellant's property and assets below the amount of its outstanding debts and liabilities; and, consequently, the prohibition of this statute cannot affect appellee's rights.
Section 37 of chapter 56, Rev. St. Maine 1930, as amended by laws of 1933, chapter 53, provides that, "Dividends of profit may be made by the directors, but the capital shall not thereby be reduced, until all debts due from the corporation are paid, . . ." while section 93 of chapter 56, Rev. St. Maine 1930, provides that, "Corporations, not created for literary, benevolent, and banking purposes, shall not so divide any of their corporate property as to reduce their stock below its par value, until all debts are paid." And section 101 of said chapter also provides that the capital stock subscribed for any corporation shall stand for the security of creditors and shall be paid for in cash or its equivalent. The rights of creditors are in no way involved in this case, and the record is wholly barren of any evidence that would show that appellee's rights were in any way affected by the provisions of any one of the last above-mentioned statutes.
Section 102 of the said section 56, Rev. St. Maine 1930, provides as follows: "Sec. 102. Withdrawal of capital stock,void as against judgment creditor, receivers, or trustees. . . . No dividend declared by any corporation from its capital stock or in violation of law, no withdrawal of any portion of such stock, directly or indirectly, no cancellation or surrender of any stock, and no transfer thereof in any form to the corporation which issued it, is valid as against any person who has a lawful and bona fide judgment against said corporation, based upon any claim in tort or contract or for any penalty, or as against *Page 137
any receivers, trustees, or other persons appointed to close up the affairs of an insolvent corporation."
In connection with the discussion of these statutes, our attention is also called to the case of Spear v. Rockland-Rockport Lime Co., 113 Me. 285, 93 A. 754, 6 A.L.R. 793, wherein the Supreme Court of Maine held that as to creditors, a preferred stockholder's rights are subordinate, and that he cannot claim dividends out of funds that are needed for, or that properly should be applied to, the payment of debts. As hereinbefore pointed out, the rights of creditors are not here involved; and there is no proof whatever showing that any of the requirements or prohibitions of the cited statutory provisions of the state of Maine have any application here, or in any way militate against appellee's right to rescind.
There was no reversible error in any of the rulings of the court on the preliminary motions and pleadings; and upon the testimony of the appellee, which is corroborated in all material respects by the testimony of one of the agents who negotiated the sale of the stock in question, we think he was entitled to a peremptory instruction on the first count of the declaration. Consequently, other alleged errors in the admission or exclusion of testimony and in the instructions granted to appellee become immaterial.
The judgment of the court below will therefore be affirmed.
Affirmed. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2998654/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-2224
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
TRAVIS ROBINSON,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 04 CR 109—Allen Sharp, Judge.
____________
SUBMITTED DECEMBER 5, 2005—DECIDED JANUARY 13, 2006
____________
Before POSNER, KANNE, and SYKES, Circuit Judges.
SYKES, Circuit Judge. Travis Robinson pleaded guilty
to being a felon in possession of a firearm in violation of
18 U.S.C. § 922(g)(1). The day he was arrested, Robinson
also may have fired the gun several times while standing on
his front porch. He did not admit this conduct, though—at
least not in court—and the indictment did not charge it.
At sentencing, which occurred after United States v.
Booker, 125 S. Ct. 738 (2005), the government asked the
judge to find by a preponderance of the evidence that
Robinson had indeed fired his gun from his front porch.
Such a finding would have meant that Robinson possessed
a firearm in connection with another felony—specifically,
2 No. 05-2224
criminal recklessness in violation of section 35-42-2-2 of the
Indiana Code—and would have provided the basis for a
four-level enhancement to Robinson’s advisory sentencing
range under the sentencing guidelines. See U.S.S.G.
§ 2K2.1(b)(5); Booker, 125 S. Ct. at 767 (District courts,
while no longer bound by the sentencing guidelines, “must
consult those Guidelines and take them into account
when sentencing.”). Rather than make a finding on the
matter, however, the district judge denied the enhancement
“in the interest of caution” because the indictment did not
charge, nor did Robinson admit, that he had fired the gun.
The judge calculated a guidelines range of 51-63 months
and sentenced Robinson to 51 months, the low end of the
advisory range. Had the judge made a finding that Robin-
son fired the gun and therefore possessed it in connection
with another felony, the advisory guidelines range would
have been 77-96 months. The government appealed the
sentence.
Discussion
The district judge offered the following explanation for his
refusal to make a finding on whether Robinson fired his
gun: “[I]n the post-Booker world, [the court] has the discre-
tion to sentence outside the Guideline range as long as the
sentence is reasonable. . . . [But] in the interest of caution,
the Court is reluctant to grant a four level enhancement
based on facts not charged in the indictment, proven to a
jury beyond a reasonable doubt, or admitted by the defen-
dant.” That was error.
Our cases since Booker have explained the steps in
criminal sentencing now that the sentencing guidelines
are advisory. There are two: 1) calculate the appropriate
advisory guidelines range; and 2) decide whether to im-
pose a sentence within the range or outside it, by refer-
ence to the factors set forth in 18 U.S.C. § 3553(a). The first
No. 05-2224 3
step is no different now than it was before Booker.
See United States v. Cunningham, 429 F.3d 673 (7th Cir.
2005); United States v. Rodriguez-Alvarez, 425 F.3d 1041,
1046 (7th Cir. 2005); United States v. Dean, 414 F.3d 725,
727 (7th Cir. 2005); United States v. George, 403 F.3d 470,
472-73 (7th Cir. 2005). District judges must resolve dis-
puted factual issues, see FED. R. CRIM. P. 32(i)(3)(B);
U.S.S.G. § 6A1.3(b) (2004), determine relevant conduct by a
preponderance of the evidence, and apply the appropriate
sentence enhancements in order to compute the advisory
guidelines sentence range. Dean, 414 F.3d at 727.
Step two is the discretionary decision whether to sentence
the defendant within the advisory range or outside it. If the
judge is inclined to impose a sentence outside the advisory
guidelines range, or if a sentence within the range is
challenged as unreasonable, the judge must explain why
the sentence imposed is appropriate in light of the statutory
factors specified in § 3553(a). Cunningham, 429 F.3d at
675-76; George, 403 F.3d at 473.
We then review sentences for reasonableness. Booker,
125 S. Ct. at 765. Post-Booker, we continue to review the
district court’s fact-finding for clear error and its inter-
pretation of the guidelines de novo. United States v.
Baldwin, 414 F.3d 791, 798 (7th Cir. 2005). Sentences
within a properly calculated guidelines range are presumed
reasonable. United States v. Mykytiuk, 415 F.3d 606, 608
(7th Cir. 2005). Though entitled to a presumption of
reasonableness, sentences within the guidelines range that
are challenged as unreasonable must be shown to conform
with § 3553(a) sentencing factors. Cunningham, 429 F.3d at
675-76; see also United States v. Williams, 425 F.3d 478 (7th
Cir. 2005). Those outside the range are not entitled to any
presumption—they are measured for reasonableness based
on their conformity with the sentencing factors of § 3553(a).
Cunningham, 429 F.3d at 675.
4 No. 05-2224
When a judge does not properly calculate a guidelines
sentence, our review for reasonableness is forestalled.
United States v. Bokhari, 430 F.3d 861, Nos. 05-1302 &
05-1303, Slip op. at 3-4 (7th Cir. Dec. 6, 2005). Guidelines
ranges must be determined correctly as a matter of
law—that much is implicit in Booker’s remedial holding.
After all, if sentencing judges are obliged to consider
guidelines ranges, though treating them as advisory, surely
they must consider properly calculated ranges, not just any
guidelines range that comports with the judge’s discretion-
ary judgment. Without proper guidelines calculations, we
cannot determine whether a sentence is entitled to the
rebuttable presumption of reasonableness or whether we
must search the district judge’s reasons for sentencing
outside the guidelines range.
The directive to properly calculate the advisory guidelines
sentence is not only for the defendant’s benefit.
The government, too, has an interest in a proper calcula-
tion. We have said before, mandatory or advisory, the
sentencing guidelines represent eighteen years of care-
ful thought about appropriate sentences for federal criminal
offenders. Mykytiuk, 415 F.3d at 607.
Here, the district judge was concerned that because the
firing of the gun was not charged, admitted, or found by
a jury, he would run afoul of the Sixth Amendment by
finding facts. True, Booker holds that judges may not find
facts that increase the maximum punishment and that
a mandatory sentencing guidelines scheme violates that
rule. But Booker resolved the problem by making the
guidelines advisory; judicial fact-finding in sentencing is
acceptable because the guidelines are now nonbinding.
Dean, 414 F.3d at 730; McReynolds v. United States, 397
F.3d 479, 481 (7th Cir. 2005).
In an overabundance of Sixth Amendment caution, the
district judge declined to determine whether Robinson fired
No. 05-2224 5
his gun. By sidestepping this determination, the district
judge erred as a matter of law by failing to resolve a
disputed sentencing fact essential to a properly calculated
guidelines range.
Accordingly, we VACATE Robinson’s sentence and
REMAND the case to the district judge for resentencing
consistent with this opinion.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-13-06 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2998493/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued December 6, 2005
Decided December 20, 2005
Before
Hon. WILLIAM J. BAUER, Circuit Judge
Hon. JOHN L. COFFEY, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
No. 05-2100
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff-Appellee, Court for the Northern District of
Illinois, Eastern Division
v.
No. 04 CR 266
MICHAEL D. STEPHEN,
Defendant-Appellant. Samuel Der-Yeghiayan,
Judge
ORDER
Michael Stephen pleaded guilty to distributing over 50 grams of cocaine base,
21 U.S.C. § 841(a)(1). In April 2005 the district court sentenced him to 180 months’
imprisonment and five years’ supervised release. Stephen argues on appeal that
the prison sentence is unreasonable because his criminal history category under the
advisory sentencing guidelines overstates the severity of his criminal record and
because his current conviction stems from a one-time transaction initiated by the
government.
In March 2003, a confidential source (CS) working for the FBI called Stephen
seeking to purchase crack cocaine. Stephen agreed to meet the CS at a liquor store
No. 05-2100 Page 2
in Joliet, Illinois, and sell him 2.5 ounces of crack for $2000. Stephen arrived at the
store without the drugs, and eventually agreed to meet the CS later at a residence
in Joliet. A few hours later, Stephen arrived at the residence and gave the CS a bag
containing 55.5 grams (1.96 ounces) of a substance later proven to be crack cocaine
in exchange for $1350.
A grand jury charged Stephen with one count of distributing cocaine base,
and in he pleaded guilty to the charge without a plea agreement. At his change-of-
plea hearing, Stephen acknowledged that the government could prove beyond a
reasonable doubt that he sold 55.5 grams of crack to the CS in March 2003.
The probation officer who prepared the presentence investigation report
calculated an advisory guideline range of 151 to 188 months. She started with a
base offense level of 32, see U.S.S.G. § 2D1.1(c)(4), and subtracted three levels for
acceptance of responsibility, see U.S.S.G. § 3E1.1. Stephen’s criminal history
category was VI based on his accumulation of 17 criminal history points. Stephen
did not object to the PSR but filed a sentencing memorandum in which he argued
that his criminal history category overstated the severity of his criminal record
because he had never committed any violent crimes. He emphasized that a number
of his prior convictions were for driving with a revoked or suspended license.
Stephen also urged the court to consider that “the government informant was the
deciding factor in the amount of contraband that was to be transacted,” but he also
conceded that he was not “legally entrapped.” Finally, Stephen asked the court to
take into account the “unexplainable disparity” in sentences for distributing powder
and crack cocaine.
The government filed a sentencing memorandum arguing for a sentence
within the advisory guideline range. It contended that Stephen’s criminal history
category does not overstate the severity of his record, notwithstanding the lack of
convictions for violent crimes, because he had 28 criminal convictions at the age of
28. The government also urged the court to disregard Stephen’s suggestion that it
mattered who initiated the transaction, because Stephen obviously was willing and
“able to readily sell the 55.5 grams of cocaine” when contacted by the CS. Finally,
the government requested that the court apply the guidelines applicable to crack
offenses without regard to any purported disparity because crack is “more
dangerous . . . less expensive, and highly addictive” compared to powder cocaine.
At Stephen’s sentencing hearing, the district court concluded that the
advisory guideline range in the PSR “accurately reflects the defendant’s offense
level and criminal history category” and adopted it in full. The court specifically
concluded that Stephen had shown no grounds for rejecting the calculation of his
criminal history category; on this point and the others Stephen raised, the court
“agree[d ] with the government’s arguments.” After stating that it had considered
No. 05-2100 Page 3
all of the parties’ oral and written arguments, the sentencing guidelines, and the
factors enumerated in 18 U.S.C. § 3553(a), the court imposed a sentence of 180
months—a term within the advisory range.
In light of United States v. Booker, 125 S.Ct. 738 (2005), we will affirm a
sentence so long as it is reasonable. In evaluating the reasonableness of a sentence,
we continue to be guided by the now-advisory sentencing guidelines in addition to
the § 3553(a) factors. See id. at 765-67; United States v. Alburay, 415 F.3d 782, 786-
87 (7th Cir. 2005). Where, as here, the sentence falls within the properly calculated
advisory guideline range, it is presumed reasonable. United States v. Mykytiuk, 415
F.3d 606, 608 (7th Cir. 2005). The presumption will be rebutted only where the
defendant demonstrates that the sentence is unreasonable when measured against
the § 3553(a) factors. Id.
Stephen first argues that his sentence is unreasonable because the district
court accepted his criminal history category as calculated rather than taking into
account the absence of convictions for violent crimes. Although he does not cite
U.S.S.G. § 4A1.3(b), his argument appears to be premised on the downward
departure that section contemplates when “the criminal history category
substantially over-represents the seriousness of the defendant’s criminal history or
the likelihood that the defendant will commit other crimes.” Prior to Booker, the
decision whether to depart downward for this reason was discretionary and thus
unreviewable, unless the district court believed there was no authority to depart.
E.g., United States v. Bradford, 78 F.3d 1216, 1223 (7th Cir. 1996). Although our
task is now limited to deciding whether the sentence is reasonable, we look by way
of analogy to the prior treatment of this particular sentencing factor. See United
States v. Castro-Juarez, 425 F.3d 430, 434-35 (7th Cir. 2005) (recognizing that,
although “the question before us is ultimately the reasonableness of the sentence,”
prior decisions interpreting the upward departure under § 4A1.3(a)(1) were useful
in determining whether increasing the sentence for similar reasons was
reasonable). Stephen presents no persuasive argument why it was unreasonable for
the district court to conclude that his criminal history category accurately
represented his lengthy, albeit mostly non-violent, criminal history. The downward
departure under § 4A1.3 applied “where defendants had steered clear of crime for a
substantial period of time,” which Stephen has not, and where the “prior offenses
were relatively minor in terms of violence or danger to the community.” Bradford,
78 F.3d at 1223-24. Stephen stresses the non-violent nature of his crimes, but his
prior offenses include several more severe than driving without a license, such as
reckless driving, possession of cannabis, and resisting a peace officer. The district
court was within its discretion to agree with the government that Stephen’s 28
convictions as an adult, not all of which counted toward his criminal history
category, weigh against a sentence below the guideline range.
No. 05-2100 Page 4
Stephen next contends that he was entitled to a shorter sentence because
“the government decided on the amount and kind of contraband that was to be
transacted.” Stephen conceded in the district court that there is no basis for
arguing that he was “legally” entrapped. Despite his efforts to differentiate it,
however, his argument is virtually indistinguishable from “sentencing entrapment,”
a doctrine we do not favor. See United States v. Estrada, 256 F.3d 466, 475 (7th Cir.
2002). To warrant a downward departure on this basis prior to Booker, Stephen
would have to establish that he was not predisposed to engage in a crime of equal
severity to the offense of conviction. United States v. Gutierrez-Herrera, 293 F.3d
373, 377 (7th Cir. 2002). That the government initiated the drug transaction bears
little on whether Stephen was inclined to participate, see id., but that is the extent
of his evidence that he was not predisposed to commit the crime. Moreover, even if
the sentencing court could have departed downward prior to Booker, it would not
follow that its decision not impose a lesser sentence due to the government’s role in
the offense is unreasonable now.
Finally, Stephen argues that the differential between sentences for crack and
powder cocaine offenses renders his sentence unreasonable. We have already
rejected an identical argument in the wake of Booker. See United States v. Gipson,
425 F.3d 335, 337 (7th Cir. 2005). In Gipson1*we reasoned that it would be
inconsistent to deem it unreasonable for the district court not to act on a perceived
discrepancy between guideline ranges for crack and powder cocaine when we have
“routinely upheld the differential against constitutional attack” and “rejected
wholesale downward departures from the guidelines on this basis.” Id. at 337.
Nothing prevents the district court from considering the discrepancy in selecting a
reasonable sentence, but we have declined to require it.
Because Stephen has not demonstrated that his sentence is unreasonable
when reviewed in light of the § 3553(a) factors, he has not rebutted the presumption
of reasonableness. Although his effort comes up short, we thank and compliment
his court-appointed counsel, Thomas C. Brandstrader, for his vigorous effort on
Stephen’s behalf. The judgment of the district court is AFFIRMED.
A sua sponte effort to rehear Gipson en banc failed (Judges Williams and Evans
1
dissenting). See United States v. Gipson, No. 05-1407, 2005 WL 3288385 (7th Cir.
Dec. 1, 2005). | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3000541/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-3408
RLJCS ENTERPRISES, INC., et al.,
Plaintiffs-Appellants,
v.
PROFESSIONAL BENEFIT TRUST MULTIPLE EMPLOYER
WELFARE BENEFIT PLAN AND TRUST, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 03 C 6080—John F. Grady, Judge.
____________
ARGUED APRIL 9, 2007—DECIDED MAY 2, 2007
____________
Before EASTERBROOK, Chief Judge, and BAUER and
KANNE, Circuit Judges.
EASTERBROOK, Chief Judge. Professional Benefit Trust
offers death, health, severance, and other fringe benefits
to small corporations, many of them operated by physi-
cians. To fund the death benefits, the Trust takes out
insurance on the lives of participant employees. If an
employee dies, the Trust pays out the sum agreed with the
sponsoring employer, which may be more or less than the
death benefit under the insurance policy. Purchasing
insurance through a pool that covers hundreds of employ-
ers and owns thousands of policies has several benefits.
2 No. 06-3408
One is that joining a multi-employer welfare-benefit plan
under ERISA enables employers to deduct contributions as
business expenses while employees can defer taxation on
the value of the fringe benefit. See 26 U.S.C. §419A(f )(6).
Another is that the employees are assured of coverage
even if a particular insurer should fail; all assets of the
Trust stand behind every promised benefit. But the Trust
cannot provide either the tax benefit or the risk-spreading
service if each participant is treated as the owner of “his
own” policy; the Trust must create a common fund that
can be used for the benefit of all. The trust agreement
sets up a Surplus Account for this purpose.
Plaintiffs are former participants in the Trust. On
withdrawal, they were entitled to their pro rata share of
the Trust’s net asset value, excluding the Surplus Account.
Once a participant employee withdraws, the Trust no
longer has an insurable interest in his life, so it allows him
to purchase that policy for its cash surrender value.
Plaintiffs say that they are entitled to more—in particular,
to distributions of stock attributable to “their” policies
while they were owned by the Trust. In 1999 Canada Life
Assurance Company converted from mutual to stock
ownership. Sun Life Insurance Company of Canada did
the same in 2000. Policy holders are the nominal owners
of mutual insurance companies, and mutual insurers that
change to ownership by equity investors offer stock to
policyholders as part of the process; free or discounted
stock cashes out the value of the policyholders’ ownership
interest in the insurer’s buildings and other assets. The
Trust, as the policies’ owner, thus acquired stock in the
reorganized Canada Life and Sun Life. Some of the stock
has been retained; the rest has been sold in the market
and the money reinvested.
What was the Trust to do with the proceeds of these
transactions? After some initial uncertainty, the Trust
decided to put them in its Surplus Account. It did this by
No. 06-3408 3
classifying the stock (and the net profit of any securities
acquired and later sold) as “experience gains” under the
trust agreement. It could have classified the stock as
“dividends” on the policies; that, too, would have landed
the stock in the Surplus Account. Assignment to the
Surplus Account means that the assets with the Trust
inure to the benefit of ongoing participants when
any participant withdraws. In this suit under ERISA,
plaintiffs contend that the stock (and any substitute
assets) should have been distributed to them when they
withdrew, on the theory that these elements of value are
attached to each policy, which (plaintiffs maintain) each
participant “really” owns individually, notwithstanding
the terms of the trust agreement. Plaintiffs also contend
that defendants have engaged in racketeering and are
liable for treble damages under RICO, 18 U.S.C. §§ 1961-68.
This attempt to smear the defendants as criminals draws
into question the sincerity and accuracy of plaintiffs’ other
contentions. ERISA and trust law can be complex, and
it does not help to accuse one’s trading partner of mail
fraud just because a disagreement requires judicial
resolution.
One complication is that, during the years when Sun Life
and Canada Life converted to investor ownership, the
trust agreement did not define “experience gains.” (A later
amendment classifies the proceeds of demutualization as
“experience gains,” but the Trust does not contend that
it applies to the conversions of Canada Life and Sun Life,
if only because plaintiffs never assented to that amend-
ment.) Nor does the plan expressly grant the Trustee
discretion to resolve ambiguity. This means that the
federal court might be required to make an independent
decision. See Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101 (1989). But this turns out to be unnecessary; the
plaintiffs do not contest the Trust’s understanding of
“experience gains.” They maintain, as we have said, that
4 No. 06-3408
each participant employee owns one insurance policy
and therefore is entitled to receive that policy and all
distributions attributable to it.
In making this argument plaintiffs rely on a Private
Letter Ruling issued by the Internal Revenue Service in
2001. This ruling (PLR 200127047) concluded that the
Trust (as it was organized in 1997) was an aggregation of
welfare-benefit plans rather than a single plan and
therefore did not entitle its participants to deductions
under §419A(f )(6). (The Trust has since changed the terms
of its governing documents in an attempt to protect the
participants’ tax benefits; the IRS has not yet said whether
it views the changes as adequate.) The district court,
however, concluded that the IRS’s view of the tax conse-
quences does not change the Trust’s terms—which unam-
biguously make the Trust the owner of each life-insurance
policy and entitle the Trust to control any value derived
from the policy. That led the district court to grant sum-
mary judgment for the defendants. 438 F. Supp. 2d 903
(N.D. Ill. 2006).
The Trust does not buy and administer insurance
policies on behalf of beneficiaries; it does so for its own
security. The Trust contracts to pay a sponsoring employer
(or a participant employee) a particular benefit. In this
respect the Trust acts as an insurer. The Trust then
secures its obligation and spreads risk by contracting
with traditional insurance companies. The Third Plan
Document, the governing instrument for these plaintiffs,
makes this apparent:
Each application for a policy, and the policies
themselves, shall designate the Trustee as sole
owner, with the right reserved to the Trustee to
exercise any right or option contained in the
policies, subject to the terms and provisions of this
Agreement. The Trustee shall be the named bene-
ficiary . . . . [§3.1]
No. 06-3408 5
Subject to the right of a Participant Employee to
make a Beneficiary designation (and change such
designation from time to time) the Trustee shall
have full and complete control over any insurance
policy . . . . [§5.2(a)]
[T]he Trustee is authorized and empowered . . .
[t]o apply for and to own any life insurance policy
of the Insurer held as an asset of the Trust Fund,
and to exercise any option, privilege or benefit in
connection therewith, including, without limita-
tion, the right to collect and receive the cash
surrender value proceeds and all dividends or
other distributions thereof . . . . [§14.4(m)]
The Employer shall have no right, title or interest
in and to the contributions made by it to the Trust;
and, no part of the Trust property, or res, nor any
income attributable thereto, ever shall revert to
the Employer or be used for, or be diverted to,
purposes other than for the exclusive benefit of the
Participant Employees or for the payment of taxes
and expenses of administration of the Trust. No
Participant Employee shall have any right, title or
interest in and to any contributions to the Trust
by the Employer, any portion of the Trust res, nor
any portion of any income attributable to the
Trust, except as may otherwise be provided herein.
[§8.3]
[N]o Participant Employee shall have any right,
title or interest in any specific assets of the Trust
Fund . . . . [§10.3(i)]
This language (and there is more in the same vein) shows
that the Trust acts as insurer and buys policies to reinsure
the risk; only the Trust has any property interest in any
particular policy. It follows that distributions of cash or
stock attributable to any policy also belong to the Trust.
6 No. 06-3408
What the employer and employee receive is the promised
death benefit and, if they withdraw while the employee
is still alive, a share of the Trust’s net assets (except the
Surplus Account)—but no entitlement to the fruits of any
particular policy. The distributions on Sun Life and
Canada Life policies no more belong to plaintiffs than they
do to any other participants in the Trust. To see this,
imagine that one of the plaintiff employers had con-
tracted with Prudential for life insurance, and that
Prudential had reinsured with Canada Life and received
stock when Canada Life demutualized. No one would
suppose that Prudential would have to hand over any of
that stock if an insured decides to surrender his policy
for its cash value before death occurs.
Plaintiffs lose if the trust agreement’s language is
enforced; they scarcely bother to contest this. Instead they
contend that, because Tracy Sunderlage (the Trust’s top
manager) initially stated that the Trust would treat stock
received in demutualization as attached to the policies,
and available for distribution on withdrawal—and actually
did distribute stock to a few withdrawing employers—the
Trust is bound to honor that arrangement with them too.
Quite apart from ERISA, this argument would be a flop.
One party’s unilateral decision to give its contracting
partner a benefit not required by the contract’s terms (for
example, a bank that excuses a customer’s late payment)
does not create any entitlement to future gifts. Conver-
sions from mutual to stock form were novel; it took a
while for the Trust to decide what to do, and it was not
bound to give everyone the benefit of its initial missteps.
Plaintiffs do not allege that they relied on Sunderlage’s
representations to their detriment; they were already
participants in the Trust when Sun Life and Canada Life
demutualized.
No. 06-3408 7
Paying out more to plaintiffs would leave less for other
participants in the Trust. That’s why ERISA forbids special
deals between a multi-employer plan and any set of
employers or participants. See, e.g., Central States Pension
Fund v. Gerber Truck Service, Inc., 870 F.2d 1148 (7th Cir.
1989) (en banc). Plaintiffs cannot reach an understanding
with Sunderlage that jeopardizes the interests of strang-
ers. Even for single-firm pension or welfare plans, any
participant’s rights are set by the written document and
may not be varied orally. See, e.g., Frahm v. Equitable Life
Assurance Society, 137 F.3d 955 (7th Cir. 1998). This
protects other participants (and sponsoring employers)
from what may be mistaken or imprudent promises by the
employees hired to administer the plans. Every participant
gets his entitlement under the plan’s terms, no less and no
more; no participant is entitled to a windfall, no matter
how earnestly one was promised and no matter how many
mistaken payments the plan may have made before it
finally got things right. Whatever room there may be for
estoppel based on irreversible decisions taken as a result
of incorrect advice—a subject on which, as we remarked
in Helfrich v. Carle Clinic Association, P.C., 328 F.3d 915,
918 (7th Cir. 2003), this court has not come to rest—does
not assist plaintiffs, who do not contend that they took any
irreversible step in reliance on bad advice from
Sunderlage. Plaintiffs have their own lawyers and made
their own decisions.
So far, we have not mentioned the lead argument in
plaintiffs’ brief: that the district court should not have
excluded reports from three witnesses offered as experts.
An accountant would have given his view of the
demutualization process, and two lawyers proposed to
opine on the meaning and effect of the IRS’s private letter
ruling. The district judge excluded these three reports
because he thought that plaintiffs had missed the deadline
for expert reports in discovery and, in any event, because
8 No. 06-3408
they conveyed legal rather than “expert” opinions. The
latter reason is sufficient, see Bammerlin v. Navistar
International Transportation Corp., 30 F.3d 898, 901 (7th
Cir. 1994), so we need not discuss the former.
Argument about the meaning of trust indentures,
contracts, and mutual-to-stock conversions belongs in
briefs, not in “experts’ reports.” Legal arguments are
costly enough without being the subjects of “experts’ ”
depositions and extensive debates in discovery, in addition
to presentations made directly to the judge. If specialized
knowledge about tax or demutualization would assist the
judge, the holders of that knowledge can help counsel write
the briefs and present oral argument. In this court each
side is represented by two law firms, and a professor of law
also has signed plaintiffs’ brief. Enough!
Not that the reports’ exclusion made any difference. All
of them started from the premise that the participants
“really” owned the insurance policies, and that’s the core
issue in the case. It had to be addressed, not assumed
away. In the accountant’s view, stock received in
demutualization should not be treated as an “experience
gain” because it is not a “gain” of any kind. A policy’s
premium goes in part to pay for insurance and in part to
pay for “ownership”; when the ownership rights are split
from the insurance in demutualization, the stock should
be retained by the policy’s owner so that an interest
already paid for through premiums is not lost. That may
be so as an economic matter—but it overlooks the fact that
the Trust, not the participant, paid the premiums of the
policy. Participating employers buy a promise of a death
benefit to be paid by the Trust; it is the Trust that chooses
where and how to reinsure, and that pays for the protec-
tion. So if the stock belongs to whoever paid the premium
and owns the policy, then it belongs to the Trust rather
than the employer or the participant employee.
No. 06-3408 9
Finally, the litigants have debated at length the signifi-
cance of Chicago Truck Drivers Health & Welfare Fund v.
Teamsters Local 710, 2005 U.S. Dist. LEXIS 42877 (N.D. Ill.
Mar. 4, 2005), which discusses the handling of stock
received in demutualization. It is a pointless debate. The
Teamsters’ plans have terms different from those of the
Professional Benefit Trust. What’s more, decisions of
district judges have no authoritative effect. See, e.g., Old
Republic Ins. Co. v. Chuhak & Tecson, P.C., 84 F.3d 998,
1003 (7th Cir. 1996); Colby v. J.C. Penney Co., 811 F.2d
1119, 1124 (7th Cir. 1987). District judges’ opinions often
contain persuasive observations, but these can be incorpo-
rated into the parties’ briefs. It is never helpful to have
an lengthy exchange on what a particular district court’s
opinion “really means” and whether that case was cor-
rectly decided. The parties should learn what the opinion
has to teach and weave its wisdom into their own presen-
tations.
AFFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-2-07 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2998685/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued December 14, 2005
Decided January 6, 2006
Before
Hon. KENNETH F. RIPPLE, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
Hon. ANN CLAIRE WILLIAMS, Circuit Judge
No. 05-1851
OLGER GONALZO PERALTA-CABRERA, On Petition for Review of
Petitioner, an Order of the Board of
Immigration Appeals
v.
No. A73-014-022
*
ALBERTO R. GONZALES,
Respondent.
ORDER
A few days after entering the United States illegally in July 1994, the
Immigration and Naturalization Service detained Peralta-Cabrera, an Ecuadorean
national, and his traveling companion at O’Hare International Airport in Chicago.
Peralta-Cabrera was charged with deportability as an alien who entered the United
States without inspection, 8 U.S.C. § 1251(a)(1)(B) (1994) (current version at 8
U.S.C. § 1227(a), (b)(1)). His traveling companion telephoned his brother-in-law
who lived in Chicago, Florentine Arias, and asked him to come to O’Hare and help
them seek their release.
According to Peralta-Cabrera, he told the INS agents who arrested him that
he would stay with Arias once released. After Arias arrived, he spoke with the INS
*
Pursuant to Fed. R. App. P. 43(c), Alberto R. Gonzales is substituted for his
predecessor, John D. Ashcroft, as United States Attorney General.
No. 05-1851 Page 2
agents and provided the following address where the INS could contact Peralta-
Cabrera: “841 West Cornelia, Chicago, Illinois 60657.” However, Arias did not
specify that mail should be sent to Peralta-Cabrera “in care of” Arias.
On August 10, 1994, the immigration court issued notice that Peralta-
Cabrera’s deportation hearing was scheduled for November 23, 1994; the notice was
sent to Peralta-Cabrera via certified mail and addressed to him at “841 West
Cornelia, Chicago, Illinois 60657.” The notice was returned to the immigration
court on August 12, 1994, bearing the postal stamp “Attempted Not Known.”
Peralta-Cabrera did not appear at the November 23 deportation hearing, and an IJ
ordered him removed in absentia. The court then mailed a copy of the IJ’s decision
to Peralta-Cabrera at the same address; the decision again was returned to the
immigration court bearing the stamp “Attempted Not Known.”
Nearly ten years later, Peralta-Cabrera applied for adjustment of status
based upon an approved employment-visa petition and moved to reopen his
deportation proceedings, rescind his in absentia deportation order, and change
venue to the immigration court in Bloomington, Minnesota. In a memorandum
supporting his motion, Peralta-Cabrera asserted that service of the hearing notice
was not reasonably calculated to reach him in Chicago because the INS failed to
address the notice to be sent to him “in care of” Arias. He argued, in essence, that it
was the INS agent’s responsibility to ensure that all mail sent to Peralta-Cabrera
was sent “in care of” Arias because the agent had constructive notice that Peralta-
Cabrera was staying with Arias. Peralta-Cabrera included with his motion an
affidavit attesting that he lived at the Corneila address when the immigration court
attempted to mail notice of the hearing and that he never refused the delivery of
any mail.
The IJ denied Peralta-Cabrera’s motion to reopen, reasoning that it was
Peralta-Cabrera’s responsibility to specify that his mail needed to be sent “in care
of” Arias, and that “he can be ‘charged’ with receiving notice which was sent to the
only address he provided.” Peralta-Cabrera appealed to the BIA, which upheld the
denial of the motion to reopen, finding that the motion was sent to Peralta-
Cabrera’s last known address and that he received proper notice of the hearing.
On appeal, Peralta-Cabrera does not contend that the address he provided to
the INS agent was incorrect; he instead argues that it was the INS agent’s fault
that the mail was not addressed “in care of” Arias. The government, however, asks
us to remand the case to the BIA in light of our recent decision Sabir v. Gonzales,
421 F.3d 456 (7th Cir. 2005), to examine whether Peralta-Cabrera can be charged
with receiving notice.
We accept the government’s suggestion. On remand, the BIA should consider
No. 05-1851 Page 3
Sabir and determine whether Peralta-Cabrera thwarted the postal service’s
attempts to deliver notice to him. If the BIA concludes that Peralta-Cabrera did not
thwart delivery of notice, then it should examine whether his motion to reopen
should be granted on the basis that he did not receive notice in accordance with 8
U.S.C. § 1229a(b)(5)(C)(ii). Each side shall bear their own costs.
REMANDED. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4353746/ | Balash v Melrod (2018 NY Slip Op 08769)
Balash v Melrod
2018 NY Slip Op 08769
Decided on December 21, 2018
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 21, 2018
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: WHALEN, P.J., SMITH, DEJOSEPH, TROUTMAN, AND WINSLOW, JJ.
956 CA 18-00360
[*1]ANDREW BALASH, PLAINTIFF-RESPONDENT,
vMARY B. MELROD, DEFENDANT-APPELLANT.
JANINE C. FODOR, OLEAN, FOR DEFENDANT-APPELLANT.
CELLINO & BARNES, P.C., BUFFALO (ELLEN B. STURM OF COUNSEL), FOR PLAINTIFF-RESPONDENT.
Appeal from an order of the Supreme Court, Cattaraugus County (Jeremiah J. Moriarty, III, J.), entered August 17, 2017. The order denied the motion of defendant for summary judgment dismissing the complaint.
It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting the motion in part and dismissing the complaint insofar as the complaint, as amplified by the bill of particulars, alleges that defendant had actual notice of the dangerous condition and as modified the order is affirmed without costs.
Memorandum: Plaintiff commenced this action seeking damages for injuries that he sustained while he was inspecting the belt of a running snowblower that was stored in a garage located on rental property owned by defendant, his sister. The engine of the snowblower was exposed because the snowblower lacked an engine compartment cover. Defendant contends that Supreme Court erroneously denied her motion for summary judgment dismissing the complaint. We agree in part and conclude that the court erred in denying the motion with respect to the allegation that defendant had actual notice of the dangerous condition. We therefore modify the order accordingly.
Defendant contends that she is entitled to summary judgment because, as an out-of-possession landlord, she is not liable for plaintiff's injuries. We reject that contention. It is well settled that "an out-of-possession landlord who relinquishes control of the premises and is not contractually obligated to repair unsafe conditions is not liable . . . for personal injuries caused by an unsafe condition existing on the premises" (Ferro v Burton, 45 AD3d 1454, 1454 [4th Dept 2007] [internal quotation marks omitted]; see Pomeroy v Gelber, 117 AD3d 1161, 1162 [3d Dept 2014]). In determining whether a landowner has relinquished control, we consider "the parties' course of conduct—including, but not limited to, the landowner's ability to access the premises—to determine whether the landowner in fact surrendered control over the property such that the landowner's duty is extinguished as a matter of law" (Gronski v County of Monroe, 18 NY3d 374, 380-381 [2011], rearg denied 19 NY3d 856 [2012]). Here, it is undisputed that defendant asked plaintiff to stay at the property for a period of time in order to perform repairs and maintenance. Indeed, in deposition testimony submitted by defendant, plaintiff testified that defendant had asked him to do so twice in the past. Inasmuch as defendant's own evidentiary submissions create an issue of fact whether she relinquished control of the premises, she failed to meet her burden of establishing entitlement to judgment as a matter of law on the ground that her status as an out-of-possession landlord absolves her of liability (see generally Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).
The court erred, however, in denying the motion with respect to plaintiff's allegation in his bill of particulars that defendant had actual notice of the dangerous condition that caused plaintiff's injury. Defendant established as a matter of law that she had no actual notice of the dangerous condition by submitting an affidavit in which she averred that the parties' sister had [*2]provided the snowblower in a used condition, that defendant never saw the snowblower, and that no one informed her about the snowblower's condition or the need to perform maintenance on it. In opposition to the motion, plaintiff failed to submit any evidence establishing that defendant was aware of the condition of the snowblower (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).
In contrast, defendant failed to establish as a matter of law that she lacked constructive notice of the dangerous condition. In deposition testimony submitted by defendant, one of the parties' brothers, who was a tenant at the premises and had also used the snowblower, testified that the snowblower was missing an engine compartment cover. Defendant failed to submit any evidence establishing how long the snowblower was in the garage in that condition. We therefore conclude that defendant's own submissions create an issue of fact whether the dangerous condition was " visible and apparent and . . . exist[ed] for a sufficient length of time prior to the accident to permit [defendant] to discover and remedy it' " (Rivera v Tops Mkts., LLC, 125 AD3d 1504, 1505 [4th Dept 2015], quoting Gordon v American Museum of Natural History, 67 NY2d 836, 837 [1986]).
Finally, defendant failed to establish as a matter of law that plaintiff's conduct was the sole proximate cause of his injuries. In deposition testimony submitted by defendant, plaintiff testified that his hands were at least six inches from the engine compartment when the serpentine belt unexpectedly came loose and pulled his hand into the engine. Defendant thus failed to demonstrate that plaintiff's accident was " unrelated to the alleged defect' " (Grefrath v DeFelice, 144 AD3d 1652, 1654 [4th Dept 2016]; cf. Sorrentino v
Paganica, 18 AD3d 858, 859 [2d Dept 2005]).
Entered: December 21, 2018
Mark W. Bennett
Clerk of the Court | 01-03-2023 | 12-21-2018 |
https://www.courtlistener.com/api/rest/v3/opinions/3000208/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-4429
IN RE:
KEVIN J. LONG,
Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 5709—Executive Committee of the
District Court.
____________
SUBMITTED NOVEMBER 15, 2006—DECIDED JANUARY 31, 2007
____________
Before POSNER, COFFEY, and MANION, Circuit Judges.
POSNER, Circuit Judge. The Executive Committee of the
U.S. District Court for the Northern District of Illinois has
issued an order barring Kevin Long from access to the
William J. Campbell Library, which is the public library
in the Dirksen Federal Courthouse, where the district
court as well as this court is housed. The order has the
effect of an injunction and is therefore appealable to this
court—provided it is judicial rather than administrative
in character. In re Chapman, 328 F.3d 903, 904-05 (7th Cir.
2003) (per curiam); In re Palmisano, 70 F.3d 483, 484 (7th
Cir. 1995).
2 No. 05-4429
The committee determined that “Long had, on two
separate occasions, approached female externs and asked
them to model for him. Additionally, Mr. Long has con-
sistently defied other library rules. He refuses to print his
name upon entering the library; he has been found in the
CALR section of the library (clearly marked ‘Court Per-
sonnel Only’); and he has entered the library through
secure doors by following employees who have access to
those entrances.” The committee’s order prohibits him
from entering the library.
Long’s appeal does not question the Executive Com-
mittee’s authority to manage the library (nor need we
consider its authority); rather he argues that by barring
him from the library without notice and an opportunity
for a hearing, the Executive Committee has deprived him
of property without due process of law. We cannot con-
sider the merits of the argument, because we do not have
jurisdiction. The order excluding Long from the library
is an administrative rather than a judicial order. No pro-
ceeding has been instituted against Long. The executive
committee in excluding him was acting in a proprietary
capacity, just like a restaurant that expels an unruly
customer and forbids him to return. Such an action is not
judicial; rather it is the kind of action that the person
against whom it was taken might seek judicial redress
for. Our jurisdiction is limited to review of judicial orders
and of regulatory orders by administrative agencies.
Long’s appeal is therefore
DISMISSED.
No. 05-4429 3
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-31-07 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2999389/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-1711
GUO H. HUANG,
Petitioner,
v.
ALBERTO R. GONZALES,
Respondent.
____________
Petition for Review of an Order of the
Board of Immigration Appeals.
No. A95-577-259
____________
ARGUED APRIL 19, 2006—DECIDED JULY 14, 2006
____________
Before COFFEY, EASTERBROOK, and MANION, Circuit Judges.
MANION, Circuit Judge. Guo Huang applied for asylum
alleging that Chinese family planning cadres forced his wife
to have an involuntary abortion. An immigration judge
denied the application, finding that Huang was not credible
and had not demonstrated either past persecution or a
reasonable fear of future persecution. Because the IJ’s
adverse credibility finding was based on substantial
evidence, including Huang’s submission of a certificate
purportedly documenting his wife’s forcible abortion, we
deny the petition for review.
2 No. 05-1711
I.
At his asylum hearing before an Immigration Judge, Guo
Huang testified that he, his wife, and their son are from
Lianjiang County in Fujian Province. After his son’s birth,
his wife had an IUD implanted according to mandatory
birth control practices. But in 1999 the Huangs paid a
private doctor to remove the IUD, and in March 2000 she
learned that she was pregnant. The pregnancy was in its
very early stages at that point, and the Huangs moved to a
nearby town, purportedly to prevent family planning
authorities from discovering her condition. She subse-
quently missed her mandatory physical examination,
given every three months.
Huang alleged that his wife’s failure to appear for the
physical alerted the family planning authorities that she
might be pregnant, and that on May 15, 2000, the “family
planning cadres found her.” Huang testified that when he
came home and found his wife missing, someone told
him that she had been seized by family planning cadres as
she was taking out the trash. He asserted that he went to the
local clinic to find her, but by the time he arrived she had
already had an abortion. Huang specifically testified that
the abortion was involuntary. He also offered a certificate,
signed by a physician and bearing an official seal from the
Lianjiang County Hospital, which states that Jin Fang
Huang underwent an “artificial abortion” on May 15, 2000.
The certificate does not specify whether the procedure was
voluntary or involuntary. Huang testified that she was
given the certificate after he asked the hospital for “proof in
case later on my wife suffer any complication afterwards
they can help.” Finally, he testified that if he were returned
to China he feared imprisonment because of his wife’s
pregnancy. Also, he was concerned about his “illegal exit,”
No. 05-1711 3
a reference to his once having a valid passport that he
relinquished to the snakeheads who helped smuggle him to
the United States.1
After Huang testified, the IJ read aloud portions of a
background report prepared in March 2000 by the Canadian
Embassy in Beijing describing conditions in Lianjiang
County. The IJ noted that according to the report, forced
abortion and forced sterilization were no longer accepted
methods for enforcing birth control, even though local
government officials acknowledged problems with this in
the past. The IJ also referred to the State Department’s
1998 Profile of Asylum Claims and Country Conditions,
which states that the U.S. embassy was “unaware of any so-
called ‘abortion certificates,’ which are often presented as
part of asylum applications as evidence of a forced abor-
tion.” That report says that “the only document that might
resemble such a certificate and result in confusion is a
document issued by hospitals upon a patient’s request after
a voluntary abortion.”
The IJ then issued his decision, ruling that Huang failed to
establish his claim for asylum because he was not credible.
1
Huang’s wife did not come to America with him, and remains
in China. Her absence in these proceedings is, in itself, no bar
to Huang’s claim. “[T]he spouse of a woman who has been forced
to undergo an abortion or sterilization procedure can thereby
establish past persecution.” In re C-Y-Z, 21 I. & N. Dec. 915, 918
(B.I.A.1997); see also Zhang v. Gonzales, 434 F.3d 993, 1001 (7th Cir.
2006) (citing In re C-Y-Z); Lin v. Ashcroft, 385 F.3d 748, 753 (7th
Cir. 2004). At oral argument, Huang asserted that his intention
was to bring his family over from China after he had obtained
asylum. See 8 U.S.C. § 1158(b)(3)(A) (allowing the spouse or child
of an asylee “be granted the same status as the alien if accompa-
nying, or following to join, such alien”).
4 No. 05-1711
Specifically, the IJ stated that he “did not believe [Huang’s]
story and believes that [Huang’s] wife either never went for
an abortion, or perhaps agreed to have a voluntary abortion
on May 15, 2000.” The IJ based this finding on several
perceived inconsistencies in Huang’s story. First, the IJ
noted that Huang failed to explain how the authorities
located the family after their move to Guantou Town less
than two months earlier, or why they would be searching
for her so early in the pregnancy. The IJ also doubted
Huang’s testimony that his wife’s missed physical examina-
tion accounted for her being seized by family planning
cadres and forced to undergo an abortion. Moreover, the IJ
noted that Huang testified that his family was not threat-
ened with fines or pressured in any other way before the
alleged abortion. The IJ also emphasized that forcible
abortions were not being performed at the time in Fujian
Province and that certificates are given not to women who
have involuntary abortions, but rather to women who
undergo voluntary abortions and want proof of the proce-
dure to qualify for medical leave from work. Having found
him incredible, the IJ ruled that Huang had not shown that
he or his wife had suffered past persecution or that he had
a well-founded fear of future persecution if returned to
China. The Board of Immigration Appeals adopted and
affirmed the IJ’s ruling.
II.
Credibility determinations must be supported by cogent
and specific reasons and bear a legitimate nexus to the
finding. Gjerazi v. Gonzales, 435 F.3d 800, 807 (7th Cir. 2006);
Mansour v. I.N.S., 230 F.3d 902, 906 (7th Cir. 2000). This
court affords substantial deference to an IJ’s stated reasons,
and will overturn a credibility finding only in “extraordi-
No. 05-1711 5
nary circumstances.” Giday v. Gonzales, 434 F.3d 543, 550
(7th Cir. 2006). No such deference is due, however, to
credibility findings that are “drawn from insufficient or
incomplete evidence.” Georgis v. Ashcroft, 328 F.3d 962, 969
(7th Cir. 2003). The credibility analysis in this case is not
affected by the REAL ID Act of 2005, Pub.L. No. 109-13, 119
Stat. 231, because Huang filed his asylum petition before the
passage of that statute. See Diallo v. Gonzales, 439 F.3d 764,
766 n.1 (7th Cir. 2006).
Huang correctly argues that some of the IJ’s bases for his
credibility finding were not founded in cogent and
specific reasoning. For instance, the IJ merely speculated,
without support in the record, that family planning cadres
could not or would not take action so quickly after dis-
covering that Huang’s wife was pregnant. Nor does the
record support the IJ’s conclusion that Huang’s testimony
was “simply too weak to establish a credible or plausible
claim” because he failed to testify that he had been threat-
ened with fines or lesser sanctions. The IJ had no basis in the
record to find that the family planning authorities would
resort to lesser sanctions in a case where the family had
already fled. If the IJ had based his credibility determination
on this reasoning alone, the credibility finding would be
unsupportable; we “cannot uphold credibility assessments
unmoored from the record, based on nothing but the IJ’s
personal speculation or conjecture.” Tabaku v. Gonzales, 425
F.3d 417, 421 (7th Cir. 2005); see also Lin v. Ashcroft, 385 F.3d
748, 755-56 (7th Cir. 2004).
But the IJ did base his finding on one ground that is
sufficient to support the determination. The IJ specifically
alluded to the State Department asylum profile to suggest
that the Chinese government does not issue certificates of
involuntary abortions, and found that Huang’s testimony
6 No. 05-1711
and his characterization of the abortion certificate were
inconsistent with the report. The IJ relied on the State
Department’s 1998 Profile of Asylum Claims and Country
Conditions Report, which disclaimed any knowledge of
involuntary abortion certificates:
The U.S. Embassy and Consulate General are unaware
of any so-called ‘abortion certificates,’ which often are
presented as part of asylum applications as evidence of
a forced abortion. According to Embassy officials, the
only document that might resemble such a certificate
and result in confusion is a document issued by hospi-
tals upon a patient’s request after a voluntary abortion.
This certificate is used by patients as evidence to request
2 weeks of sick leave after an abortion has been per-
formed, a right provided by the law.
The IJ held that when viewed in light of the profile, Huang’s
“explanation as to the issuance of an abortion certificate in
May of 2000 suggests that his wife agreed to have the
abortion, it was not forced.”
We have not yet directly addressed whether an official
certificate offered as proof of a forced abortion constitutes
evidence of such persecution despite a contrary State
Department profile, but we have twice relied on the profile
to hold that IJs may not demand such certificates as corrobo-
ration of claims of a forcible abortion. See Zhang v. Gonzales,
434 F.3d 993, 999-1000 (7th Cir. 2006); Lin v. Ashcroft, 385
F.3d at 753-54. In both cases, we cited the same passage
from the State Department profile relied upon in this case
and held that the petitioners’ failure to present documentary
evidence of an involuntary abortion was excusable because
any such documentation “would imply that the procedure
was voluntary as opposed to forced.” Lin v. Ashcroft, 385
F.3d at 753. “According to Embassy officials, the only
No. 05-1711 7
document of that nature is one provided only in cases of
voluntary abortions, in which certificates are provided to
allow the patient to obtain time off work. The absence of a
hospital certificate . . . is entirely consistent with [allegations
of an involuntary abortion].” Zhang, 434 F.3d at 1000
(citation omitted).
Other circuits have similarly relied on the State Depart-
ment’s characterization of the certificates as documenta-
tion of voluntary procedures and required corroboration
from applicants offering them as evidence of an involuntary
abortion. The Eighth Circuit recently upheld an adverse
credibility finding in a case where the petitioner presented
a certificate as proof of an involuntary abortion: “These
inconsistencies are of a substantive nature and go to the key
issues in [the petitioner’s] asylum claim. [Petitioner] has
offered no concrete evidence in support of his testimony
regarding the forced enforcement of China’s family plan-
ning policy in the Fujian Province. Without such evidence,
there was reason for the IJ to question the credibility of
[petitioner’s] testimony about the issue.” Cao v. Gonzales, 442
F.3d 657, 661 (8th Cir. 2006). Other circuits have also treated
the attempt to use the certificates as proof of an involuntary
abortion as an inconsistency that the petitioner must
affirmatively address. In Chen v. Gonzales, 434 F.3d 212, 219
(3d Cir. 2005), the Third Circuit held that an IJ was justified
in requiring a petitioner to provide further corroborating
evidence of an involuntary abortion where the petitioner
offered an “abortion certificate, a document whose authen-
ticity [the IJ] questioned and a document which on its face
is silent as to whether the abortion referred to was procured
without consent.” Most recently, the Second Circuit held
that the State Department’s profile was compelling, and
“constituted a basis for the IJ to have found implausible
[petitioner’s] testimony that his wife’s abortion—as evi-
8 No. 05-1711
denced by the certificate—was involuntary.” Lin v. Gonzales,
446 F.3d 395, 400 (2d Cir. 2006).
As shown in the case law from this and other circuits, the
State Department’s vague and inconclusive determina-
tion as to the validity of these abortion certificates is at odds
with the testimony of many asylum applicants from China.
But even though the State Department’s characterization is
not as well-researched or informative as we might wish, it
constitutes evidence that such a certificate shows only a
voluntary abortion, and that conflict supported the IJ’s
adverse credibility determination. Although we held in
Dong v. Gonzales, 421 F.3d 573, 578 (7th Cir. 2005), that “an
IJ should not rely on generalized Profiles or Country
Reports to refute an applicant’s personal experience,” the IJ
here did not apply “generalized Profiles or Country
Reports.” See also Chen v. Ashcroft, 376 F.3d 215, 225-26 (3d
Cir. 2004) (IJ may not reject “the validity of the abortion
certificates based on nothing more than the country re-
port”). Rather, the IJ narrowly applied specific information
provided in the profile and contrasted it with the peti-
tioner’s testimony. Moreover, in Dong the IJ’s application of
the country report was flawed because “[n]either the Profile
nor the Country Report rule out the” petitioner’s version of
events. Dong, 421 F.3d at 578. The information in the State
Department’s profile here regarding the certificates explic-
itly contradicts Huang’s testimony. We conclude, as the
Eighth Circuit did in Cao v. Gonzalez, that the inconsistency
was substantive and that without additional corroborating
evidence, the IJ was entitled to find Huang’s testimony
implausible. Cao, 442 F.3d at 661.
We acknowledge that our holding may place applicants in
a difficult position, especially since the line between a
voluntary and a coerced abortion may sometimes be
No. 05-1711 9
blurred.2 But the contradiction between Huang’s character-
ization of the certificate and the analysis of the State Depart-
ment casts serious doubts on either the authenticity of the
document or its provenance. While this case predated the
REAL ID Act and Huang was not required to supply
corroborating evidence, see Diallo v. Gonzales, 439 F.3d at n.1,
the government at argument indicated that an affidavit from
Huang’s wife would have made his case for asylum much
stronger and more sustainable. We concur, and note that the
Third Circuit has held that even “using the pre-REAL ID
Act standard for reviewing IJ determinations concerning the
availability of corroboration,” it was reasonable for an IJ to
expect some corroborating evidence where an abortion
certificate is offered as proof of an involuntary abortion.
Chen, 434 F.3d at 220. We need not reach the issue of
corroboration here; the IJ did not demand any corroborating
evidence from Huang, but simply made an adequate
credibility determination on the basis of the available
evidence.
2
It is undisputed in this and many other cases that China
vigorously enforces its “one child” policy. (If the first child is a
girl, with some bureaucratic approval the parents may be allowed
to have a second child.) However, a mother of a first-born son
who is again pregnant may feel compelled to submit to a
“voluntary” abortion to avoid being captured later by the cadres
and forced to have an abortion. That may be what it takes to
obtain a certificate, but to label such an abortion “voluntary” is
questionable to say the least. The certificate should at least prove
she was pregnant; if she already has a son, one could assume she
had no choice but to abort the second baby. Perhaps the affidavit
that is missing in this case could set forth a scenario to corrobo-
rate what seems to be a Hobson’s choice inflicted upon Chinese
families.
10 No. 05-1711
Huang also argues that the IJ failed to give his case a
“particularized review” because it arbitrarily disregarded
sections of the State Department and Canadian reports
suggesting that forced abortions, while uncommon and
prohibited by government policy, do occur. See Toptchev v.
I.N.S., 295 F.3d 714, 723 (7th Cir. 2002) (appropriate to take
notice of State Department country report as long as Board
undertook a particularized review of the case). The BIA
must “consider the issues raised, and announce its deci-
sion in terms sufficient to enable a reviewing court to
perceive that it has heard and thought and not merely
reacted.” Mansour, 230 F.3d at 908, quoting Becerra-Jimenez v.
I.N.S., 829 F.2d 996, 1000 (10th Cir. 1987). Huang cites
Chitay-Pirir v. I.N.S., 169 F.3d 1079, 1081 (7th Cir. 1999), for
the additional proposition that the IJ’s “interpretation of the
evidence should be fully inclusive for an accurate review to
result,” and contends that this means that the IJ was re-
quired to specifically consider and discuss the parts of the
reports compatible with his allegations. He asserts that the
IJ ignored congruities between his testimony and the
reports, and that therefore he did not receive the “particu-
larized review” required by Toptchev, 295 F.3d at 723. But in
Chitay-Pirir, the IJ’s serious misunderstanding of the facts
and the lack of current information in the record precluded
a “discerning judgment” by this court. Chitay-Pirir, 169 F.3d
at 1081-82. Here, Huang has failed to show that the IJ made
any factual errors. He merely asserts that the IJ gave
insufficient weight to those parts of the report that are
arguably consistent with his testimony. Nor has he shown
that the IJ failed to make a “particularized review” of his
case. Toptchev, 295 F.3d at 723. Here, the IJ’s analysis, as
adopted by the BIA, shows that it did consider the issues
Huang raised, and found cogent and specific reasons, rooted
No. 05-1711 11
in the available country reports, to find that his testimony
was not credible.
III.
We hold that the IJ’s credibility determination, while
partially founded on mere speculation, was ultimately
based on substantial evidence in the form of Huang’s
submission of the abortion certificate. In denying Huang’s
petition for review, we note that it is not clear what will
become of him. Homeland Security Secretary Michael
Chertoff recently commented that China’s delay in taking
back emigrants has created a backlog of some 39,000
Chinese citizens in the United States. See Lara Jakes Jordan,
Chertoff: China won’t take back deportees, Associated Press,
March 14, 2006; US says China refuses deportees, BBC News,
March 16, 2006. It is unclear how many Chinese citizens
are currently detained in the United States awaiting repatri-
ation. The government was unfortunately unable to clarify
matters at oral argument, either as to the size of the backlog
or the extent to which it is the result of China’s inability or
refusal to process such returns. In any event, despite our
concerns, there are no “extraordinary circumstances”
present in this case that warrant granting Huang’s petition
for review. Giday, 434 F.3d at 550. The petition is therefore
DENIED.
12 No. 05-1711
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-14-06 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/8569595/ | *306TEXTO COMPLETO DE LA SENTENCIA
La parte apelante, Carmen I. Cruz Santos, mediante el recurso de apelación de título procura la revocación de la sentencia emitida por el Tribunal de Primera Instancia, Sala Superior de Caguas, (en adelante, “TPF), sobre liquidación de bienes.
Por los fundamentos que más adelante habremos de exponer, confirmamos la sentencia en controversia.
II
Tal y como mencionáramos, el caso ante nos está vinculado a revisar el análisis efectuado por el TPI al momento de liquidar la comunidad de bienes habida entre las partes por casi veintitrés años. Como es natural en este tipo de casos, la sucesión de eventos posterior a la disolución del matrimonio va inexorablemente atada a las consideraciones que se deben tener en cuenta al momento de liquidar los bienes en la comunidad subsistente. Por ello, pasaremos a auscultar los hechos suscitados durante dicho período para facilitar el análisis de la controversia según planteada mediante el recurso instado ante nos.
El Sr. Gregorio Acosta Navarro y la Sra. Carmen I. Cruz Santos se casaron el 11 de agosto de 1964 bajo el régimen de sociedad legal de gananciales. El 9 de enero de 1981, el TPI decretó el divorcio de Acosta Navarro y Cruz Santos por haberlo acordado ambos de mutuo acuerdo. Como parte de la petición de divorcio, las partes presentaron un escrito jurado intitulado Estipulación, mediante el cual fue admitida la existencia tanto de bienes y deudas gananciales como la división parcial de éstos. El acuerdo consistió en que la Sra. Cruz Santos permanecería residiendo en el inmueble, propiedad de ambos según estipulado, junto a los cuatro hijos habidos en el matrimonio, todos ellos menores de edad al momento de efectuarse la disolución del vínculo marital y en la aceptación de lo recogido en la referida estipulación.
Como parte de la pensión alimentaria correspondiente, se acordó que el Sr. Acosta Navarro proveería la cantidad de $300 mensuales, los cuales incluirían el pago de una primera hipoteca que gravaba la propiedad en cuestión, ello por concepto de alimentos para beneficio de los cuatro menores que en ella residirían junto con la Sra. Cruz Santos. Al momento de dictar la sentencia apelada, el TPI estableció que dicho préstamo adeudaba la cantidad de $10,142.91, con un pago mensual de $193.00. De los documentos ante nos, no se desprende que las partes acordaran que el Sr. Acosta Navarro asumiría la obligación del saldo total de la mencionada hipoteca.
*307Con posterioridad al decreto de divorcio, las partes convivieron nuevamente en la misma propiedad en controversia. El 22 de febrero de 1983, las partes asumieron en comunidad de bienes la responsabilidad de una segunda hipoteca por la cantidad de $11,717.69 de principal e intereses, cuyo pago mensual era de $195.00. Al cabo de aproximadamente tres años, la Sra. Cruz Santos se fue voluntariamente de la propiedad de ambos, según declarado por ella bajo juramento mediante documento que sometiera ante el TPI el 16 de enero de 1987 en el caso de divorcio. Contemporáneo a ello, el Sr. Acosta Navarro solicitó en el mismo caso que se le permitiera arrendar la residencia en cuestión. De la prueba se desprende que ello respondía a que la parte apelada continuaba pagando la pensión alimentaria, la cual había sido aumentada a $325 mensuales y, a su vez, el monto de la primera y segunda hipoteca. El TPI accedió a su petitorio, por lo que, mediante contrato privado de 1ro de agosto de 1986, el Sr. Acosta Navarro logró alquilar la propiedad en un canon mensual de $425.00, luego de, a sus expensas, someter la residencia a mejoras para poder fijar dicha cantidad de alquiler.
Finalizada su relación post-divorcio con otra persona, la Sra. Cruz Santos solicitó al TPI en el caso de divorcio retomar a la casa propiedad de las partes. Mediante resolución de 29 de agosto de 1986, el TPI puso a disposición de la Sra. Cruz Santos la residencia para ser habitada junto a sus cuatro hijos, una vez finalizara el aludido contrato de arrendamiento e instruyó a las partes a hacer los arreglos pertinentes para satisfacer los pagos hipotecarios adeudados. Vencido el contrato de arrendamiento, el Sr. Acosta Navarro se vio en la obligación de pagar las dos hipotecas desde febrero hasta mayo de 1987.
Dado los cambios suscitados con posterioridad a la Estipulación suscrita entre las partes por motivo de la disolución del matrimonio en el 1981 y a solicitud de la parte apelada, el TPI revisó los mismos. El 28 de mayo de 1987, las partes acordaron, durante la celebración de una vista al respecto, que el pago de la primera hipoteca le correspondería a la Sra. Cruz Santos, y el pago de la segunda hipoteca, además de la pensión de $325.00 al Sr. Acosta Navarro. En ese acuerdo tampoco se menciona derecho alguno de reclamar créditos. Al cabo de dos meses de dicho acuerdo, el Sr. Acosta Navarro saldó el préstamo correspondiente a la segunda hipoteca y así se lo hizo constar a la Sra. Cmz Santos. El 25 de octubre de 1999, el TPI ordenó el archivo de lo relacionado con la petición de divorcio, dado que los cuatro hijos habidos en el matrimonio habían alcanzado la mayoría de edad.
Así las cosas, el 8 de febrero de 2002, Sr. Acosta Navarro presentó la acción de liquidación de bienes ante el TPI de cuya sentencia hoy se recurre. En síntesis, el apelado alegó la indivisión de la comunidad de bienes post ganancial creada acaecido el divorcio el 9 de enero de 1981 y reseñó haber afrontado el pago de deudas gananciales sin aportación alguna por parte de la Sra. Cruz Santos. Debido a ello, solicitó la división y liquidación de dichos bienes y que se le adjudicaran los créditos correspondientes por los pagos realizados por él que no era de su responsabilidad pactada hacerlos. Por su parte, la apelante respondió que las alegadas deudas ya habían sido satisfechas según lo estipulado por las partes.
Transcurridos varios incidentes procesales, el 14 de octubre de 2003, el TPI emitió la sentencia apelada. En lo pertinente, el TPI consignó las siguientes determinaciones de hechos como base para las conclusiones esbozadas. Dice el TPI que:
“16. Desde noviembre del 1999 hasta el presente, la Sra. Cruz ha habitado la residencia y no ha realizado pago alguno a la hipoteca. El Sr. Acosta ha pagado la hipoteca hasta el presente, sin recibir aportación alguna de la demandada.
17. La residencia fue tasada por le Sr. Rafael Fernández Vázquez en el mes de noviembre de 2002. La tasación es de $50,000.00
18. El informe de tasación expone que la estructura está en completo deterioro en el interior y exterior. El deterioro puede ser observado en las paredes, techos, puertas, ventanas y conductos de agua y luz. El techo
*308
está agrietado y requiere tratamiento. La depreciación física comprende el 35%, lo que sería $18,711.00.
19. La Sra. Cruz no evidenció con prueba documental alguna que hizo mejoras o reparaciones a la propiedad durante estos 15 años que ha residido la misma. El testimonio de las alegadas mejoras no mereció nuestra credibilidad.
20. Por estipulación de las partes, el 2 de diciembre de 2003, en una previa vista, se acordó el valor de los bienes muebles del hogar en $5,000.00. La Sra. Cruz siempre retuvo los bienes muebles para su uso y beneficio. Estipularon las partes que el Sr. Acosta tiene un crédito de $2,500.00. (Enfasis omitido)
21. La parte demandante invocó el derecho a valor rentable del inmueble. Se sometió certificación del Tasador Rafael Fernández Vázquez, con fecha del 21 de mayo de 2003.
22. La Sra. Cruz no desea retener la propiedad y así lo manifestó por conducto de su representante legal. El Sr. Acosta invocó entonces su derecho a retener la misma. ”
Ante el parecer que antecede, y conforme a la apreciación de la prueba que tuvo ante sí, el TPI no concedió crédito alguno a las partes por los pagos hipotecarios realizados hasta octubre de 1999, ya que entendió que el “hogar seguro” terminó para ese entonces. No obstante, el TPI partió de la premisa que entre noviembre de 1999 y hasta la fecha del dictamen recurrido, los pagos hipotecarios que debieron realizarse por ambas partes sólo los realizó el Sr. Acosta en su totalidad, por lo que le adjudicó un crédito de $4,632.00 o la mitad de lo pagado durante el período antedicho de 48 meses. A su vez, el TPI entendió que desde ese mismo período la propiedad hubiese tenido valor rentable determinado, pero por el referido deterioro el valor rentable disminuyó, según estipulado por las partes. Por lo que, luego de deducir los pagos hipotecarios realizados por el Sr. Acosta, el TPI descifró el valor rentable dejado de percibir por los comuneros. Luego de afirmar que el “valor rentable lo disfrutó totalmente la Sra. Cruz, sin hacer aportación”, al Sr. Acosta Navarro le correspondía también un crédito por concepto de valor rentable.
A raíz de la liquidación realizada, el TPI determinó que el Sr. Acosta Navarro tenía una participación de $30,553.55 y la Sra. Cruz Santos una de $9,303.55. En cuanto al deseo expresado por el Sr. Acosta Navarro, a saber la retención de la propiedad, el TPI resolvió que debía abonar a la Sra. Cruz Santos la cantidad antes mencionada, correspondiente a la participación de ésta en la comunidad, si es que deseaba quedarse con la misma. De la apelante querer permanecer en la propiedad, el dictamen la obligó a pagarle al apelado un canon de arrendamiento sobre la propiedad si las partes llegaban a ese acuerdo.
En desacuerdo con el curso decisorio tomado por el TPI, la apelante presentó ante este Tribunal un recurso de apelación formulando los siguientes señalamientos de error:
“Erró el [TPI] al imputarle la suma de $5,071.45 a la demandada-apelante como responsabilidad por el pago en el balance de la hipoteca existente (primera hipoteca) aun cuando las partes habían acordado desde el 28 de mayo de 1987 que el demandante-apelado asumiría el pago de la misma.
Erró el [TPI] al imputarle la suma de $4,632.00 a la demandada-apelante como responsabilidad por el pago de la primera hipoteca durante el período de noviembre de 1999 hasta octubre de 2003, aun cuando las partes habían acordado desde el 28 de mayo de 1987 que el demandante-apelado asumiría el pago de la misma.
Erró el [TPI] al determinar que por algunos años y de forma irregular, la Sra. Cruz le enviaba en efectivo el dinero para este pago de la primera hipoteca.
*309
Erró el [TPI] al determinar que en el acuerdo de las partes sobre el pago de las hipotecas no se provee derecho alguno a reclamar créditos.
Erró el [TPI] al no conceder crédito alguno a la demandada-apelante por los reembolsos en exceso que ella realizó al demandante apelado para el pago de la segunda hipoteca, la cual le correspondía pagar a ella. ”
Con el beneficio de la reproducción de la prueba oral por medio de la transcripción presentada a esos efectos y la comparecencia de ambas partes, resolvemos.
III
Estando íntimamente relacionados los errores imputados, discutiremos los mismos en conjunto.
En Puerto Rico, el matrimonio da origen a la sociedad legal de gananciales, salvo pacto en contrario, y es considerado el régimen favorecido por nuestro ordenamiento jurídico. Está principalmente reglamentado por los Arts. 1295 al 1326 de nuestro Código Civil. 31 L.P.R.A. sees. 3621-3624. De modo supletorio, a dicho régimen le son de aplicación los preceptos del contrato de sociedad. Art. 1298 del Código Civil, 31 L.P.R.A. 3624. Se ha establecido que la sociedad tiene como causa la consecución de los fines particulares del matrimonio, mas no el lucro, como sucede en la mayor parte de las sociedades ordinarias. Montalván Ruiz v. Rodríguez Navarro, 161 D.P.R._(2004); 2004 J.T.S. 48; opinión de 23 de marzo de 2004, citando a Int’l Charter Mortgage Corp. v. Registrador, 110 D.P.R. 682, 866 (1981); García v. Montero Saldaña, 107 D.P.R. 319, 322 (1978). Mientras esté vigente la existencia de la sociedad ganancial, sus componentes son codueños y coadministradores del caudal matrimonial sin especial designación de partes o cuotas. Id.
Por otro lado, una vez se disuelve el matrimonio por la muerte de uno de los cónyuges, por divorcio o cuando se declara nulo el matrimonio, se extingue, a su vez, la sociedad legal de gananciales y esto lleva consigo la separación de propiedad y bienes de todas clases entre los cónyuges. Art. 105 del Código Civil, 31 L. P.R.A see. 381. Sus titulares (ex - cónyuges), pasan a ser copartícipes de una comunidad de bienes ordinaria, la cual, "por más que se prolongue su estado de indivisión, es una masa en liquidación". González Cruz v. Quintana Cortés, 145 D.P.R. 463 (1998); Calvo Mangas v. Aragonés Jiménez, 115 D.P.R. 219, 228 (1984).
Esta nueva comunidad de bienes entre los ex - cónyuges no se rige por las normas de la sociedad de gananciales, sino por las de comunidad de bienes - Soto López v. Colón Meléndez, 143 D.P.R. 282 (1994); Calvo Mangas v. Aragonés Jiménez, supra; García v. Montero Saldaña, supra-, que a su vez, en ausencia de contrato o disposiciones especiales, se gobierna por los Artículos 326 al 340 del Código Civil de Puerto Rico, 31 L.P.R.A. § 1271 - 1285. La liquidación que corresponde hacer, al momento de ser solicitada por uno o ambos comuneros, puede resumirse en tres (3) operaciones, a saber; (1) formación de inventario con avalúo y tasación; (2) determinación del haber social o balance líquido a partir; y (3) división y adjudicación de los gananciales. Rosa Resto v. Rodríguez Solis 111 D.P.R. 89, 91 (1981).
Conviene indicar que la separación de bienes y propiedad con el advenimiento de la comunidad aludida, entiéndase la liquidación de los bienes comunes entre los ex-cónyuges, en realidad no siempre es contemporánea a la disolución del vínculo matrimonial. Montalván Ruiz v. Rodríguez Navarro, supra. Véase además, Calvo Mangas v. Aragonés Jiménez, supra; García López v. Méndez García, 102 D.P.R. 383, 395 (1974). Dicha comunidad de bienes post-ganancial existe hasta que se liquida la sociedad legal de gananciales de manera final, por lo que puede extenderse indefinidamente, ya que la acción nunca prescribe -Art. 1865 del código Civil, 31 L.P.R.A. see. 5295-, pero cualquiera de los comuneros puede pedir la división de la cosa común en cualquier momento. Id.
Así, si la correspondiente liquidación no se hace de inmediato, los activos y pasivos existentes pueden variar con el paso del tiempo; esto es, se pueden dar frutos, satisfacerse deudas, generarse ganancias, sufrirse *310pérdidas o incurrirse en gastos en cuanto al caudal existente en la comunidad. Montalván Ruiz v. Rodríguez Navarro, supra. A esos efectos, expresa el Tribunal Supremo que:
“[E]n la adjudicación final de la participación que le corresponde a cada ex-cónyuge, debe tomarse en consideración, de acuerdo a la evidencia sometida, si uno de los ex cónyuges puede interponer frente al otro un crédito por los cambios y operaciones ocurridas en el haber común. Igualmente, conforme se dispone en el Art. 328 del Código Civil, 31 L.P.R.A. see 1273, hay que considerar cualquier efecto adverso que cualquiera de los ex cónyuges cause al haber común.”
Id, nota al calce número 3. (Énfasis en el original).
A tenor con el Art. 326 del Código Civil, 31 L.P.R.A. see. 1271, se crea una comunidad de bienes, siempre y cuando la propiedad de un derecho o bien pertenezca en partes iguales a varias personas. Al momento de llevar a cabo la liquidación, el Art. 1322 del Código Civil, 31 L.P.R.A. see. 3696, establece que el sobrante líquido de los bienes gananciales se dividirá por partes iguales entre los ex cónyuges o sus herederos.
Sin embargo, no podemos perder de perspectiva que la referida igualdad se debe presumir bajo el régimen de comunidad de bienes. La participación que cada comunero tenga en la administración de la cosa, incluyendo sus pasivos y activos en común, será en proporción a sus respectivas cuotas, las cuales siempre se deben presumir iguales, salvo prueba en contrario. Art. 327 del Código Civil, 31 L.P.R.A. see. 1272.
En vista de lo anterior, podemos colegir que cuando la liquidación de los bienes gananciales se realice una vez disuelto el matrimonio, la proporción de cada ex cónyuge debe ser en partes iguales. Si se mantiene el estado de indivisión, una vez surja la susodicha comunidad de bienes, puede causar una variación en la proporción correspondiente. En estos casos, donde no se liquida la sociedad legal de gananciales de manera inmediata, al momento de determinar la participación que a cada ex cónyuge le pertenece, “es preciso distinguir entre el valor de los bienes existentes al momento de la disolución de la sociedad legal de gananciales vis a vis el valor al momento de su liquidación”. Montalván Ruiz v. Rodríguez Navarro, supra. Por lo que el Tribunal debe evaluar si ha habido un aumento o disminución en el valor de los bienes al momento de la liquidación y que se deban exclusivamente a la gestión realizada por uno de los cónyuges. Id.
Sobre dicho particular, recién se ha resuelto que en caso de desigualdad en las gestiones que realice cada cónyuge por individual, la presunción antes discutida puede ser rebatida mediante prueba fehaciente de que el valor de los bienes en común es producto de la gestión de uno de los cónyuges. Id. Por lo tanto, la división correspondiente se hará de acuerdo a la aportación o gestión de cada comunero al bien común. Indudablemente, la razón lógica detrás de dicho análisis estriba en que, disuelta la sociedad de gananciales y creada la comunidad, cesa la presunción de ganancial consagrada en el Art. 1307 del Código Civil, 31 L.P.R.A. 3647. Con el propósito de hacer el delicado trabajo de adjudicar participaciones individuales al momento de hacer la liquidación post ganancial, se ha sugerido que dicha responsabilidad recaiga, primordialmente, en el TPI. Montalván Ruiz v. Rodríguez Navarro, supra. Dado el hecho de que el juzgador de instancia es el que aprecia la prueba y los testimonios orales ofrecidos por las partes en litigio, se debe reconocer la discreción utilizada por el juzgador de instancia en el referido proceso. Id.
Recapitulando, las participaciones correspondientes a los comuneros en la comunidad surgida al momento de disolver el matrimonio, se presumen iguales antes de: (1) realizar la formación de inventario con avalúo y tasación; (2) determinar el haber social o balance líquido a partir; y (3) dividir y adjudicar los gananciales. Tal y como mencionáramos, dicha presunción de igualdad en las partidas no es automática. Es decir, puede ser rebatible por cualquiera de los ex cónyuges en las ocasiones reseñadas, y en cuanto a todo gasto, esfuerzo, deuda o crédito hecho “durante el período de vida transitorio de la comunidad posganancial”. Montalván Ruiz v. Rodríguez Navarro, supra. Una vez el juzgador evalúe toda la prueba que refleje el aumento o disminución *311del haber en la comunidad producto de la gestión particular de los ex cónyuges, podrá estar dispuesto a determinar los cambios que puedan haber surgido en las participaciones correspondientes a las partes.
A la luz de lo expuesto anteriormente, corresponde que analicemos los hechos del caso de marras.
IV
El 9 de enero de 1981, cuando se decretó el divorcio y la automática disolución de la sociedad legal de gananciales compuesta por el Sr. Acosta Navarro y la Sra. Cruz Santos, las partes acordaron por vía de Estipulación una división parcial de los bienes habidos entre las partes durante la vigencia del matrimonio. Según mencionáramos, la parcialidad estriba en que la Sra. Cruz Santos y los cuatro hijos menores del matrimonio continuaron habitando el inmueble perteneciente a ambos “hasta que éstos decidieran en el futuro el destino del mismo”. Sobre los bienes muebles no se efectuó la división al momento de presentar la Estipulación para el divorcio porque, en ese entonces, se expresó que se dividirían de forma equitativa. Además, no podemos perder de perspectiva que la intención de las partes, en aquel momento, fue esbozado meridianamente claro en el antedicho documento.
Del expediente se desprende que luego de una serie de hechos suscitados entre las partes, formando ya parte de la comunidad de bienes posgananacial, entre los que se encuentra la constitución de una segunda hipoteca suscrita por las partes la cual gravaba la propiedad de ambos, el Sr. Acosta Navarro incurrió en una serie de gastos destinados a mejorar las condiciones del bien inmueble en cuestión. El propósito de la gestión individual del Sr. Acosta Navarro fue para poder alquilar la residencia que, voluntariamente, ya la Sra. Cruz Santos y sus hijos no habitaban. El Sr. Acosta Navarro se vio obligado a alquilar a un tercero, fuera de la comunidad posganacial, el referido bien por espacio de seis meses para poder satisfacer la deuda existente por concepto de la primera y segunda hipoteca, ya que la Sra. Cruz Santos, hasta ese momento, en nada aportaba para dichos pagos.
Cuando ella regresa a la residencia aún indivisa, junto a sus cuatro hijos, el TPI instó a las partes a estipular lo relativo al pago de las hipotecas aludidas. Por lo que el 28 de mayo de 1987, las partes acordaron dichos pagos, qué préstamo le correspondía pagar a los comuneros por individual y hasta se aumentó a $325 la pensión alimentaria que le correspondía pagar al Sr. Acosta Navarro.
Concurrimos con la observación del TPI a los efectos de establecer que en ese acuerdo no se mencionó derecho alguno a reclamar créditos. Más aún, de la transcripción de la prueba estudiada se desprende que la Sra. Cruz Santos pagaba la primera hipoteca, conforme los acuerdos efectuados entre las partes con posterioridad a la disolución del matrimonio, por lo que no le asiste razón de reclamar crédito alguno. La Sra. Cruz Santos tenía el deber de pagar la susodicha hipoteca y así lo hizo, hasta julio 1999, cuando el último de los hijos del matrimonio advino en su mayoridad. Aunque el acuerdo del 1987 recoge que a la Sra. Cruz Santos le correspondía pagar la segunda hipoteca, lo cierto es que, mediante sus actos afirmativos y su testimonio, quedó demostrado que pagaba la primera, además de atestiguar que reconocía que la segunda hipoteca ya estaba salda por el propio Sr. Acosta Navarro.
Sin dudas, dado el análisis de la totalidad de la prueba presentada ante nos y conforme a la normativa vigente, las participaciones correspondientes a los ex cónyuges en el caso de autos no podían ser equitativas. Debe tenerse en mente que las deudas y el valor de los bienes en común tienen un valor inicial y que, aparte de cualquier gestión efectuada, para bien o para mal, en pos de la administración de los activos y pasivos es común. En este caso, las fluctuaciones en las participaciones responden en proporción a las cuotas de las partes, a sus gestiones y aportaciones individuales hechas durante los veintidós años de vigencia de la comunidad de bienes habida entre ellos. En todo caso, a quien le correspondía en derecho reclamar un crédito al momento de liquidarse la comunidad era al Sr. Acosta Navarro por sus gestiones de reparación del bien inmueble en un momento dado y por los pagos hipotecarios que satisfizo antes de octubre de 1999. Sin embargo, no los reclamó *312teniendo derecho a ello.
No obstante lo anterior, en el sano ejercicio de su discreción, luego de la operación correspondiente de liquidación del caudal según discutida, el TPI le concedió un crédito al Sr. Acosta Navarro por los pagos hipotecarios realizados por éste desde noviembre de 1999 hasta octubre de 2003, fecha en que fue emitida la sentencia apelada. A su vez, el TPI le concedió correctamente al apelado el valor rentable dejado de percibir como comunero y el valor de los bienes muebles que, desde disuelto el matrimonio, habían quedado sin liquidar y estuvieron todo ese tiempo bajo el uso y disfrute de la apelante para un total de $30,553.55.
Por su parte, el TPI determinó que la participación correspondiente a la Sra. Cruz Santos al momento de liquidar la comunidad de bienes era de $9,303.55. Esto responde a que el TPI, a la luz del ordenamiento jurídico discutido, le adjudicó del valor neto de la propiedad en controversia el deterioro sufrido y reflejado en la tasación y le dedujo de su participación: (1) la deuda hipotecaria a mayo de 2003; (2) la amortización de deuda hipotecaria desde noviembre de 1999 a octubre de 2003; (3) el valor rentable dejado de percibir por los comuneros; y (4) el valor de los bienes muebles al momento de la liquidación.
Finalmente, concordamos con el TPI en cuanto a que para resolver la controversia trabada, el tribunal apelado se vio en la obligación de evaluar cuestiones de credibilidad que, a nuestro juicio, realizó en ausencia de pasión, prejuicio, parcialidad y error manifiesto.
Es norma claramente establecida por el Tribunal Supremo de Puerto Rico que en ausencia de error manifiesto, pasión, prejuicio o parcialidad, no se intervendrá a nivel apelativo con las determinaciones de hechos y adjudicación de credibilidad hecha en instancia por el juzgador de los hechos. Argüello v. Argüello, opinión de 31 de agosto de 2001, 154 DPR_(2001), 2001 J.T.S. 127; Trinidad v. Chade, opinión de 18 de enero de 2001, 153 D.P.R._(2001), 2001 J.T.S. 10.
Un foro apelativo no puede descartar y sustituir por sus propias apreciaciones, basadas en un examen del expediente del caso, las determinaciones tajantes y ponderadas del foro de instancia. Argüello v. Argüello, supra. La determinación de credibilidad del tribunal sentenciador es merecedora de gran deferencia por parte del tribunal apelativo, por cuanto es ese juzgador quien, de ordinario, está en mejor posición para aquilatar la prueba testifical desfilada, ya que él fue quien oyó y vio declarar a los testigos. Id.; Pueblo v. Bonilla Romero, 120 D.P.R. 92 (1987).
Ante ello, reiteramos que la norma fundamental de nuestro ordenamiento jurídico de que los tribunales apelativos, en ausencia de error, pasión, prejuicio o parcialidad, no deben intervenir con las determinaciones de hechos, la apreciación de la prueba y las adjudicaciones de credibilidad realizadas por los tribunales de instancia. Trinidad v. Chade, supra.
V
Resolvemos, por tanto, que el TPI efectuó la operación de liquidación de la comunidad de bienes existente entre las partes conforme a derecho. Habida cuenta de que la parte apelada logró con éxito, mediante la prueba presentada, rebatir la presunción de que la liquidación debe hacerse por partes iguales y logró probar que los créditos adjudicados a las partes fueron producto de la gestión, aportación y trabajo individual de los comuneros durante el estado de indivisión de la comunidad posganancial. Ineludible nos resulta concluir que la parte apelada fue merecedora de la adjudicación de credibilidad que hiciera el TPI mediante la sentencia apelada.
Por lo antes expuesto, confirmamos la sentencia apelada.
Lo acordó el Tribunal y lo certifica la Secretaria General.
*313Aida Ileana Oquendo Graulau
Secretaria General
ESCOLIOS 2004 DTA 112
1. Véase Alegato de Apelación, “Minuta”, Apéndice #10, pág. 33. Cabe aclarar que dicho documento se desprende que al apelado le correspondía satisfacer el monto adeudado de la primera hipoteca y a la apelante lo relativo a la segunda. Sin embargo, el TPI sentenció, a base de la totalidad de la prueba, que el Sr. Acosta Navarro pagó la primera hipoteca además de la pensión alimentaria, “y que por algunos años y deforma irregulad’, la Sra. Cruz Santos enviaba al apelado el pago para la primera hipoteca, conciente de que iba dirigido a pagar la misma, dado su testimonio expreso en corte donde reconoció el vencimiento de la segunda hipoteca por los pagos efectuados por el apelado.
2. Véase Alegato de Apelación, “Sentencia”, Apéndice #2, págs. 4-5.
3. Id, “Sentencia”, Apéndice #2, pág. 6.
4. Véase Alegato de Apelación, “Sentencia”, Apéndice #2, pág. 2. | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2998731/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued January 24, 2006
Decided February 23, 2006
Before
Hon. KENNETH F. RIPPLE, Circuit Judge
Hon. ILANA DIAMOND ROVNER, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
No. 05-1417
Appeal from the United States
LINDA J. PARKER, District Court for the Western
Plaintiff-Appellant, District of Wisconsin
v. No. 04-C-281-S
JO ANNE B. BARNHART, John C. Shabaz,
Commissioner of Social Security, Judge.
Defendant-Appellee.
ORDER
Linda J. Parker appeals from the judgment of the district court affirming the
decision of the Commissioner of Social Security to deny her claim for disability
insurance benefits. Because Parker's notice of appeal to this court was not timely
filed, we are compelled to dismiss her appeal for lack of jurisdiction.
Parker is a 50-year-old woman who claims she suffers from a variety of
physical and mental impairments, including interstitial cystitis (IC), a bladder
impairment. The common symptoms of IC are pelvic pain and a frequent and
urgent need to urinate. Parker sought benefits in 2000, but her application was
denied initially and upon reconsideration. She then proceeded to a hearing before
No. 05-1417 Page 2
an administrative law judge. At the end of the hearing, the ALJ, applying the five-
step analysis, 20 C.F.R. § 404.1520(a)(4), found that Parker was not engaged in
substantial, gainful activity and that she suffered from severe IC. The ALJ also
found that none of Parker's impairments met or equaled a listed impairment in
Appendix 1, Subpart P, Regulation No. 4. And critical to her case, the ALJ
concluded that Parker retained the residual functional capacity to perform her past
work as a telephone order taker and, alternatively, could perform other jobs
available in Wisconsin where she lives, including positions as an office worker or
food preparation worker. Therefore, the ALJ ruled that Parker was not disabled
and denied her claim for benefits. Because the Appeals Council denied Parker's
request for review, the ALJ's decision became the final decision of the
Commissioner of Social Security.
The district court entered judgment affirming the Commissioner's decision on
December 15, 2004. Parker's notice of appeal was filed in this court on February 15,
2005. After we ordered Parker to explain why her appeal should not be dismissed
for lack of jurisdiction, Parker filed a motion in the district court to extend the time
to appeal. Parker's attorney claimed he misread the date stamp on the district
court's judgment (he thought that the date of entry read "December 16" when in fact
it read "December 15"). Consequently he thought the notice of appeal was due one
day after a December 15 entry date would require. The district court granted this
motion without explanation.
The government argues that the district court abused its discretion in
granting Parker's motion to extend the time to appeal. Although a district court
has discretion to extend the time to appeal up to 30 days after the entry of
judgment, Fed. R. App. P. 4(a)(5)(A), this discretion is not unlimited. A district
court may grant a motion to appeal late only on a showing of excusable neglect or
good cause by the appellant. Id.; Marquez v. Mineta, 424 F.3d 539, 541 (7th Cir.
2005); United States v. Alvarez-Martinez, 286 F.3d 470, 472 (7th Cir. 2002).
The government points out, correctly, that miscalculation of the time in
which to appeal is not excusable neglect. Marquez, 424 F.3d at 541. However,
Parker is not arguing that her attorney miscalculated the time to appeal. Rather,
she is arguing that an unclear date stamp on the district court's judgment misled
her and her attorney into thinking the deadline was one day later than it was. The
issuance of this unclear date stamp might qualify as excusable neglect or good cause
for a one-day extension. But any possible confusion from the date stamp does not
explain Parker's filing on February 15.
Because the federal government is a party in this case, Parker had sixty days
from the district court's entry of judgment to file her notice to appeal. Fed. R. App.
P. 4(a)(1)(B). Sixty days after December 15 is February 13. However, since
No. 05-1417 Page 3
February 13, 2005 was a Sunday, Parker had until Monday February 14, 2005 to
file her notice of appeal. Fed. R. App. P. 26(a)(3). Even if she and her attorney
reasonably believed the district court judgment was entered on December 16, this
excuse only gets her to February 14. It does not explain why Parker filed the notice
to appeal on February 15, one day beyond the date suggested by the alleged
confusion over the date stamp.
Since Parker did not offer to the district court any excuse for filing her notice
of appeal on February 15, and since the district court did not provide any other
rationale for its decision, the court abused its discretion in granting Parker's
motion. Marquez, 424 F.3d at 541 (district court abused its discretion in granting
leave to file notice of appeal one day late when appellant lacked an adequate excuse
for the late filing). Therefore, we must dismiss Parker's appeal as untimely filed. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3001177/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued November 13, 2007
Decided December 17, 2007
Before
Hon. JOHN L. COFFEY, Circuit Judge
Hon. TERENCE T. EVANS, Circuit Judge
Hon. DIANE S. SYKES, Circuit Judge
No. 06-4060
UNITED STATES OF AMERICA, Appeal from the United States
Plaintiff-Appellee, District Court for the Eastern
District of Wisconsin.
v.
No. 05-CR-11
LAWRENCE T. TURNER,
Defendant-Appellant. Rudolph T. Randa,
Chief Judge.
ORDER
Lawrence Turner pleaded guilty to participating in a conspiracy to possess
and distribute crack and powder cocaine. See 21 U.S.C. §§ 846, 841(a)(1). Before
sentencing, though, he wrote several letters to the presiding district judge
complaining about his appointed counsel and asking for a replacement. The court
granted this request and appointed substitute counsel to represent Turner at the
sentencing hearing. The court sentenced Turner to serve a term of 270, a sentence
90 months below the bottom of the appropriate guidelines range. The defendant-
appellant Turner argues on appeal that the court erred in failing to construe the
content of his letters as a motion to withdraw his guilty plea. Because the district
No. 06-4060 Page 2
court judge had previously appointed counsel and substitute counsel at the
defendant’s request, the defendant had representation at all times while appearing
before the court and did not request to withdraw his guilty plea. It is not the duty
nor the responsibility of the trial judge to participate in the prosecution or the
defense. The judge is to remain fair and impartial. Because Turner at no time
individually or with counsel moved the court to withdraw the previously entered
guilty plea, nor did he file a motion under 28 U.S.C. § 2255, we affirm the judgment.
Turner and his cohorts known as “2-6 Vice Lords” bought cocaine in Texas
and Illinois and transported it to Milwaukee, Wisconsin where they sold it. Turner,
the alleged ringleader, admitted in his plea agreement that the conspiracy involved
at least 50 grams of crack and 5 kilograms of powder cocaine. Thus he faced a
sentence of 20 years to life in confinement. See 21 U.S.C. § 841(b)(1)(A). During the
plea hearing, Turner stated under oath that no one had made any threats or
promises to induce him to plead guilty aside from the information contained in the
plea agreement on file with the court. Furthermore, Turner acknowledged that he
was satisfied with his first lawyer’s representation and had no questions for his
attorney or the court dealing with his guilty plea or the plea process. It should also
be made clear that during that period of time, Turner was assisting the government
in its prosecution of other members of the conspiracy and at the request of the
government, the court delayed sentencing to facilitate Turner’s ongoing cooperation.
While Turner was in custody, he began to harass his former girlfriend, Tosha
Rudd, and persuaded his friends to break all the windows in her home. As a result
the court restricted his phone and visitation privileges. Turner next made up a
story about a co-conspirator in an attempt to gain additional credit for cooperation.
As a result of this most recent illegal activity, Turner damaged his credibility and
the prosecution decided not to use him to testify against another co-conspirator.
In February 2006, eleven months after pleading guilty, Turner sent the trial
judge the first in a series of letters expressing his dissatisfaction with his initially
appointed counsel, Mark Rosen. Turner stated that Rosen had “never had his best
interest at heart,” had ignored the contents of discovery evidence in advising him to
plead guilty, and had failed to give him proper information regarding the effect of a
proposed four-level upward adjustment under U.S.S.G. § 3A1.1. Turner requested
that the district court permit him to speak with another counsel. The prosecutor
wrote the court opposing Turner’s request for new counsel and giving due credit to
Rosen’s performance.
Later that same month Turner wrote a second letter to the trial judge
requesting substitute counsel. Turner now alleged that Rosen had conspired with
investigators and the prosecutor to get him to enter a plea of guilty, and that the
prosecutor’s letter in support of Rosen was evidence of that conspiracy.
No. 06-4060 Page 3
Furthermore, Turner asserted that Rosen “made” him execute the plea agreement
even though he was unhappy with the bargain and had said so to counsel. Turner
also complained that Rosen had made no effort to get drug evidence suppressed or
moved to dismiss the indictment on grounds of selective prosecution. He
furthermore complained that Rosen told him that the four-level leadership
adjustment would be outweighed by the credit he would receive for cooperating with
the government. In response Rosen advised the court that his communication with
Turner had broken down and that he believed the court should grant Turner’s
request for new counsel. The court acquiesced in Turner’s request, but also found
and acknowledged that Rosen had zealously represented Turner. The court
permitted his counsel to withdraw based on the breakdown in communication.
After that, Turner continued to send letters complaining about Rosen until
the court named new counsel. Turner’s correspondence then came to a halt. His
new counsel, Gregory Dutch, did not move to withdraw Turner’s guilty plea, nor did
he file any motion concerning Rosen’s performance.
Six months later the district court sentenced Turner to a term of 270 months
after considering the guidelines range of 360 months to life, the statutory minimum
of 20 years, and the government’s motion under U.S.S.G. § 5K.1 for a sentence 25%
below the range to reflect Turner’s cooperation tempered by his misconduct while in
jail. At the sentencing hearing, Turner admitted his guilt in a letter to the court,
stating that he was ready to enter his plea and accept the consequences.
On appeal Turner now argues that the district court should have addressed
the allegations in his letters that Rosen coerced his guilty plea through deficient
performance. Turner does not ask us to decide whether Rosen was ineffective;
rather, he wants us to order a remand “to allow the district court to address Mr.
Turner’s pro se letter.” The parties disagree about the standard we should use to
review the propriety of the district court’s response to Turner’s letters. Turner
argues that whether a district court “may fail to address a pro se letter complaining
that defense counsel” coerced a guilty plea is a question of law that should be
reviewed de novo. The government counters that the construction a district court
gives to a pro se submission is reviewed for abuse of discretion. But neither party
has addressed the relevant question: did the district court have any obligation to
further consider Turner’s pro se letters after appointing substitute counsel to
replace Rosen? Turner’s entire presentation assumes that the answer is yes, but he
cites no authority to support his unstated premise.
The district court had no duty to consider Turner’s pro se letters. We have
often observed that a district court need not address pro se submissions received
from counseled defendants. See, e.g., United States v. James, 487 F.3d 518, 527-28
(7th Cir. 2007) (noting that district court could but did not have to address
counseled defendant’s pro se motions); United States v. Traeger, 289 F.3d 461, 471
No. 06-4060 Page 4
(7th Cir. 2002) (holding that district court was not required to address defendant’s
pro se motion once new counsel was appointed). At no point did Turner waive his
right to counsel or invoke his right of self-representation. Instead, he appears to
argue that he was entitled to both new counsel and self-representation. But
representation by counsel and self-representation are “mutually exclusive
entitlements.” United States v. Johnson, 223 F.3d 665, 668 (7th Cir. 2000)
(quotation marks and citation omitted). And hybrid representation is generally
disfavored, see United States v. Chavin, 316 F.3d 666, 671-72 (2002), so once the
court provided Turner with a second counsel, it had no obligation to give Turner’s
letters any further consideration, for he had competent representation. Traeger,
289 F.3d at 471.
Even assuming that, according to Turner, his letters were intended to be
construed as a motion to withdraw his guilty plea, Turner effectively ratified his
plea by forgoing the opportunity to challenge it once Dutch took over his
representation. See Doe v. United States, 51 F.3d 693, 700-01 (7th Cir. 1995);
United States v. Darling, 766 F.2d 1095, 1101 (7th Cir. 1985). Over six months
passed between the time of Dutch’s appointment and the sentencing
hearing—ample time for Turner to consult with Dutch regarding Rosen’s alleged
ineffectiveness and file a formal motion to withdraw his plea. And the district court
gave Turner the opportunity at sentencing to voice any remaining concerns, and he
said nothing about Rosen or wanting to withdraw his plea. In fact, he again
acknowledged his own guilt. The district court was not required to respond to
Turner’s pro se complaints about Rosen once Turner declined to challenge his guilty
plea with Dutch’s assistance.
Finally, Turner argues that remand is appropriate because the government
might argue in any subsequent collateral action under 28 U.S.C. § 2255 that he
waived his ineffective-assistance claim concerning Rosen’s performance. But
Turner cites incorrect law in support of this proposition. The government says it
will not make this argument, nor can it after Massaro v. United States, 538 U.S. 500
(2003) and its progeny. See, e.g., id., at 504-05; United States v. Turcotte, 405 F.3d
515, 537 (7th Cir. 2005).
AFFIRMED. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3000537/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-1961
THOMAS POWERS,
Plaintiff-Appellant,
v.
DONALD SNYDER, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 02-1372—Harold A. Baker, Judge.
____________
SUBMITTED APRIL 4, 2007—DECIDED MAY 3, 2007
____________
Before POSNER, WOOD, and WILLIAMS, Circuit Judges.
POSNER, Circuit Judge. The district judge dismissed this
prisoner’s civil rights suit (42 U.S.C. § 1983) for failure to
state a claim. Except with respect to the following rulings,
we agree with the district judge’s reasoning and conclu-
sions.
Concerning the plaintiff’s claim that he was “forc[ed] to
work in inhumane condition[s] by [being forced] to have
hepatitis shots; knowing and exposing the plaintiff to
conditions where [the warden] knows hepatitis exists,” the
district judge said only that “the plaintiff’s allegations do
2 No. 04-1961
not rise to a constitutional violation.” The problem with
the plaintiff’s claim is not that knowingly exposing a
prisoner to hepatitis or other serious diseases could not
amount to cruel and unusual punishment in violation of
the federal Constitution; it could. Barnes v. Briley, 420 F.3d
673, 675 (7th Cir. 2005); Forbes v. Edgar, 112 F.3d 262, 267
(7th Cir. 1997); Billman v. Indiana Department of Corrections,
56 F.3d 785, 788-89 (7th Cir. 1995); Butler v. Fletcher, 465
F.3d 340, 345 (8th Cir. 2006). The problem is that the
Constitution is not violated by a prison’s forcing a prisoner
who is assigned to work in an unhealthy environment to
be inoculated against the microbes that make it unhealthy.
The prison must be allowed to choose between removing
the prisoner from the unhealthy environment and protect-
ing him from its consequences. Robbins v. Clarke, 946 F.2d
1331, 1333 (8th Cir. 1991) (“although Kitt alleges that he
comes into contact with infected prisoners through his
work as a prison barber, he neither claims that he is denied
any safeguards that barbers regularly employ, nor does he
claim that his exposure to infectious and contagious
disease is more substantial than the exposure of barbers (or
anyone else) to infectious and contagious diseases outside
the prison setting”); Forbes v. Edgar, supra, 112 F.3d at 266-
67; Shannon v. Graves, 257 F.3d 1164, 1168 (10th Cir. 2001);
Good v. Olk-Long, 71 F.3d 314, 316 (8th Cir. 1995). This is
provided, of course, that the protection is efficacious. But
there is no reason to doubt that it was in this case, given
the plaintiff’s own pleadings. Hepatitis A is the only
form of hepatitis that is transmitted by means other than
an exchange of blood or other bodily fluids, and two safe
and effective vaccinations exist for it. Federal Bureau of
Prisons, Guidelines for the Prevention and Treatment of
Viral Hepatitis (Oct. 2005); Centers for Disease Control,
Hepatitis A Fact Sheet (Oct. 4, 2006), www.cdc.gov/
No. 04-1961 3
ncidod/diseases/hepatitis/a/afact.pdf; Centers for
Disease Control, Vaccines to Prevent Hepatitis A and Hepatitis
B (Sept. 2002), www.cdc.gov/idu/hepatitis/vaccines.htm.
More problematic is the judge’s disposition of the
plaintiff’s claim that he has bone degeneration and arthritis
in one of his hips as a result of a serious injury yet the
defendants refuse to allow him a walking cane (while
forcing him to work at a job that requires walking and
lifting) or a lower berth in a bunk bed. The judge said that
this was simply a “disagreement with a doctor’s treatment
decisions,” which “cannot be the basis for an Eighth
Amendment challenge.” But as all that was before the
judge when he ruled was the plaintiff’s complaint plus the
plaintiff’s correspondence with his doctors, the ruling is
defensible only if these documents establish that the
plaintiff was merely disagreeing with a doctor’s treatment
decisions. The correspondence shows disagreement, all
right, but the judge was mistaken to think that by attach-
ing this correspondence the plaintiff was acknowledging
a mere disagreement. A plaintiff does not, simply by
attaching documents to his complaint, make them a part of
the complaint and therefore a basis for finding that he has
pleaded himself out of court. Simpson v. Nickel, 450 F.3d
303, 306 (7th Cir. 2006); Carroll v. Yates, 362 F.3d 984, 986
(7th Cir. 2004); Guzell v. Hiller, 223 F.3d 518, 519 (7th Cir.
2000); Northern Indiana Gun & Outdoors Shows, Inc. v. City
of South Bend, 163 F.3d 449, 455 (7th Cir. 1998) (“rather
than accepting every word in a unilateral writing by a
defendant and attached by a plaintiff to a complaint as
true, it is necessary to consider why a plaintiff attached
the documents, who authored the documents, and the
reliability of the documents”). The terse responses from
the doctors indicating disagreement with the plaintiff’s
4 No. 04-1961
need for a cane or a lower berth are consistent with their
being willfully indifferent to his suffering. An affidavit
attesting the adequacy of their response to his requests
for treatment might show that there was no triable issue,
but the defendants jumped the gun by moving to dismiss
the complaint before any discovery.
With respect to the plaintiff’s claim that at one prison
he “was housed in a unit with 48 Smoke Cell[s] and 2 Non-
Smoke and a day room full of smoke, [and] that [he] could
not escape the tobacco smoke” and that the wardens of
three other prisons where he was confined refused to
create nonsmoking units or otherwise limit his exposure
to smoke, the district court said—nothing. Now it is by no
means certain that the plaintiff has a meritorious claim. A
prison is not required to provide a completely smoke-free
environment, except for prisoners who have asthma or
some other serious respiratory condition that even a low
level of ambient smoke would aggravate. Alvarado v.
Litscher, 267 F.3d 648, 653 (7th Cir. 2001); Talal v. White,
403 F.3d 423, 427 (6th Cir. 2005); Weaver v. Clark, 45 F.3d
1253, 1256 (8th Cir. 1995); Hunt v. Reynolds, 974 F.2d 734,
736 (6th Cir. 1992). A normal prisoner must prove that he
“is being exposed to unreasonably high levels of ETS [envi-
ronmental tobacco smoke].” Helling v. McKinney, 509 U.S.
25, 35 (1993) (emphasis added). Helling does not say what
level of smoke would be “unreasonably high,” but notes
that the plaintiff had a cellmate who smoked five packs a
day. Id. at 28; see also Steading v. Thompson, 941 F.2d 498,
500 (7th Cir. 1991); Atkinson v. Taylor, 316 F.3d 257, 268 (3d
Cir. 2003).
But although a prisoner who complains that cigarette
smoking amounts to punishment because it is endanger-
ing his health must therefore show that his health is indeed
No. 04-1961 5
endangered, Henderson v. Sheahan, 196 F.3d 839, 846, 852
(7th Cir. 1999); Oliver v. Dean, 77 F.3d 156, 160 (7th Cir.
1996), there are other modes of inflicting cruel and unusual
punishment besides ones that endanger a person’s health,
such as handcuffing a prisoner for hours to a hitching post,
Hope v. Pelzer, 536 U.S. 730, 737-30 (2002), or conducting
a strip search intended to humiliate the prisoner, Calhoun
v. DeTella, 319 F.3d 936, 939 (7th Cir. 2003), or even deny-
ing a prisoner all opportunity to exercise. Delaney v.
DeTella, 256 F.3d 679, 683-84 (7th Cir. 2001). “Many
things—beating with a rubber truncheon, water torture,
electric shock, incessant noise, reruns of ‘Space 1999’—may
cause agony as they occur yet leave no enduring injury.
The state is not free to inflict such pains without cause just
so long as it is careful to leave no marks.” Williams v. Boles,
841 F.2d 181, 183 (7th Cir. 1988). So maybe there’s a level
of ambient tobacco smoke that, whether or not it creates a
serious health hazard, inflicts acute discomfort amounting,
especially if protracted, to punishment. Whether the
plaintiff’s claim rises to this level or instead amounts
just to a complaint about something more akin to an
annoyance than to oppression, see, e.g., Tesch v. County of
Green Lake, 157 F.3d 465, 476 (7th Cir. 1998); Lunsford v.
Bennett, 17 F.3d 1574, 1582 (7th Cir. 1994), is impossible to
determine from the complaint. The judge should have
directed the plaintiff to explain his claim in greater detail.
See Pratt v. Tarr, 464 F.3d 730, 733 (7th Cir. 2006); Alston v.
Parker, 363 F.3d 229, 234 (3d Cir. 2004).
Also unclear from the complaint is whether the plaintiff
is charging the defendants with deliberate indifference to
his welfare in their failing to respond to his concerns
about tobacco smoke. For if not—if they were merely
careless in failing to correct the problem—then they cannot
6 No. 04-1961
be thought to have been punishing him, and so his claim,
founded of course on the Eighth Amendment, would fail.
Farmer v. Brennan, 511 U.S. 835, 835 (1994); Scarver v.
Litscher, 434 F.3d 972, 975 (7th Cir. 2006); Talal v. White,
supra, 402 F.3d at 427-28; Atkinson v. Taylor, supra, 316 F.3d
at 269. But bearing in mind that he had no lawyer, we
find in the complaint enough intimations of deliberate
indifference to bar dismissal at this stage. The complaint
alleges one warden’s “deliberate intent” to deny the
plaintiff a smoke-free cell despite his “mental anguish and
concern for future harm”; that “Captain Dusian . . . de-
liberately violated the plaintiff’s 8th Amendment by not
giving the plaintiff his non-smoke cell for 48 days . . . .
[T]he plaintiff suffered with cellmates that were heavy
smokers”; and that another warden violated the plaintiff’s
rights by “not having a non-smoke unit, that the plaintiff
has been subject to heavy smokers since his arrival . . . and
still has not been put in a non-smoke cell, that [the
warden is] deliberately violating the plaintiff’s rights.”
In a separate part of the complaint, the plaintiff alleges
that the warden restricted visits from the plaintiff’s wife
and friend “out of abuse of power which stems from an
incident in 1995 between the plaintiff and [the warden].”
The incident is not specified. The allegation is unclear, to
say the least, but since the plaintiff has no lawyer, the
judge should have directed the plaintiff to explain the
claim. Or if the judge was entitled to dismiss it—for it is
even vaguer than the smoking claim—he should have done
so with leave to replead, rather than dismissing it, as he
did, along with the rest of the complaint, with prejudice
(and adding that the suit would count as a “strike,”
limiting the plaintiff’s right to bring subsequent suits). The
plaintiff explains in his brief in this court that the claim is
No. 04-1961 7
retaliation—the incident that precipitated the restriction of
visits to him was his filing grievances against the prison.
Such retaliation violates a prisoner’s right, founded on the
First Amendment, to petition government for the redress of
grievances. Simpson v. Nickel, supra, 450 F.3d at 305; Pearson
v. Welborn, 471 F.3d 732, 741 (7th Cir. 2006); Boxer X v.
Harris, 437 F.3d 1107, 1112 (11th Cir. 2006); Friedl v. City of
New York, 210 F.3d 79, 85 (2d Cir. 2000). If the plaintiff
can prove it, he has a good claim. He is entitled to try to
prove it.
The judgment is vacated and the matter remanded to the
district court with respect to the arthritis, smoking, and
retaliation claims, but is otherwise affirmed.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-3-07 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3001243/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-1687
MAKOR ISSUES & RIGHTS, LTD., et al.,
Plaintiffs-Appellants,
v.
TELLABS INCORPORATED, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 C 4356—Amy J. St. Eve, Judge.
____________
ARGUED NOVEMBER 1, 2007—DECIDED JANUARY 17, 2008
____________
Before POSNER, WOOD, and SYKES, Circuit Judges.
POSNER, Circuit Judge. This appeal is before the court
a second time, after our previous decision, 437 F.3d 588
(7th Cir. 2006), reversing the dismissal of the suit by the
district court on the defendants’ motion to dismiss, was
itself reversed by the Supreme Court. 127 S. Ct. 2499 (2007).
The Court remanded the case to us with directions to
consider whether the plaintiffs’ allegations of securities
fraud in violation of section 10(b) of the Securities Ex-
change Act of 1934, 15 U.S.C. § 78j(b), and SEC Rule 10b-5,
17 C.F.R. § 240.10b-5, create the “strong inference” of
scienter, as defined by the Supreme Court in its opinion,
2 No. 04-1687
that the Private Securities Litigation Reform Act of 1995
requires for the complaint to survive a motion to dismiss.
Rule 10b-5 forbids a company or an individual “to
make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the state-
ments made, in the light of the circumstances under which
they were made, not misleading.” 17 C.F.R. § 240.10b-5(b).
But liability requires proof of the defendant’s “scienter,”
which is to say proof that he either knew the statement
was false or was reckless in disregarding a substantial risk
that it was false. Higginbotham v. Baxter International, Inc.,
495 F.3d 753, 756 (7th Cir. 2007). A popular definition of
recklessness in this context is “an extreme departure from
the standards of ordinary care . . . to the extent that the
danger was either known to the defendant or so obvious
that the defendant must have been aware of it.” In re
Scholastic Corp. Securities Litigation, 252 F.3d 63, 76 (2d Cir.
2001), quoting Rolf v. Blyth, Eastman Dillon & Co., 570
F.2d 38, 47 (2d Cir. 1978). This looks like two criteria—
knowledge of the risk and how big the risk is—but as a
practical matter it is only one because knowledge is
inferable from gravity (“the danger was either known
to the defendant or so obvious that the defendant must
have been aware of it”). When the facts known to a per-
son place him on notice of a risk, he cannot ignore the
facts and plead ignorance of the risk. AMPAT/Midwest,
Inc. v. Illinois Tool Works Inc., 896 F.2d 1035, 1042 (7th Cir.
1990); SEC v. Jakubowski, 150 F.3d 675, 681 (7th Cir. 1998).
A complication introduced by the Private Securities
Litigation Reform Act is that “actual knowledge” of falsity,
not merely indifference to the danger that a statement
is false, is required for liability for “forward-looking”
statements—predictions or speculations about the future.
No. 04-1687 3
15 U.S.C. § 78u-5(c)(1)(B)(ii); see Helwig v. Vencor, Inc.,
251 F.3d 540, 554-55 (6th Cir. 2001). This has implications
for pleading, since the “strong inference” that must be
drawn to avoid dismissal cannot be an inference merely
of recklessness if predictions are challenged as fraudulent.
The fact that all the statements challenged in this case
that we found in our earlier opinion to be materially
false are in the present tense is not decisive on the ques-
tion whether the statements include predictions: “Our
earnings are certain to double” is in the present tense,
but is a prediction. But a mixed present/future state-
ment is not entitled to the safe harbor with respect to the
part of the statement that refers to the present. When
Tellabs told the world that sales of its 5500 system were
“still going strong,” it was saying both that current sales
were strong and that they would continue to be so, at least
for a time, since the statement would be misleading if
Tellabs knew that its sales were about to collapse. The
element of prediction in saying that sales are “still going
strong” does not entitle Tellabs to a safe harbor with
regard to the statement’s representation concerning cur-
rent sales.
Section 21D(b)(2) of the Reform Act requires that the
plaintiff’s complaint “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), that
is, with scienter. But except with regard to “forward-
looking” statements, the Act does not specify “the re-
quired state of mind,” so it remains the concept of scienter
developed before the Act. Nathenson v. Zonagen Inc.,
267 F.3d 400, 407-09 (5th Cir. 2001); Helwig v. Vencor, Inc.,
supra, 251 F.3d at 550. In our previous opinion, we ruled
that the plaintiffs had adequately pleaded not only that
4 No. 04-1687
the defendants had made materially false statements
but also that they had acted with the required scienter.
The first ruling was not disturbed by the Supreme
Court and is the law of the case, controlling our present
consideration. The second ruling was not reversed, but
the Supreme Court disagreed with this court’s interpreta-
tion of “strong inference” of scienter and directed us to
dismiss the complaint unless “a reasonable person
would deem the inference of scienter cogent and at least
as compelling as any opposing inference one could draw
from the facts alleged.” 127 S. Ct. at 2510 (footnote omit-
ted). The plaintiff “must plead facts rendering an infer-
ence of scienter at least as likely as any plausible op-
posing inference.” Id. at 2513 (emphasis in original). So
first the inference must be cogent, and second it must be
as cogent as the opposing inference, that is, the inference
of lack of scienter.
To judges raised on notice pleading, the idea of drawing
a “strong inference” from factual allegations is mysterious.
Even when a plaintiff is required by Rule 9(b) to plead
facts (such as the when and where of an alleged fraudu-
lent statement), the court must treat the pleaded facts as
true and “draw all reasonable inferences in favor of the
plaintiff.” Borsellino v. Goldman Sachs Group, Inc., 477 F.3d
502, 506-07 (7th Cir. 2007). To draw a “strong inference”
in favor of the plaintiff might seem to imply that the
defendant had pleaded facts or presented evidence that
would, by comparison with the plaintiff’s allegations,
enable a conclusion that the plaintiff had the stronger
case; and therefore that a judge could not draw a strong
inference in the plaintiff’s favor before hearing from the
defendant. But comparison is not essential, and obviously
is not contemplated by the Reform Act, which requires
dismissal in advance of the defendant’s answer unless
No. 04-1687 5
the complaint itself gives rise to a strong inference of
scienter. For a defendant will usually have evidence to
present in his defense; and so a complaint that on its face,
and without reference to the defendant’s case, creates only
a weak or bare inference of scienter, suggesting that the
plaintiff would prevail only if there were no defense
case at all, would be quite likely to fail eventually
when the defendant had a chance to put on his case,
which would normally be after pretrial discovery. Appar-
ently Congress does not believe that weak complaints
should put a defendant to the expense of discovery in a
securities-fraud case, which is likely to be complex—as
this case is.
The complaint alleges the following: The corporate
defendant, Tellabs, manufactures equipment used in
fiber optic cable networks; its principal customers are
telephone companies. In December 2000, the beginning of
the period of alleged violations of Rule 10b-5, Tellabs’s
principal product, accounting for more than half its sales,
was a switching system called TITAN 5500. The product
was almost 10 years old when on December 11 Tellabs
announced that the 5500’s successor product, TITAN 6500,
was “available now” and that Sprint had signed a multi-
year, $100 million contract to buy the 6500, though in fact
no sales pursuant to the contract closed until after the
period covered by the complaint. The same announce-
ment added that despite the advent of the 6500, sales of
the 5500 would continue to grow. (Most of these and
other announcements quoted in the complaint were
made by Richard Notebaert, who was Tellabs’s chief
executive officer and, along with Tellabs, is the principal
defendant.)
The following month, Tellabs announced that “customers
are buying more and more Tellabs equipment” and that
6 No. 04-1687
Tellabs had “set the stage for sustained growth” with the
successful launch of several products. In February, the
company told its stockholders that its growth was “robust”
and that “customers are embracing” the 6500. In response
to a question frequently asked by investors—whether
sales of the 5500 had peaked—the company declared
that “although we introduced this product nearly 10 years
ago, it’s still going strong.” In March the company re-
duced its sales estimates slightly but said it was doing
so because of lower than expected growth in a part of its
business unrelated to the 5500 and 6500 systems, and
that “interest in and demand for the 6500 continues to
grow” and “we are satisfying very strong demand and
growing customer demand [for the 6500, and] we are as
confident as ever—that may be an understatement—about
the 6500.” And in response to a securities analyst’s ques-
tion whether Tellabs was experiencing “any weak-
ness at all” in demand for the 5500, Notebaert re-
sponded: “No, we’re not . . . . We’re still seeing that prod-
uct continue to maintain its growth rate; it’s still experienc-
ing strong acceptance.” Yet from the outset of the period
covered by the complaint Tellabs had been flooding its
customers with tens of millions of dollars worth of 5500s
that the customers had not requested, in order to create
an illusion of demand. The company had to lease extra
storage space in January and February to accommodate
the large number of returns.
Just weeks after these statements Tellabs reduced its
sales projections significantly because its customers
were “exercising a high degree of prudence over every
dollar spent.” But it reiterated that the demand for the
6500 was “very strong.” In April it said “we should hit
our full manufacturing capacity [for the 6500] in May or
June to accommodate the demand we are seeing. Every-
No. 04-1687 7
thing we can build, we are building and shipping. The
demand is very strong.”
In June, however, at the end of the period covered by
the complaint, Tellabs announced a major drop in reve-
nues, and its share price, which at its peak during the
period had been $67 and in the middle of the period had
varied between $30 and $38, fell to just under $16. (It
currently is below $7.00.) But the deterioration had been
well under way by December as a result of the bursting of
the fiber-optics bubble in the middle of the year. The
market for the 5500 was evaporating; the next month
(January 2001), Tellabs’s largest customer, Verizon, re-
duced its orders for the 5500 by 50 percent—having
already, the previous June, reduced them by 25 percent.
And not a single 6500 system was shipped during the
complaint period.
Tellabs’s revenues in 2001 were 35 percent lower than
the year before and its profits 125 percent lower. The
drop in the second quarter (most of which was within the
period covered by the complaint) over the year before
was even steeper; revenues dropped 43 percent and profits
211 percent.
The company’s statements that we have quoted or
paraphrased were, we ruled in our previous opinion—and,
to repeat, the ruling binds us as law of the case—ade-
quately pleaded as materially false. But is an inference of
scienter from these allegations cogent and at least as
compelling as the contrary inference—that there was no
scienter? It is easier to consider the second, the compara-
tive, question first, and also to separate the issue of the
company’s scienter from that of Notebaert’s. The em-
phasis throughout the litigation has been on the latter,
8 No. 04-1687
but the former is also alleged and (though briefly) argued;
and we begin with it.
There are two competing inferences (always assuming
of course that the plaintiffs are able to prove the allega-
tions of the complaint). One is that the company knew
(or was reckless in failing to realize, but we shall not have
to discuss that possibility separately) that the state-
ments were false, and material to investors. The other is
that although the statements were false and material,
their falsity was the result of innocent, or at worst care-
less, mistakes at the executive level. Suppose a clerical
worker in the company’s finance department accidentally
overstated the company’s earnings and the erroneous
figure got reported in good faith up the line to Notebaert
or other senior management, who then included the
figure in their public announcements. Even if senior
management had been careless in failing to detect the
error, there would be no corporate scienter. Intent to
deceive is not a corporate attribute—though not because
“collective intent” or “shared purpose” is an oxymoron. It
is not. A panel of judges does not have a single mind,
but if all the judges agree on the decision of a case, the
decision can properly be said to represent the collective
intent of the panel, though the judges who join an opinion
to make it unanimous may not agree with everything
said in it.
The problem with inferring a collective intent to de-
ceive behind the act of a corporation is that the hierar-
chical and differentiated corporate structure makes it
quite plausible that a fraud, though ordinarily a delib-
erate act, could be the result of a series of acts none of
which was both done with scienter and imputable to the
company by the doctrine of respondeat superior. Some-
No. 04-1687 9
one low in the corporate hierarchy might make a
mistake that formed the premise of a statement made at
the executive level by someone who was at worst care-
less in having failed to catch the mistake. A routine in-
vocation of respondeat superior, which would impute the
mistake to the corporation provided only that it was
committed in the course of the employee’s job rather
than being “a frolic of his own,” Joel v. Morrison, 6 C. & P.
501, 172 Eng. Rep. 1338 (1834), would, if applied to a
securities fraud that requires scienter, attribute to a cor-
poration a state of mind that none of its employees had. To
establish corporate liability for a violation of Rule 10b-5
requires “look[ing] to the state of mind of the individual
corporate official or officials who make or issue the state-
ment (or order or approve it or its making or issuance,
or who furnish information or language for inclusion
therein, or the like) rather than generally to the collective
knowledge of all the corporation’s officers and employees
acquired in the course of their employment.” Southland
Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353,
366 (5th Cir. 2004) (footnote omitted). A corporation is
liable for statements by employees who have apparent
authority to make them. See, e.g., American Society of
Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556,
568 (1982), and for the application of the principle to
securities fraud In re Atlantic Financial Management, Inc., 784
F.2d 29, 31-32 (1st Cir. 1986).
Suppose the false communication by the low-level
employee to his superiors had been deliberate. Suppose
he was embezzling tens of millions of dollars, and by
concealing the embezzlement greatly exaggerated his
corporation’s assets. Suppose he even knew that as a
result the corporation would misrepresent its assets to
10 No. 04-1687
investors. Nevertheless, even if his superiors were care-
less in failing to detect the embezzlement, the corpora-
tion would not be guilty of fraud, since the malefactor’s
acts of embezzling and concealing the embezzlement
would not be acts on behalf of the corporation; deliberate
wrongs by an employee are not imputed to his employer
unless they are not only within the scope of his employ-
ment but in attempted furtherance of the employer’s
goals. Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1421-22
(7th Cir. 1986); Fitzgerald v. Mountain States Tel. & Tel. Co.,
68 F.3d 1257, 1262-63 (10th Cir. 1995); Home Life Ins. Co. v.
Equitable Equipment Co., 680 F.2d 1056, 1059-60 (5th Cir.
1982).
The Supreme Court has declined to incorporate com-
mon law principles root and branch into section 10(b) of
the Securities Exchange Act (and hence into Rule 10b-5),
and specifically has rejected aider and abettor liability.
Central Bank of Denver, N.A. v. First Interstate Bank of
Denver, N.A., 511 U.S. 164 (1994). But the doctrines of
respondeat superior and apparent authority remain
applicable to suits for securities fraud. AT&T v. Winback &
Conserve Program, Inc., 42 F.3d 1421, 1429-33 (3d Cir. 1994).
Tellabs does not argue the contrary.
The court in the Southland Securities case said that corpo-
rate scienter could be based on the state of mind of some-
one who furnished false information that became the
basis of a fraudulent public announcement. Suppose he
had knowingly supplied the false information intending
to help the company. His superiors would not be liable
for failing to catch the mistake, but Southland implies that
the corporation would be liable, just as it would be in a
common law tort suit. W. Page Keeton et al., Prosser and
Keeton on the Law of Torts § 70, pp. 505-06 (5th ed. 1984).
No. 04-1687 11
That theory of liability is not argued in this case, however,
and so we need not explore it. Nor do the plaintiffs seek to
use section 20(a) of the Securities Exchange Act, 15 U.S.C.
§ 78t(a), to impose “control person” liability on the corpora-
tion, which would require the plaintiffs to overcome
defenses of good faith and noninducement. Tellabs does
not make the argument, which has been rejected by most
courts, that section 20(a) supersedes liability based on
apparent authority or respondeat superior. Hollinger v.
Titan Capital Corp., 914 F.2d 1564, 1576-78 (9th Cir. 1990) (en
banc); Commerford v. Olson, 794 F.2d 1319, 1322-23 (8th Cir.
1986); In re Atlantic Financial Management, Inc., supra, 784
F.2d at 32-35; Fey v. Walston & Co., 493 F.2d 1036, 1051-53
(7th Cir. 1974).
The critical question, therefore, is how likely it is that
the allegedly false statements that we quoted earlier in
this opinion were the result of merely careless mistakes
at the management level based on false information fed
it from below, rather than of an intent to deceive or a
reckless indifference to whether the statements were
misleading. It is exceedingly unlikely. The 5500 and the
6500 were Tellabs’s most important products. The 5500
was described by the company as its “flagship” product
and the 6500 was the 5500’s heralded successor. They
were to Tellabs as Windows XP and Vista are to Microsoft.
That no member of the company’s senior management
who was involved in authorizing or making public state-
ments about the demand for the 5500 and 6500 knew that
they were false is very hard to credit, and no plausible
story has yet been told by the defendants that might
dispel our incredulity. The closest is the suggestion that
while “available” no doubt meant to most investors that the
6500 was ready to be shipped to customers rather than that
12 No. 04-1687
the new product was having teething troubles that would
keep it off the market for many months, this may have been
a bit of corporate jargon innocently intended to indicate
that the company was ready to take orders. If so, then
while it was false as reasonably understood by investors
the false impression was a result of mutual misunderstand-
ing rather than of fraud. See Banque Arabe et Internationale
D’Investissement v. Maryland National Bank, 57 F.3d 146, 153-
54 (2d Cir. 1995). But this is highly implausible when
“available” is set among the company’s alleged lies about
the 6500—that “customers are embracing” the 6500, that
“interest in and demand for the 6500 continues to grow,”
that “we are satisfying very strong demand and growing
customer demand [for the 6500 and] we are as confident as
ever—that may be an understatement—about the 6500,”
and that “we should hit our full manufacturing capacity in
May or June to accommodate the demand [for the 6500] we
are seeing. Everything we can build, we are building and
shipping. The demand is very strong.”
Another possible, though again very unlikely, example
of innocent misunderstanding is the charge of “channel
stuffing.” The term refers to shipping to one’s distributors
more of one’s product than one thinks one can sell. A
certain amount of channel stuffing could be innocent
and might not even mislead—a seller might have a real-
istic hope that stuffing the channel of distribution would
incite his distributors to more vigorous efforts to sell
the stuff lest it pile up in inventory. Channel stuffing
becomes a form of fraud only when it is used, as the
complaint alleges, to book revenues on the basis of goods
shipped but not really sold because the buyer can return
them. They are in effect sales on consignment, and such
sales “cannot be booked as revenue. Neither condition of
revenue recognition has been fulfilled—ownership and
No. 04-1687 13
its attendant risks have not been transferred, and since
the goods might not even be sold, there can be no cer-
tainty of getting paid. But those strictures haven’t
stopped some managers from using consigned goods to
fatten the top line—that is, the revenue line—of the corpo-
rate income statement.” H. David Sherman et al., Profits
You Can Trust, Spotting & Surviving Accounting Landmines 30
(Financial Times Prentice Hall 2003); SEC v. McAfee, Inc.,
Civ. Action No. 06-009 (PJH) (N.D. Cal. Jan. 4, 2006),
http://sec.gov/litigation/litreleases/lr19520.htm (visited
Nov. 19, 2007). (Similarly, Tellabs could not properly
record revenue on its contract with Sprint before actually
transferring title to 6500 systems to Sprint.) The huge
number of returns of 5500 systems is evidence that the
purpose of the stuffing was to conceal the disappointing
demand for the product rather than to prod distributors
to work harder to attract new customers, and the pur-
pose would have been formed or ratified at the highest
level of management.
All this is not to say that the plaintiffs could name
“management” as a defendant or, less absurdly, name
each corporate officer. That would be an example of “the
group pleading doctrine[, which] is a judicial presump-
tion that statements in group-published documents in-
cluding annual reports and press releases are attributable
to officers and directors who have day-to-day control or
involvement in regular company operations.” Winer Family
Trust v. Queen, 503 F.3d 319, 335 (3d Cir. 2007). As we held
in our first opinion, the doctrine is inconsistent with the
“strong inference” requirement. 437 F.3d 588, 602-03; see
also Winer Family Trust v. Queen, supra, 503 F.3d at 335-37.
But it is possible to draw a strong inference of corporate
scienter without being able to name the individuals
14 No. 04-1687
who concocted and disseminated the fraud. Suppose
General Motors announced that it had sold one million
SUVs in 2006, and the actual number was zero. There
would be a strong inference of corporate scienter, since
so dramatic an announcement would have been ap-
proved by corporate officials sufficiently knowledgeable
about the company to know that the announcement
was false.
Against all this the defendants argue that they could
have had no motive to paint the prospects for the 5500 and
6500 systems in rosy hues because within months they
acknowledged their mistakes and disclosed the true
situation of the two products, and because there is no
indication that Notebaert or anyone else who may have
been in on the fraud profited from it financially. The
argument confuses expected with realized benefits.
Notebaert may have thought that there was a chance that
the situation regarding the two key products would
right itself. If so, the benefits of concealment might ex-
ceed the costs. Investors do not like to think they’re riding
a roller coaster. Prompt disclosure of the truth would
have caused Tellabs’s stock price to plummet, as it did
when the truth came out a couple of months later. Suppose
the situation had corrected itself. Still, investors would
have discovered that the stock was more volatile than
they thought, and risk-averse investors (who predominate)
do not like volatility and so, unless it can be diversified
away, demand compensation in the form of a lower price;
consequently the stock might not recover to its previous
level. The fact that a gamble—concealing bad news in the
hope that it will be overtaken by good news—fails is not
inconsistent with its having been a considered, though
because of the risk a reckless, gamble. See First Commodity
Corp. of Boston v. CFTC, 676 F.2d 1, 7-9 (1st Cir. 1982). It is
No. 04-1687 15
like embezzling in the hope that winning at the track will
enable the embezzled funds to be replaced before they
are discovered to be missing.
So the inference of corporate scienter is not only as likely
as its opposite, but more likely. And is it cogent? Well,
if there are only two possible inferences, and one is much
more likely than the other, it must be cogent. Suppose a
person woke up one morning with a sharp pain in his
abdomen. He thought it was due to a recent operation to
remove his gall bladder, but realized it could equally
well have been due to any number of other things. The
inference that it was due to the operation could not be
thought cogent. But suppose he went to a doctor who
performed tests that ruled out any cause other than the
operation or a duodenal ulcer and told the patient that
he was 99 percent certain that it was the operation. The
plausibility of an explanation depends on the plausibility
of the alternative explanations. United States v. Beard, 354
F.3d 691, 692-93 (7th Cir. 2004); Ronald J. Allen, “Factual
Ambiguity and a Theory of Evidence,” 88 Nw. U. L. Rev.
604, 611 (1994). As more and more alternatives to a
given explanation are ruled out, the probability of that
explanation’s being the correct one rises. “Events that
have a very low antecedent probability of occurring
nevertheless do sometimes occur (the Indian Ocean
tsunami, for example); and if in a particular case all the
alternatives are ruled out, we can be confident that the
case presents one of those instances in which the rare
event did occur.” Anderson v. Griffin, 397 F.3d 515, 521 (7th
Cir. 2005). Because in our abdominal-pain example all
other inferences had been ruled out except the 1 percent
one, the inference that the pain was due to the operation
would be cogent. This case is similar. Because the alter-
16 No. 04-1687
native hypotheses—either a cascade of innocent mistakes,
or acts of subordinate employees, either or both resulting
in a series of false statements—are far less likely than
the hypothesis of scienter at the corporate level at which
the statements were approved, the latter hypothesis
must be considered cogent.
And at the top of the corporate pyramid sat Notebaert,
the CEO. The 5500 and the 6500 were his company’s key
products. Almost all the false statements that we quoted
emanated directly from him. Is it conceivable that he
was unaware of the problems of his company’s two
major products and merely repeating lies fed to him by
other executives of the company? It is conceivable, yes,
but it is exceedingly unlikely.
The defendants complain, finally, about the com-
plaint’s dependence on “confidential sources.” The 26
“confidential sources” referred to in the complaint are
important sources for the allegations not only of falsity
but also of scienter. Because the Reform Act requires
detailed fact pleading of falsity, materiality, and scienter,
the plaintiff’s lawyers in securities-fraud litigation have
to conduct elaborate pre-complaint investigations—and
without the aid of discovery, which cannot be con-
ducted until the complaint is filed. Unable to compel
testimony from employees of the prospective defendant,
the lawyers worry that they won’t be able to get to first
base without assuring confidentiality to the employees
whom they interview, even though it is unlawful for an
employer to retaliate against an employee who blows
the whistle on a securities fraud, 18 U.S.C. § 1514A, and
even though, since informants have no evidentiary privi-
lege, their identity will be revealed in pretrial discovery,
though of course a suit might never be brought or if
No. 04-1687 17
brought might be settled before any discovery was con-
ducted.
The problem with this argument—besides the seeming
flimsiness of the asserted need for anonymity—is that
allegations based on anonymous informants are very
difficult to assess. This concern led us to suggest in
Higginbotham v. Baxter International, Inc., supra, 495 F.3d
at 756-57, that such allegations must be steeply dis-
counted. But that was a very different case from this
one. The misconduct alleged consisted of frauds com-
mitted by Baxter’s Brazilian subsidiary, but because the
suit was against the parent, the plaintiffs had to show
that the parent knew about the Brazilian fraud. The
subsidiary had tried to conceal it from its parent as well
as from the Brazilian government. There was no basis
other than the confidential sources, described merely as
three ex-employees of Baxter and two consultants, for
a strong inference that the subsidiary had failed to con-
ceal the fraud from its parent and thus that the manage-
ment of the parent had been aware of the fraud during
the period covered by the complaint.
The confidential sources listed in the complaint in
this case, in contrast, are numerous and consist of per-
sons who from the description of their jobs were in a
position to know at first hand the facts to which they are
prepared to testify, such as the returns of the 5500s, that
sales of the 5500 were dropping off a cliff while the com-
pany pretended that demand was strong, that the 6500 was
not approved by Regional Bell Operating Companies,
that it was still in the beta stage and failing performance
tests conducted by prospective customers, and that it was
too bulky for customers’ premises. The information that
the confidential informants are reported to have ob-
18 No. 04-1687
tained is set forth in convincing detail, with some of the
information, moreover, corroborated by multiple sources.
It would be better were the informants named in the
complaint, because it would be easier to determine wheth-
er they had been in a good position to know the facts
that the complaint says they learned. But the absence of
proper names does not invalidate the drawing of a strong
inference from informants’ assertions. See In re Daou
Systems, Inc., 411 F.3d 1006, 1015-16 (9th Cir. 2005); Califor-
nia Public Employees’ Retirement System v. Chubb Corp., 394
F.3d 126, 146-47 (3d Cir. 2004); ABC Arbitrage Plaintiffs
Group v. Tchuruk, 291 F.3d 336, 353-54 (5th Cir. 2002);
Novak v. Kasaks, 216 F.3d 300, 312-14 (2d Cir. 2000).
We conclude that the plaintiffs have succeeded, with
regard to the statements identified in our previous opin-
ion as having been adequately alleged to be false and
material, in pleading scienter in conformity with the
requirements of the Private Securities Litigation Reform
Act. We therefore adhere to our decision to reverse
the judgment of the district court dismissing the suit.
REVERSED AND REMANDED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-17-08 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2999622/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-1465
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
TERRANCE THORNTON,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 CR 482—James B. Zagel, Judge.
____________
ARGUED MAY 5, 2006—DECIDED SEPTEMBER 12, 2006
____________
Before KANNE, WOOD, and SYKES, Circuit Judges.
KANNE, Circuit Judge. Defendant Terrance Thornton was
convicted of being a felon in possession of a firearm, 18
U.S.C. § 922(g), and possession of a firearm with an obliter-
ated serial number, § 922(k). Thornton was sentenced to
252 months’ imprisonment (21 years) under the Armed
Career Criminal Act, 18 U.S.C. § 924(e), (“ACCA”). He now
presents us with a number of issues for review attacking his
convictions and sentence under the ACCA, none of which
merit any relief. The convictions and sentence are therefore
affirmed.
2 No. 05-1465
I. HISTORY
Late on a November night in 2002, the city of Elgin,
Illinois was rocked by gunfire from a drive-by shooting.
Initial reports indicated only the location of the shooting
and that the shots had been fired from a Sport Utility
Vehicle. Several officers responded directly to the scene of
the shooting, while others scoured the area hoping to find
the suspect vehicle.
Within twenty minutes, Officers Sheehan and Schultz,
driving separately, came upon an SUV parked at a gas
station. This gas station was within a couple of miles of the
shooting. While still in his car, Schultz was able to see the
driver of the SUV, later identified as Darius Hyte, get out
and go into the station. The officers decided to investigate.
As they pulled into the gas station, Sheehan noticed that
the SUV was the only car in the lot, and that the only
people in the gas station were two customers, later identi-
fied as Hyte and Thornton, and one store employee. The
SUV was parked with its engine running and lights on.
The officers stopped their cars and headed toward the gas
station’s front door. Before they reached it, Hyte and
Thornton came out. Sheehan asked Thornton to step aside
and Schultz did the same with Hyte. Sheehan then asked
Thornton if he was driving the SUV. Thornton responded by
saying that “his girl was driving” it. After getting Thorn-
ton’s name and birth date, Sheehan used the police radio on
his person to run a warrant check on Thornton. It came
back positive for an outstanding warrant for felony domestic
battery. Thornton was arrested. The whole encounter, from
the time Sheehan first approached Thornton until the time
dispatch provided the results of the warrant check, lasted
three to four minutes.
After placing Thornton in his squad car, Sheehan looked
into the passenger window of the SUV. Sitting on the
passenger side floorboard he saw a black semiautomatic
No. 05-1465 3
handgun and a box of ammunition. He opened the door
of the SUV to take a closer look, but never touched the gun.
Evidence technicians arrived later to collect the gun, which
had its serial number obliterated. Two cellular phones were
also retrieved from the SUV. One phone was found sitting
between the passenger seat and the center console, and the
other was in the center console. Further investigation of the
phone found closer to the passenger seat revealed several
numbers programmed into its address book belonging to
people who knew Thornton. One of the numbers in the
address book was an attorney who had represented Thorn-
ton. The phone also logged an incoming call on the night of
the shooting from a girlfriend of Thornton’s.
Officers also collected an empty Swisher Sweets cigar box
and a pack of nearly empty Newport cigarettes from the
SUV. When he was arrested, Thornton had a new, un-
opened box of Philly blunt cigars. Hyte was also arrested,
and he had in his possession a pack of Newport cigarettes.
Forensic evidence later tied the gun in the SUV to the
shooting. The shell casings at the scene of the shooting and
those found in the SUV were the same nine millimeter
Luger type. At trial, an Illinois State Police firearm’s expert
testified that the shell casings found at the scene of the
shooting had been fired from the gun found in the SUV.
Forensic evidence also tied Thornton to the gun, though
indirectly—his fingerprint was found on the magazine in
the handgun.
Prior to trial, the judge denied Thornton’s motion to
suppress, which argued the evidence against him was
obtained as a result of an unconstitutional stop and arrest.
At trial, Thornton objected to a portion of the jury in-
struction defining joint possession. His objection was to
the portion of the instruction italicized below:
Possession may be sole or joint. If one person alone
has actual or constructive possession of a firearm,
possession is sole. If two or more persons share actual
4 No. 05-1465
constructive possession of a firearm, possession is joint.
An individual may possess a firearm even if other
individuals may have access to a location where posses-
sion is alleged. Also, an individual may possess a
firearm even if other individuals share the ability to
exercise control over the firearm. Possession may be
joint.
Thornton argued that this portion of the instruction defined
possession too broadly, an argument he now reasserts
before us.
Also at trial, the judge sustained the government’s
objections to Thornton’s attempts to call two police officers
to the stand: Officers Hooker and Mendiola. Thornton
wanted to call Hooker to impeach Officer Schultz’s testi-
mony that there were only two people (Thornton and Hyte)
in the gas station when the officers arrived on the scene.
According to Thornton, Hooker had been told by the gas
station attendant that two other customers were present in
the store when Thornton and Hyte entered. Thornton also
proffered that Mendiola would testify that he was present,
along with the other officers, when Hyte was initially
encountered outside of the gas station. According to Thorn-
ton, Mendiola could establish that while being questioned,
Hyte called another person with his cellular phone, and
that Hyte told Mendiola the SUV belonged to Hyte’s
girlfriend. Thornton viewed the evidence of Hyte calling
someone as raising the inference a third party—Hyte’s
girlfriend—might have been present in the SUV and in
possession of the gun. The judge excluded both witnesses on
hearsay grounds.
After he was convicted, Thornton was sentenced under
the ACCA. One of the three necessary predicate violent
felonies included a 1990 burglary conviction. The only
evidence in the record of this conviction is an entry in
No. 05-1465 5
Thornton’s Presentence Investigation Report (“PSR”). After
identifying the conviction, the PSR states:
According to court records, the defendant was originally
charged with residential burglary, possession of canna-
bis and theft. He was convicted on a plea of guilty to the
amended charge of burglary, and the other two counts
were dismissed (nolle prosequi). The defendant was
represented by counsel.
The amended criminal complaint charged that the
defendant committed the offense of burglary (a Class 2
felony) in that without authority, he knowingly entered
a building of another, [name and address omitted], with
the intent to commit a theft.
At his sentencing hearing, Thornton argued that all of his
qualifying convictions should have been submitted to the
jury. He also took specific aim at the 1990 burglary convic-
tion, arguing that it was “incorrect” to designate this as a
qualifying conviction. The entirety of his objection in this
regard is as follows:
In addition, one of the cases that [was] mentioned was
the 1990 case regarding him being a career criminal
in the PSI report was this 1990 case for burglary case.
It is a burglary case. It is not a residential burglary
case. There is case law out there that discusses this
in US v. Hicks that states that a general burglary does
not fall within the violent felony provision to be eligible
under 924.
The government maintained that all of Thornton’s
qualifying convictions were properly considered. The judge
found the Guideline’s sentence—which included the
ACCA enhancement—properly calculated and sentenced
Thornton accordingly.
6 No. 05-1465
II. ANALYSIS
Thornton raises the following issues with regard to his
convictions, which will be addressed in turn: first, lack of
both reasonable suspicion to stop and probable cause to
arrest; second, insufficient evidence to support the jury’s
verdict; third, error in the jury instruction defining posses-
sion; and, fourth, abuse of discretion in the district judge’s
exclusion of certain witness testimony. He also attacks his
sentence under the ACCA and the reasonableness of his
sentence.
A. Convictions
First, the district judge made no error in denying the
motion to suppress. We review the court’s legal conclu-
sions de novo and factual determinations for clear error.
United States v. Cellitti, 387 F.3d 618, 621 (7th Cir. 2004)
(citation omitted). Thornton argues the officers did not have
reasonable suspicion to stop him when he first came out of
the gas station, but this argument misstates the judge’s
ruling and ignores crucial facts upon which the judge relied.
What the judge said was that when Officer Sheehan first
approached Thornton coming out of the gas station and
asked him whether the SUV was his, the encounter was
voluntary. Thornton points us to no facts in the record
giving us reason to doubt this ruling. See, e.g., Kaupp v.
Texas, 538 U.S. 626, 630 (2003) (giving examples of circum-
stances indicating a seizure as opposed to a voluntary
encounter, such as “ ‘the threatening presence of several
officers, the display of a weapon by an officer, some physical
touching of the person of the citizen, or the use of language
or tone of voice indicating that compliance with the officer’s
request might be compelled’ ”) (quoting United States v.
Mendehall, 466 U.S. 544, 554 (1980)).
All the officer did was ask Thornton questions as he came
out of the gas station, which Thornton answered volun-
No. 05-1465 7
tarily. There were three officers, but Thornton was also
accompanied by Hyte. The officers neither displayed their
weapons nor touched either suspect, and there is no
indication whatsoever in the record that the officers’ tone,
language, or other action would have communicated to
Thornton that he was seized. See id. at 629 (explaining that
a stop is a seizure and not voluntary when “the police
conduct would ‘have communicated to a reasonable per-
son that he was not at liberty to ignore the police presence
and go about his business’ ”) (quoting Florida v. Bostick, 501
U.S. 429, 437 (1991)). Thus, no reasonable suspicion was
necessary when Officer Sheehan first approached Thornton,
and its existence at the beginning of the encounter is
therefore irrelevant. See United States v. Hendricks, 319
F.3d 993, 999 (7th Cir. 2004) (“[L]aw enforcement officers
do not violate the Fourth Amendment’s prohibition of
unreasonable seizures merely by approaching individuals
on the street or in other public places and putting questions
to them if they are willing to listen.”) (quoting United States
v. Drayton, 536 U.S. 194, 200 (2002)).
The judge also decided that from the outset the officers
had reasonable suspicion to believe the SUV was involved
in criminal activity. Furthermore, the judge concluded
that reasonable suspicion to stop Thornton existed once
he voluntarily tied himself to the SUV by telling the
officer that his girlfriend was driving it. We agree. See
United States v. Raibley, 243 F.3d 1069, 1074 (7th Cir.
2001) (“Even facts susceptible of an innocent construc-
tion will support the decision to detain an individual
momentarily for questioning, so long as one may rationally
infer from the totality of the circumstances—the whole
picture, that the person may be involved in criminal activ-
ity.”) (citations and quotations omitted). Therefore, Thorn-
ton was properly stopped after he voluntarily tied himself
to the SUV.
And this proper investigatory stop did not turn into an
arrest without probable cause. Within three to four minutes
8 No. 05-1465
of initially approaching Thornton, the officers learned that
a warrant was outstanding for his arrest. That information
supports probable cause for the arrest whether or not it was
correct. See United States v. Mounts, 248 F.3d 712, 715 (7th
Cir. 2001) (citing United States v. Hensley, 469 U.S. 221,
231 (1985)); United States v. Hairston, 763 F.2d 233, 235
(7th Cir. 1985).
Thornton also argues that the officers did not have a
proper reason to look into the windows of the SUV, but this
argument is clearly without merit. An officer needs
no reason to look through the windows of a car parked in a
public place. Texas v. Brown, 460 U.S. 730, 740 (1983)
(“There is no legitimate expectation of privacy shielding
that portion of the interior of an automobile which may
be viewed from outside the vehicle by either inquisitive
passersby or diligent police officers.”) (citations omitted);
United States v. Willis, 37 F.3d 313, 315-17 (7th Cir. 1994)
(explaining that police officer did not need reasonable
suspicion to look into a car parked in a school parking lot).
Second, we review Thornton’s sufficiency of the evi-
dence argument by viewing all of the facts in the light most
favorable to the prosecution and questioning whether any
rational trier of fact could have found him guilty beyond a
reasonable doubt. United States v. Carrillo, 435 F.3d 767,
775 (7th Cir. 2006). We will only overturn Thornton’s
conviction “if the record is devoid of evidence” of guilt. Id.
(citation omitted). Thornton argues the evidence was
insufficient to prove he knowingly possessed a gun, much
less a gun with an obliterated serial number. The gun was
found on the passenger side floorboard of the SUV. Evi-
dence placing Thornton in the SUV included, among other
things: the cellular phone near the passenger seat which
contained the phone numbers of Thornton’s girlfriend and
attorney; Thornton’s proximity to the SUV at the gas
station with its engine running and the lights on; and, the
empty packet of cigars in the SUV and the fresh pack
No. 05-1465 9
Thornton had on his person after leaving the gas station.
Thornton is also tied quite closely to the gun by the pres-
ence of his fingerprint on the magazine found in it. From
these facts a rational jury could have concluded that
Thornton knowingly possessed the gun. After concluding
that he knowingly possessed the gun, the jury also could
have concluded that he knew the gun’s serial number had
been obliterated, given that one need only look at the gun
to attain that knowledge. See, e.g., United States v.
Tylkowski, 9 F.3d 1255, 1260-61 (7th Cir. 1993) (circum-
stantial evidence of defendant’s control over a box sufficient
to support the reasonable inference that he knew it con-
tained illegally converted machine guns with obliterated
serial numbers).
Third, we reject Thornton’s argument that the jury
instruction did not properly define possession. Whether an
instruction accurately states the law is an issue we re-
view de novo. United States v. Smith, 308 F.3d 726, 740 (7th
Cir. 2002). The portion of the instruction Thornton attacks
as defining the law too broadly—that defining joint
possession—accurately states the law because possession
may be joint, and nothing about the way the instruction
reads misstates that principle. See United States v. Kitchen,
57 F.3d 516, 521 (7th Cir. 1995) (citations omitted).
Fourth, there is no error in the judge’s ruling to exclude
the testimony of Officers Hooker and Mendiola, a ruling we
review for abuse of discretion. United States v. Aldaco, 201
F.3d 979, 985 (7th Cir. 2000). That proposed testimony—a
recounting by the officers of what others told them—would
have been nothing more than impermissible hearsay. See
Fed. R. Evid. 801, 802. The judge did not abuse his discre-
tion in excluding it.
10 No. 05-1465
B. Sentence
Thornton’s primary attack is that he should not have been
sentenced under the ACCA, but he also argues that his
sentence is unreasonable. There are three facets to his
argument that he was improperly sentenced under the
ACCA. We can easily reject the first: that the jury was
required to pass on the existence of all qualifying convic-
tions. See United States v. Stevens, 453 F.3d 963, 967 (7th
Cir. 2006) (noting that “Almendarez-Torres remains intact”);
United States v. Browning, 436 F.3d 780, 782 (7th Cir.
2006) (explaining that “the continued authority of
Almendarez-Torres is not for us to decide”); see also United
States v. Williams, 410 F.3d 397, 402 (7th Cir. 2005) (“[T]he
district court does not violate a defendant’s Sixth Amend-
ment right to a jury trial by making findings as to his
criminal record that exposes him to greater criminal penal-
ties.”) (citations omitted).
Thornton’s second argument, which we review for plain
error only, is that he cannot be sentenced as an armed
career criminal when the only evidence of his convictions—
particularly the 1990 burglary conviction—is the informa-
tion contained in the PSR. Thornton wants us to hold that
a judge must actually have before him or her the actual
records of previous convictions (state-court charging
documents, plea agreements, etc.) before finding a defen-
dant eligible for sentencing under the ACCA. In other
words, Thornton wants us to hold that the PSR’s description
of the relevant records is always insufficient to support a
finding that a defendant is eligible for sentencing under the
ACCA.
Thornton did not make this objection below. His only
objection relied upon the information in the PSR (as
opposed to challenging its sufficiency) and was that the
1990 burglary conviction had been amended from a residen-
tial burglary to a general burglary of a building
No. 05-1465 11
and therefore could not qualify under the ACCA.1 Moreover,
Thornton did not even raise this argument in his opening
brief. That brief only argues that reference to the charging
document alone does not ensure that Thornton was con-
victed of generic burglary (an issue we deal with below).
Normally, we do not consider arguments raised in reply.
United States v. LaShay, 417 F.3d 715, 719 (7th Cir. 2005)
(“Typically, arguments first raised in a reply brief are
considered waived.”) (citation omitted). In any event, we
will consider this argument for plain error. Fed. R. Crim. P.
1
We note that this argument appears to be based on the false
notion that only a residential burglary qualifies as a “violent
felony” for purposes of the ACCA. See Taylor v. United States, 495
U.S. 575, 593-94, 598 (1990) (rejecting the view that the ACCA
incorporates all the common law limitations of burglary, such as
a dwelling, in favor of a broader definition including unlawful
entry into “a building or other structure”) (citations omitted);
United States v. King, 62 F.3d 891, 896 (7th Cir. 1995) (explaining
that burglary of any building is sufficient to meet the definition of
generic burglary).
As Thornton’s counsel alluded to at the sentencing hearing, and
Thornton himself later argued in a pro se motion to reduce
sentence, United States v. Hicks, 122 F.3d 12 (7th Cir. 1997)
explains that only burglary “of a dwelling,” and not mere burglary
of a building, is sufficient to qualify as a “crime of violence” under
the career offender enhancement of U.S.S.G. § 4B1.1. But that is
because the definition of “crime of violence” in § 4B1.2 is specifi-
cally limited to “burglary of a dwelling.” The definition of “violent
felony” for purposes of the ACCA is not so limited, and includes
burglaries of buildings or structures. See 18 U.S.C.
§ 924(e)(2)(B)(ii); U.S. Sentencing Guidelines Manual § 4B1.4,
Application Note 1 (2004) (explaining that “[i]t is to be noted that
the definition[ ] of ‘violent felony’ . . . in 18 U.S.C. § 924(e)(2) [is]
not identical to the definition[ ] of ‘crime of violence’ . . . used in
§ 4B1.1.); see also Taylor, 495 U.S. at 593-94, 598; King, 62 F.3d
at 896.
12 No. 05-1465
52(b); United States v. Gray, 410 F.3d 338, 345 (7th Cir.
2005). To require relief, an error must be plain, affect
substantial rights, and also “seriously affect the fairness,
integrity or public reputation of judicial proceedings.” Gray,
410 F.3d at 345 (citations and quotations omitted).
The district court’s reliance on the PSR in this case is not
plain error. We have previously explained that it is not even
error for a court, when sentencing under the ACCA, to rely
on an unchallenged PSR when determining whether the
necessary qualifying convictions exist. See United States v.
Skidmore, 254 F.3d 635, 641 n.4 (7th Cir. 2001) (explaining
that “the PSR satisfied the government’s burden under 18
U.S.C. § 924(e)(1) to establish that [the defendant] had
three prior violent felony convictions” where the PSR was
unchallenged); United States v. Davenport, 986 F.2d 1047,
1048 (7th Cir. 1993) (finding no error where the court relied
on the PSR and did not consider charging documents while
sentencing under ACCA); United States v. Hudspeth, 42
F.3d 1015, 1019 n.6 (7th Cir. 1994) (en banc) (“A certified
record of conviction or a presentence investigation report, if
not challenged, will normally satisfy” the government’s
burden to show three prior violent felony convictions.)
(emphasis added) (citations omitted).
Even assuming reliance on the PSR was error, there is no
showing here that Thornton’s substantial rights have been
affected, and we see no reason to presume such prejudice
where its existence is easily discoverable by the defendant.
United States v. Olano, 507 U.S. 725, 735 (1993) (“Normally,
although perhaps not in every case, the defendant must
make a specific showing of prejudice to satisfy the ‘affecting
substantial rights’ prong of Rule 52(b).”). All Thornton
needed to do to show prejudice was retrieve the amended
criminal complaint from the 1990 burglary conviction. With
that document in hand, it would be easy for him to deter-
mine whether the PSR’s description of it was accurate. For
all we know, Thornton’s trial counsel may very well have
No. 05-1465 13
done this and concluded the PSR accurately recites Thorn-
ton’s conviction. Davenport, 986 F.2d at 1050 (positing that
it may be that “trial counsel obtained the charging papers,
recognized that they satisfy Taylor, and saw no point in
insisting that the record be padded with evidence adverse
to his client”).
Thornton’s third argument with regard to sentencing
under the ACCA is that even if we find no reversible error
in the district court’s reliance on the PSR, the information
therein is still insufficient to show that the 1990 burglary
conviction is a qualifying “violent felony.” See 18 U.S.C.
§ 924(e). It is undisputed that in 1990 Illinois had what
is called a “nongeneric” burglary statute. The distinctive
characteristic of a nongeneric burglary statute is that it
criminalizes unlawful entry into structures other than
buildings, such as cars, railroad cars, and boats. For
purposes of the ACCA, however, burglary is only a violent
felony if it is of the generic kind; that is, unlawful entry into
a building or other structure—boats or cars do not suffice.
Shepard v. United States, 544 U.S. 13, 15-16 (2005) (ex-
plaining that the ACCA “makes burglary a violent felony
only if committed in a building or enclosed space (‘generic
burglary’), not in a boat or motor vehicle.”).
The problem for courts applying the ACCA is what to do
with a conviction under a nongeneric burglary statute,
because it may be possible that the defendant was merely
convicted of burglarizing a car or boat and therefore not
subject to the enhancement. The Supreme Court initially
answered this question in the context of a conviction after
a jury trial, explaining that a court should determine
whether the relevant “charging paper and jury instructions
actually required the jury to find all the elements of generic
burglary in order to convict the defendant,” without delving
any further into the facts surrounding the conviction.
Taylor v. United States, 495 U.S. 575, 602 (1990). In
14 No. 05-1465
Shepard, the Court made clear this holding applies to guilty
pleas:
We hold that enquiry under the ACCA to determine
whether a plea of guilty to burglary defined by a
nongeneric statute necessarily admitted elements of the
generic offense is limited to the terms of the charging
document, the terms of a plea agreement or transcript
of colloquy between judge and defendant in which the
factual basis for the plea was confirmed by the defen-
dant, or to some comparable judicial record of this
information.
544 U.S. at 26 (emphasis added). The PSR in this case
makes clear that Thornton pled guilty to an amended
charge that he “committed the offense of burglary (a Class
2 felony) in that without authority, he knowingly entered a
building of another, [name and address omitted], with the
intent to commit a theft.” The PSR’s specific reference to the
“amended criminal complaint” dispels any doubt about
whether it relies on proper sources. Cf. United States v.
Blake, 415 F.3d 625, 629-30 (7th Cir. 2005) (remanding with
instructions that the sentencing judge be sure the “court
records” referred to in the PSR complied with Shepard for
purposes of applying the ACCA). And the issues raised by
Illinois’s nongeneric burglary statute are obviated by the
charge’s specific allegation of the elements of generic
burglary. Taylor, 495 U.S. at 598 (defining generic burglary
as “an unlawful or unprivileged entry into, or remaining in,
a building or other structure, with intent to commit a
crime”) (citations omitted). Thornton’s plea of guilty to this
charge is sufficient to show that the 1990 burglary convic-
tion is a violent felony for purposes of the ACCA.
Finally, we reject Thornton’s argument that his sentence
is unreasonable. He was sentenced within the applicable
Guidelines’ range, which gives rise to a presumption that
his sentence is reasonable. United States v. Mykytiuk, 415
No. 05-1465 15
F.3d 606, 608 (7th Cir. 2005). Thornton’s nitpicking of the
judge’s explanation gets him nowhere, especially where he
raised no substantial argument for a sentence outside of the
Guidelines range. See United States v. Spano, 447 F.3d 517,
519 (7th Cir. 2006). Thornton’s sentence is within
a properly calculated Guidelines range and he has not made
a showing of unreasonableness. Id. at 519-20.
III. CONCLUSION
Accordingly, Thornton’s convictions and sentence are
AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-12-06 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2999662/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted March 30, 2006
Decided August 30, 2006
Before
Hon. JOEL M. FLAUM, Chief Judge
Hon. DANIEL A. MANION, Circuit Judge
Hon. ANN CLAIRE WILLIAMS, Circuit Judge
Nos. 04-3341 & 05-2529
RAKZAN AUOB, et al., Petition for Review of Orders of the
Petitioners, Board of Immigration Appeals.
v.
Nos. A78-372-735, A78-372-736, A78-
ALBERTO R. GONZALES, 372-737, A78-372-738, A78-372-739,
Respondent. A78-372-740.
ORDER
Rakzan Auob, a native and citizen of Iraq, applied for asylum and other relief
in 2000. She listed her husband and four children as derivative beneficiaries. The first
hearing on the merits took place on December 5, 2002. The hearing was not completed
that day, and the immigration judge continued the matter until May 20, 2003. In the
interim, in March 2003, Saddam Hussein was removed from power in Iraq. On May
9, 2003, prior to the resumption of the hearing, the petitioners moved for a
continuance, asserting that Hussein’s removal had substantially changed the reasons
for their asylum claim. The immigration judge denied the motion for a continuance.
After the petitioners stated that they did not wish to go forward if their request for a
continuance was denied, the immigration judge deemed their requests for asylum,
Nos. 04-3341 & 05-2929 Page 2
withholding of removal, and relief under the Convention Against Torture abandoned.
The Board of Immigration Appeals affirmed the immigration judge’s decision.
Two months later, on October 10, 2004, Auob was baptized a Christian. On
November 8, 2004, the petitioners filed a motion to reopen with the Board based on
this new development. The Board denied the motion to reopen, and, on May 3, 2005,
it denied the petitioners’ subsequent motion to reconsider the denial of their motion to
reopen.
The petitioners then filed a petition for review with this court, contending: (1)
the immigration judge erred when it denied the petitioners’ motion for a continuance;
(2) the Board erred when it denied their motion to reopen; and (3) the Board erred
when it denied the petitioners’ motion for reconsideration. The government’s brief
urged us to deny the petition for review.
In addition to filing a petition for review with this court, the petitioners filed a
motion to reopen with the Board, alleging that country conditions in Iraq had changed
sufficiently to warrant a reopening of their case. On July 26, 2006, the Board granted
the petitioners’ motion to reopen. According to the Board’s opinion, the Department
of Homeland Security had opposed the motion to reopen, on the ground that the motion
exceeded the time and number restrictions for filing motions to reopen under 8 C.F.R.
§ 1003.2(c). The Board, however, found the petitioners had established that conditions
in Iraq had materially changed in a manner sufficient to support the reopening of their
proceedings. As a result, it granted the motion to reopen and remanded the matter to
the immigration judge for further proceedings consistent with the Board’s opinion and
the entry of a new decision.
Shortly thereafter, the government filed a motion to dismiss the instant petition
for review for lack of jurisdiction.* This court may only review final orders of removal.
See, e.g., 8 U.S.C. § 1252(a)(1); Hashish v. Gonzales, 442 F.3d 572, 574 (7th Cir. 2006).
Consequently, when the Board of Immigration Appeals reopens a matter, “the effect
is to render the decision nonreviewable.” Ren v. Gonzales, 440 F.3d 446, 449 (7th Cir.
2006); see also Bronisz v. Ashcroft, 378 F.3d 632, 637 (7th Cir. 2006) (“We . . . hold that
the grant of a motion to reopen vacates the previous order of deportation or removal
and reinstates the previously terminated immigration proceedings.”); see also Lopez-
Ruiz v. Ashcroft, 298 F.3d 886, 887 (9th Cir. 2002) (dismissing petition for lack of
jurisdiction after Board of Immigration Appeals granted motion to reopen). Not only
is dismissal of the petition for review compelled by our precedent, but it is the sensible
result in this case. Conditions in Iraq have changed substantially since the petitioners
filed their initial request for relief, and they warrant a full exploration by an
immigration judge into whether the petitioners are entitled to relief.
*
We allowed the petitioners an opportunity to respond to the government’s
motion to dismiss, but the petitioners have not submitted a response.
Nos. 04-3341 & 05-2929 Page 3
The petition for review is DISMISSED for lack of jurisdiction. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2999572/ | UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted July 21, 2006
Decided August 1, 2006
Before
Hon. Joel M. Flaum, Chief Judge
Hon. Daniel A. Manion, Circuit Judge
Hon. Terence T. Evans, Circuit Judge
No. 03-3113
United States of America, Appeal from the United States District
Plaintiff-Appellee, Court for the Northern District
of Illinois, Eastern Division
v.
No. 99 CR 559
Ruben Arroyo,
Defendant-Appellant. Wayne R. Andersen,
Judge.
ORDER
Defendant-appellant Ruben Arroyo was convicted by jury of possession with
intent to distribute heroin and conspiracy to possess with intent to distribute heroin
in violation of 21 U.S.C. §§ 841 and 846. At Arroyo’s sentencing hearing, the
government presented evidence that Arroyo had also distributed large quantities of
cocaine. The district court considered both the heroin and cocaine transactions in
applying the federal sentencing guidelines, and arrived at a sentence of 360 months’
imprisonment and five years of supervised release. Arroyo appealed his conviction and
sentence. In United States v. Arroyo, 406 F.3d 881 (7th Cir. 2005), we affirmed
Arroyo’s conviction, but ordered a limited remand pursuant to the procedures set forth
in United States v. Paladino, 401 F.3d 471 (7th Cir. 2005), to permit the district court
to determine if it would have imposed the same sentence had it known at the time of
sentencing that the guidelines were advisory.
No. 03-3113 Page 2
On remand, the district court determined that it likely would not impose the
same sentence under an advisory guidelines regime. Instead, the district court
“probably would impose a sentence that is modestly under the guideline range.” The
district court properly noted that, pursuant to 18 U.S.C. § 3553(a), a sentence should
be “‘sufficient but not greater than necessary,’ taking into account the circumstances
of the offense, the history and characteristics of the defendant, and the need for the
sentence imposed to reflect the seriousness of the offense, to afford adequate deterrence
to criminal conduct and to protect the public from further crimes by the defendant.”
The district court determined that, given the defendant’s age of 42 years old and his
criminal history, there is a “greatly reduced” chance that defendant would engage in
further criminal activity upon release from prison. The district court also concluded
that a modestly reduced sentence would adequately reflect the seriousness of the crime
and provide deterrence to criminal activity.
In response to the district court’s order on remand, the government filed a
position statement indicating that it does not object to a full remand for a new
sentencing proceeding. Accordingly, we VACATE Arroyo’s original sentence and
REMAND this matter to the district court for resentencing. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4555627/ | Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
08/14/2020 08:08 AM CDT
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Nebraska Supreme Court Advance Sheets
306 Nebraska Reports
BRUMBAUGH v. BENDORF
Cite as 306 Neb. 250
Kirk E. Brumbaugh, appellant, v.
Meegan Bendorf, appellee.
___ N.W.2d ___
Filed June 26, 2020. No. S-19-732.
1. Attorney Fees: Appeal and Error. A trial court’s decision awarding or
denying attorney fees will be upheld absent an abuse of discretion.
2. Costs: Appeal and Error. The decision of a trial court regarding taxing
of costs is reviewed for an abuse of discretion.
3. Federal Acts: Claims: Courts. A state court may use procedural rules
applicable to civil actions in the state court unless otherwise directed by
a federal act, but substantive issues concerning a claim under the act are
determined by the provisions of the act and interpretive decisions of the
federal courts construing the act.
4. Judgments: Appeal and Error. As a general proposition, an appellate
court does not require a district court to explain its reasoning.
5. Statutes: Words and Phrases. The word “may” when used in a statute
will be given its ordinary, permissive, and discretionary meaning unless
it would manifestly defeat the statutory objective.
6. Intercepted Communications: Courts: Attorney Fees. Whether rea-
sonable attorney fees should be awarded under 18 U.S.C. § 2520 (2018)
or Neb. Rev. Stat. § 86-297 (Reissue 2014) is addressed to the trial
court’s discretion.
7. Attorney Fees. When an attorney fee is authorized, the amount of the
fee is addressed to the trial court’s discretion.
8. ____. If an attorney seeks a statutory attorney fee, that attorney should
introduce at least an affidavit showing a list of the services rendered, the
time spent, and the charges made.
9. ____. An award of attorney fees involves consideration of such factors
as the nature of the case, the services performed and results obtained,
the length of time required for preparation and presentation of the case,
the customary charges of the bar, and general equities of the case.
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BRUMBAUGH v. BENDORF
Cite as 306 Neb. 250
10. Statutes. Statutory language is to be given its plain and ordinary
meaning.
11. Intercepted Communications: Costs. Neb. Rev. Stat. § 25-1708
(Reissue 2016) does not apply to a discretionary award of reasonable
litigation expenses under either 18 U.S.C. § 2520 (2018) or Neb. Rev.
Stat. § 86-297 (Reissue 2014).
12. Appeal and Error. An appellate court is not obligated to engage in an
analysis that is not necessary to adjudicate the case and controversy
before it.
Appeal from the District Court for Douglas County:
Kimberly Miller Pankonin, Judge. Affirmed.
Karl von Oldenburg, of BQ & Associates, P.C., L.L.O., for
appellant.
Karen S. Nelson, of Carlson & Burnett, L.L.P., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Cassel, J.
INTRODUCTION
After Kirk E. Brumbaugh obtained a jury verdict for less
than the statutory minimum, he moved for attorney fees autho-
rized but not mandated by statute. The district court denied
the request. On appeal, we decline Brumbaugh’s invitation to
abandon our longstanding procedure and to instead require that
a trial court provide an explanation of its reasons regarding a
fee decision. Finding no abuse of discretion, we affirm the dis-
trict court’s judgment awarding no fees or costs.
BACKGROUND
Complaint and Judgment
Brumbaugh sued Meegan Bendorf (and Bank of America,
which was dismissed with prejudice after trial) under fed-
eral 1 and state 2 wiretapping statutes and under Neb. Rev.
1
18 U.S.C. § 2520 (2018).
2
Neb. Rev. Stat. § 86-297 (Reissue 2014).
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BRUMBAUGH v. BENDORF
Cite as 306 Neb. 250
Stat. § 20-203 (Reissue 2012). The relief requested in the
complaint included damages, injunctive relief, attorney fees,
and costs.
The allegations of the complaint arose out of Bendorf’s
interception of Brumbaugh’s Bank of America online credit
card account records. The complaint alleged that during the
pendency of divorce and child custody modification proceed-
ings between Brumbaugh and Bendorf, Bendorf requested that
Bank of America send Brumbaugh’s credit card statements
and account activity to an email address that she maintained.
According to Bendorf’s responsive pleading, the email account
was a joint account that she created either before or during
her marriage to Brumbaugh. She affirmatively alleged that
Brumbaugh’s damages were caused by the actions or inactions
of himself or a third party or by intervening causes over which
she had no control.
The matter proceeded to a jury trial. The court instructed
the jury that if it found in favor of Brumbaugh, he was entitled
to recover “[s]tatutory damages of whichever is the greater of
$100.00 per day, for each day of violation, or $10,000.00.” The
jury found that Brumbaugh met his burden of proof as to both
the federal and state wiretapping claims and awarded damages
of $4,800. Brumbaugh promptly filed a motion for judgment
notwithstanding the verdict and a motion to alter or amend,
both based on the jury’s award of damages. The court sus-
tained the motions, entering judgment in favor of Brumbaugh
on both wiretapping claims and awarding statutory damages
of $10,000.
Attorney Fees
Brumbaugh subsequently filed a motion for attorney fees.
He alleged that he was limiting his request for attorney fees
to those related to Bendorf’s portion of the case only and that
he was not requesting fees for any time spent correspond-
ing with Bendorf’s counsel or in connection with inspec-
tion of Bendorf’s computers. The motion requested an order
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BRUMBAUGH v. BENDORF
Cite as 306 Neb. 250
“granting attorney fees and costs in this matter in the amount
of $18,551.08 for Attorney [2] (including costs) and $6,250.00
for Attorney [1], for a total of $24,801.08.”
During a hearing on the motion, the court received three
exhibits offered by Brumbaugh. The first exhibit was Attorney
2’s affidavit, which attached “[n]ot all of [the legal time he
spent on the matter], but some of it.” It contained itemized
billing amounting to $16,850 and itemized costs of $1,701.08
for a total of $18,551.08. The second exhibit was an attorney
fee affidavit by Attorney 1, who had commenced the action
on Brumbaugh’s behalf. It accounted for 21 hours of his
time at an hourly rate of $250, for a total request of $5,250.
Brumbaugh also offered an affidavit prepared by Bendorf’s
counsel, which showed “the time she put into it up to the point
of trial.” According to the exhibit, Bendorf had incurred attor-
ney fees of $20,894.80.
In argument during the hearing, Brumbaugh’s attorney
stated that he tried to limit his fee request to time addressing
the claims against Bendorf and not Bank of America, that he
was not requesting $4,500 relating to digital forensics, and that
he “truly narrowed down the times.” Later, the court entered
an order stating: “The Court finds that [Brumbaugh’s] Motion
for Attorney Fees should be and is Denied. Case disposed of.”
Brumbaugh appealed from the denial of his motion for attor-
ney fees, and we moved the case to our docket. 3 As authorized
by court rule, we submitted the case without oral argument. 4
ASSIGNMENTS OF ERROR
Brumbaugh assigns that the district court erred in (1) failing
to provide a concise and clear explanation of why it denied
attorney fees and costs, (2) failing to award any attorney fees
pursuant to § 2520 and § 86-297, and (3) failing to address or
award costs to him as prevailing party.
3
See Neb. Rev. Stat. § 24-1106(3) (Cum. Supp. 2018).
4
See Neb. Ct. R. App. P. § 2-111(B)(1) (rev. 2017).
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BRUMBAUGH v. BENDORF
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STANDARD OF REVIEW
[1] A trial court’s decision awarding or denying attorney fees
will be upheld absent an abuse of discretion. 5
[2] The decision of a trial court regarding taxing of costs is
reviewed for an abuse of discretion. 6
ANALYSIS
Explanation of Fee Award Not Required
Brumbaugh sought attorney fees authorized by both a fed-
eral 7 and a state 8 statute. The district court denied the request
without explanation. An initial issue is whether federal or state
law controls in this state court proceeding.
Brumbaugh directs our attention to federal case law call-
ing for an explanation of reasons for an attorney fee award. In
connection with attorney fees under 42 U.S.C. § 1988 (2012),
the U.S. Supreme Court emphasized that the trial court has
discretion to determine the amount of attorney fees to award
and stated:
It remains important, however, for the district court to
provide a concise but clear explanation of its reasons for
the fee award. When an adjustment is requested on the
basis of either the exceptional or limited nature of the
relief obtained by the plaintiff, the district court should
make clear that it has considered the relationship between
the amount of the fee awarded and the results obtained. 9
The Supreme Court later repeated the importance of an
explanation for fee awards under § 1988: “It is essential that
5
State ex rel. Peterson v. Creative Comm. Promotions, 302 Neb. 606, 924
N.W.2d 664 (2019). See, also, Morford v. City of Omaha, 98 F.3d 398 (8th
Cir. 1996).
6
Millard Gutter Co. v. American Family Ins. Co., 300 Neb. 466, 915
N.W.2d 58 (2018).
7
§ 2520.
8
§ 86-297.
9
Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 76 L. Ed. 2d 40
(1983).
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BRUMBAUGH v. BENDORF
Cite as 306 Neb. 250
the judge provide a reasonably specific explanation for all
aspects of a fee determination, including any award of an
enhancement. Unless such an explanation is given, adequate
appellate review is not feasible . . . .” 10 Specifically with
respect to fees under § 2520, the Eighth Circuit has stated that
the judge should provide an explanation of the reasons for a
fee award. 11
State courts are bound by the U.S. Supreme Court’s inter-
pretation of federal statutes. 12 While our research uncovered
no U.S. Supreme Court case addressing § 2520, we recognize
that federal substantive law governs the merits of the fed-
eral claim.
[3] But the same is not true for procedures that must be
followed in state court. “‘The general rule, “bottomed deeply
in belief in the importance of state control of state judicial
procedure, is that federal law takes the state courts as it finds
them.” . . .’” 13 In the context of disposing of a claim under
a different federal act, 14 we stated that a state court may use
procedural rules applicable to civil actions in the state court
unless otherwise directed by the federal act, but substantive
issues concerning a claim under the act are determined by the
provisions of the act and interpretive decisions of the federal
courts construing the act. 15
[4] Nothing in the text of § 2520(b) or § 86-297(2) requires
any findings regarding attorney fees. As a general proposi-
tion, this court does not require a district court to explain its
10
Perdue v. Kenny A., 559 U.S. 542, 558, 130 S. Ct. 1662, 176 L. Ed. 2d 494
(2010).
11
See Bess v. Bess, 929 F.2d 1332 (8th Cir. 1991).
12
Gillpatrick v. Sabatka-Rine, 297 Neb. 880, 902 N.W.2d 115 (2017).
13
Johnson v. Fankell, 520 U.S. 911, 919, 117 S. Ct. 1800, 138 L. Ed. 2d 108
(1997).
14
Federal Employers’ Liability Act, 45 U.S.C. §§ 51 through 60 (2012).
15
See Ballard v. Union Pacific RR. Co., 279 Neb. 638, 781 N.W.2d 47
(2010).
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reasoning. 16 A statute in our civil procedure code provides for
specific findings in certain circumstances, but it requires them
only upon a party’s request. 17 And Brumbaugh did not request
specific findings. Unless a statute requires specific findings or
we have mandated them as a matter of case law, such findings
are not required. 18 Brumbaugh cited no Nebraska authority for
the proposition that specific findings are required in awarding
attorney fees. The only Nebraska case he cited in this regard
was a Nebraska Court of Appeals decision affirming a trial
court’s judgment that denied attorney fees without making
explicit findings. 19
The federal court decisions calling for an explanation of
an attorney fee award is a matter of federal procedure. This
is not a situation where the difference between our general
practice of not requiring specific findings and the federal case
law calling for an explanation of a fee award would produce a
different ultimate disposition. 20 We conclude the federal proce-
dure does not apply in this state court civil action to either the
federal claim or the state claim of Brumbaugh for fees under
the wiretapping statutes. We decline Brumbaugh’s invitation to
require trial courts to provide an explanation of an award of
attorney fees.
Denial of Attorney Fees
[5,6] There is no dispute that attorney fees are discretion-
ary under both the federal and state statutes. The federal
statute states that any person “whose wire, oral, or electronic
communication is intercepted, disclosed, or intentionally
16
Strasburg v. Union Pacific RR. Co., 286 Neb. 743, 839 N.W.2d 273
(2013).
17
See Neb. Rev. Stat. § 25-1127 (Reissue 2016).
18
Becher v. Becher, 299 Neb. 206, 908 N.W.2d 12 (2018). See, also,
Strasburg v. Union Pacific RR. Co., supra note 16.
19
See Model Interiors v. 2566 Leavenworth, LLC, 19 Neb. App. 56, 809
N.W.2d 775 (2011).
20
See Johnson v. Fankell, supra note 13.
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used . . . may in a civil action recover . . . such relief as
may be appropriate.” 21 The state statute reverses the order
of the words “oral” and “electronic,” but is otherwise identi-
cal to § 2520(a), particularly in both phrases using the word
“may.” 22 The word “may” when used in a statute will be given
its ordinary, permissive, and discretionary meaning unless it
would manifestly defeat the statutory objective. 23 Both stat-
utes then provide that appropriate relief for an action under
the respective section includes reasonable attorney fees. 24 But
neither statute mandates an award of such fees. Brumbaugh
concedes that in both statutes, “the attorney [fee] award
provision is permissive and not mandatory.” 25 Because we
agree, we hold that whether reasonable attorney fees should
be awarded under § 2520 or § 86-297 is addressed to the trial
court’s discretion.
[7] When an attorney fee is authorized, the amount of
the fee also is addressed to the trial court’s discretion. 26
Because discretion is involved, a trial court’s decision award-
ing or denying attorney fees will be upheld absent an abuse of
discretion. 27
[8] We have generally said that if an attorney seeks a statu-
tory attorney fee, that attorney should introduce at least an
affidavit showing a list of the services rendered, the time
spent, and the charges made. 28 We have cautioned that “[l]iti-
gants who do not file an affidavit or present other evidence
21
§ 2520(a) (emphasis supplied).
22
See § 86-297(1).
23
Holloway v. State, 293 Neb. 12, 875 N.W.2d 435 (2016).
24
See, § 2520(b)(3); § 86-297(2)(c).
25
Brief for appellant at 11.
26
See ACI Worldwide Corp. v. Baldwin Hackett & Meeks, 296 Neb. 818, 896
N.W.2d 156 (2017).
27
Cisneros v. Graham, 294 Neb. 83, 881 N.W.2d 878 (2016). See, also,
Morford v. City of Omaha, supra note 5.
28
ACI Worldwide Corp. v. Baldwin Hackett & Meeks, supra note 26.
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risk the loss of attorney fees, because of the difficulty of dis-
cerning such information from the record alone.” 29 Here, both
of Brumbaugh’s attorneys filed affidavits in support of the
fee request.
Brumbaugh argues that his attorneys followed “good ‘billing
judgment’” by limiting his billing to only the successful claim
and for “reduc[ing] the billing on the successful claim to bill-
ing for actual legal process.” 30 We note that the fee affidavits
of Brumbaugh’s attorneys do not show what the total fees were
before deductions for the portion of the case against Bank
of America.
[9] An award of attorney fees involves consideration of
such factors as the nature of the case, the services performed
and results obtained, the length of time required for prepara-
tion and presentation of the case, the customary charges of
the bar, and general equities of the case. 31 There is nothing in
our record to suggest that the district court did not consider
these factors.
We are mindful that the district court had a far greater
understanding of the litigation involved here—it was involved
from commencement of the case and ultimately conducted a
jury trial. In contrast, our record is limited to filings in the
transcript—over 400 pages worth—and a bill of exceptions
containing only the hearing on attorney fees. The bill of excep-
tions excludes all pretrial proceedings, the jury trial record,
and all other posttrial proceedings. What we can gather from
the transcript is that Brumbaugh and Bendorf were formerly
married, that this action was drawn out over nearly 3 years,
and that the jury believed Brumbaugh was entitled to damages
of only $4,800, which award the court increased to $10,000—
the statutory minimum under § 2520(c)(2) and § 86-297(3)(b).
In other words, while Brumbaugh obtained a jury verdict in
29
Garza v. Garza, 288 Neb. 213, 221, 846 N.W.2d 626, 633 (2014).
30
Brief for appellant at 12.
31
ACI Worldwide Corp. v. Baldwin Hackett & Meeks, supra note 26.
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his favor, it was less than half of the minimum damages man-
dated by both statutes (despite jury instructions laying out
Brumbaugh’s right to statutory damages). On this record, we
cannot say that the district court abused its discretion in award-
ing no attorney fees.
Costs
Brumbaugh also argues that the district court abused its
discretion in failing to address and award costs. The federal
statute and the state statute each allow as relief the award of
“other ligation costs reasonably incurred.” 32
[10,11] Brumbaugh directs our attention to a Nebraska stat-
ute stating “costs shall be allowed,” 33 but the statute is not
applicable here. The statute states: “Where it is not otherwise
provided by this and other statutes, costs shall be allowed of
course to the plaintiff . . . upon a judgment in favor of the
plaintiff, in actions for the recovery of money only or for the
recovery of specific real or personal property.” 34 Statutory lan-
guage is to be given its plain and ordinary meaning. 35 Here,
§ 2520 and § 86-297 “otherwise provide[]” 36 by making the
costs discretionary. We hold that § 25-1708 does not apply to
a discretionary award of reasonable litigation expenses under
either § 2520 or § 86-297. We cannot say that the district court
abused its discretion by not awarding litigation costs.
Acceptance of Benefits
[12] Bendorf argues that Brumbaugh may not prosecute the
appeal, because he has accepted the benefit of the judgment.
According to a supplemental transcript, Bendorf paid $5,000
toward the judgment through the clerk of the district court
32
See, § 2520(b)(3); § 86-297(2)(c).
33
Neb. Rev. Stat. § 25-1708 (Reissue 2016).
34
Id. (emphasis supplied).
35
Brown v. State, 305 Neb. 111, 939 N.W.2d 354 (2020).
36
§ 25-1708.
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in June 2019 and the check was deposited into Brumbaugh’s
account. Having rejected the arguments raised by Brumbaugh,
it is not necessary to address whether he waived the right to
appeal by accepting partial payment of the judgment. An appel-
late court is not obligated to engage in an analysis that is not
necessary to adjudicate the case and controversy before it. 37
CONCLUSION
We conclude that the district court did not abuse its discre-
tion in declining to award attorney fees or costs to Brumbaugh.
Accordingly, we affirm.
Affirmed.
37
Saylor v. State, 304 Neb. 779, 936 N.W.2d 924 (2020). | 01-03-2023 | 08-14-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/3001295/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-4270
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
FERNANDO FIGUEROA-ESPANA,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 06 CR 48—David F. Hamilton, Judge.
____________
ARGUED SEPTEMBER 25, 2007—DECIDED DECEMBER 28, 2007
____________
Before EASTERBROOK, Chief Judge, and BAUER and
KANNE, Circuit Judges.
BAUER, Circuit Judge. After the district court denied
his motion to suppress evidence, Fernando Figueroa-
Espana pleaded guilty to one count of possession with
intent to distribute five kilograms of cocaine in violation
of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(ii). He reserved
the right to appeal the district court’s denial of his
motion to suppress and his sentence. For the following
reasons, we affirm.
2 No. 06-4270
I. Background
At 1:20 p.m. on March 7, 2006, Indiana State Trooper
Dennis Wade observed a Nissan pickup truck tailgating
another vehicle on Interstate 65 near Indianapolis,
Indiana. Trooper Wade pulled over the truck, approached
the driver, Figueroa-Espana, and told him that he was
driving too close to the vehicle in front of him. Figueroa-
Espana indicated that he did not speak English. Trooper
Wade asked, in a mixture of English and Spanish, for
Figueroa-Espana’s driver’s license. Figueroa-Espana
produced a document which Trooper Wade thought to
be an international driver’s license, but was actually a
voter registration card. Trooper Wade asked, again mixing
English and Spanish, if Figueroa-Espana had a United
States driver’s license. Figueroa-Espana responded that
he did not. Trooper Wade then asked for the “rejistro,”
which he understood to mean “registration.” Figueroa-
Espana produced an expired insurance document in the
name of another individual.
At this point, Trooper Wade was joined by Trooper Dean
Wildauer. Trooper Wade explained to Trooper Wildauer
the language difficulties with Figueroa-Espana, and
suggested that Trooper Wildauer, whose Spanish was
stronger, might have more luck. Trooper Wildauer ap-
proached the truck and asked Figueroa-Espana about
the ownership of the vehicle. Figueroa-Espana initially
stated that he owned the truck. When Trooper Wildauer
pointed out that the insurance document indicated that
he was not the owner, Figueroa-Espana audibly sighed
and, according to Trooper Wildauer, became nervous.
Figueroa-Espana then said that the truck belonged to his
friend, but he could not recall the friend’s name. Figueroa-
Espana later stated that the truck belonged to his boss.
During the course of this conversation, Trooper Wildauer
asked Figueroa-Espana to get out of the truck, and the
conversation continued in front of Trooper Wade’s cruiser.
No. 06-4270 3
Meanwhile, Trooper Wade returned to his cruiser to
prepare a warning ticket and run the truck’s license
plates. While in the car, Trooper Wade turned on a video
camera attached to his cruiser. The camera recorded
video and audio of the remainder of the conversation.
Trooper Wildauer asked Figueroa-Espana about his
immigration status and his ultimate destination. Figueroa-
Espana said that he had been in the United States
for three years, and that he was in the country illegally.
He said that he was headed to Indianapolis for a job, but
he could not give a specific address. He stated that the
job involved laying asphalt, but Trooper Wildauer noted
that Figueroa-Espana did not appear to be traveling with
tools or clothes that would suggest this type of work.
During the questioning, Trooper Wildauer observed
Figueroa-Espana becoming increasingly nervous, hesitat-
ing before answering questions and uttering multiple
audible sighs.
Trooper Wade then left his cruiser, issued Figueroa-
Espana a warning ticket, and told him he was “free to go.”
As Figueroa-Espana walked back to his truck, Troopers
Wade and Waldauer decided that they wanted more
information. Trooper Wade honked the horn of his cruiser,
which briefly activated the siren. Figueroa-Espana turned
back, and Trooper Wildauer called out to him, in Spanish:
“Friend, come here please, I have more questions, okay?”
Trooper Wildauer then asked if Figueroa-Espana had any
guns, drugs, or large sums of money in the truck, and
Figueroa-Espana responded that he did not. Trooper
Wildauer then asked if he could search the truck, and
Figueroa-Espana said that he could. Trooper Wildauer
informed Figueroa-Espana that he could refuse the
search, saying in Spanish, “[y]ou don’t have to.” Figueroa-
Espana acknowledged this, and allowed the search. During
the search, the troopers discovered two electronically-
4 No. 06-4270
controlled hidden compartments in the truck which
contained approximately ten kilograms of cocaine.
After being arrested, transported to a police station, and
read his Miranda rights, Figueroa-Espana confessed to a
bilingual Drug Enforcement Agent that he knowingly
transported the drugs. On March 22, 2006, Figueroa-
Espana was charged by indictment with possession with
intent to distribute five kilograms or more of cocaine,
in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(ii).
Figueroa-Espana filed a motion to suppress the drugs
recovered from the search of the truck. On August 23,
2006, the district court held a hearing on the motion. The
district court denied Figueroa-Espana’s motion; shortly
thereafter, Figueroa-Espana entered a conditional plea
of guilty to the charge in the indictment. On November 21,
2006, the district court sentenced Figueroa-Espana to 176
months’ imprisonment and 5 years’ supervised release.
This appeal followed.
II. Discussion
Figueroa-Espana argues that the district court (1) erred
in denying his motion to suppress evidence uncovered
after an unconstitutional search; and (2) improperly con-
sidered the fact that he made a motion to suppress in
calculating his sentence. We address these issues in turn.
A. Motion to Suppress Evidence
Figueroa-Espana raises three challenges to the dis-
trict court’s denial of his motion to suppress. First, he
contends that he was detained by the troopers in violation
of his Fourth Amendment rights, and that the evidence
obtained must be excluded. Second, he contests the find-
ing that he did not have a protected Fourth Amendment
No. 06-4270 5
interest in the truck that would allow him to challenge
the search. Finally, he argues that the court erred in
holding that, even if he did have a protected Fourth
Amendment interest, he consented to the search. This
court reviews a district court’s legal determinations
made with respect to the suppression ruling de novo
and reviews factual determinations for clear error. United
States v. Riley, 493 F.3d 803, 808 (7th Cir. 2007).
1. The Detention of Figueroa-Espana
Figueroa-Espana argues that the encounter consisted
of two separate and legally distinguishable stops, the
second of which violated his Fourth Amendment rights.
The first stop, according to Figueroa-Espana, began with
the traffic stop and ended when Trooper Wade issued the
warning ticket and said he was “free to go.” The second
stop began when Trooper Wade honked the horn which
activated the siren, and Trooper Wildauer told Figueroa-
Espana, in Spanish, that he had more questions.
Figueroa-Espana rightly does not challenge the con-
stitutionality of the traffic stop. Officer Wade had prob-
able cause to stop the truck when he observed that the
truck was “more close[ ] than is reasonable and prudent”
to the car before it, in violation of Ind. Code § 9-21-8-14.
See Whren v. United States, 517 U.S. 806, 809-10, 116
S. Ct. 1769, 135 L. Ed. 2d 89 (1996) (finding that a police
officer may stop a vehicle when he has “probable cause to
believe that a traffic violation has occurred”). Rather,
Figueroa-Espana contends that once the troopers com-
pleted the traffic stop and informed him he was free to
leave, they had no reasonable basis to initiate a second
stop which was neither consensual nor supported by
reasonable suspicion of criminal conduct. Figueroa-Espana
argues that, under Wong Sun v. United States, 371 U.S.
471, 488, 83 S. Ct. 407, 9 L. Ed. 2d 441 (1963), any evid-
6 No. 06-4270
ence uncovered from this improper second encounter
should have been excluded as “fruit of the poisonous tree.”
The district court found that what Figueroa-Espana
labeled a “second stop” was actually a consensual encoun-
ter following the initial stop, and, therefore did not
implicate any Fourth Amendment rights. In the alterna-
tive, the court found that the interaction was a brief
investigatory stop, entirely justified by reasonable suspi-
cion of criminal activity based on Figueroa-Espana’s
behavior and responses to the troopers’ questions.
As a preliminary matter, we decline to adopt the analyti-
cal framework offered by Figueroa-Espana of his en-
counter with the Indiana troopers. The fact that the
troopers sought further information from Figueroa-Espana
after he was told he could leave does not render this
second phase of questions a new seizure. See United States
v. Rivera, 906 F.2d 319, 322-23 (7th Cir. 1990) (finding
that an officer’s request to search a car, after giving the
motorist a written warning, returning his identification,
and indicating that he was free to leave, was part of a
consensual encounter and not a new seizure). Rather, the
events following the issuance of the warning ticket are
more appropriately analyzed as either a consensual
encounter or an extension of the initial stop based on
reasonable suspicion.
A consensual encounter between an individual and a
law enforcement official does not trigger Fourth Amend-
ment scrutiny. United States v. Moore, 375 F.3d 580, 584
(7th Cir. 2004). In determining whether a stop is consen-
sual, relevant factors include whether the encounter
took place in public, whether the suspect consented to
speak to police, whether the officers told the suspect
that he was not under arrest and free to leave, whether
the suspect was moved to another area, the number of
officers present and whether they displayed weapons or
No. 06-4270 7
physical force. See United States v. Adamson, 441 F.3d
513, 520 (7th Cir. 2006). The district court, in finding
that the encounter was consensual, noted that Figueroa-
Espana was not under arrest, that the officers never
displayed their weapons or made threats of physical force,
and that he had just been told he was free to leave.
Figueroa-Espana offers little to disturb this finding,
arguing that the short “whoop” of the siren and the tone
of the troopers’ questions demonstrate that the encounter
was a seizure and not a consensual encounter.
In any event, even if the “whoop” of the siren and
the subsequent questions constituted a detention, such a
detention was part of an extension of the initial traffic
stop entirely justified by reasonable suspicion of criminal
activity. “A seizure that is justified solely by the inter-
est in issuing a warning ticket to the driver can become
unlawful if it is prolonged beyond the time reasonably
required to complete that mission.” Illinois v. Caballes,
543 U.S. 405, 407, 125 S. Ct. 834, 160 L. Ed. 2d 842 (2005).
However, information lawfully obtained during that peri-
od may provide the officer with reasonable suspicion of
criminal conduct that will justify prolonging the stop to
permit a reasonable investigation. United States v. Martin,
422 F.3d 597, 602 (7th Cir. 2005); United States v. Muriel,
418 F.3d 720, 725 (7th Cir. 2005). This court has empha-
sized that the length of detention following a traffic
stop based on probable cause must be reasonable. See
Muriel, 418 F.3d at 725; United States v. Carpenter, 406
F.3d 915, 916 (7th Cir. 2005); United States v. Childs,
277 F.3d 947, 954 (7th Cir. 2002) (en banc) (“What the
Constitution requires is that the entire process remain
reasonable.”).
Under the totality of the circumstances, the troopers
were wholly justified in prolonging the stop; Figueroa-
Espana’s statements and demeanor created reasonable
suspicion of criminal conduct. During the initial traffic
8 No. 06-4270
stop, Figueroa-Espana changed his story as to who
owned the truck, vacillating between himself, an unnamed
friend, and his boss. He provided conflicting informa-
tion regarding his destination. He failed to provide a
valid driver’s license or vehicle registration. He admitted
that he was in the United States illegally. Both troopers
testified that Figueroa-Espana appeared nervous during
their questioning.
Figueroa-Espana argues that each of these independent
factors has an innocent explanation, without reference
to the possession of drugs. Nevertheless, even when
innocent explanations exist for individual factors taken
separately, reasonable suspicion may arise when the
factors are considered together. See United States v.
Baskin, 401 F.3d 788, 793 (7th Cir. 2005) (“[B]ehavior
which is susceptible to an innocent explanation when
isolated from its context may still give rise to reason-
able suspicion when considered in light of all of the
factors at play.”); United States v. Finke, 85 F.3d 1275,
1280 (7th Cir. 1996) (finding that factors considered
separately may have innocent explanations, but give
rise to reasonable suspicion when viewed in combination).
In light all of the information available to the troopers
which was lawfully obtained during the course of the
initial traffic stop, it was not unreasonable for the
troopers to suspect that Figueroa-Espana was engaging
in criminal conduct. See Martin, 422 F.3d at 602. Nor
was it unreasonable for the troopers to further detain
Figueroa-Espana to investigate this suspicion. The exten-
sion of time after the issuance of the warning ticket was
anything but unreasonable; indeed, Trooper Wildauer
proceeded quite expeditiously, obtaining Figueroa-
Espana’s consent to search the truck within moments of
asking the additional questions. As such, the activation of
the siren and subsequent questions from Trooper Wildauer
did not constitute an unlawful detention of Figueroa-
Espana.
No. 06-4270 9
2. Protected Fourth Amendment Interest in the
Truck
Figueroa-Espana further contends that the district court
erred in finding that he lacked a protected Fourth Amend-
ment interest in the truck. The district court held that
because Figueroa-Espana was not the owner of the
vehicle and could not identify the owner, he had no
reasonable expectation of privacy in the vehicle and
therefore could not challenge the legality of the search.1
“Fourth Amendment rights are personal rights which . . .
may not be vicariously asserted.” United States v. Jackson,
189 F.3d 502, 507 (7th Cir. 1999) (internal quotations
omitted). We have recognized that a driver who does not
own a vehicle may still challenge a search of the vehicle.
United States v. Garcia, 897 F.2d 1413, 1418-19 (7th Cir.
1990). In order to determine whether a driver of a vehicle
may challenge a search, we apply a two-pronged test,
asking whether the defendant had a subjective and an
objective right to privacy. United States v. Haywood, 324
F.3d 514, 515-16 (7th Cir. 2003); United States v. Walker,
237 F.3d 845, 849 (7th Cir. 2001). To satisfy the subjec-
tive portion of the test, a defendant must show that he
“actually and subjectively” held an expectation of privacy.
Torres, 32 F.3d at 230. An objective expectation is one
that society recognizes as legitimate and reasonable.
1
The district court, the government, and Figueroa-Espana
address this issue as one of “standing” to contest the search.
However, “in determining whether a defendant is able to show
the violation of his (and not someone else’s) Fourth Amendment
rights, the ‘definition of those rights is more properly placed
within the purview of substantive Fourth Amendment law
than within that of standing.’ ” Minnesota v. Carter, 525 U.S. 83,
87-88, 119 S. Ct. 469, 142 L. Ed. 2d 373 (1998) (quoting Rakas v.
Illinois, 439 U.S. 128, 140, 99 S. Ct. 421, 58 L. Ed. 2d 387 (1978));
United States v. Brack, 188 F.3d 748, 755 n. 2 (7th Cir. 1999).
10 No. 06-4270
Haywood, 324 F.3d at 416 (citing Walker, 237 F.3d at 849).
The burden is on the defendant to establish that he has
a protected Fourth Amendment interest in the truck.
Jackson, 189 F.3d at 508 (citing United States v. Torres,
32 F.3d 225, 230 (7th Cir. 1994)).
Figueroa-Espana fails both prongs of the test. He
produced little evidence to suggest that he actually held
an expectation of privacy in the truck. During the traffic
stop, Figueroa-Espana could not affirmatively state how
he came to be behind the wheel of the truck, reciting three
contradictory stories. At the suppression hearing,
Figueroa-Espana was given a chance to state definitively
who owned the truck. Instead, he changed his story
again, testifying that he did not know who actually owned
the truck, and that he received the truck from “[a] person
whose name I don’t know.” Without evidence suggest-
ing that Figueroa-Espana was driving the truck with
someone else’s permission, he cannot establish that he
had a subjective expectation of privacy in the vehicle. Nor
can he establish an objective expectation of privacy. In
addition to being an unauthorized driver, Figueroa-Espana
failed to produce a valid driver’s license to either trooper.
He should not have been driving any vehicle, let alone
a truck of dubious origins, and therefore his objective
expectation of privacy in the truck was neither legitimate
nor reasonable. See Haywood, 324 F.3d at 516 (finding
that an unlicensed and unauthorized driver did not have
an objective expectation of privacy that society recognizes
as legitimate and reasonable). Accordingly, Figueroa-
Espana lacks a protected Fourth Amendment interest
that would allow him to challenge the search of the truck.
3. Consent to Search the Truck
Assuming that Figueroa-Espana did have a protected
Fourth Amendment interest, his challenge would be short-
No. 06-4270 11
lived, as the district court properly found that he con-
sented to the search. The Fourth Amendment accommo-
dates warrantless searches when law enforcement officials
receive voluntary consent to search. Schneckloth v.
Bustamonte, 412 U.S. 218, 219, 93 S. Ct. 2041, 36 L. Ed. 2d
854 (1973); United States v. Sandoval-Vasquez, 435 F.3d
739, 744 (7th Cir. 2006). The government bears the bur-
den of proving by a preponderance of the evidence that
consent was freely and voluntarily given. Sandoval-
Vasquez, 435 F.3d at 744. Whether consent is voluntary
is a question of fact, dependent upon the totality of the
circumstances. Schneckloth, 412 U.S. at 227, 93 S. Ct. 2041;
Sandoval-Vasquez, 435 F.3d at 744. We review a dis-
trict court’s finding that a defendant voluntarily con-
sented to a search for clear error. United States v. Santi-
ago, 428 F.3d 699, 704 (7th Cir. 2005). In reviewing
the court’s finding, we must recall that “a determination
of voluntariness does not ride on the presence or absence
of a single controlling factor.” United States v. Johnson,
495 F.3d 536, 541 (7th Cir. 2007) (citation omitted). Among
the factors to be considered are: (1) the person’s age,
intelligence, and education; (2) whether he was advised of
his constitutional rights; (3) how long he was detained
before he gave his consent; (4) whether his consent was
immediate, or was prompted by repeated requests by the
authorities; (5) whether any physical coercion was used;
and (6) whether the individual was in police custody
when he gave his consent. Santiago, 428 F.3d at 704-05.
The government presented ample evidence to demon-
strate that Figueroa-Espana freely and voluntarily con-
sented to the search of his truck. The troopers did not
coerce him, physically or otherwise, to agree to the
search. His consent was immediate, prompted by a single
question by Trooper Wildauer. Trooper Wildauer informed
Figueroa-Espana that he was not required to allow the
search of the truck, but Figueroa-Espana consented
12 No. 06-4270
anyway. Nothing in the record suggests that his age (forty-
one) or intelligence rendered him unable to understand
or comprehend the questions regarding consent. Con-
sidering the totality of the circumstances surrounding
Figueroa-Espana’s consent, we cannot say the district
court clearly erred in finding that consent was volun-
tarily and freely given.
Figueroa-Espana focuses on the insufficiency of Trooper
Wildauer’s Spanish-speaking skills in seeking consent. The
district court observed the videotape and concluded that
though Officer Wildauer’s Spanish was accented and
flawed, Figueroa-Espana understood the questions and
responded accordingly. Officer Wildauer testified that
he could sufficiently communicate with Figueroa-Espana
on the key issues, and the district court found this testi-
mony credible. The district court almost entirely dis-
credited Figueroa-Espana’s testimony on this matter;
Figueroa-Espana stated in an affidavit filed for the
suppression hearing that “[f]rom the time of my stop until
I was taken to the police station, the officers spoke to me
only in English.” Unfortunately for Figueroa-Espana, the
video and audio recording of the encounter belied this
statement. Determinations on the credibility of wit-
nesses are the purview of the district court, United
States v. Fields, 371 F.3d 910, 914 (7th Cir. 2004), and we
see no reason to disturb the district court’s findings here.
Figueroa-Espana finally contends that any consent
given to the troopers was insufficient to “purge the taint”
of what he argues was an illegal seizure of his person, see
Brown v. Illinois, 422 U.S. 590, 603-04, 95 S. Ct. 2254, 45
L. Ed. 2d 416 (1975); United States v. Green, 111 F.3d 515,
521 (7th Cir. 1997); we have already concluded that the
activation of the siren and subsequent questions asked
by Trooper Wildauer were lawful, therefore this prin-
ciple does not apply. See Sandoval-Vasquez, 435 F.3d
at 745.
No. 06-4270 13
B. Sentencing
Figueroa-Espana challenges his sentence, arguing that
the district court based it, in part, on an impermissible
factor. He contends that the court, in calculating his
sentence, considered the fact that Figueroa-Espana filed
a motion to suppress evidence, and that such consider-
ation was in error.
Post-Booker, we generally review a sentence for reason-
ableness in light of the statutory sentencing factors in
18 U.S.C. § 3553(a). United States v. Hollins, 498 F.3d
622, 629 (7th Cir. 2007). We review legal questions
de novo, including constitutional challenges to sentences.
Id. (citations omitted); United States v. Peters, 462 F.3d
716, 717-18 (7th Cir. 2006). Figueroa-Espana cloaks his
argument as a constitutional challenge, contending that
the district court’s impermissible consideration of the
motion to suppress violated his Fourth, Fifth, and Sixth
Amendment rights. The government, by contrast, analyzed
this issue as a challenge to the reasonableness of the
sentence, and not a constitutional challenge warranting
de novo review. We will address Figueroa-Espana’s
argument as a constitutional challenge, as he indicates
in his reply brief that he does not challenge the reason-
ableness of his sentence.
The district court sentenced Figueroa-Espana to 176
months’ imprisonment and explained the basis of the
sentence:
The sentence is based on the defendant’s criminal
conduct, his illegal residence and entrance into the
United States, his untruthful statements in his af-
fidavit and in his court testimony during the suppres-
sion hearing, and also includes a minor adjustment for
the fact that he chose to plead guilty.
14 No. 06-4270
Sent. Tr. at 142-43. The court specifically addressed the
“untruthful statements” in the affidavit and at the hear-
ing:
Mr. Figueroa-Espana, in this kind of situation, it
would be possible for you—it would have been possible
for you to tell the truth what you were doing [sic],
tell the truth and get a downward adjustment in the
safety valve. If you had done that, you would be
looking at a sentencing range on the order of 70 to 87
months, less than half the sentence I’m imposing
in this case.
Those provisions in the Sentencing Guidelines recog-
nize that a person can make a mistake, but can then
decide to do the right thing to make up for that mis-
take. When they do, there’s a pretty good chance they
will not get into trouble again. This is at least the
premise of the sentencing policies.
But you made a very different choice in this case. You
lied to the police. You moved to suppress evidence. You
lied about what happened then. You did so in your
affidavit and in court. The result is that your sen-
tence is several years above the mandatory minimum
sentence, but that’s based on the choices that you
made.
Sent. Tr. at 146-47.
Figueroa-Espana asks us to infer from this record—
specifically, from the statement, “[y]ou moved to sup-
press evidence”—that the district court enhanced the
sentence because he filed a motion to suppress the evi-
dence. He argues (without any supporting authority)
that in so doing, the district court encroached upon
Figueroa-Espana’s (1) due process right to challenge the
introduction of inadmissible evidence; (2) right to rely
on advice of counsel in filing the motion to suppress; and
(3) right to challenge Fourth Amendment violations.
No. 06-4270 15
To the extent that these arguments are legally cogniza-
ble, they all rest upon a single unsupported presupposi-
tion: that the district court considered the fact of filing a
motion to suppress in calculating the sentence. Figueroa-
Espana’s use of a selective quotation does not avail his
argument. The phrase “[y]ou moved to suppress evidence”
must be examined in the context of the entire proceedings.
The record shows that the district court based the sen-
tence, inter alia, on several “untruthful statements” made
by Figueroa-Espana. The court identified two sets of
statements—first, that Figueroa-Espana lied to the
police during the traffic stop, and second, that he lied to
the district court in the motion to suppress and at the
hearing on the motion—and then noted the consequences
of making these statements. In this regard, the state-
ment “[y]ou moved to suppress evidence” frames the
context of the second set of untrue statements, and does
not offer a separate basis for assessing Figueroa-Espana’s
sentence. At the suppression hearing and at sentencing,
the district court repeatedly noted its displeasure at the
fact that Figueroa-Espana openly lied on multiple occa-
sions. These lies, and not any motions filed by Figueroa-
Espana, led to his sentence.
III. Conclusion
For the foregoing reasons, we AFFIRM Figueroa-Espana’s
conviction and sentence.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—12-28-07 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3002145/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 08-1699
A NGUS M. D UTHIE and M ICHAEL J. C ONDRON,
Plaintiffs-Appellees,
v.
M ATRIA H EALTHCARE, INC.,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 C 5491—Jeffrey N. Cole, Magistrate Judge.
____________
A RGUED M AY 27, 2008—D ECIDED A UGUST 28, 2008
____________
Before R OVNER, W ILLIAMS, and SYKES, Circuit Judges.
W ILLIAMS, Circuit Judge. This case arises out of the
merger of CorSolutions Medical, Inc. with a subsidiary of
Matria Healthcare, Inc., in a deal worth hundreds of
millions of dollars. Angus Duthie and Michael Condron
were CorSolutions officers prior to the merger. We con-
sider in this appeal whether the merger agreement man-
dates arbitration of fraud claims that Matria asserts
2 No. 08-1699
against Duthie and Condron individually, seeking re-
covery from their personal assets. Because we conclude
the agreement does not require these claims to be arbi-
trated, we affirm the district court’s decision to enjoin
Matria from pursuing the claims in a pending arbitration
proceeding.
I. BACKGROUND
Matria and CorSolutions provide services to employers,
health plans, and government-sponsored health care
programs. Pursuant to an Agreement and Plan of Merger
signed December 14, 2005 (the “Agreement”), CorSolutions
agreed to merge with Coral Acquisition Corp., a Matria
subsidiary. CorSolutions became the surviving corpora-
tion after the merger and a wholly-owned subsidiary of
Matria. The merger agreement spanned seventy-one single-
spaced pages.
Angus Duthie and Michael Condron, the plaintiffs in
this case, were CorSolutions officers. Duthie was its
chairman and Chief Executive Officer, and Condron served
as the president and Chief Operating Officer. The two
remained CorSolutions officers for a time after the merger.
At the time of the merger, Duthie owned CorSolutions
shares that represented a 0.45% ownership interest in
the company. Condron did not own any CorSolutions
shares when the Agreement was signed but became a
shareholder sixteen days later, when he exercised options
and acquired 124,000 shares of CorSolutions’s common
stock, which comprised about 2.4% of the company’s
outstanding shares at the time. Duthie signed the Agree-
No. 08-1699 3
ment, but only in his capacity as chairman and CEO.
Condron did not sign the Agreement.
Pursuant to the Agreement, $20.3 million went into the
Escrow Account, an account set up to satisfy certain
potential post-closing claims and adjustments contem-
plated by the Agreement. The Agreement appointed Coral
SR, LLC as the “Stakeholder Representative,” meaning
that it was “constituted to act as the representative, agent,
and attorney-in-fact for the Stakeholders and their succes-
sors and assigns . . . for all purposes under this Agreement,
the Escrow Agreement and the Agent’s Escrow Agree-
ment.” Agrt. § 2.4(a). The Agreement defines the “Stake-
holders” as “the holders of Common Stock, the holders
of Preferred Stock, the holders of Company Options and
the holders of Company Warrants.” Agrt. § 1.1. Duthie
and Condron are both “Stakeholders” under the Agree-
ment’s definition of the term.
The Agreement provides for four different arbitration
forums. The Settlement Accountant, an independent
accounting firm, is to resolve post-closing disputes over
balance adjustments and working capital computations.
Agrt. § 2.9(b). A Tax Arbitrator, a senior tax partner in a
mutually agreeable accounting firm, would resolve any
tax-related matters. Agrt. § 5.12(h). The BIPA Arbitrator
is to resolve disputes concerning a refund CorSolutions
owed to the Centers for Medicare & Medicaid Services.
Agrt. § 7.5(d). And, in the section most relevant to this
case, section 7.4 provided for arbitration of certain dis-
putes in accordance with the Commercial Arbitration
rules of the American Arbitration Association (“AAA”).
4 No. 08-1699
We would not be here, of course, if all had gone
smoothly. Instead, according to Matria, the very day after
the merger closed, one of CorSolutions’s customers in-
formed Matria that it planned to conduct an audit of
CorSolutions’s disease management programs. That was
news to Matria, and it maintains that CorSolutions and its
officers knew about the customer’s concerns before the
merger but failed to convey them to Matria.
In October 2006, Coral SR initiated AAA arbitration
proceedings against Matria. Matria responded by filing
a suit in the Delaware Court of Chancery seeking to
enjoin the arbitration and asserting claims against Coral
SR based on alleged inaccuracies in the Agreement’s
representations and warranties. Matria did not sue any
individuals in the Delaware case. On March 1, 2007, the
Delaware court held that the Agreement required arbitra-
tion of the fraud claims that Matria had asserted against
Coral SR seeking recovery from the Escrow Fund. Matria
Healthcare, Inc. v. Coral SR LLC, No. 2513-N, 2007 WL
763303, at * 9 (Del. Ch. Mar. 1, 2007).
Two months later, Matria asserted counterclaims in
the AAA arbitration against Coral SR for fraud, equitable
fraud, and breach of contract. Matria also asserted counts
of fraud, equitable fraud, and breach of contract against
Duthie and Condron in the same filing, alleging that the
two had knowingly withheld information and made
multiple misrepresentations. Duthie and Condron then
moved to dismiss the claims against them in arbitration
for lack of jurisdiction. The arbitration panel denied the
motion. Duthie and Condron subsequently filed a com-
No. 08-1699 5
plaint seeking a declaration that Matria’s claims against
them were not arbitrable and a preliminary injunction
preventing Matria from proceeding against them in
the arbitration. The magistrate judge entered an order
preliminarily enjoining Matria from proceeding in the
arbitration against Duthie and Condron, and Matria
appeals from that decision.
II. ANALYSIS
This case involves a complex transaction that yielded
complex documentation; we begin with first principles.
“Although the Federal Arbitration Act favors resolution
of disputes through arbitration, its provisions are not to
be construed so broadly as to include claims that were
never intended for arbitration.” Continental Cas. Co. v. Am.
Nat. Ins. Co., 417 F.3d 727, 730 (7th Cir. 2005) (quoting
Am. Logistics, Inc. v. Catellus Dev. Corp., 319 F.3d 921, 929
(7th Cir. 2003)). That is, “arbitration is a matter of con-
tract and a party cannot be required to submit to arbitra-
tion any dispute which he has not agreed so to submit.”
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)
(citation omitted).
Whether a particular dispute must be arbitrated is
generally a question for judicial determination, unless the
parties “clearly and unmistakably” provided otherwise
in their agreement. Id. Neither party disputes that the
court, and not the arbitration panel, should decide the
arbitrability question in this case. Nor is there clear and
unmistakable evidence to the contrary in the Agreement,
and so we proceed.
6 No. 08-1699
Whether the parties agreed to arbitrate is a matter of
state contract law. Hawkins v. Aid Ass’n for Lutherans, 338
F.3d 801, 806 (7th Cir. 2003). In this case, Delaware law
controls. Agrt. § 9.6. As with any contract, our task is to
interpret the Agreement in a manner that satisfies the
“reasonable expectations of the parties at the time they
entered the contract.” Dittrick v. Chalfant, 948 A.2d 400,
406 (Del. Ch. 2007) (citation omitted). We are nonethe-
less mindful that the Federal Arbitration Act “ ‘is a con-
gressional declaration of a liberal federal policy favoring
arbitration agreements’ and ‘that questions of arbitrability
must be addressed with a healthy regard for the federal
policy favoring arbitration.’ ” Continental Cas. Co., 417
F.3d at 730-31 (citing Moses H. Cone Mem’l Hosp. v. Mercury
Const. Corp., 460 U.S. 1, 24 (1983)).
This case comes to us on appeal from the grant of a
preliminary injunction, and the relevant inquiry in this
case is whether Duthie and Condron demonstrated a
likelihood of success on the merits. See St. John’s United
Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th
Cir. 2007) (listing factors court should consider when
determining whether to grant preliminary injunction). We
ultimately review whether a district court should have
granted a preliminary injunction for an abuse of discretion.
Miller v. Flume, 139 F.3d 1130, 1134 (7th Cir. 1998). The
likelihood of the success on the merits in this case
depends on the soundness of the district court’s inter-
pretation of the Agreement’s language, see id. at 1135,
however, and we review a district court’s interpreta-
tions of the merger agreement de novo, see Fyrnetics
No. 08-1699 7
Ltd. v. Quantum Group, Inc., 293 F.3d 1023, 1029 (7th Cir.
2002).
The question on appeal is whether the Agreement
mandates arbitration before the AAA of the claims Matria
asserted against Duthie and Condron in the AAA proceed-
ing. These claims allege that Duthie and Condron made
fraudulent misrepresentations and omissions both in
person and in the Agreement, and they seek recovery
from Duthie and Condron’s personal assets. Matria
argues that these claims must be arbitrated because: (1) it
contends that the Agreement mandates that any claim
involving misrepresentations or omissions arising out of
the merger must be arbitrated, and (2) according to Matria,
the Delaware Court of Chancery already said they must be.
A. The Agreement does not require arbitration of all
claims.
As support for its argument that the Agreement requires
arbitration of all claims arising out of the Agreement,
Matria turns principally to certain language in section
7.3(d)(ii). This section provides in full:
In accordance with the terms of the Escrow Agree-
ment, for a period of twenty-four (24) months after
the Closing Date, Parent shall be entitled to make
claims against the Escrow Fund with respect to
Damages arising out of or resulting from, or
amounts payable with respect to, the matters set
forth in Section 7.1 (other than Section 7.1(a), which
is the subject of Section 7.4(d)(i) and subject to
8 No. 08-1699
the limitation in Section 7.3(d)(iii); it being under-
stood that in the event Parent shall have timely
delivered notice of any claim on the Escrow Fund
pursuant to Section 7.1, such claim shall survive
until such time as such claim is finally resolved.
The parties intend to shorten the statute of limita-
tions and agree that, after the Closing Date, any
claim or cause of action against any of the parties hereto,
or any of their respective directors, officers, employees,
Affiliates, successors, permitted assigns, or Representa-
tives based upon, directly or indirectly, any of the
representations or warranties, covenants or agreements
contained in this Agreement, or any other agreement,
document or instrument to be executed and delivered in
connection with this Agreement may be brought only as
expressly provided in this Article VII.
(Emphasis added.)
We do not agree that the portion of the provision we
italicized above mandates arbitration of any claim
alleging that a director or officer made misrepresent-
ations in the Agreement. Consistent with section 7.3(d)’s
“Survival of Representations and Warranties; Claims
Period” heading, the point of this section is to shorten
the statute of limitations for claims against the Escrow
Fund. Shortening the time period for bringing such claims
reflects a reasonable desire for finality concerning the
amount in the Fund so that the remainder can be distrib-
uted to the Stakeholders within a reasonable period of
time. And although section 7.3(d)(ii) expressly mentions
directors and officers, it does not state that any claim
No. 08-1699 9
against a director or officer is arbitrable. Instead, it pro-
vides that claims against directors and officers may be
brought “only” as “expressly provided” in Article VII.
Nothing in Article VII expressly provides for arbitra-
tion of claims against individual defendants for their
personal assets. Instead, consistent with its head-
ing, “Claims on Escrow Funds,” Article VII only provides
for arbitration of claims against the Escrow Fund. Ten and
a half pages long, Article VII sets forth detailed provisions
relating to claims on the “Escrow Fund,” a term it mentions
over forty times. Section 7.1 sets forth the circumstances
under which Matria can make a claim against the Escrow
Fund. Section 7.2 specifies the claims process. Section 7.3
details certain limitations on claims. For example, section
7.3(b) specifies that the maximum liability for Matria’s
claims on the Escrow Fund is the amount in the Escrow
Fund, and it further provides that neither Coral SR nor
any Stakeholder has any obligation to contribute money
to the Escrow Fund under any circumstance.
The next section, section 7.4, is critical to this case. It
provides:
Section 7.4. Disputes. In the event of a post-Closing
dispute between the Parent and the Stakeholder
Representative relating to any Claim other than a
Third Party Claim that is the subject of litigation
(“Escrow Fund Dispute”) or any claim subject to
Section 5.12 or Section 7.5, the Stakeholder Repre-
sentative and Parent shall seek in good faith to
negotiate a resolution of such Escrow Fund Dis-
pute within ninety (90) days of receipt by the
10 No. 08-1699
Stakeholder Representative of a Claim Notice. If
the Stakeholder Representative and Parent are not
able to resolve such Escrow Fund Dispute, all of
the parties hereto agree that such Escrow Fund
Dispute shall be exclusively and finally settled by
arbitration in accordance with the Commercial
Arbitration Rules of the AAA . . . .
Section 7.4, then, only mandates the arbitration of an
“Escrow Fund Dispute.” The dispute here is neither
between the proper parties nor of the proper subject to
constitute an “Escrow Fund Dispute” under the Agree-
ment. First, the dispute is not one “between the Stake-
holder Representative and Parent,” the entities that section
7.4 defines as the parties to an “Escrow Fund Dispute.” The
Agreement defines the “Parent” as Matria and the “Stake-
holder Representative” as Coral SR. But the claims at
issue in this appeal are between Matria and individual
officers. Cf. Matria Healthcare, Inc., 2007 WL 763303 (suit
between Matria and Coral SR).
The Agreement also not equate the “Stakeholder Repre-
sentative” to the individual “Stakeholders” (nor does
Matria argue that it does). The Agreement specifies that
the “Stakeholder Representative” is Coral SR, and that
Coral SR acts as the representative for the individual
“Stakeholders” for purposes under the Agreement. When
referring only to these individuals, the Agreement uses
the term “Stakeholder” or “Stakeholders”. See, e.g.,
Agrt. §§ 2.3(a), 2.9(c), 2.14, 3.17, 7.3(b), 8.2, 9.10. Section 7.4,
however, only refers to disputes in which the “Stakeholder
Representative” is a party.
No. 08-1699 11
In addition, the recovery Matria seeks in its claims
against the individual officers is not of the type that
section 7.4 makes arbitrable as an “Escrow Fund Dispute.”
We note first that although the claims Matria filed in
arbitration against Coral SR and Duthie and Condron
asked for recovery from the Escrow Fund as well as from
Duthie and Condron’s personal assets, Matria readily
acknowledges that it could only obtain recovery from the
Escrow Fund by arbitrating claims against Coral SR.
Opening Br. at 19, Reply Br. at 2 n.2. The question at
issue in this appeal, then, only concerns claims for
personal assets.
Such claims do not fall within the scope of section 7.4,
which only compels arbitration of claims on the Escrow
Fund. To fall within section 7.4’s purview, a dispute must
relate to a “Claim,” which the Agreement defines to
include “Third Party Claims” (not relevant here) and
“Direct Claims.” A “Direct Claim” under the Agreement
is one where the “Parent shall be entitled to make a
claim for Damages pursuant to Section 7.1.” Agrt. § 7.2(a).
A claim for “Damages” under section 7.1 is a claim “against
the Escrow Fund in accordance with the terms of the
Escrow Agreement.” (Emphasis added.) Because the
claims at issue seek recovery from Duthie and Condron’s
personal assets, not from the money in the Escrow Fund,
section 7.4 does not apply to these claims.
The text of Article VII as a whole reinforces this conclu-
sion. The parties seemed to approach Article VII, the
section entitled “Claims on Escrow Fund,” with particular
care. It alone takes up over ten pages with detailed provi-
12 No. 08-1699
sions including a shortened statute of limitations, a prohi-
bition on punitive damages, and a ceiling for liability. Yet
it does not state anywhere that claims for amounts from
sources other than the Escrow Fund must be arbitrated.
The other provision to which Matria turns in support
of its position that the Agreement requires arbitration of
all, or at least nearly all, claims, section 9.7, also does not
help it. Section 9.7 has two (very long) sentences. The first
reads:
Consent to Jurisdiction. Except as provided in
Sections 2.9 (Post-Closing Adjustment of Initial
Merger Consideration), 5.12(h) (Tax Disputes), 7.4
(Escrow Fund Disputes) and 7.5 (BIPA Claims)
herein, each of the parties hereto: (a) irrevocably
consents to submit itself to the personal jurisdic-
tion of any state or federal court of competent
jurisdiction located in the City of Wilmington in
the State of Delaware, for the purpose of any action
or proceeding arising out of this Agreement or any
of the transactions contemplated by this Agree-
ment, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or
other request for leave from any such court and
(c) agrees that, except in any action brought
against the party in another jurisdiction by an
independent third party, it will not bring any
action relating to this Agreement or any transac-
tions contemplated by this Agreement in any
court other than a state or federal court of compe-
tent jurisdiction located in the City of Wilmington
No. 08-1699 13
in the State of Delaware, except for the purpose of
enforcing any award or decision.
And the second sentence says:
For the avoidance of doubt, except for claims for
specific performance arising after the date hereof and
prior to the Closing, any claims arising out of this
Agreement, or the breach, termination or validity
thereof, shall be finally and exclusively determined by
arbitration in accordance with Sections 2.9 (Post-
Closing Adjustment of Initial Merger Consider-
ation), 5.12(h) (Tax Disputes), 7.4 (Escrow Fund
Disputes) or 7.5 (BIPA Claims).
(Emphasis added.) Matria contends that the use of “any
claims” in the second sentence can only mean that any
and all claims arising out of the Agreement, save for
specific performance claims that the first sentence specifi-
cally excludes, must be arbitrated.
Although this section could have been written more
clearly, we do not read it to mandate arbitration of all
claims arising out of the Agreement. Matria attempts to
place section 9.7 on par with all-encompassing arbitra-
tion clauses such as the one in Kiefer Specialty Flooring,
Inc. v. Tarkett, Inc., 174 F.3d 907, 909-10 (7th Cir. 1999),
which stated that “any controversy or claims arising out of
or relating to . . . the Agreement . . . shall be settled by
arbitration.” We read those clauses broadly and attach a
presumption of arbitration. See id. Here, however, the
second sentence in section 9.7 does not end with the
statement that any claims arising out of the agreement
14 No. 08-1699
“shall be finally and exclusively determined by arbitra-
tion”; instead, the sentence states that the claims “shall be
finally and exclusively determined by arbitration in
accordance with” (emphasis added) four specific sections
in the agreement. Cf. Wellborn Clinic v. Medquist, Inc., 301
F.3d 634, 639 (7th Cir. 2002). None of the four sections
listed in section 9.7’s second sentence required arbitra-
tion in this case, and we do not read this section to man-
date arbitration in instances that fall outside the scope
of those four sections.
Reading section 9.7 as a whole supports Duthie and
Condron’s position. The first sentence of the section
provides that “except as” provided in four specific sec-
tions, the parties agreed to jurisdiction in federal or state
courts in Delaware “for the purpose of any action or
proceeding arising out of this Agreement.” If all claims
arising out of the Agreement were arbitrable as Matria
maintains, there would be little need to consent to juris-
diction in Delaware for “any action or proceeding arising
out of” the Agreement. And as the district court recog-
nized, it would seem odd that the parties to the Agree-
ment meant to expand substantially the claims for which
arbitration is mandatory by a single sentence at the end
of a “Consent to Jurisdiction” section.1
1
We note that although section 7.3(d)(ii) might suggest that
Matria would be left without a place to bring a claim of fraud
against individual officers if the claim could not be arbitrated
under Article VII, Duthie and Condron do not go that far. They
acknowledged to us that a court would be the proper forum
for Matria’s fraud claims against them.
No. 08-1699 15
B. The Delaware Court of Chancery did not address
the issue before us.
Matria also argues that the district court’s decision
conflicts with the Delaware Court of Chancery’s determi-
nation that Matria’s fraud claims against Coral SR were
arbitrable under the Agreement. Article VII mentions
fraud claims in section 7.3(d)(iv), which provides in part:
. . . except for claims involving fraud [and certain
other causes of action], from and after the Closing,
the right to make a claim on the Escrow Fund
provided for in this Article VII pursuant to the
provisions of this Article VII . . . shall be the exclu-
sive remedy of Parent . . . for any breach of or
inaccuracy in any representation or warranty or
any non-compliance with or breach of or default
in the performance of any of the covenants or
agreements contained in this Agreement . . . .
Section 7.3(d)(iv) makes clear that Matria’s recourse
for fraud is not limited to a claim on the amount in the
Escrow Fund. But the section does not state that all fraud
claims must be arbitrated before the AAA; in fact, the
section does not specify any forum at all for fraud claims.
The upshot is that while section 7.3(d)(iv) does not prohibit
Matria from asserting a claim on the Escrow Fund on the
basis of fraud, the provision also does not require the
parties to arbitrate a fraud action that does not make a
claim on the Escrow Fund. The latter situation is the one
we have here.
There are plausible reasons why the parties to the
Agreement would have agreed to this approach. The
16 No. 08-1699
parties seemed to have wanted claims on the Escrow Fund
resolved quickly so that any money left over in the Fund
could be distributed to Stakeholders in a timely manner
(the Agreement specifies in section 7.6 that the amount
remaining in the Escrow Fund after all post-closing
adjustments and claims had been satisfied would be
distributed to the Stakeholders), hence the Agreement’s
shortened statute of limitations on Escrow Fund claims.
For fraud claims, however, the Agreement does not
attempt to shorten the statute of limitations, nor does it
attempt to limit Matria’s potential recovery. Cf. Agrt.
§ 7.3(b) (maximum amount available to Matria for claims
on the Escrow Fund is the amount in the fund at the time,
and no one had any obligation to replenish it); Agrt.
§ 7.3(c)(iv) (term “Damages” in Article VII does not
include punitive damages). In turn, a party sued under
the Agreement did not surrender procedural protections,
including a right to a jury trial, for fraud claims where
recovery was not limited by the Escrow Fund cap and
punitive damages could be sought.
The Delaware court held that the Agreement required
Matria to arbitrate fraud claims against Coral SR that
sought money from the Escrow Fund. See Matria Healthcare,
2007 WL 763303, at *9 (claims “against the Escrow Fund
established by the Merger Agreement must be brought
in accordance with the parties’ agreement to arbitrate”).
That’s a far cry from Matria’s current fraud claims against
individual officers for their personal assets. Matria did not
assert any claims against any directors, officers, or Stake-
holders individually in the Delaware action, a fact not
lost on that court. See id. at *8 (noting that Coral SR was
No. 08-1699 17
before it only “as the representative of the Stakeholders
with respect to Matria’s claims to the Escrow Fund and not,
at least as alleged in the Verified Complaint, as an
attorney-in-fact for individual Stakeholders against whom
claims might, at least theoretically, be asserted.”). The
Delaware court made no ruling about claims against
individual Stakeholders as such claims were not before it.
Moreover, unlike here, Matria sought to recover from
the Escrow Fund in its Delaware suit. While the exten-
sive provisions in the Agreement regarding claims
against the Escrow Fund reflect the drafters’ desire to
have claims—including fraud claims—properly asserted
against the Fund resolved through arbitration, the Agree-
ment contains no such terms regarding individual
officers or their assets. Matria points out that its verified
complaint in the Delaware action also sought recovery
from a source other than the Escrow Fund. But the
“other source” was the Agent’s Escrow Fund, a fund
established to pay the fees for Coral SR and any legal
representation Coral SR hired to represent the Stake-
holders collectively. The Agent’s Escrow Fund, like the
Escrow Fund, consists only of funds collectively owned
by the Stakeholders and managed by Coral SR; the re-
maining balance, if any, in both funds will be distributed
pro rata to the Stakeholders after all claims against the
funds are resolved. Matria’s claims in this case are not
against Coral SR, and, as it recognizes, it cannot recover
from the Escrow Fund for any fraud committed only by
Duthie and Condron, who are but two of the many Stake-
holders who collectively “own” the Escrow Fund and
Agent’s Escrow Fund.
18 No. 08-1699
Along those same lines, the Delaware court’s footnote
stating that “Whether Matria’s claims are limited to the
Escrow Fund is a question for the arbitrator,” id. at *8 n.37,
is not inconsistent with the district court’s conclusion
that the claims against Duthie and Condron are not
arbitrable. Matria had asserted a claim in the Delaware
suit against Coral SR for money in the Escrow Fund,
making it a claim that had to be arbitrated under the
Agreement. Given that the claim had to be arbitrated, the
Delaware court concluded it would let the arbitrator
decide the scope of the arbitration, including whether
the remedy for any fraud committed by Coral SR was
limited to the money in the Escrow Fund. That doesn’t
mean that Matria’s fraud claims at issue in this case
must be arbitrated, because there isn’t a predicate claim
against the Escrow Fund here.
We finally note that Duthie and Condron are not col-
laterally estopped from asserting that Matria’s claims
against them are not arbitrable. The Delaware court made
no determination about claims against individuals like
Duthie and Condron, as such claims were not before it.
See Garcia v. Village of Mt. Prospect, 360 F.3d 630, 634 n.6
(7th Cir. 2004) (collateral estoppel requires that issue of
law or fact actually have been litigated and decided in
previous action). Judicial estoppel also does not apply, as
the Delaware court did not adopt a position that was
inconsistent with the one Duthie and Condron raised
here. See New Hampshire v. Maine, 532 U.S. 742, 750-51
(2001).
Our examination of the Agreement as a whole leads us
to conclude that the Agreement does not mandate arbitra-
No. 08-1699 19
tion of the types of claims Matria asserted against Duthie
and Condron in the AAA arbitration. As a result, we
need not reach Duthie and Condron’s alternate argu-
ments in support of affirming the district court’s opinion
and entry of a preliminary injunction.
III. CONCLUSION
The judgment of the district court is AFFIRMED.
8-28-08 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3002150/ | United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
August 27, 2008
Before
DIANE P. WOOD, Circuit Judge
JEREMY KUNZ, ] Appeals from the United
Plaintiff-Appellee, ] States District Court of
Cross-Appellant ] the Northern District of
] Illinois, Eastern Division
Nos. 06-3828 & 06-3827 v. ]
] No. 01 C 1753
RICHARD DEFELICE, Officer, ]
Defendant-Appellant, ] James B. Zagel,
Cross-Appellee ] Judge.
]
and ]
]
CITY OF CHICAGO, et al., ]
Defendants, ]
Cross-Appellees. ]
Upon consideration of the MOTION TO CORRECT PUBLISHED OPINION, filed
on August 25, 2008, by counsel for the City of Chicago,
IT IS ORDERED that the motion to correct the opinion is GRANTED. On page 2 of
the slip opinion, the sentence beginning on line 12 shall be corrected as follows: “The City
and DeFelice appeal from those judgments” is replaced with “DeFelice appeals from those
judgments”. On lines 9 and 10 of page 23 of the slip opinion, “June 22, 2006 opinion” shall
be replaced with “September 16, 2005 order”. On line 16 of page 23 of the slip opinion,
“June 22, 2006 opinion” shall be replaced with “September 16, 2005 order”. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3517162/ | The appellant married the appellee on March 6, 1922, in Orleans Parish, Louisiana, where they were born and reared and where they formerly had a rented home. Appellant during most of the time, in the series of events concerned here, was a business agent of a labor union, the office of which was in New Orleans. He was not so employed when the case was tried. He claims to have established his domicile in this state in a room of a boarding house, which, during his absence, the landlord rented to others with his consent. Appellee has been an inmate of the Louisiana Asylum for the Insane since 1939. Appellant has not visited her, communicated with her, or sent her anything since her confinement. The issue here is whether or not, and when, he had established a domicile in Mississippi, as required by our divorce statute, sufficient *Page 524
to confer jurisdiction on the Chancery Court of Pearl River County, to hear his petition for divorce. He testified to several different dates of its establishment in Mississippi. He also gave conflicting reasons for establishing such a domicile in Mississippi. There were other discrepancies and inconsistencies in his testimony with reference to the establishment of his residence or domicile in Mississippi. Under our statute, Section 2736, subsection (a), before he was qualified to have a chancery court hear his application for a divorce, he must have proven himself to have been an actual bona fide resident within this State for one year next preceding his commencement of the suit.
He registered in Mississippi for the first time in 1943, paid poll taxes for 1943 and 1945, overlooking, he said, the 1944 payment. There is some confusion also as to when he established his domicile in Pearl River County, which was in January 1944 apparently from one portion of his testimony, but a month or two later, according to another portion of his testimony.
He filed this suit for divorce on March 23, 1945, claiming to be a resident citizen of Pearl River County, and alleged that his wife was incurably insane. Section 2735, Code 1942. No answer was filed by or on behalf of his wife, and when the case came on to be heard, the learned chancery judge manifestly suspected the good faith of complainant as to his domicile in Mississippi, where incurable insanity is a ground for divorce, instead of Louisiana where divorce is not granted for insanity. Sections 138, 139, Dart's Louisiana Civil Code, 2nd Ed., Vol. 1. The Court asked the appellant this question: "You say you never decided to make this your legal residence until you discovered by talking to the drug store man that there was a ground for divorce in Mississippi on insanity?" Answer: "I had been living here at that time for three or four months already." And, also this question by the court: "And if you were to get a divorce, you would leave?" Answer: "I don't intend to leave. I am going to stay here." The conversation at the drug store, to which *Page 525
the court referred, was on a Sunday afternoon in Picayune some time about June 1944, while he was rooming at the Ford rooming house in Picayune. In the course of this allegedly casual conversation, appellant then learned for the first time, from a voluntary and unsolicited statement of the druggist, that divorce could be obtained in Mississippi from his wife because of her incurable insanity, he said. He then got in touch with an attorney who confirmed this information, resulting in the filing of the suit under consideration. Appellant was corroborated in some respects of his testimony relative to the establishment of a Mississippi domicile, by the proprietor of the rooming house, Mr. Ford, and also by a roomer therein, and by an old friend residing in Slidell, Louisiana. This evidence would have been conclusive upon the chancery court, since it was uncontradicted directly by any witnesses; except for the discrepancies and inconsistencies within the evidence itself; and the troubling absence of the testimony of the druggist, supra; and the lack of intelligent consistency in the appellant's own testimony.
The matter of domicile is governed in this State by such cases as May v. May, 158 Miss. 68, 130 So. 52; Smith v. Smith,194 Miss. 431, 12 So. 2d 428; Hairston v. Hairston, 27 Miss. 704, 61 Am. Dec. 530; Smith v. Deere, 195 Miss. 502, 16 So. 2d 33. From these cases, it appears that to constitute complainant an actual bona fide resident within the state for one year next preceding commencement of a divorce suit, there must have been actual residence voluntarily established within the State, with bona fide intention of remaining here, if not permanently at least indefinitely; and that a domicile, once established, continues until another is acquired, and cannot be considered lost or changed until a new one is acquired by removal to a new locality with the intent to remain there, as stated above, and to abandon the old without intent to return thereto. Section 2736, Subsection (b), Code 1942, provides that: "In any case where the proof shows that a residence was acquired in this state with a purpose of *Page 526
securing a divorce, the court shall not take jurisdiction thereof, but dismiss the bill at the cost of the complainant." The final decree adjudicated that the complainant (appellant here) "is not a bona fide citizen of the State of Mississippi and that he attempted to acquire his residence in Mississippi for the purpose of obtaining a divorce against his insane wife who is confined in the state hospital in Jackson, Louisiana, and that the court has no jurisdiction to try said cause." The bill was dismissed at cost of complainant, who appealed here.
As stated, except for the defects, to which reference was made above, in the testimony of appellant and the discrepancies and inconsistencies in the evidence otherwise, the proof in the record without contradiction would have required the chancellor not to reject it. In Tarver v. Lindsey, 161 Miss. 379,137 So. 93, we have said, in effect, that where the testimony of intelligent witnesses is undisputed, is reasonable, and in harmony with physical facts, and facts of common observation, and witnesses are unimpeached, the trier of facts must act on the testimony. It can hardly be said here that appellant was an intelligent witness, as he became entangled and confused, and his statements were not impressive and convincing; and especially was he uncertain as to his dates with reference to the time of the establishment of his purported domicile in Mississippi — at one time claiming such domicile to have been established prior to his registration in 1943, and at another time subsequent thereto and to his payment of poll tax for 1943. The corroboration was not strong enough, we think, to reinforce appellant's testimony adequately enough to overcome these difficulties. So, we do not think that the testimony in the case at bar measures up to the requirements of the cited case.
Therefore, we do not reverse the chancellor and render a decree here for appellant, that he has satisfactorily demonstrated the establishment of his domicile in Mississippi as required by law. But, we do reverse the decree of the chancellor dismissing the original bill, and *Page 527
remand the cause for further investigation as to the domicile in Mississippi. The testimony of the druggist would be of material interest here, upon which the good faith of the appellant so largely depended, because appellant ascribed to the druggist the inception of the idea of his obtaining a divorce from his wife, and its suggestion to him. Why he was not introduced as a witness does not appear in the record. It also seems obvious to us that other persuasive evidence could be obtained on the issue here involved. Under such conception of the situation, we do not act finally on the state of facts so inadequately developed in material details in the record before us, and, therefore, as stated, reverse and remand the case for further development of pertinent facts, more cogently and fully, on the issue here involved. Moore v. Sykes' Estate, 167 Miss. 212, 149 So. 789. See also Planters Bank v. Courtney, Smedes M. Ch. 40.
Reversed and remanded.
Sydney Smith, C.J., did not participate in this decision. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3517168/ | The appellee, L. Seligman, secured a judgment against the administratrix of the estate of D.A. Sinclair, deceased, which was duly enrolled. Upon this judgment, writs of garnishment were issued by which the Bank of Shaw, a branch of the Grenada Bank, and E.B. House were summoned to answer as garnishees. On the return day of these writs, the garnishees filed answers denying any indebtedness to the judgment debtor; denying that they had any effects of the judgment debtor in possession *Page 172
or under control; and denying that they knew or believed that any other person had effects of said judgment debtor in his possession or under his control. Upon the filing of these answers, the judgment creditor filed separate written contests of each of them, and no further action was taken in the matter at the return term.
The cause was thereafter continued from term to term until the November, 1931, term of the circuit court, when a final judgment was entered against the garnishees for the amount of the judgment upon which the writs of garnishment were based, with interest and costs, and, from this judgment, the bank prosecuted an appeal by the execution of a proper appeal bond. Upon the filing of an assignment of error in this court, the garnishee, E.B. House, attempted to join in the appeal without the execution of an appeal bond, and, upon motion of the appellee, the appeal was dismissed as to him, and the cause proceeded upon the appeal of the garnishee bank.
Upon the hearing of the cause in the court below, no evidence was offered in support of the contests of the answers filed by the garnishees, and the judgment appealed from appears to be in the nature of a judgment by default, or rather a judgment on the pleadings, which consisted only of the writs of garnishment, answers thereto, and written contests of these answers. Among other things, the judgment contains the following recital: "The garnishees herein having filed separate answers, and the answers being contested in writing by the plaintiff, by traverse, and the said traverses being filed at the term of the court to which the answers were filed, and this cause being this day duly called in open court, and the plaintiffs appearing and announcing ready for trial, and the garnishees appearing not, and not joining issue with the plaintiff, and making default, and the plaintiffs demanding judgment against the said garnishees . . . and the court considering the answers *Page 173
of the garnishees herein, and also considering the traverses filed by the plaintiff and all other pleadings, it is therefore, ordered and adjudged that the plaintiff, L. Seligman, do have of and recover from the garnishees, the Bank of Shaw and E.B. House, both jointly and severally," etc.
Section 1854, Code of 1930, provides as follows: "If the plaintiff believe that the answer of the garnishee is untrue, or that it is not a full discovery as to the debt due by the garnishee, or as to the property in his possession belonging to the defendant, he shall, at the term when the answer is filed, unless the court grant further time, contest the same, in writing, specifying in what particular he believes the answer to be incorrect. Thereupon the court shall try the issue at once, unless cause be shown for a continuance, as to the truth of the answer, and shall render judgment upon the facts found, when in plaintiff's favor, as if they had been admitted by the answer, but if the answer be found correct, the garnishee shall have judgment for costs against the plaintiff."
A garnishee's answer is conclusive until contested, as provided by the section above quoted, Williams v. Jones, 42 Miss. 270, and, upon a contest of the garnishee's answer, the burden of proof is upon the judgment creditor to show that it is untrue, Gordin v. Moore, 62 Miss. 493. To like effect was the holding of the court in the case of Thomas v. Sturges, 32 Miss. 261, wherein, upon a contest of a garnishee's answer, there was involved the question of fraud in the transfer of property by the garnishee. In passing upon the question presented, the court said: "Under such circumstances, it is plain that the burden of proof to establish fraud in the transfer, was upon the plaintiff. The answer denied indebtedness by the garnishee to Cherry, and under oath. It is manifest that the proof of indebtedness rested upon the plaintiff, even if no question of fraud had been raised." *Page 174
In the case at bar, upon the filing of the contests of the separate answers filed by the garnishees, issue was joined upon the question as to whether or not the answers were true. Upon this issue, the burden of proof was on the contestant, the judgment creditor, and, in the absence of proof to support the contests, the court was powerless to enter judgment on the pleadings in favor of the judgment creditor. The judgment entered by the court against the appellant bank will therefore be reversed.
The appellant next contends that, when the appellee asked for a judgment on the pleadings in the court below, the court should have entered a judgment in favor of the garnishees, and therefore judgment in favor of the appellant should now be entered in this court.
Upon the particular facts in this case, wherein the court below gave a judgment in favor of the appellee without the necessity of proof being offered in support of the contests, we think the cause should be remanded in order that the judgment creditor may, if he desires offer proof upon the issue joined.
Reversed and remanded. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/4555669/ | No. 121,340
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
STATE OF KANSAS,
Appellee,
v.
REX C. VAUGHN,
Appellant.
SYLLABUS BY THE COURT
1.
A district court sentencing a defendant for a new felony committed while on
felony bond under K.S.A. 2019 Supp. 21-6606(d) may impose a nonprison sanction or a
prison sanction, even though the new crime of conviction otherwise presumes a
nonprison sentence. If a prison sentence is imposed, that sentence must be consecutive
unless the defendant shows manifest injustice.
Appeal from Sedgwick District Court; STEPHEN J. TERNES, judge. Opinion filed August 14, 2020.
Affirmed.
Kasper Schirer, of Kansas Appellate Defender Office, for appellant.
Lance J. Gillett, assistant district attorney, Marc Bennett, district attorney, and Derek Schmidt,
attorney general, for appellee.
Before SCHROEDER, P.J., HILL and GARDNER, JJ.
GARDNER, J.: Rex C. Vaughn pleaded guilty to possession of methamphetamine
with intent to distribute—a crime he committed while on felony bond for a previous
1
crime. The district court ruled that special sentencing rules required it to impose the new
prison sentence consecutively to Vaughn's previous sentence. Vaughn appeals his
sentence, arguing that the district court erred by applying the wrong legal standard
because the district court had the discretion to sentence him concurrently. Disagreeing,
we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In 2019, Vaughn pleaded guilty to possession of methamphetamine with intent to
distribute, in violation of K.S.A. 2019 Supp. 21-5705(a)(l), (d)(3)(C). Because Vaughn
committed this crime while on felony bond for a previous felony (forgery and burglary in
Saline County), the district court found that Special Rule 10 applied to his new sentence.
That special rule required the district court to impose the new sentence consecutively to
his previous sentence. Vaughn's was not a multiple sentencing case—one that imposes
two or more sentences on the same day.
Before sentencing, Vaughn moved for a durational departure of 74 months in
prison and the State agreed to recommend this sentence. At sentencing, Vaughn's defense
counsel acknowledged the special rule but argued that the manifest injustice exception to
that rule applied. Vaughn asked the district court to run the sentences concurrently
because he was already serving a long time in his other cases. The State countered that a
manifest injustice finding was not appropriate under the circumstances.
The district court agreed with the State:
"Regrettably, the Court declines to find manifest injustice that would support the
concurrent sentence with the Saline County case. Like I said, this is more than an
addiction for you. This enables—this crime enables the addiction of so many others and
2
causes so much heartbreak in our community. So I will not find that there is manifest
injustice. I will run the case consecutively."
The district court granted a durational departure, imposing a 74-month prison
sentence consecutive to all prior cases, and a 36-month postrelease supervision term.
Vaughn appeals.
DID THE DISTRICT COURT ERR IN SENTENCING THE DEFENDANT?
On appeal, Vaughn argues solely that the district court erred by applying the
wrong legal standard under K.S.A. 2019 Supp. 21-6606(d) and running his sentence
consecutively. Vaughn contends that the district court had the discretion to sentence him
concurrently and that the district court erred in finding that it did not. Although Vaughn
did not raise this issue below, an exception applies which permits us to address the issue
for the first time on appeal—a newly asserted theory that involves only a question of law
that arises on proved or admitted facts and determines the case. See State v. Phillips, 299
Kan. 479, 493, 325 P.3d 1095 (2014).
The district court applied K.S.A. 2019 Supp. 21-6606(d) in sentencing Vaughn
consecutively. Its terms are mandatory: "Any person who is convicted and sentenced for
a crime committed while on release for a felony pursuant to article 28 of chapter 22 of the
Kansas Statutes Annotated, and amendments thereto, shall serve the sentence
consecutively to the term or terms under which the person was released." K.S.A. 2019
Supp. 21-6606(d). This statute forms the basis for Special Rule 10.
The Legislature provided an exception to this rule in K.S.A. 2019 Supp. 21-
6819(a)—a district court shall not impose a mandatory consecutive sentence if manifest
injustice will result. But Vaughn does not contend that this manifest injustice exception
applies. Although Vaughn argued manifest injustice at his sentencing hearing, the district
3
court found that the circumstances did not warrant such a finding, and Vaughn does not
challenge that finding on appeal.
Vaughn argues only that the judge had the discretion to sentence him to a
concurrent sentence, citing K.S.A. 2019 Supp. 21-6604(f)(4). Vaughn's argument is
threefold. First, he contends that the terms of this statute, which also apply when a
defendant commits a crime while on felony bond, make a consecutive sentence
permissive, not mandatory.
Second, Vaughn argues that K.S.A. 2019 Supp. 21-6604(f)(4) and K.S.A. 2019
Supp. 21-6606(d) are contradictory because both refer to the imposition of consecutive
sentences for offenders on felony bond, yet one uses "may" and the other uses "shall."
Third, Vaughn relies on the rule of lenity that applies to conflicting statutes. See
State v. Horn, 288 Kan. 690, 693, 206 P.3d 526 (2009) ("Where the legislature fails to
manifest a clear legislative intent by permitting the existence of conflicting statutory
provisions, the rule of lenity must be considered."). The rule of lenity requires this court
to adopt the interpretation of a criminal statute most favorable to the defendant when
presented with two reasonable and sensible interpretations of that statute. State v. Collins,
303 Kan. 472, 476, 362 P.3d 1098 (2015). Under this rule, the interpretation most
favorable to Vaughn is that a new sentence for felons who commit new crimes while on
felony bond may be imposed concurrently.
Vaughn also contends that canons of construction dictate that K.S.A. 2019 Supp.
21-6604(f)(4) controls because K.S.A. 2019 Supp. 21-6606(d) applies only when the
defendant is receiving two sentences on the same day—Vaughn received only one
sentence on his sentencing date. Vaughn argues that "K.S.A. 21-6606(d) merely grants
authority for the court to impose a consecutive sentence under K.S.A. 21-6604(f)(4)." As
4
a result, Vaughn argues that the district court had discretion to impose a concurrent
sentence without making a manifest injustice finding.
The State responds that K.S.A. 2019 Supp. 21-6604(f)(4) and K.S.A. 2019 Supp.
21-6606(d) do not conflict: "The seemingly contradictory language from K.S.A. 21-
6604(f)(4) is in fact not contradictory as it applies only to authorize a prison sentence
while deferring to K.S.A. 21-6606 for the mandatory consecutive nature of said
sentence." As we explain below, we agree with the State's position.
ANALYSIS
"[S]tatutory interpretation is a question of law subject to unlimited review." State
v. Buell, 307 Kan. 604, 606, 412 P.3d 1004 (2018). We apply the traditional principles of
statutory interpretation:
"'The most fundamental rule is that the intent of the legislature governs if that
intent can be ascertained. An appellate court must first attempt to ascertain legislative
intent through the statutory language enacted, giving common words their ordinary
meanings. When a statute is plain and unambiguous, an appellate court does not speculate
as to the legislative intent behind it and will not read into the statute something not
readily found in it. Where there is no ambiguity, the court need not resort to statutory
construction. Only if the statute's language or text is unclear or ambiguous does the court
use canons of construction or legislative history or other background considerations to
construe the legislature's intent.' [Citations omitted.]" City of Dodge City v. Webb, 305
Kan. 351, 356, 381 P.3d 464 (2016).
In interpreting K.S.A. 2019 Supp. 21-6604(f)(4), we must examine the statutory
scheme considering "various provisions of an act in pari materia with a view to
reconciling and bringing the provisions into workable harmony, if possible." State v.
5
Coman, 294 Kan. 84, 93, 273 P.3d 701 (2012); State v. Cole, 238 Kan. 370, Syl. ¶ 1, 710
P.2d 25 (1985). As a result, we do not read this statute in isolation.
The language of the statutes
We begin with the plain language of the statutes. Vaughn asserts K.S.A. 2019
Supp. 21-6604(f)(4) controls, permitting the court to sentence him consecutively or
concurrently:
"When a new felony is committed while the offender is on release for a felony pursuant
to the provisions of article 28 of chapter 22 of the Kansas Statutes Annotated, and
amendments thereto, or similar provisions of the laws of another jurisdiction, a new
sentence may be imposed consecutively pursuant to the provisions of K.S.A. 21-6606, and
amendments thereto, and the court may sentence the offender to imprisonment for the
new conviction, even when the new crime of conviction otherwise presumes a nonprison
sentence. In this event, imposition of a prison sentence for the new crime does not
constitute a departure." (Emphasis added.) K.S.A. 2019 Supp. 21-6604(f)(4).
Vaughn alleges that the statute above conflicts with the one below:
"Any person who is convicted and sentenced for a crime committed while on
release for a felony pursuant to article 28 of chapter 22 of the Kansas Statutes Annotated,
and amendments thereto, shall serve the sentence consecutively to the term or terms
under which the person was released." (Emphasis added.) K.S.A. 2019 Supp. 21-6606(d).
We first examine K.S.A. 2019 Supp. 21-6604(f)(4). Its introductory clause—the
language preceding "a new sentence"—describes the kind of felon to which the statute
applies. Vaughn fits within that language, as both parties agree that Vaughn committed a
new felony while he was on felony bond. So we set that clause aside.
6
The rest of subsection (f)(4) speaks to what the court may do when that
introductory clause is met—"a new sentence may be imposed consecutively pursuant to
the provisions of K.S.A. 2019 Supp. 21-6606." K.S.A. 2019 Supp. 21-6604(f)(4). The
meaning of the subsection becomes clearer when we read its language in the active,
instead of in the passive, voice. So instead of the passive "a new sentence may be
imposed," the active voice says, "the court may impose a new sentence." Logically, this
means that the court may or may not impose a new prison sentence. It has the discretion
to do either. "May," as a helping verb, works as part of the verb "impose," not with the
adverb "consecutively." When construing a statute, we apply the rules of English
grammar.
We move on. If the court opts to impose a new prison sentence, how does it do
that? It does so "consecutively pursuant to the provisions of K.S.A. 2019 Supp. 21-6606."
K.S.A. 2019 Supp. 21-6604(f)(4). Consecutively is an adverb, modifying the verb
"impose," or the verb phrase "may impose." Read together, this clause restricts the earlier
portion of the sentence: "a new sentence may be imposed consecutively." The rest of the
subsection is written in the active voice. It states, "the court may sentence the offender to
imprisonment for the new conviction" even if the new crime is presumptive nonprison.
K.S.A. 2019 Supp. 21-6604(f)(4). That language underscores that the focus of K.S.A.
2019 Supp. 21-6604(f)(4) is on what the court is authorized to do. This is consistent with
the statute's heading, "Authorized dispositions."
We then look to "the provisions of K.S.A. 21-6606," as K.S.A. 2019 Supp. 21-
6604(f)(4) requires that "a new sentence may be imposed consecutively pursuant to the
provisions of K.S.A. 21-6606." The focus of the language in K.S.A. 21-6606 is not on
what a court is authorized to do. Rather, the focus is on what sentence the recidivistic
felon must serve. This statute has multiple subsections, one of which directly applies to
Vaughn. But we must first briefly address four other subsections, as they paint the full
picture.
7
K.S.A. 2019 Supp. 21-6606(a) addresses multiple sentences—when a court
imposes separate sentences of imprisonment on the same date for a defendant's different
crimes. Such sentences "shall run concurrently or consecutively as the court directs."
K.S.A. 2019 Supp. 21-6606(a). If the court fails to direct, and the record is silent as to
how two or more sentences imposed at the same time shall be served, they shall be served
concurrently, "except as otherwise provided in subsections (c), (d) and (e)." K.S.A. 2019
Supp. 21-6606(a). Subsection (a) does not apply here because Vaughn did not receive
multiple sentences—his sentences were on different dates. And, the record is not silent as
to how Vaughn was to serve his sentence—the district court stated it was consecutive.
Nor does subsection (b) apply. Subsection (b) provides that persons convicted and
sentenced for a crime committed while on probation, assignment to a community
correctional services program, parole, or conditional release for a misdemeanor shall
serve the sentence concurrently or consecutively, as the court directs. K.S.A. 2019 Supp.
21-6606(b). Vaughn was on bond for a felony.
The next three subsections of K.S.A. 2019 Supp. 21-6606 require consecutive
sentences for certain repeat felons, including Vaughn:
"(c) Any person who is convicted and sentenced for a crime committed while on
probation, assigned to a community correctional services program, on parole, on
conditional release or on postrelease supervision for a felony shall serve the sentence
consecutively to the term or terms under which the person was on probation, assigned to
a community correctional services program or on parole or conditional release.
"(d) Any person who is convicted and sentenced for a crime committed while on
release for a felony pursuant to article 28 of chapter 22 of the Kansas Statutes Annotated,
and amendments thereto, shall serve the sentence consecutively to the term or terms
under which the person was released.
8
"(e)(1) Any person who is convicted and sentenced for a crime committed while
such person is incarcerated and serving a sentence for a felony in any place of
incarceration shall serve the sentence consecutively to the term or terms under which the
person was incarcerated."
These three sections show "a clear legislative intent to cover the waterfront and to
require consecutive sentences where a defendant commits a felony while released on
bond in a prior felony case, whether at the beginning of the prosecution prior to trial or at
the end of the trial or after the defendant has been sentenced or after defendant is placed
on probation or parole or conditional release or while incarcerated." State v. Reed, 237
Kan. 685, 688, 703 P.2d 756 (1985) (examining the predecessor statute, K.S.A. 1984
Supp. 21-4608[3], [4], and [5]).
Subsection (d) applies to Vaughn, independently of subsection (a), which does not
apply here. It requires that "[a]ny person who is convicted and sentenced for a crime
committed while on release for a felony pursuant to article 28 of chapter 22 of the Kansas
Statutes Annotated, and amendments thereto, shall serve the sentence consecutively to
the term or terms under which the person was released." K.S.A. 2019 Supp. 21-6606(d).
Vaughn was convicted and sentenced for a crime committed while on release for a felony
pursuant to article 28 of chapter 22 of the Kansas Statutes Annotated. So, for that new
crime, he "shall serve the sentence consecutively." K.S.A. 2019 Supp. 21-6606(d). The
court has no discretion to sentence Vaughn concurrently.
Vaughn argues that subsection (d) relates only to multiple sentences and is a
subset of subsection (a). But he concedes that position is contrary to our cases which
examined the predecessor statute to K.S.A. 2019 Supp. 21-6606—K.S.A. 21-4608. See
State v. Christensen, 23 Kan. App. 2d 910, 937 P.2d 1239 (1997), disapproved of on
other grounds by State v. Bolin, 266 Kan. 18, Syl. ¶ 3, 968 P.2d 1104 (1998); State v.
LaGrange, 21 Kan. App. 2d 477, 901 P.2d 44 (1995), abrogated by State v. Rodriguez,
9
305 Kan. 1139, 390 P.3d 903 (2017); State v. Owens, 19 Kan. App. 2d 773, 875 P.2d
1007 (1994). He admits our Supreme Court has rejected that reasoning as well, citing
State v. Edwards, 252 Kan. 860, 870, 852 P.2d 98 (1993) (finding subsection [1] is "a
specific statute applied when all involved sentences occur, as here, on the same date and
take precedence over subsection [3] of [K.S.A. 1992 Supp. 21-4608]"). Vaughn argues
that these cases were wrongly decided, yet we have no ability to overturn a Supreme
Court case, when, as here, we have no indication it is changing its position. State v.
Rodriguez, 305 Kan. 1139, 1144390 P.3d 903 (2017) (Kansas courts are "duty bound to
follow Kansas Supreme Court precedent absent indication Supreme Court is departing
from previous position.").
Vaughn asserts that subsection (a), relating to multiple sentences, restricts the
subsections that follow, including subsection (d). But the plain language of the statute is
not structured that way—each subsection from (a) through (d) addresses a different
factual situation. And subsection (a), relating to multiple sentences, expressly defers to
subsection (d) in its exception. That exception states if the "record is silent as to the
manner in which two or more sentences imposed at the same time shall be served, they
shall be served concurrently, except as otherwise provided in subsections (c), (d) and
(e)." (Emphasis added.) K.S.A. 2019 Supp. 21-6606(d). Subsections (c), (d), and (e) each
require consecutive sentences. So even if a defendant commits multiple new felonies
while on felony bond and the court imposes multiple sentences yet fails to state whether
those sentences are concurrent or consecutive, subsection (d) requires the defendant to
serve those sentences consecutively, despite subsection (a)'s general rule that when the
record is silent two or more sentences imposed at the same time shall be served
concurrently. Vaughn did not have two or more sentences imposed at the same time, so
subsection (a) does not apply to him. Subsection (d) does.
These two statutes, K.S.A. 2019 Supp. 21-6604(f)(4) and K.S.A. 2019 Supp. 21-
6606(d), do not conflict. Rather, they are harmonious. The Legislature intended for them
10
to be read together, as K.S.A. 2019 Supp. 21-6604(f)(4)'s reference to "the provisions of
K.S.A. 2019 Supp. 21-6606" confirms. This natural reading of the statutes makes sense.
A district court which chooses to impose a new sentence on a defendant such as Vaughn
must do so "consecutively pursuant to the provisions of K.S.A. 2019 Supp. 21-6606."
K.S.A. 2019 Supp. 21-6604(f)(4). It has no discretion to do otherwise. See Reed, 237
Kan. at 687-88 (finding mandatory consecutive sentences were required under the
predecessor statute to K.S.A. 2019 Supp. 21-6606[d]—K.S.A. 1984 Supp. 21-4608[4]—
because Reed committed two felonies after being released on felony bond pending trial in
the first case).
In contrast, Vaughn's interpretation of K.S.A. 2019 Supp. 21-6604(f)(4) makes no
sense. Vaughn interprets "may" as modifying "consecutively." He thus reads the
operative language in this statute to mean: "a new sentence may be imposed
consecutively or concurrently pursuant to the provisions of K.S.A. 2019 Supp. 21-6606."
But that adds language to the subsection, which says nothing about concurrent sentences.
See State v. Ardry, 295 Kan. 733, 737, 286 P.3d 207 (2012) (it is not for an appellate
court to add to or delete vital language from a statute). And a concurrent sentence for a
defendant like Vaughn (who is sentenced for a felony on one date and then commits
another felony while on felony bond) is impossible "pursuant to the provisions of K.S.A.
2019 Supp. 21-6606." (Emphasis added.) K.S.A. 2019 Supp. 21-6604(f)(4). For that kind
of repeat felon, the only applicable subsection in K.S.A. 2019 Supp. 21-6606 is (d),
which mandates that the defendant "shall serve the sentence consecutively." So no
concurrent sentence could be imposed pursuant to any provision of K.S.A. 2019 Supp.
21-6606 for Vaughn or similarly situated felons. Our interpretation, unlike Vaughn's,
meets our duty to "construe a statute to avoid unreasonable or absurd results." State v.
Arnett, 307 Kan. 648, 654, 413 P.3d 787 (2018).
11
The legislative history
Vaughn argues that certain testimony during legislative hearings in 1999 about the
amendment to K.S.A. 21-4603d(f) "leaves no doubt that the Legislature intended district
court judges to have discretion to run sentences either concurrently or consecutively
when a new offense is committed while on felony bond." He cites testimony by Judge
(now Chief Justice) Luckert, the Kansas Attorney General, and the Kansas District
Judges' Association (KDJA).
Individual testimony during legislative sessions is rarely conclusive as to the
Legislature's collective intent. See, e.g., State ex rel. SRS v. Bohrer, 286 Kan. 898, 911,
189 P.3d 1157 (2008) (finding contradictory comments tell us "very little about what the
legislature actually believed when it enacted the statutes"). At any rate, we review the
documents Vaughn has attached to his brief. Although we do not agree that the statute's
language is ambiguous, neither is it a model of clarity. So we consider legislative history.
See Nauheim v. City of Topeka, 309 Kan. 145, 149-50, 432 P.3d 647 (2019). It shows us
that the issue before the Legislature was the court's power to sentence felons like Vaughn
to prison instead of presumptive probation and had nothing to do with concurrent versus
consecutive sentences.
Judge Luckert's testimony in support of the bill stated only that "[i]t would allow
the sentencing judge to impose a sentence [to] be served consecutively for a new crime
that was committed while he was on bond for the original crime." Nothing in her
statement suggested that the bill would give the sentencing judge discretion to sentence
such a defendant concurrently.
Similarly, Attorney General Stovall's letter submitted in support of the bill
contained no language favorable to Vaughn's position. Instead, it stated that the bill
12
"will allow a judge the discretion to impose imprisonment on a criminal defendant who
commits a new felony while on bond for a felony offense. . . . This bill simply provides
the court with discretion to impose a sentence of imprisonment on a defendant who
commits a new felony while on bond for committing a felony, with the result that the
sentence is not considered a departure.
....
"This bill merely grants the court the discretion to impose a prison sentence
without it constituting a departure in a clearly essential situation."
The letter did not suggest that the district court would have any discretion to impose a
concurrent sentence on such a defendant.
Neither did the testimony of the KDJA. It urged support of the bill, stating, "[t]he
amendment would allow a sentencing judge to . . . sentence a defendant to prison to serve
a sentence consecutive to another sentence if an offender commits a felony while released
on bond before trial or sentencing in another case."
The KDJA referred to the use of the word "may" in concluding:
"Kansas district judges have experienced cases where the judge felt that a prison
sanction was appropriate when the defendant committed a new crime while on bond
awaiting sentencing in another case. A defendant's conduct while on bond is often a good
indicator of the defendant's ability to abide by the conditions of probation. However,
there are also circumstances where the nonprison sanction remains inappropriate. Thus,
the Kansas District judges urge your support for the language which states that a
defendant may be sentenced consecutively for a new crime committed while on bond.
The Kansas District Judges also support the amendment which would allow the
imposition of a prison sanction even if the crime might otherwise be presumptive
probation."
13
This language explains that the "may" gives the sentencing court the option to sentence a
defendant in Vaughn's position to a prison or a nonprison sanction, because "there are
also circumstances where the nonprison sanction remains inappropriate." Thus, the
KDJA's testimony cuts against Vaughn's contrary view that the word "may" permits a
court to sentence him concurrently under this subsection of the statute.
The Legislature enacted K.S.A. 21-6604(f)(4), not to give courts discretion as to
whether to sentence repeat felons like Vaughn concurrently or consecutively, but to give
courts the power to sentence such defendants to imprisonment even when the new crime
of conviction otherwise presumes a nonprison sentence. That is the thrust of the
testimony above. And that is the issue that sparked enactment of this subsection, as we
explain below.
When enacted in 1993, K.S.A. 21-4603d, the precursor to K.S.A. 21-6604(f), did
not include language about defendants such as Vaughn, who committed a new felony
while on felony bond. Rather, it stated:
"When a new felony is committed while the offender is incarcerated and serving a
sentence for a felony or while the offender is on probation, assignment to a community
correctional services program, parole, conditional release, or postrelease supervision for a
felony, a new sentence shall be imposed pursuant to the consecutive sentencing
requirements of K.S.A. 21-4608, and amendments thereto, and the court may sentence
the offender to imprisonment for the new conviction, even when the new crime of
conviction otherwise presumes a nonprison sentence. In this event, imposition of a prison
sentence for the new crime does not constitute a departure." K.S.A. 1993 Supp. 21-
4603d(a); see L. 1993, ch. 165, § 1.
The Kansas Supreme Court held that this language excluded defendants such as
Vaughn, who committed a new felony while on felony bond. State v. Arculeo, 261 Kan.
286, 293, 933 P.2d 122 (1997). Arculeo committed a new felony while released on bond
14
pending sentence in a prior felony case, as did Vaughn. Although the KSGA provided a
presumptive nonprison sentence for his new crime, the district court sentenced him to
prison. The district court found that Arculeo was on "conditional release" when he
committed the new crime, fitting him within that term in the statute above.
The Kansas Supreme Court reversed, finding that K.S.A. 21-4603d did not include
persons released for a felony under article 28, chapter 22, and inviting the Legislature to
amend the statute if it desired that result:
"The present statute we now consider, K.S.A. 21-4603d, does not contain the
language relied on in Reed to cover a defendant released on bond. Notably absent from
K.S.A. 21-4603d is the language contained in K.S.A. 21-4608(d), which specifically
refers to article 28 of Chapter 22 of the Kansas Statutes Annotated and specifically covers
a case like the one in this appeal where the new felony is committed while the defendant
is on bond awaiting sentences in prior felonies. Had the legislature wanted an accused
charged with a new crime while released on bond for a prior felony to be covered under
the provisions of K.S.A. 21-4603d authorizing imposition of a prison sentence when the
new crime of conviction otherwise presumes a nonprison sentence, it could have added
the language contained in K.S.A. 21-4608(d).
"We hold that a defendant who at the time of sentencing for a new felony had
been released on bond pending sentence in a prior felony case, is not on conditional
release as that term is used in K.S.A. 21-4603d. We further hold that the statutory
provision in K.S.A. 21-4603d authorizing a court to sentence an offender to
imprisonment for a new conviction even when the new crime of conviction otherwise
presumes a nonprison sentence, does not apply to the defendant in this case, who
committed a new felony while on bond pending sentence in a prior felony case."
(Emphasis added.) Arculeo, 261 Kan. at 293.
So a district court lacked the authority to sentence repeat felons such as Vaughn to
imprisonment for a new conviction presumed to be a nonprison sentence, even though the
sentencing statute ("the language contained in K.S.A. 21-4608[d]," now K.S.A. 21-
15
6606[d]) then, as now, required a felon released on bond who committed a new felony to
serve a consecutive sentence. See 261 Kan. at 293.
The Legislature responded to Arculeo by doing exactly what the Supreme Court
invited it to do, granting courts that power. It amended K.S.A. 21-4603d in 1999 to add
language specific to felons such as Arculeo and Vaughn who commit a new felony while
released on bond for a prior felony:
"When a new felony is committed while the offender is on release for a felony
pursuant to the provisions of article 28 of chapter 22 of the Kansas Statutes Annotated, a
new sentence may be imposed pursuant to the consecutive sentencing requirements of
K.S.A. 21-4608 and amendments thereto, and the court may sentence the offender to
imprisonment for the new conviction, even when the new crime of conviction otherwise
presumes a nonprison sentence. In this event, imposition of a prison sentence for the new
crime does not constitute a departure." K.S.A. 1999 Supp. 21-4603d(a)(11); see L. 1999,
ch. 164, § 13.
The Legislature thus gave the district courts the power to impose a new sentence of
imprisonment for felons such as Vaughn, "pursuant to the consecutive sentencing
requirements of K.S.A. 21-4608" (now K.S.A. 2019 Supp. 21-6606), even when the new
crime of conviction otherwise presumed a nonprison sentence. That language changed
stylistically in 2013 to its current language, "a new sentence may be imposed
consecutively pursuant to the provisions of K.S.A. 21-6606." K.S.A. 2013 Supp. 21-
6604(f)(4). Nothing the Legislature did related to the concurrent/consecutive issue, as
Vaughn alleges.
The lens through which Vaughn reads K.S.A. 2019 Supp. 21-6604(f)(4) presumes
that the Legislature meant to address the concurrent/consecutive issue by using the word
"may." But that presumption finds no support in legislative history and invites a
misreading of the statute. The issue this statute addresses is whether the court has the
16
authority to sentence offenders such as Vaughn to prison for a new felony presumed to be
a nonprison sentence. This statute gives the court the ability to impose a new prison
sentence for such felons, but only consecutively, in accordance with the requirements of
K.S.A. 2019 Supp. 21-6606(d). A district court sentencing a defendant for a new felony
committed while on felony bond under that subsection may impose a nonprison sanction
or may impose a prison sanction even though the new crime of conviction otherwise
presumes a nonprison sentence. K.S.A. 2019 Supp. 21-6604(f)(4). In either event, the
sentence must be consecutive, unless the defendant shows manifest injustice. K.S.A.
2019 Supp. 21-6606(d); K.S.A. 2019 Supp. 21-6819(a).
We find it unnecessary to address the alternative analysis raised by the parties and
addressed in our other cases which have decided this issue adversely to Vaughn's
position. See, e.g., State v. Al-Bureni, No. 119,274, 2019 WL 985979, at * 4 (Kan. App.)
(unpublished opinion) (finding no conflict between these statutes because the language in
K.S.A. 2017 Supp. 21-6604[f][4] is broader than in K.S.A. 2017 Supp. 21-6606[d] and
the more specific statute controls), rev. denied 310 Kan. 1063 (2019).
The district court correctly ruled that because Vaughn failed to show manifest
injustice, Vaughn's sentence must be consecutive.
Error in Journal Entry
Finally, as the State points out, the journal entry erroneously states that the district
court applied Special Rule 9: "Crime Committed While Incarcerated, on Probation,
Parole, Conditional Release, or Postrelease Supervision for a Felony." But the sentencing
transcript reflects that the district court applied Special Rule 10 because Vaughn was on
felony bond during the commission of the crime. Generally, "where the sentence
announced from the bench differs from the sentence later described in the journal entry,
the orally pronounced sentence controls." Abasolo v. State, 284 Kan. 299, 304, 160 P.3d
17
471 (2007). The State has noted its intent to prepare a nunc pro tunc journal entry to
correctly reference Special Rule 10 instead of Special Rule 9, and we trust it will do so.
Affirmed.
18 | 01-03-2023 | 08-14-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/3003664/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 08-2544
B ARBARA J. S UAREZ and W ILLIAM G. S UAREZ,
Plaintiffs-Appellants,
v.
T OWN OF O GDEN D UNES, INDIANA;
O FFICERS R OBERT T ROWBRIDGE,
H AROLD M C C ORKEL, K EVIN H UGHES,
K EN T OMASKO, W ILLIAM S MITH, and
JOSEPH R ADIC,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 2:05-cv-225-APR—Andrew P. Rodovich, Magistrate Judge.
A RGUED F EBRUARY 25, 2009—D ECIDED S EPTEMBER 11, 2009
Before F LAUM, W ILLIAMS, and T INDER, Circuit Judges.
T INDER, Circuit Judge. A nasty confrontation between
various law enforcement officials and Barbara Suarez
and her son William resulted in the Suarezes’ arrest. The
officers entered the Suarez home late at night with a
2 No. 08-2544
search warrant they had obtained based on evidence
that an underage drinking party was taking place at the
house. Barbara was charged with contributing to the
delinquency of a juvenile and William was charged with
consumption by a minor, resisting arrest, and battery of
a law enforcement officer. William pleaded guilty to the
consumption and battery charges; the charges against
Barbara were dropped.
After the termination of their criminal proceedings, the
Suarezes filed a § 1983 action against a multitude of
defendants. See 42 U.S.C. § 1983. The Suarezes’ claims
fell into two basic types. First, they alleged that the
search of their house and their arrests violated the
Fourth Amendment. Second, William alleged that the
police used unnecessary force when they arrested him.
All of the defendants were awarded summary judgment
on the Fourth Amendment claims. Most defendants were
similarly granted summary judgment on the excessive
force claim, except for officers Tomasko, Smith, and Radic,
who prevailed at a jury trial. The Suarezes appeal the
denial of summary judgment on the illegal search and
arrest claims and raise an evidentiary issue arising
from the excessive force trial. They limit their appeal to
their claims against the town of Ogden Dunes and six
individual officers from the variety of law enforcement
entities responsible for the Indiana Dunes environs.
I. Background
On the night of his high school graduation in June 2003,
William Suarez had a party at his parents’ house in Ogden
No. 08-2544 3
Dunes, Indiana. The party was apparently typical for the
area: a group of teenagers gathered around a bonfire,
drinking beer on the beach behind the Suarez home. At
11:00 p.m. Robert Trowbridge of the Ogden Dunes Police
Department pulled up in front of the Suarez home to
ticket one of the kids, Gerald Bardeson, for parking on
the road with an invalid permit. After speaking with
Bardeson, Trowbridge let him off without a ticket (despite
noticing alcohol on Bardeson’s breath) and noted that
there appeared to be underage drinking taking place at
the home. While he talked with Bardeson, he was
verbally abused by the partygoers.
Trowbridge pulled to the end of the road and as he
stopped there, several youths jumped on the trunk of his
car. He believed that these youths were from the
Suarez party, but there was at least one other party in-
volving teenagers taking place on the beach that night.
He drove by the house once more and was subjected to
more verbal abuse. After leaving the house, Trowbridge
believed he needed assistance dealing with the party
and went to round up police reinforcements.
Bardeson, meanwhile, left for home after he spoke with
Trowbridge. He felt the party was getting out of control
and that everyone was going to end up in jail. Bardeson
wasn’t able to avoid the long arm of the Ogden Dunes
law, however; Officer Trowbridge and his reinforce-
ments descended on him after he parked at a tennis court
across the street from his house. There, after Bardeson
allegedly resisted arrest, he was pepper-sprayed,
handcuffed, and possibly set upon by a K-9. Bardeson
4 No. 08-2544
was trundled off to jail but his part in our story ends
there. He pleaded guilty to a charge of being a minor
consuming alcohol in order to put the whole incident
behind him.
As Trowbridge and his reinforcements were rounding
up Bardeson, William Suarez was wrapping up the
party. He went outside, told everyone who was leaving
to take off, put out the bonfire, and invited nine of his
friends to stay the night. The town had a beach curfew of
midnight, so this was when parties usually ended. But,
Barbara Suarez also had a bad feeling that Trowbridge
would be back to cause trouble, so she had the kids
come upstairs to sleep in her room (she was also con-
cerned about their continued access to alcohol, which she
alleges she discovered they were drinking after the
party broke up).
After arresting Bardeson, Trowbridge returned to the
Suarez house with at least eight to ten squad cars. (It must
have been a slow night for law enforcement in the
Ogden Dunes area.) When the police arrived at 11:53 p.m.,
there were no kids in the street or the yard but there
were still multiple cars parked around the residence.
Some of these cars were in the driveway, which held up
to six cars. Others had valid temporary parking passes
and were parked on the road in front of the house. Be-
lieving that the party was continuing in the house,
Trowbridge called a local judge for a search warrant.
The judge heard the following facts in Trowbridge’s
application for the warrant: Trowbridge reported that he
“came across a whole bunch of kids” standing in the
No. 08-2544 5
driveway of the Suarez home when he was issuing a
ticket for an illegally parked car. After deciding not to
issue the ticket, he was turning around to leave when
“a few of the kids approached the squad car and jumped
on the roof and got up on the trunk of the car.” The
kids “come [sic] back three more times and jumped on
the car and the hood again.” He testified that when he
went to chastise the kids, there was a group “screaming
and yelling and laughing in the driveway” and he
decided to go get backup. After backup arrived, “we
found three bottles, containers of (unintelligible) 1 around
the house. All the kids retreated into the home.” Respond-
ing to the judge’s question, Trowbridge testified that the
bottles “were laying in the backyard,” that the children
“looked anywhere from sixteen to twenty,” and he be-
lieved they had been consuming alcohol. He finally
testified that he sought a warrant to go into the home
and “determine the facts” and that “we shown [sic] the
light through the window and could see kids hiding
behind the couches.” The judge issued a warrant authoriz-
ing entry into the Suarez home to search the premises.
At approximately 12:30 a.m., after the police knocked
on the door (and possibly called the house) a disputed
number of times, they broke down the door with a
ramrod and arrested Barbara and William (after wrestling
him out of the attic and pepper-spraying him). They
1
It’s unfortunate that this word is unintelligible, but it’s clear
from the context and the parties’ deposition testimony that
the word is “beer.” The Suarezes do not dispute this.
6 No. 08-2544
breathalyzed the other boys at the house, arresting
those who tested positive for alcohol.
After the disposition of their criminal cases, the
Suarezes sued pursuant to 42 U.S.C. § 1983, alleging that
their Fourth Amendment rights were violated by the
search and subsequent arrests, because neither was
supported by probable cause. William Suarez also
alleged that the police had used excessive force in his
arrest. The case was assigned by the parties’ consent to
a magistrate judge, who granted summary judgment for
the defendants on the issue of probable cause and sum-
mary judgment to certain other officers on the excessive
force claim. William Suarez’s case against three officers
proceeded to trial on the issue of police brutality, where
the defendants prevailed. We now take up the Suarezes’
appeal.
II. Analysis
A. Was there probable cause for the search of the
Suarez home? 2
We review a grant of summary judgment de novo,
drawing all inferences in favor of the non-moving party.
2
Defendants argue that the plaintiffs are estopped from
relitigating the probable cause issue because the matter was
decided in a state suppression proceeding. Whitley v. Seibel, 676
F.2d 245, 248 (7th Cir. 1982). We are not so sure. See Best v.
City of Portland, 554 F.3d 698, 699 (7th Cir. 2009). In any event,
we need not decide the viability of this defense because the
plaintiffs’ argument fails on the merits.
No. 08-2544 7
Steen v. Myers, 486 F.3d 1017, 1021 (7th Cir. 2007). Summary
judgment is only appropriate when “the evidence in the
record shows no genuine issue of material fact and the
moving party is entitled to judgment as a matter of
law.” Id. (citing Fed. R. Civ. P. 56(c)).
The Suarezes’ illegal search claim depends on whether
the police had probable cause to support a search of the
Suarez home. Probable cause exists when “the known
facts and circumstances are sufficient to warrant a man
of reasonable prudence in the belief that . . . evidence of
a crime will be found.” Ornelas v. United States, 517 U.S.
690, 696 (1996); United States v. Lowe, 516 F.3d 580, 585
(7th Cir. 2008). Probable cause deals with beliefs, not
certainties. United States v. Sokolow, 490 U.S. 1, 8 (1989). It
is a “fluid concept” that depends on the context in
which it is being assessed. Ornelas, 517 U.S. at 696.
Probable cause is a matter of common sense, based on
the “factual and practical considerations of everyday
life.” Id. at 695. “In making probable-cause determinations,
law enforcement agents are entitled to draw reasonable
inferences from the facts before them, based on their
training and experience.” United States v. Funches,
327 F.3d 582, 586 (7th Cir. 2003); see also Groh v. Ramirez,
540 U.S. 551, 575 (2004) (Thomas, J., dissenting) (“The
point of the Fourth Amendment . . . is not that it denies
law enforcement the support of the usual inferences
which reasonable men draw from evidence. Its pro-
tection consists in requiring that those inferences be
drawn by a neutral and detached magistrate instead
of being judged by the officer engaged in the often com-
petitive enterprise of ferreting out crime.” (alteration in
8 No. 08-2544
the original) (quoting Johnson v. United States, 333 U.S. 10,
13-14 (1948))). “Probable cause is only a probability or
substantial chance of criminal activity, not a certainty
that a crime was committed.” Beauchamp v. City of
Noblesville, Ind., 320 F.3d 733, 743 (7th Cir. 2003).
The Suarezes do not contend that the judge Officer
Trowbridge spoke to should not have issued a search
warrant for their home. Instead, they challenge the
veracity of the statements Trowbridge made in sup-
porting his request for the warrant. This is tough sled-
ding. The affidavit (in this case, the sw orn
telephonic testimony) supporting a search warrant
carries with it a presumption of validity. Franks v.
Delaware, 438 U.S. 154, 165, 171 (1978); Molina ex rel. Molina
v. Cooper, 325 F.3d 963, 968 (7th Cir. 2003). To survive
summary judgment the plaintiffs must “provide
evidence that the officers knowingly or intentionally or
with a reckless disregard for the truth made false state-
ments to the judicial officer” and show that “the false
statements were necessary to the judicial officer[’s] deter-
mination[] that probable cause existed.” Molina, 325 F.3d
at 968 (quotation omitted). The same standard applies
to any alleged omissions in the warrant. Id. “Immate-
rial” misstatements or omissions do not invalidate the
warrant. Id.
The plaintiffs’ theory of the case rests in large part on
the personal animus that they allege existed between
Trowbridge and themselves—an animus that, they
argue, had resulted in a feud that culminated in their
arrest. They argue that Trowbridge lied when he told
No. 08-2544 9
the judge that kids could be seen hiding behind furni-
ture. He also misled the judge, they claim, by implying that
he had seen kids retreat into the house, when in reality he
had returned to find all the kids gone. They say that
Trowbridge specifically skipped over the timing issues that
made the probable cause determination in this case diffi-
cult; his statement to the magistrate implies that he had
essentially seen the kids go into the house while waiting
for his backup.
The question is whether any statement or omission
that the Suarezes challenge was intentionally or recklessly
false, and whether it was material to the issuance of the
warrant. Their allegations can be grouped into two
basic categories. The first group concerns the timing of
the warrant. The second concerns misrepresentations
regarding the physical evidence at the scene. Neither
category of evidence the Suarezes offer is sufficient to
overturn the affidavit’s presumption of validity.
The first category of disputed evidence includes the
Suarezes’ allegations that Officer Trowbridge omitted the
timing between the events with the kids in the Suarez
driveway and the time the officers returned to find the
house dark. They further argue that his formulation
that “[a]ll the kids retreated into the home” misleadingly
implied that Officer Trowbridge saw the kids go into
the home. They also argue that Offcer Trowbridge ne-
glected to mention that Gerry Bardeson, to whom
Trowbridge had referred to specifically throughout
his application for the warrant, had already been
arrested by the time the police sought the warrant, and
10 No. 08-2544
that he was the only known minor drinking at the house.
The Suarezes argue that Trowbridge’s combination of
omissions and misrepresentations elided the gap in time
that made it impossible to connect anything taking
place outside the Suarez home at 11:00 p.m. with what
was taking place in the home at 11:53 p.m.
However, the undisputed facts indicate that none of
Trowbridge’s statements or omissions was materially
false. First, it is undisputed that there were several cars
still parked around the Suarez home, both in the street
and in the driveway; the presence of these cars and the
fact that no one was in the street, outside the house
or behind the house on the beach, provided ample basis
for Trowbridge’s claims that the teenagers “retreated
into the house.” This was therefore not a misrepresenta-
tion. Second, a gap of fifty-three minutes between ob-
serving the rowdy behavior of the youths and a decision
to enter into the home does not sever the connection
between the illegal behavior that Trowbridge witnessed
and a belief that illegal activity was occurring in the
home, or that evidence of the illegal activity would be
found there, particularly since the parked cars gave rise
to an inference that a gathering was still taking place.
The omission of the timing therefore was not material to
the determination of probable cause. Finally, had
Trowbridge specifically mentioned Bardeson’s arrest, it
would only have bolstered his claim that there was under-
age drinking taking place at the Suarez residence, since
Bardeson was arrested for consuming alcohol and he
had just left the residence. Failure to mention this fact
was, again, not material to the probable cause determina-
tion.
No. 08-2544 11
The second class of the Suarezes’ claims attack the
specific evidence that Trowbridge referred to in the
warrant application. The Suarezes argue that only one
officer—not Trowbridge—actually claimed to have
seen someone hiding in the house. Trowbridge, they
also note, testified during a deposition in the civil case
that he did not personally see bottles around the
house. They complain that the kids who jumped on
Trowbridge’s car could not be positively traced to the
gathering at the Suarez home. And they argue no plastic
cups, beer bottles, or other alcoholic beverages were
photographed outside the residence.
But the Suarezes are nit-picking. It is true that
according to some of their witnesses, there was at least
one other party taking place on the beach that night, but
Trowbridge’s car was leapt on shortly after he had been
hassled specifically by kids at the Suarez home. This
allowed him to draw an extremely reasonable inference
that unruly kids were present at the home he wished
to search. Similarly, while it is true that Trowbridge
personally did not find beer bottles, he swore in his
application for the warrant that other officers found
the bottles and reported it to him. He made the same
statement regarding the teenagers hiding in the house,
a statement that is backed up by another officer on the
scene, Park Ranger Chorba. Officer Trowbridge was
entitled to rely on the collective knowledge of all the
investigating officers in making out his warrant request.
United States v. Parra, 402 F.3d 752, 764 (7th Cir. 2005).
The Suarezes say that Chorba was lying, and that all
the kids were upstairs in the house. Given that William
12 No. 08-2544
admitted in his deposition to looking out of the house
and seeing the cops assembling, both sides’ versions of
the facts are easy to reconcile and we think that this was
probably not a misrepresentation. The Suarezes had been
tipped off by a neighbor that a phalanx of squad cars
was lining up down the street, which explains William’s
furtive glances at the action taking place outside his
house. Furthermore, even if Chorba’s statement was
incorrect, the plaintiffs must show that Trowbridge’s
reliance on it was a reckless misrepresentation; they
cannot. Finally, even if there were a genuine dispute
over what Chorba actually saw, we do not think it a
material one; the validity of the warrant did not hinge
on the officers’ ability to spot kids in the house. Given the
presence of the cars outside the home, the teenagers’
presence within, as noted, was a reasonable inference
for the officers to make.
Regarding whether or not cups or bottles were tagged
into evidence, the Suarezes cannot seriously argue that
the officers’ reference to any of the aforementioned evi-
dence was a misrepresentation. Given that other officers
supported the assertion that bottles were outside the
home and that both parties’ witnesses testified at deposi-
tion that there were coolers of beer at the party, the
Suarezes fall far short of establishing that Trowbridge
lied when he testified that the bottles were seen in the
backyard. More broadly, despite the quibbles that the
Suarezes have with Officer Trowbridge’s warrant
request, they cannot contest that the facts on the ground
were much as he described them to the magistrate. Accord-
ingly, they fall short of establishing the intentional or
No. 08-2544 13
reckless misrepresentations or omissions that the Franks
standard requires. The grant of summary judgment in
the defendants’ favor was, therefore, appropriate.
B. Legality of the Suarezes’ Arrests
The Suarezes next argue that their arrests were illegal
because the police did not have probable cause to be in
their home. Because we find that probable cause for the
search warrant existed, this argument necessarily fails.
This disposes of William’s claim. Barbara Suarez also
hints that probable cause did not exist to arrest her, even
if it did exist to enter the home, because there was no
evidence that she supplied the alcohol or encouraged
anyone to drink. But, as the Indiana Court of Appeals
has held, a homeowner’s decision to permit minors to
consume alcohol in her home is sufficient to violate Indi-
ana’s contributing to the delinquency of a minor statute.
IND. C ODE 35-46-1-8 (penalizing an adult who “knowingly
or intentionally encourages, aids, induces, or causes a
person less than 18 years of age to commit an act of delin-
quency”); Rush v. Indiana, 881 N.E.2d 46, 54 (Ind. Ct. App.
2008). Given that the police had reason to believe, as
we’ve discussed, that minors were consuming alcohol at
the Suarez home, and that Barbara Suarez was on
the premises, surrounded by teenagers who were
breathalyzed and arrested, and had not responded to
the officers’ request for entry, the undisputed facts
show that there was probable cause for her arrest.
14 No. 08-2544
C. Admissibility of Evidence
William Suarez also challenges the trial court’s refusal
to admit portions of an audiotape of police activity that
night; he wanted to use the portions of the tape to show
that the officers on trial were insistent on getting and
executing a warrant. These recordings, William argues,
would impeach the officers’ contention at trial that they
did not have an integral role in the decision to search
the Suarez home. We review a judge’s decision to
exclude evidence for an abuse of discretion. United States
v. L.E. Myers Co., 562 F.3d 845, 855 (7th Cir. 2009). We
will find error only where “no reasonable person could
take the view adopted by the trial court.” Id. (quotation
omitted).
The recording William sought to admit was captured by
a microphone worn by Trowbridge. The microphone
recorded conversations beginning with the decision to
seek a warrant to search the Suarez home. The trial
judge admitted the recording beginning with the entry
into the Suarez home but excluded the earlier portion
that contained the officers’ discussion of whether to
execute the warrant.
The judge excluded the earlier conversations because
he found that their relevance was outweighed by the
confusion of issues that the evidence’s admission
would engender. See F ED. R. E VID. 403. The sole issue at
trial was whether the police officers used excessive
force after they had entered the house and arrested Wil-
liam Suarez. The issue was not whether the officers
had probable cause to enter the house. We find it reason-
No. 08-2544 15
able for the judge to believe that evidence of the steps
taken to secure the warrant would confuse the jury on
the force issue. Thus, there was no abuse of discretion.
III. Conclusion
For the foregoing reasons, the judgment of the district
court is A FFIRMED.
9-11-09 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3003574/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted August 12, 2009
Decided August 12, 2009
Before
FRANK H. EASTERBROOK, Chief Judge
MICHAEL S. KANNE, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
No. 08‐3653
Appeal from the United States District
UNITED STATES OF AMERICA, Court for the Eastern District of
Plaintiff‐Appellee, Wisconsin.
v. No. 07‐CR‐303
CHRISTOPHER T. JACKSON, William C. Griesbach,
Defendant‐Appellant. Judge.
O R D E R
Christopher Jackson pleaded guilty to one count of armed bank robbery and one
count of being a felon in possession of a firearm. See 18 U.S.C. §§ 2113(a) & (d) and 922(g)(1)
and (2). Jackson’s plea agreement included a waiver of his right to appeal any sentence
within the statutory maximum that did not result from ineffective assistance of counsel or
consideration of constitutionally impermissible factors. The district court sentenced Jackson
to 115 months, the top of the guidelines range. Jackson filed a notice of appeal, but his
appointed counsel now seeks to withdraw under Anders v. California, 386 U.S. 738 (1967),
because he cannot discern a nonfrivolous basis for appeal. Jackson has not accepted our
invitation to comment on counsel’s motion; thus, we limit our review to the potential issues
identified in counsel’s facially adequate brief. See CIR. R. 51(b); United States v. Schuh, 289
F.3d 968, 973‐74 (7th Cir. 2002).
No. 08‐3653 Page 2
Counsel informs us that Jackson wants his guilty plea vacated, see United States v.
Knox, 287 F.3d 667, 670‐71 (7th Cir. 2002), but because Jackson did not move to withdraw his
plea in district court, we would review the plea colloquy for plain error in evaluating
whether the plea was voluntary. United States v. Griffin, 521 F.3d 727, 730 (7th Cir. 2008).
We agree with counsel that any argument challenging the voluntariness of Jackson’s
plea would be frivolous. The district court’s plea colloquy with Jackson was extensive. The
judge covered at length the elements of the charged offenses, the corresponding minimum
and maximum statutory penalties, restitution, and special assessment, see FED. R. CRIM P.
11(b)(1)(F),(G),(H), and (I), his right to a jury trial and the rights he would give up by
forgoing a jury trial, see id. at 11(b)(1)(C)(D)(E), and the consequences of his appeal waiver,
see id. at 11(b)(1)(N). The judge repeatedly asked Jackson if he understood the rights he
would surrender by pleading guilty, and Jackson repeatedly and each time unequivocally
answered that he did. As counsel points out, the judge failed to discuss Jackson’s right to
plead not guilty, see id. at 11(b)(1)(B) or his right to trial counsel, see id. at 11(b)(1)(D), but
considering that he had initially pleaded not guilty before his change‐of‐plea‐hearing and
had been represented by counsel throughout, Jackson was likely aware of these rights. See
id at Rule 11(h); Knox, 287 F.3d at 670; see also United States v. Driver, 242 F.3d 767, 769 (7th
Cir. 2001).
We also agree with counsel that any argument challenging Johson’s sentence would
be frivolous. We will enforce an appeal waiver if it is part of a voluntary plea, United States
v. Linder, 530 F.3d 556, 561 (7th Cir. 2008), and Jackson’s appeal waiver forecloses any
argument challenging his sentence except a claim that the district court relied on a
constitutionally impermissible factor or that the sentence exceeded the statutory maximum,
see United States v. Bownes, 405 F.3d 634, 637 (7th Cir. 2005); see also United States v. Lockwood,
416 F.3d 604, 608 (7th Cir. 2005). Neither of those issues is relevant here.
Finally, counsel considers whether Jackson could argue that he received ineffective
assistance of counsel. As counsel points out, ineffective assistance claims are better suited
to collateral review, at which time a full record can be developed. See United States v. Harris,
394 F.3d 543, 557‐58 (7th Cir. 2005).
Accordingly, we GRANT counsel’s motion to withdraw and DISMISS the appeal. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/8569596/ | *315TEXTO COMPLETO DE LA SENTENCIA
Los hechos que originan la reclamación de epígrafe guardan relación con un contrato de mudanza y el alegado incumplimiento por la compañía Montaña Moving & Shipping Express, Inc., (en adelante Montaña Moving) contratada para el servicio. La señora Marisol de la Rosa contrató un servicio de mudanza de Puerto Rico al estado de Florida en los Estados Unidos. Parte de la mudanza se extravió y algunos muebles se rompieron. Montaña Moving admitió el extravío de parte de la mudanza, pero sostiene que su responsabilidad asciende al monto del seguro que le compró la señora de la Rosa. Sostuvo la recurrida, además, que las sumas reclamadas son exageradas. La resolución dictada por la Comisión de Servicio Público (en adelante la Comisión) declaró ha lugar la reclamación y concedió tres mil trescientos veintiséis dólares con ocho centavos en concepto de muebles rotos, pago de seguro, gastos, sufrimientos y angustias mentales.
La señora de la Rosa Rodríguez incoó un recurso de revisión contra la determinación de la Comisión en el que sostiene que debió anularse el contrato de seguro suscrito entre las partes, que se le requirió un quántum de prueba mayor al que dispone la ley y que los daños sufridos le fueron subestimados.
Evaluado el recurso y por los fundamentos que se expondrán a continuación, resolvemos modificar la determinación de la Comisión en cuanto a las partidas de daños concedidas y los honorarios.
II
La señora Marisol de la Rosa y su esposo Ernesto Osorio Correa resolvieron mudar su familia de Puerto Rico al estado de Florida en los Estados Unidos. A los fines de realizar la mudanza contrataron los servicios de Montaña Moving. Dicha compañía se dedica al negocio de mudanzas locales e internacionales y tiene licencia vigente en la Comisión.
Un representante de Montaña Moving visitó a la recurrente durante el mes de agosto de 1997 y le sometió un estimado del costo de los servicios.
La recurrente contrató los servicios de mudanza de Montaña Moving para trasladar sus pertenencias y mobiliario de su residencia en Río Piedras a Tampa, en Florida. El precio acordado por los servicios fue de $1,150 y la recurrente pagó, además, un seguro de $62 para un total de $1,212. La señora de la Rosa pagó el monto del contrato según acordado.
Los empleados de Montaña Moving comparecieron a la casa de la señora de la Rosa el 2 de septiembre de 1997 para empacar los muebles grandes. La señora de la Rosa empacó la ropa y otras pertenencias personales en cajas provistas por la recurrida. El contrato identifica los siguientes artículos recogidos por Montaña Moving para la mudanza: cinco piezas de comedor; tres piezas de cuarto de niño; tres piezas de balcón; una cuna; un TV de 25" y su mesa; tres piezas de sala; dos mesas de sala; un espejo; una máquina de coser; un aire *316acondicionado y veintitrés cajas. La recurrente aseguró su mudanza por $4,600. El contrato le fue entregado a la recurrente el día que el recurrido recogió la mudanza. (Transcripción, pág. 54.)
Las 23 cajas PBO (pack by owner), fueron empacadas por la recurrente en recipientes provistos por la recurrida. Estas fueroniaseguradas por $1,500.
La mudanza fue entregada a la recurrente en Tampa seis semanás más tarde, el 27 de octubre de 1997, que resultó ser dos semanas más tarde de lo acordado.
Durante la entrega de la mudanza, la señora de la Rosa informó por escrito a los representantes de Montaña Moving que faltaban cinco cajas (PBO) que, de acuerdo con el inventario, estaban numeradas como artículos 113, 127, 130, 131 y 132. Además, la recurrente identificó en la entrega otros dos muebles rotos, numerados como 115 y 154.
La recurrente sostuvo varias comunicaciones telefónicas con el representante de Montaña Moving en tomo a la pérdida sufrida y los muebles averiados durante la mudanza.
La inacción de Montaña Moving provocó que la señora de la Rosa les remitiera una carta el 17 de noviembre de 1997, en la que identificó los bienes muebles extraviados en las cajas perdidas y reiteró su reclamo de que se le entregara la propiedad o se le compensara justamente por ella. En la carta se identificaban artículos perdidos, tales como zapatos, ropa, manteles, vajilla, artículos de cocina, bicicleta y cuadros. Se identificaron en la carta otros muebles que estaban rotos, a saber: silla de balcón, gavetero, mesa de noche, un mattress, head board, tela del juego de sala, mesa de la máquina de coser y un jarrón decorativo.
La recurrente reiteró su reclamación en una segunda carta de 1 de abril de 1998, en la que valoró los bienes perdidos o dañados y estimó el monto de los daños sufridos $10,374.50. El recurrente no contestó tales cartas.
Como resultado del extravío, la recurrente y su familia sufrieron serios trastornos familiares, que incluyeron la pérdida de ropa, objetos con valor sentimental de la familia, como álbumes de la historia de la hija y album y recordatorios de boda; sentirse desvalido y abandonado en un lugar donde arribó recientemente sin sentir apoyó o interés de la recurrida y, por el contrario, despreocupación por atender sus reclamos. La recurrida no realizó gestiones para aclarar con el Servicio de Aduana la pérdida o reclamación, más allá de una comunicación ligera e inconsecuente. La recurrida no brindaba información de las gestiones que realizaba para resolver el problema. La recurrente tuvo pérdida monetaria del valor de los bienes y sufrió serias angustias mentales.
La señora de la Rosa presentó una querella en la Comisión el 25 de enero de 1999.
Montaña Moving contestó la querella y atribuyó la pérdida de las cajas al Servicio de Aduana Federal que inspeccionó el furgón donde trasladaban la mudanza. Sostuvo, además, que mediante una carta reclamó a la agencia federal los bienes extraviados.
La Comisión concluyó que los actos y omisiones de Montaña Moving causaron daños a la señora de la Rosa y su familia. La Comisión concedió por el valor de las cajas extraviadas $326.08, por los daños a los bienes muebles averiados, rotos o dañados $2,300 y por los sufrimientos, angustias y contratiempos causados a la recurrente $700 para un total de $3,326.08.
Inconforme con la determinación, la recurrente presentó una solicitud de revisión. La recurrente sostiene que la Comisión erró al no anular el contrato de servicios, que se. requirió a la recurrente un quántum de prueba mayor al requerido en acciones civiles, que los daños sufridos fueron subestimados y que no se concedió honorarios de abogados.
*317Ill
El Art. 20 (a) de la Ley de Servicio Público de Puerto Rico, Ley 109 de 28 de junio de 1996, según enmendada, 27 L.P.R.A. sec. 1107, le reconoce a la Comisión facultad para imponer la concesión de daños.
“(a) Cuando la Comisión, luego de celebrada audiencia determinare que cualquiera tarifa cobrada, acto realizado u omitido, o práctica puesta en vigor, ha infringido cualquier orden, fuere injusta o irrazonable, estableciere diferencias o preferencias injustificadas o indebidas o que la tarifa cobrada excede la radicada, publicada y vigente a la fecha en que se prestó el servicio, podrá ordenar a la compañía de servicio público o porteador por contrato que pague al perjudicado, dentro del tiempo razonable que se especifique, el importe de los daños y perjuicios sufridos como resultado de la tarifa, acto, omisión o práctica injusta, irrazonable o ilegal. La orden que a ese efecto se expida contendrá conclusiones de hechos y la cuantía que ha de pagarse. ” (Énfasis suplido).
El Tribunal Supremo, al interpretar el alcance y amplitud del citado Art. 20, reconoció la facultad que tiene la Comisión para imponer el pago de daños en el caso de Vera v. Pavesi, 116 D.P.R. 55, 58 (1985)
Somos del criterio que dicho precepto legal [el Art. 20] faculta a la Comisión de Servicio Público a conceder indemnización monetaria a un usuario de una compañía de servicio público, o porteador por contrato, únicamente en aquellos casos en que éste se ve afectado o sufre daños: 1 — al ser "víctima" de una tarifa, práctica puesta en vigor, acto, u omisión que (a) infrinja cualquier orden de la Comisión, o (b) resulta injusta o irrazonable, o (c) establece diferencias o preferencias injustificadas o indebidas, y 2 — cuando le es cobrada una tarifa que excede la radicada, publicada y vigente a la fecha en que se prestó el servicio.
La doctrina jurisprudencial reconoce a la Comisión expertise en la concesión de daños cuando la reclamación tiene una relación directa y sustancial con el servicio público que presta la empresa y se requiere aplicar el conocimiento especializado de la agencia para resolver la controversia. Rovira Palés v. PR Telephone Co., 96 D.P.R. 47, 52-53 (1968); Viajes Gallardo v. Clavell, 131 D.P.R. 275, 288 (1992).
La concesión de daños por la Comisión ha tomado diversas formas. En el caso de Viajes Gallardo v. Clavell, supra, se validó el resarcimiento de daños materiales, contratiempos, angustias y sufrimientos mentales cuando una agencia de viaje no provee un alojamiento seguro.
Las determinaciones de las agencias administrativas especializadas merecen gran deferencia y respeto. Misión Industrial de Puerto Rico v. J.C.A., 145 D.P.R. 908 (1998); Metropolitana S.E. v. A.R.P.E., 138 D.P.R. 200 (1995).
La Ley de Procedimiento Administrativo Uniforme, Ley 170 de 12 de agosto de 1988, 3 L.P.R.A. see. 2102 et seq. (en adelante L.P.A.U.), en su sección 4.5, 3 L.P.R.A. see. 2175, establece los límites de la revisión judicial de decisiones administrativas y reitera el principio de que las determinaciones de hechos de las agencias serán sostenidas por el Tribunal si se basan en evidencia sustancial que obre en el expediente administrativo. Hilton Hotels v. Junta de Salario Mínimo, 74 D.P.R. 670 (1953).
Las conclusiones de derecho de los organismos administrativos que no involucren interpretaciones efectuadas dentro del ámbito de la especialización de la agencia concernida, son revisables en toda su extensión. Rivera v. A. & C. Development, 144 D.P.R. 450 (1997).
El Tribunal de Apelaciones podrá intervenir en la apreciación de la prueba cuando la agencia recurrida, en la decisión que emite, no toma en cuenta e ignora, sin fundamento para ello, un hecho material importante que no podía ser pasado por alto; a cuando, por el contrario, la agencia administrativa, sin justificación y fundamento alguno para ello, le concede gran peso y valor a un hecho irrelevante e inmaterial y basa su *318decisión exclusivamente en el mismo; o cuando, no obstante considerar y tomar en cuenta todos los hechos materiales e importantes y descartar los irrelevantes, la agencia administrativa livianamente sopesa y calibra los mismos. Pueblo v. Ortega Santiago, 125 D.P.R. 203 (1990); Ramírez v. Policía de P.R., 158 D.P.R._(2002), 2003 J.T.S. 3.
Varios planteamientos en la apelación guardan relación con la consideración de la evidencia desfilada y el quantum requerido por la Comisión para establecer hechos.
La L.P.A.U. pretende brindar a los ciudadanos un servicio público de excelencia y eficiencia. Además, pretende ordenar los procesos administrativos decisionales y posibilitar al ciudadano mecanismos efectivos para conocer las determinaciones de las agencias y cuestionarlas cuando no estén conformes. 3 L.P.R.A. see. 2101, et seq.
La Sec. 3.13 de la LPAU, 3 L.P.R.A. see. 2163, dispone las normas y aspectos del derecho probatorio que serán aplicadas durante las vistas administrativas:
“Vista — Procedimiento:
(a)...
(b)...
(c) El funcionario que presida la vista podrá excluir aquella evidencia que sea impertinente, inmaterial, repetitiva o inadmisible por fundamentos constitucionales o legales basados en privilegios evidencíanos reconocidos por los tribunales de Puerto Rico.
(d)...
(e) Las Reglas de Evidencia no serán aplicables a las vistas administrativas, pero los principios fundamentales de evidencia se podrán utilizar para lograr una solución rápida, justa y económica del procedimiento. (Enfasis nuestro)
IV
Montaña Moving fue negligente en el cuido y manejo de la mudanza de la señora de la Rosa y no cumplió con su obligación de proteger los bienes que recibió para custodia y traslado. El recurrido tenía la obligación de examinar la integridad de la mudanza y requerir al Servicio de Aduana explicación inmediata en tomo a la desaparición de bienes. La compañía Montaña Moving se enteró del extravío de las cajas cuando la señora de la Rosa le reclamó durante la entrega de la mudanza. Además, la ruptura de otros muebles implica falta de cuidado y protección en el empaque o no dar la debida protección a los artículos y ello evidencia conducta negligente.
La Comisión de Servicio Público concluyó correctamente que Montaña Moving era responsable y responde en daños y peijuicios por los sufrimientos y angustias que provocó a la recurrente. Al estimar los daños ocasionados a la familia, erró la agencia administrativa, pues subestima aspectos esenciales de los daños causados que debemos corregir.
Resulta evidente el malestar, incomodidad, ansiedad y preocupación que ocasiona a una familia recibir una mudanza incompleta y la parte que recibieron tenía varios muebles rotos. Las gestiones realizadas por la recurrente con la compañía de mudanza eran infructuosas y trasluce una desidia notable de la recurrida en la atención de la queja y en la búsqueda de explicaciones del porqué de la pérdida de la mudanza. Las cartas dirigidas por la recurrente a la recurrida ocurren en un intervalo del mes de noviembre hasta el siguiente mes de *319abril, sin que se presentara en el récord contestación alguna más allá de una explicación superficial de que alegaban que era el Servicio de Aduana el responsable de la pérdida de los bienes.
Lo que olvida Montaña Moving es que era su obligación y responsabilidad contractual realizar la mudanza y responder por las pérdidas de la misma.
De igual forma es responsable, al amparo del Art. 20 de la Ley de la Comisión, por los daños y perjuicios ocasionados al ciudadano que lo contrata de buena fe.
La resolución de la Comisión repite, en varias ocasiones, que la señora de la Rosa no presentó prueba corroborativa en apoyo de su reclamo y hace alusión a la ausencia de documentos que corroboren su testimonio. Pierde de vista la Comisión que el derecho probatorio establece como norma que para establecer un hecho no se requiere certeza matemática y es suficiente el testimonio de un testigo que merezca credibilidad sin necesidad de prueba corroborativa. 32 L.P.R.A. Ap. IV, R. 10 (c) y (d). Requerir a una familia que localice cheques, recibos de compra y evidencia documental de cómo se adquirieron las cosas extraviadas en circunstancias en que han tenido problemas con la mudanza, es irrazonable.
Montaña Moving contrató realizar una mudanza y tenía la obligación y responsabilidad de manejo y cuido de la mudanza y trasladarla de forma segura y eficaz. No hacerlo implica incumplimiento del contrato y responsabilidad por los daños ocasionados a la familia de la Rosa.
Del examen de las partidas concedidas por la Comisión, entendemos que se subestima la correspondiente a los daños y perjuicios. Recuérdese que se trata de una familia que recién comenzaba una vida en la ciudad de Tampa, Florida, y aguardaba, para establecer su hogar, los muebles cuyo cuido había encomendado a Montaña Moving. El extenso testimonio de la señora de la Rosa, transcrito y sometido ante nuestra consideración, refleja y evidencia una familia afectada en su ajuste en la nueva ciudad, ansiosa por la pérdida de sus pertenencias, por la ausencia de explicaciones y la evidente responsabilidad de la compañía de mudanza. Algunos de los objetos extraviados tienen un enorme valor sentimental e irremplazable. Nos referimos a objetos, tales como el álbum de boda, álbum y fotos que recogen la historia de sus hijos. Objetos tangibles como un libro de costura especializado, mesas, sillas y otros muebles.
Por los sufrimientos y angustias sufridos por la recurrente y causados por Montaña Moving, se modifica la partida concedida por la Comisión de $700 y se concede la suma de $7,000.
Confirmamos las otras partidas concedidas y las partidas denegadas.
La recurrente firmó un seguro que protegía el valor de los bienes en cada caja por la suma de $65.20. El contrato está firmado por las partes y la recurrente aceptó en su testimonio ante la Comisión que le fue entregado el día en que recogieron la mudanza. El contrato era simple, estaba escrito en los idiomas inglés y español y no vemos razón por la cual anularlo. La recurrente aseguró cada caja por la suma de $65.20 y tiene derecho a que se le pague el seguro correspondiente a cinco cajas extraviadas para un total de $326.10.
La Comisión concede una importancia desproporcionada a la existencia del seguro entre las partes. Si bien no concluimos que debemos anular el contrato sometido entre las partes, queda claro para nosotros que la responsabilidad adicional de Montaña Moving se relaciona con los sufrimientos, inconvenientes y angustias ocasionados a la familia.
La Comisión concedió correctamente una partida por los daños ocasionados a los muebles descritos en el contrato y en el "Household Goods Descriptive Inventory" que asciende a $2,300.
*320Finalmente, el recurrente reclama la imposición de honorarios. La LPAU reconoce a las agencias administrativas poder para imponer honorarios cuando medie una conducta temeraria tal y como se conceden en los casos que dispone la Regla 44 de Procedimiento Civil. 3 L.P.R.A. sec. 2170(a).
En consideración a los hechos descritos que evidencian una actitud temeraria, contumaz y despreocupada del recurrido, imponemos la suma de $1,000 de honorarios. 3 L.P.R.A. 2170 (a); 32 L.P.R.A. Ap. Ill, R. 44.1. En tal adjudicación consideramos el comportamiento despreocupado de la recurrida antes de radicarse la querella ante la Comisión y su actitud durante el litigio. Raoca Plumbing v. TransWorld, 114 D.P.R. 464 (1993).
Examinado el expediente y considerada la transcripción de evidencia sometida por las partes, resolvemos modificar la resolución de la Comisión a los únicos fines de aumentar la partida de daños concedida a la recurrente y la imposición de honorarios. Se concede a la recurrente la suma de $7,000 en daños y perjuicios y $1,000 de honorarios de abogado.
Por los fundamentos anteriormente expuestos, se expide el auto y se modifica la resolución recurrida par.a aumentar la partida de $700 concedida a la recurrente como compensación por los sufrimientos y angustias mentales a la suma de $7,000 y para concederle $1,000 en concepto de honorarios de abogado, y así modificada se confirma.
Así lo pronunció y manda el Tribunal y lo certifica la Secretaria General.
Aida Ileana Oquendo Graulau
Secretaria General | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/3002909/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 07-3693
D AVID P. L EIBOWITZ, Trustee
for the benefit of creditors in
Goldblatt’s Bargain Stores, Inc.,
Plaintiff,
v.
G REAT A MERICAN G ROUP, INC.,
Defendant-Appellant,
and
L AS ALLE B ANK, N.A.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 C 3025—David H. Coar, Judge.
A RGUED S EPTEMBER 18, 2008—D ECIDED M ARCH 18, 2009
Before E ASTERBROOK, Chief Judge, and SYKES and T INDER,
Circuit Judges.
E ASTERBROOK, Chief Judge. Goldblatt’s Bargain Stores
operated six outlets in the Chicago area. All were closed
2 No. 07-3693
as part of Goldblatt’s bankruptcy. In January 2003 Great
American Group agreed to buy the inventory at two of
these stores for approximately 45% of what Goldblatt’s had
spent for the merchandise. Great American Group paid
approximately 75% of the agreed amount before taking
possession. Later Washington Inventory Service was to
determine the value of the inventory. If it was worth at
least as much as Goldblatt’s had represented, then Great
American Group was to pay the remaining 25% of the
price; if it was worth less, then the final price would
depend on Washington Inventory Service’s appraisal,
and Great American Group might be entitled to a refund.
Because LaSalle Bank, Goldblatt’s principal creditor, had
a security interest in the inventory, the transaction was
contingent on LaSalle’s approval, which was given.
Before the transaction closed, Great American Group
learned that Goldblatt’s had moved some inventory
from the four operating stores to the two that were to be
liquidated. Goldblatt’s had paid its suppliers some
$450,000 for these goods. Great American Group did not
tell LaSalle Bank about this transfer. Washington
Inventory Service concluded that the inventory on hand
when Great American Group took over these two stores
was worth at least as much as Goldblatt’s had represented.
Great American Group paid the rest of the price, and it
made a profit on the sale of the stores’ contents to the
public.
In February 2003 Goldblatt’s decided to close the four
remaining stores. Again Great American Group purchased
the inventory at a price based on Goldblatt’s estimate,
No. 07-3693 3
subject to a settling up after Washington Inventory
Service appraised the inventory. Again LaSalle Bank
consented and promised to indemnify Great American
Group if Goldblatt’s could not make good on any obliga-
tion. After Great American Group had paid, however,
Washington Inventory Service concluded that the inven-
tory was worth at least $2 million less than Goldblatt’s
had estimated. This finding entitled Great American
Group to a refund of approximately $1 million. The bank-
ruptcy estate could not pay, having turned the money
over to LaSalle Bank. And LaSalle, though required by the
contract to pay, refused to do so. It insisted that Great
American Group had committed fraud by failing to
reveal the transfer of inventory from the four February-
closure stores to the two January-closure stores.
Bankruptcy Judge Wedoff held a trial and concluded
that Great American Group had a duty to reveal the
transfer of inventory. He reached this conclusion under
Illinois law (which the parties agree is applicable), as
summarized by this court:
An omission can of course be actionable as a fraud.
But not every failure by a seller (or borrower, or
employee, etc.) to disclose information to the
buyer (or lender, or employer, etc.) that would
cause the latter to reassess the deal is actionable. A
general duty of disclosure would turn every bar-
gaining relationship into a fiduciary one. There
would no longer be such a thing as arm’s-length
bargaining, and enterprise and commerce would
be impeded. The seller who deals at arm’s length
4 No. 07-3693
is entitled to “take advantage” of the buyer at
least to the extent of exploiting information and
expertise that the seller expended substantial
resources of time or money on obtaining—other-
wise what incentive would there be to incur
such costs? But when the seller has without sub-
stantial investment on his part come upon material
information which the buyer would find either
impossible or very costly to discover himself, then
the seller must disclose it—for example, must
disclose that the house he is trying to sell is in-
fested with termites. The distinction between the
two classes of case is illustrated by Lenzi v. Morkin,
103 Ill. 2d 290, 469 N.E.2d 178, 82 Ill. Dec. 644
(1984), where the failure to disclose an assessor’s
valuation was held not to be actionable, since the
valuation was a matter of public record and there-
fore ascertainable by the buyer at reasonable cost.
FDIC v. W.R. Grace & Co., 877 F.2d 614, 619 (7th Cir. 1989)
(emphasis in original; most citations omitted with-
out indication). See also Anthony T. Kronman, Mistake,
Disclosure, Information, and the Law of Contracts, 7 J. Legal
Studies 1 (1978). The bankruptcy judge concluded that
Great American Group had learned the information
without making any extra effort or investment, and that
LaSalle Bank could not have discovered the facts without
costly inquiry. So disclosure was required, and silence
was a fraud. But the judge also concluded that LaSalle
Bank would not have acted any differently had it known
of the transfer: It still would have approved Goldblatt’s
decision to sell its remaining inventory to Great American
No. 07-3693 5
Group. Finally, the judge concluded, LaSalle Bank had not
shown any loss from the fact that the inventory was in the
first group of two stores rather than the second group
of four stores. The court entered a judgment of approxi-
mately $1.09 million in Great American Group’s favor.
On appeal under 28 U.S.C. §158, the district court
reversed. It agreed with the bankruptcy court that Great
American Group owed the Bank a duty of disclosure and
committed fraud by remaining silent. It rejected Great
American Group’s argument that the transfer was not
material because it represented less than 10% of the
inventory at the second group of four stores. But the
district court, unlike the bankruptcy court, thought
that fraud vitiated the contract and thus excused
LaSalle Bank from any obligation to perform. 2007 U.S.
Dist. L EXIS 75633 (N.D. Ill. Oct. 10, 2007).
The district court complicated the case by stating that
the “matter is remanded to the Bankruptcy court for
further proceedings consistent with the terms of this
opinion and order.” A remand from a district court to a
bankruptcy court is canonically not appealable, because
it does not finally resolve the dispute. See, e.g., In re
Comdisco, Inc., 538 F.3d 647 (7th Cir. 2008). Appeal must
wait for the events on remand, which will tie up loose
ends. But, as far as we can tell, nothing has actually been
remanded in this case. The bankruptcy judge entered a
money judgment, which the district judge reversed; there
is nothing more for the bankruptcy judge to do. The
“remand” in the district judge’s opinion seems to have
been an inapt entry from a word processor’s store of
6 No. 07-3693
standard phrases. This dispute is over; the decision is
final, and we have jurisdiction.
There is a second jurisdictional issue. LaSalle Bank
contends that, even though we may have appellate juris-
diction, the bankruptcy court lacked subject-matter juris-
diction because the dispute was not related to the bank-
ruptcy. See 28 U.S.C. §157(a). Yet the sales were
authorized by a bankruptcy court; the principal obligor,
Goldblatt’s, is a debtor in bankruptcy; the reason why
Great American Group sought to recover from the Bank
was that the Trustee for Goldblatt’s had distributed the
proceeds of the sale before Washington Inventory
Service completed its valuation. Another option would
have been for the bankruptcy court to enter a judgment
against the estate in bankruptcy and insist that the
Trustee attempt to recover that amount from the Bank.
How much money is available for other creditors
depends on the disposition of this proceeding, which is
an integral part of Goldblatt’s bankruptcy. Jurisdiction
under §157(a) cannot reasonably be doubted.
The district judge approached this dispute as if LaSalle
Bank wanted rescission. A victim of fraud is entitled to
set aside the contract and have everyone’s interests re-
stored to the state preceding the fraud. See Eisenberg v.
Goldstein, 29 Ill. 2d 617, 195 N.E.2d 184 (1963); Restatement
(Second) of Contracts §§ 470–511. But the Bank does not
want rescission; it does not want the inventory back, so
it can be sold through a different liquidator; the Bank
certainly does not want to restore the payment it
received for the inventory. What it wants instead—what
No. 07-3693 7
the district court gave it—is a right to keep all of the
bargain’s benefits while avoiding the detriments. That
sort of outcome is not a “remedy” of any kind. The
fraud could not have cost the Bank more than $200,000
(the original price of the transferred inventory,
multiplied by the fraction of that price available in a
liquidation sale) and likely cost it much less (since Great
American Group bought the transferred inventory as
part of the transaction for the first two stores). It is
possible that the formulas used to determine what Great
American Group paid for the first set of two stores differed
from those for the second set of four stores, and these
differences might have caused the shift of inventory to
matter. But if there was any difference, LaSalle Bank has
not tried to show it.
A legal remedy, whether rescission or damages, does
not follow automatically from the existence of a false
statement or material omission. There must be reliance,
which is often called transaction causation, and
injury, which is often called loss causation. See Dura
Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005). (Dura
Pharmaceuticals was decided under federal securities
law, but Illinois and most other states also follow this
approach. See, e.g., Oliveira v. Amoco Oil Co., 201 Ill. 2d
134, 776 N.E.2d 151 (2002); Restatement (Second) of Torts
§§ 525, 546, 548A.) The bankruptcy judge found that
LaSalle Bank had not demonstrated either transaction
causation or loss causation. It tried to show reliance by
contending that it would have insisted that Goldblatt’s
use a different liquidator had it known that Great Ameri-
can Group had failed to reveal a material fact. The bank-
8 No. 07-3693
ruptcy judge did not believe this, however, remarking
that the evidence did not establish that any other firm
would have offered the Bank better terms—and the
Bank’s obligations to its own investors demanded that
it take the best deal available. LaSalle Bank did not even try
to establish loss causation: It did not contend that the
omission had anything to do with the sum that Great
American Group wanted to recover, or that the move-
ment of inventory among stores reduced the aggregate
price received from the two sales to Great American
Group.
The Bank would have had a better chance to show loss
causation if Great American Group had not purchased
the inventory from the second set of four stores, for then
it could have gained on the first two stores without
losing on the latter four. Yet the Bank does not seek to
increase the compensation it received from the sale of
the first two stores’ inventory. Great American Group
went ahead with the purchase of the second four
stores’ inventory despite knowing of the transfer. There’s
no reason why LaSalle Bank should be entitled to keep
more than the contract specifies for this second transaction.
LaSalle Bank relies heavily on Chicago Park District
v. Chicago & North Western Transportation Co., 240 Ill. App.
3d 839, 607 N.E.2d 1300 (1st Dist. 1992), but in that opin-
ion the court found that both reliance and injury had
been established; in this case the bankruptcy court found
after a trial that neither had been established. The bank-
ruptcy court’s findings are not clearly erroneous, so
its decision must stand.
No. 07-3693 9
The judgment of the district court is reversed, and the
case is remanded for reinstatement of the bankruptcy
court’s judgment.
3-18-09 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3002807/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 07-2480
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
M ODESTO O ZUNA,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 CR 757—John F. Grady, Judge.
A RGUED D ECEMBER 10, 2008—D ECIDED A PRIL 6, 2009
Before P OSNER, K ANNE, and R OVNER, Circuit Judges.
K ANNE, Circuit Judge. On July 28, 2003, agents of the
Drug Enforcement Agency stopped a tractor-trailer
driven by Modesto Ozuna. After searching the trailer,
allegedly pursuant to Ozuna’s consent, the agents found
200 kilograms of cocaine. Ozuna was later arrested and
indicted for possession with the intent to distribute
more than five kilograms of cocaine. The district court
initially suppressed the evidence from the search because
the government had failed to prove by a preponderance
2 No. 07-2480
of the evidence that Ozuna consented to the search. It
later reopened the suppression hearing to consider the
testimony of two handwriting experts regarding whether
a signature on the consent form belonged to Ozuna. Based
on this new evidence, the court vacated its prior order
and found the evidence admissible. Ozuna appeals the
district court’s decision to reopen the suppression
hearing and its reliance on the government’s handwriting
expert. He also appeals the district court’s decision to
exclude certain testimony he wished to present at trial.
We now affirm.
I. B ACKGROUND
In July 2003, Agent Michael Lumpkin of the Drug
Enforcement Agency informed DEA agents in Chicago
that two drug distributors, Claudio Aguilar and Mario
Garcia, were orchestrating a drug exchange in the
Chicago area using a tractor-trailer registered to “Ozuna’s
Express.” On July 28, the Chicago agents pulled over
Modesto Ozuna, who was driving a tractor-trailer bearing
the name “Ozuna’s Express.” A search of the trailer,
purportedly pursuant to Ozuna’s consent, revealed
200 kilograms of cocaine hidden among a load of limes.
Ozuna was taken to a DEA office, where, according to
agents, he admitted that he was transporting illegal
drugs. Ozuna told the agents that he wished to cooperate
against Aguilar, so he was allowed to return to Texas
for that purpose. Ozuna was released but was arrested
again in August 2004. He was subsequently indicted
No. 07-2480 3
for possession with intent to distribute more than five
kilograms of cocaine, in violation of 21 U.S.C. § 841(a)(1).
During the proceedings that followed, the government
and Ozuna recited different versions of the events sur-
rounding Ozuna’s apprehension and arrest. Disagreement
regarding these facts led to a number of evidentiary
challenges that have become the subject of this appeal.
A. Ozuna’s Motions to Suppress the Seized Cocaine
On January 12, 2005, Ozuna filed a motion to suppress
the 200 kilograms of cocaine seized from his vehicle,
arguing that he did not consent to the trailer’s search.1 On
March 2, 2005, the court held a suppression hearing,
at which DEA Special Agent Robert Glynn and Ozuna
both testified as to their recollections of the search on
July 28, 2003.
Glynn testified that, pursuant to information received
from Lumpkin, he and other agents began surveillance
of Aguilar and Garcia at O’Hare airport. Agents watched
Aguilar and Garcia drive to a hotel, where they also saw
Ozuna, who was driving a tractor-trailer. Based upon
what they witnessed and information received from
Agent Lumpkin, the agents stopped Ozuna’s tractor-trailer.
1
Ozuna also argued that the agents lacked reasonable
suspicion to stop the tractor-trailer and that his stop resulted
in an arrest without probable cause, but only the question of
his consent is relevant to this appeal.
4 No. 07-2480
Glynn and Task Force Officer William McKenna ap-
proached the driver’s door of the vehicle. According to
Glynn, he asked for Ozuna’s consent to search the
trailer, and Ozuna agreed. Ozuna told the agents that
the trailer was locked, and Glynn permitted him to
retrieve the key from the cab. Ozuna then unlocked the
trailer door.
Glynn testified that he retrieved a DEA consent-to-
search form from his car and read it to Ozuna. Ozuna
signed the form, which Glynn and McKenna also signed
as witnesses. The agents searched the trailer and discov-
ered the cocaine. They then took Ozuna to the DEA office
in Chicago.
Ozuna disputed much of Glynn’s testimony. He stated
that on July 28, he drove a tractor-trailer loaded with
mangoes and limes from Texas to Chicago. He claimed that
the agents cut him off while he was driving, pointed a
weapon at his head, demanded that he exit the truck,
and handcuffed him. Ozuna maintained that he never
gave the agents consent to search the tractor-trailer, did not
retrieve the keys from the tractor or unlock the trailer,
and did not sign the consent-to-search form. He denied
knowledge of the cocaine found in the trailer.
At the close of the suppression hearing, the district
court granted Ozuna’s motion to suppress. After ruling
that the DEA was justified in stopping the tractor-trailer,
the court held that the government had failed to prove
by a preponderance of the evidence that Ozuna
voluntarily consented to the search of the trailer. Upon
comparing the signature on the consent form to Ozuna’s
No. 07-2480 5
known signatures, the court was not convinced that Ozuna
had actually signed the form. It also expressed doubt
regarding portions of Glynn’s testimony, due to the
serious risks the agents would have faced had the search
occurred as Glynn described. Ultimately the court deter-
mined that, although it was a close question, it was not
persuaded by the greater weight of the evidence that
the government’s version of events was true, and it
granted the motion.
Following the hearing, the government submitted the
consent-to-search form for fingerprint and handwriting
analysis. Ozuna’s fingerprints were not on the form, but
a handwriting expert concluded that the signature was
Ozuna’s. On March 14, 2005, the government filed a
motion to reconsider or supplement the suppression
hearing with additional testimony from its handwriting
expert. The district court denied the motion to reconsider
and requested a response from Ozuna regarding the
motion to supplement the hearing. In response, Ozuna
argued that the additional testimony would not relate
to the issue of whether the search was consensual, and
that if the hearing were reopened, it would be prejudicial
to allow the testimony of the government’s handwriting
expert without appointing an impartial handwriting
expert to conduct an independent review of the evidence.
He later filed an additional objection to the govern-
ment’s use of expert handwriting testimony on the
ground that it did not meet the requirements of Daubert
v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
The court granted Ozuna leave to hire an expert and
conducted hearings to consider the testimony of both
handwriting experts.
6 No. 07-2480
The defense expert, Ellen Schuetzner, explained that
there were several inconsistencies and “voids” within the
pen strokes that could indicate forgery. She had not,
however, examined the document prior to its treatment
for fingerprint analysis, and she noted that the
chemical treatment or a faulty pen could also have
resulted in these inconsistencies. After comparing and
contrasting the questioned signature and known signa-
tures, Schuetzner concluded that there were “indications”
Ozuna may have signed the form, which she described
as a “very weak opinion of authorship.”
James Regent, the prosecution’s expert, testified that he
had concluded with his “highest degree of confidence” that
Ozuna had signed the questioned document. He ex-
plained that the writing appeared natural, that he did not
find evidence of simulation, and that all dissimilarities
between the questioned and known signatures were
within the expected range of variation.
On June 24, 2005, the court vacated its prior ruling and
denied Ozuna’s motion to suppress. The court explained
that it gave little credence to Regent’s conclusion that
Ozuna had in fact signed the form. Instead, the court
found the testimony of both witnesses useful in con-
ducting its own evaluation of the signatures. After examin-
ing the questioned and known signatures, the court
concluded by a preponderance of the evidence that
Ozuna had signed the consent-to-search form. Based on
this conclusion, the court found Ozuna’s testimony to the
contrary untruthful. Because of the court’s adverse deter-
mination regarding Ozuna’s credibility, it found, not-
No. 07-2480 7
withstanding its previous reservations, that Glynn’s
testimony regarding the search was more likely true
than not and held that Ozuna had consented to the search.
On January 12, 2006, Ozuna filed a motion to reconsider
the denial of his motion to suppress. In this motion, Ozuna
argued that he had new evidence that would support
his testimony and discredit that of Agent Glynn. He also
maintained that the court’s reliance on handwriting
testimony was improper. The court held another hearing
to consider additional evidence regarding the search,
but it ultimately denied Ozuna’s motion.
B. Ozuna’s First Trial
Ozuna’s first trial took place from August 7 to August 10,
2006. Among numerous witnesses, the government
called Agent Lumpkin, who testified about his contacts
with the Chicago-based DEA agents and his interactions
with Ozuna after he was released to cooperate with the
government. Lumpkin described his efforts to locate
Ozuna after he fled prosecution, as well as Ozuna’s
subsequent arrest and confession.
Ozuna called his ex-girlfriend, Oney Rios, and her sister,
Jessica Rios, to testify about their contacts with Agent
Lumpkin. Both Rios sisters claimed that Lumpkin had
called them to ask about Ozuna and made various
threats when he believed they were being uncooperative.
For example, Oney testified that Lumpkin had asked her
to lie, threatened to charge her with crimes related to the
200 kilograms of cocaine, and asked her if she wanted
8 No. 07-2480
to spend the rest of her life in jail. Jessica stated that
Lumpkin had threatened to tell her employer of her
former career as a “dancer at night.”
During the government’s rebuttal case, Lumpkin
testified that he had contacted both Rios sisters during his
pursuit of Ozuna. He stated that he had agreed to help
Oney Rios with a felony warrant that was out for her
arrest and admitted to having heated words with her
when she was uncooperative. He denied, however,
making any improper threats.
On August 11, 2008, the court declared a mistrial after
the jury was unable to reach a unanimous verdict.
C. Ozuna’s Second Trial
Ozuna’s second trial took place from November 2
through November 9, 2006. At this trial, the govern-
ment narrowed the focus of its case-in-chief. The govern-
ment called numerous witnesses who testified to the
surveillance conducted on July 28, 2003, the stop and
search of Ozuna’s truck, the discovery of the cocaine, and
Ozuna’s confession and decision to cooperate with the
DEA. However, it did not call Agent Lumpkin and
did not present evidence about Ozuna’s flight from
prosecution or his confession at the time of his arrest a
year later.
During the defense’s case-in-chief, Ozuna sought to
introduce numerous pieces of evidence that he claimed
were relevant to the credibility of the agents involved in
the investigation and the government’s case. These in-
No. 07-2480 9
cluded (1) testimony regarding Lumpkin’s contacts
with the Rios sisters; (2) questioning regarding the
alleged fabrication of a DEA-6 form 2 memorializing
Lumpkin’s discussion with Jessica Rios; (3) testimony
from Andreas Macias, whose previous identification of
Ozuna the defense claimed the government falsified; and
(4) Lumpkin’s testimony from a previous proceeding
regarding his interactions with truck drivers carrying
cocaine. The defense argued that this evidence was neces-
sary to support its theory that the government was at-
tempting to convict Ozuna at any cost. The district court
refused to admit this evidence based on Federal Rule
of Evidence 403 and because it was irrelevant.
On November 9, 2006, the jury found Ozuna guilty. He
was sentenced to twenty-five years’ imprisonment, fol-
lowed by five years of supervised release.
II. A NALYSIS
The issues Ozuna raises on appeal fall into two catego-
ries. First, Ozuna asserts that the district court erred by
considering the handwriting experts’ testimony and
subsequently denying Ozuna’s motion to suppress the
seized cocaine. Second, Ozuna argues that the district
court improperly excluded evidence that he claims was
necessary to present his theory of defense. We discuss
each issue in turn.
2
Although the parties do not define or explain a “DEA-6” form,
it is apparently a report in which agents memorialize their
interviews during an investigation.
10 No. 07-2480
A. Consideration of the Handwriting Evidence and the
Motion to Suppress the Seized Cocaine
Ozuna challenges the district court’s decision to deny
his motion to suppress after considering expert hand-
writing testimony. He first argues that the district court
erred in reopening the suppression hearing and allowing
the government to present new evidence that was avail-
able to it at the time of the original hearing. Next, he
claims that the district court erred in failing to conduct a
Daubert analysis. Because he maintains that handwriting
comparison techniques are not sufficiently reliable, he
argues that the district court should not have considered
the expert testimony at the hearing.
1. Reopening the Suppression Hearing
This court has generally given wide latitude to district
courts to reopen suppression hearings for consideration
of newly obtained evidence. See, e.g., United States v. Scott,
19 F.3d 1238, 1243 (7th Cir. 1994); United States v. Duran,
957 F.2d 499, 505-06 (7th Cir. 1992). Ozuna claims that this
same latitude is not warranted where the evidence was
available at the time of the previous hearing. In fact, he
argues that the government should never be allowed to
supplement a suppression hearing unless the evidence
is newly acquired. He asserts that because the govern-
ment could have subjected the document to handwriting
analysis prior to the first hearing, it should not have
been allowed to present this evidence at the second
hearing. We find this argument unpersuasive.
No. 07-2480 11
As we have previously recognized, society has a strong
interest in admitting all relevant evidence. United States v.
Regilio, 669 F.2d 1169, 1177 (7th Cir. 1981). Thus, a defen-
dant is entitled to suppression only in cases of constitu-
tional violations, and the district court remains free
throughout the trial to reconsider its previous orders
suppressing evidence. Id. Because of society’s interest,
we have never required the government to justify a
request for reconsideration of a prior ruling. See id.; see
also United States v. Bayless, 201 F.3d 116, 131 (2d Cir. 2000)
(opining that the Seventh Circuit has rejected “a rule
requiring the government . . . to proffer a justification
for its failure to present the relevant evidence at the
original suppression hearing”). We now likewise decline
to impose a justification requirement to reopen a sup-
pression hearing. Instead, we hold that this decision
lies within the sound discretion of the district court.
We are not the only circuit to reach this conclusion. See
In re Terrorist Bombings of the U.S. Embassies in E. Afr., 552
F.3d 177, 196 (2d Cir. 2008); see also United States v. Rabb,
752 F.2d 1320, 1323 (9th Cir. 1984) (citing Reglio with
approval and holding that “[a] criminal defendant
acquires no personal right of redress in suppressed evi-
dence”), abrogated on other grounds by Bourjaily v. United
States, 483 U.S. 171 (1987). For example, the Second Circuit
has held that “on a motion to reopen a suppression hear-
ing, there is no bright-line rule that necessarily and invari-
ably requires the government to provide a reasonable
justification for its failure to offer relevant evidence at
an earlier suppression proceeding.” In re Terrorist
Bombings, 552 F.3d at 196. Because of the policy
12 No. 07-2480
favoring introduction of lawfully obtained evidence, the
Second Circuit stated that “ ‘vague notions of unfairness . . .
ought not [to] control.’” Id. (second alteration in origi-
nal) (quoting Bayless, 201 F.3d at 132). Instead, the
court noted that the government’s justification for the
delay was merely one factor to consider, leaving the
ultimate determination to the discretion of the district
court. Id. at 196-97.
Several of our sister circuits have, however, adopted
rules requiring the government to justify reconsidering,
reopening, or supplementing suppression hearings. See,
e.g., United States v. Dickerson, 166 F.3d 667, 679 (4th Cir.
1999), rev’d on other grounds, 530 U.S. 428 (2000); United
States v. Villabona-Garnica, 63 F.3d 1051, 1055 (11th Cir.
1995); McRae v. United States, 420 F.2d 1283, 1288 (D.C. Cir.
1969). These circuits most often cite justifications of
judicial economy and a desire to avoid “piecemeal litiga-
tion.” See Dickerson, 166 F.3d at 679; see also McRae, 420
F.2d at 1288 (noting that “[t]o allow the loser at a pretrial
suppression hearing to demand a de novo determination
at trial” would defeat the purposes of promoting judicial
efficiency and ensuring that trials not be interrupted or
delayed). Rather than cite these cases, Ozuna points to
concerns about fairness, noting that “repeated litigation
imposes on the defense the impossible burden of con-
ducting multiple hearings with limited resources.”
These policy concerns are justified, but we do not
believe that a bright-line rule is the sole way to protect
them. By leaving the matter to the district court’s discre-
tion, the court remains free to refuse to reopen the sup-
No. 07-2480 13
pression hearing or to decline to consider the govern-
ment’s evidence if the government is wasting judicial
resources or proceeding in a way that is unfair to the
defendant. At the same time, adopting a more flexible
approach protects society’s interest in ensuring a com-
plete proceeding where the court considers all relevant,
constitutionally obtained evidence. Thus, “a district court
should be permitted, in the exercise of its discretion and
in light of the totality of the circumstances, to determine
whether its suppression ruling should stand.” In re
Terrorist Bombings, 552 F.3d at 197.
Having determined that a district court may, in its
discretion, reopen a suppression hearing even where the
evidence was previously available, we consider whether
the district court’s decision to do so in this case was
proper. Although this court has not articulated a
standard by which we review a district court’s decision
to reopen a suppression hearing and reconsider a prior
ruling, 3 we believe it is clear from the preceding analysis
that our review is for abuse of discretion.4
3
We have previously ruled on this issue but have never
declared the applicable standard of review. See, e.g., Scott, 19
F.3d at 1243; Duran, 957 F.2d at 505-06. We have, however,
applied an abuse of discretion standard to reopen a hearing
where the district court had not yet ruled on the issue.
United States v. Wanigasinghe, 545 F.3d 595, 598 (7th Cir. 2008).
4
Ozuna argues that because our analysis does not require the
determination of underlying facts, review should be de novo.
This argument is meritless. The district court’s decision to
(continued...)
14 No. 07-2480
The district court did not abuse its discretion in reopen-
ing the suppression hearing and considering the hand-
writing testimony. We have noted that reopening a sup-
pression hearing may be appropriate when the proffered
evidence calls the credibility of a witness into question. See
Scott, 19 F.3d at 1243; Duran, 957 F.2d at 506. In this case,
the handwriting comparison testimony had a direct
bearing on Ozuna’s credibility. If this testimony showed
that he had, in fact, signed the consent form, it would
mean that he had perjured himself at the previous hear-
ing. This information would assist the district court
in determining whose version of the search to believe,
resulting in a more accurate ruling on the motion
to suppress.
Furthermore, there is no evidence that the government
was engaged in a deliberate strategy to proceed in a
piecemeal fashion or otherwise waste judicial resources.
It does not appear from the record that the signature
was clearly at issue until the first suppression hearing.
Only then did the court express its doubts regarding
its authenticity. After noting that this was a close issue,
the court determined that the government had not met
its burden of proof. The government then responded by
requesting handwriting and fingerprint analyses. This
4
(...continued)
reopen the suppression hearing involved questions of whether
evidence was relevant to a witness’s credibility. Such decisions
are clearly factual rather than legal, rendering de novo review
inappropriate. See United States v. Hernandez-Rivas, 513 F.3d
753, 758 (7th Cir. 2008).
No. 07-2480 15
was an entirely reasonable course of action given the
court’s ruling.
Finally, we note that Ozuna has not convinced us that
he was harmed in any way by the fact that the hand-
writing testimony was presented at the second, rather
than the first, suppression hearing. Ozuna argues that
repeated litigation imposes the “impossible burden” on
the defense of conducting multiple hearings with
limited resources. But the court’s decision to reopen the
hearing did not prevent Ozuna from presenting any
evidence or making any arguments. Indeed, he called
his own handwriting expert, and his counsel extensively
cross-examined the government’s witness. Although the
document was damaged by the government’s fingerprint-
ing analysis before Ozuna’s handwriting expert could
examine it, this was not a result of reopening the sup-
pression hearing. Had the government presented the
evidence at the first suppression hearing, the document
still would have been subjected to chemical treatment
before it was turned over to Ozuna. Given these con-
siderations, the district court did not abuse its discretion
in reopening the suppression hearing.
2. Failure to Conduct a Daubert Analysis
Ozuna claims that even if reopening the suppression
hearing was proper, the district court erred by failing to
conduct a Daubert analysis prior to considering the hand-
writing testimony. In Daubert, the Supreme Court held
that it was the duty of the trial judge to examine expert
evidence before trial to “ensure that any and all scientific
16 No. 07-2480
testimony or evidence admitted is not only relevant, but
reliable.” 509 U.S. at 589. Thus, the district court serves
a “gatekeeping” function to prevent expert testimony
from carrying more weight with the jury than it deserves.
Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th Cir. 2000);
see also Daubert, 509 U.S. at 595 (“Expert evidence can
be both powerful and quite misleading because of the
difficulty in evaluating it.” (quotations omitted)).
Ozuna argues that Daubert applies with full force in
suppression hearings, just as it does in trials, but he
cites no law that effectively supports this contention.
In fact, he concedes that the Rules of Evidence do not
apply at pre-trial admissibility hearings. See United States
v. Matlock, 415 U.S. 164, 172-73 (1974); United States v.
Severson, 49 F.3d 268, 271 n.2 (7th Cir. 1995). Rule 104(a)
makes this explicit. When ruling on admissibility, a
district court judge “is not bound by the rules of evidence
except those with respect to privileges.” Fed. R. Evid.
104(a). We see no persuasive reason to disregard the
Rules of Evidence and impose a new requirement on
district court judges to conduct a Daubert analysis
during suppression hearings.
The only case Ozuna cites in support of his argument
is United States v. Posado, 57 F.3d 428 (5th Cir. 1995). There,
the district court had applied a per se rule against con-
sidering polygraph evidence at any time, including a
suppression hearing. Id. at 432. The Fifth Circuit reversed,
holding that a per se rule against admissibility was no
longer viable after the Supreme Court’s decision in
Daubert. Id. at 433. But no language in Posado supports
No. 07-2480 17
the argument that a district court must conduct a
Daubert analysis at a pre-trial suppression hearing. The
Fifth Circuit merely held that district courts could not
be prohibited from considering that evidence or assessing
its reliability. See id. In fact, the court noted that the
Rules of Evidence are relaxed in a suppression hearing
because “[a] district court judge is much less likely than
a lay jury to be intimidated by claims of scientific
validity into assigning an inappropriate evidentiary
value to [scientific] evidence.” Id. at 435.
In other words, the primary rationale behind Daubert
is not applicable in a suppression hearing. The purpose of
Daubert was to require courts to serve as gatekeepers
so that unreliable expert testimony does not carry too
much weight with the jury. Smith, 215 F.3d at 718. Judges,
on the other hand, are less likely to be swayed by experts
with insufficient qualifications. Posado, 57 F.3d at 435; see
also In re Salem, 465 F.3d 767, 776-77 (7th Cir. 2006) (uphold-
ing a bankruptcy court’s finding that “[t]he gatekeeping
function that Daubert talks about is most pointedly at
issue in a jury trial where a jury might be misled by an
expert who doesn’t have sufficient qualifications” (quota-
tions omitted)). For this reason, we have held that a
court conducting a bench trial could make reliability
determinations as the evidence was presented throughout
the trial, rather than during a formal pre-trial Daubert
hearing. In re Salem, 465 F.3d at 777. Nothing in the
Rules of Evidence or our case law prohibits a judge from
taking a similar course of action during a suppression
hearing.
18 No. 07-2480
Because the district court was not required to conduct a
Daubert hearing, we review its consideration of the
expert testimony for an abuse of discretion. Cf. Deputy
v. Lehman Bros., Inc., 345 F.3d 494, 505 (7th Cir. 2003)
(“[I]f the district court properly applied Daubert, we
review the court’s decision to admit or exclude expert
testimony only for an abuse of discretion.” (quotations
omitted)). The district court in this case carefully consid-
ered the handwriting testimony. It chose to credit some
of the experts’ analyses and discredit certain conclusions
that it found unconvincing. It then used the expert testi-
mony to guide its own analysis and determine whether
Ozuna had signed the consent form. This was a reason-
able use of the district court’s discretion, and the deci-
sion to admit the seized cocaine was proper.
B. The Exclusion of Ozuna’s Proffered Evidence
As another basis for his appeal, Ozuna claims that the
court’s decision to exclude several pieces of evidence
undermined his ability to present his theory of defense.
Ozuna maintains that most of this evidence was relevant
to show that the government would go to “any lengths,”
including fabricating evidence, to apprehend and
convict him. Ozuna also argues that Agent Lumpkin’s
testimony at a prior suppression hearing was relevant
to Ozuna’s knowledge that the trailer contained cocaine.5
5
Ozuna seems to indicate that Lumpkin’s testimony regarding
his experience with truck drivers hauling cocaine is also
(continued...)
No. 07-2480 19
The court suppressed all of this evidence, either because
it was irrelevant or because its probative value was out-
weighed by one of the concerns listed in Rule 403.
The district court has broad discretion to control the
admission of evidence. United States v. Khan, 508 F.3d 413,
417 (7th Cir. 2007). “Evidence is relevant and therefore
admissible if it has ‘any tendency to make the existence
of any fact that is of consequence to the determination
of the action more probable or less probable than it
would be without the evidence.’” United States v. Van
Allen, 524 F.3d 814, 825 (7th Cir. 2008) (quoting Fed. R.
Evid. 401). Under Rule 403, however, even relevant evi-
dence may be excluded if its probative value is substan-
tially outweighed by, for example, the danger of unfair
prejudice. Fed. R. Evid. 403. Thus, a district court
may exclude collateral or irrelevant evidence where its
tendency to mislead and confuse the jury substantially
outweighs its probative value. United States v. Jackson, 540
F.3d 578, 588 (7th Cir. 2008). We review a district court’s
evidentiary determinations for an abuse of discretion and
reverse only “when no reasonable person could take the
5
(...continued)
relevant to his theory of government fabrication. However, the
substance of his argument makes clear that he is truly arguing
that the testimony went to knowledge. Because we view the
evidence as more relevant to Ozuna’s knowledge than his
conspiracy theory, we analyze it separately. At any rate, this
evidence does not change our analysis, see infra Part II.B.2,
that Ozuna did not present convincing evidence to support a
theory that the government fabricated evidence against him.
20 No. 07-2480
view adopted by the trial court.” Khan, 508 F.3d at 417
(quotations omitted). With this framework in mind, we
now turn to Ozuna’s arguments.
1. Evidence of the Government’s Allegedly Improper Con-
duct
Ozuna points to evidence that he claims demonstrates
that the government fabricated evidence to obtain a
conviction. These include Agent Lumpkin’s interactions
with the Rios sisters, an allegedly fabricated DEA-6
form memorializing Lumpkin’s conversation with Jessica
Rios, and testimony about an allegedly orchestrated
identification of Ozuna by Macias.6 The district court held
that all of this evidence was not material to Ozuna’s
guilt or innocence or was only tangentially related to
the case at hand and excluded it. We conclude that this
was not an abuse of discretion.
None of Ozuna’s proffered evidence was relevant to
his conduct on July 28, 2003, nor the evidence the gov-
ernment presented at trial. Ozuna simply made vague
allegations of improper government conduct without
ever connecting that conduct to his apprehension or the
6
Ozuna also sought to enter into evidence various portions
of the DEA manual. He claims that the agents’ violation of
certain protocols supports his theory of government fabrica-
tion. Each portion of the manual is tangential to this case, and
as such, this argument is meritless and does not warrant
further consideration.
No. 07-2480 21
search of his trailer. He did not make any connection
whatsoever between the allegedly improper actions and
the agents who were directly involved in the search. Thus,
nothing about the evidence had any tendency to make
more or less likely any fact of consequence to Ozuna’s
guilt. See Fed. R. Evid. 401. Instead, presenting this evi-
dence would likely have confused the jury with tangen-
tially related facts. Excluding the evidence was therefore
not an abuse of discretion.
Ozuna correctly notes that even the Rules of Evidence
cannot be used to deprive a defendant of his due process
right to present a complete defense. See Holmes v. South
Carolina, 547 U.S. 319, 324-27 (2006); United States v.
Harris, 942 F.2d 1125, 1130-31 (7th Cir. 1991). We have
held that “a defendant is entitled to have the jury con-
sider any theory of the defense that is supported by the
law and that has some foundation in the evidence.” United
States v. Wiman, 77 F.3d 981, 985 (7th Cir. 1996) (emphasis
added) (quotations omitted).
The problem with Ozuna’s argument is that the theory
that his conviction resulted from fabricated evidence
has no foundation. As noted above, the excluded evidence
had no bearing on what occurred on July 28, 2003. Had
the government presented the allegedly fabricated evi-
dence in its case-in-chief, our analysis may have been
different. For example, if the government had used
Macias’s identification against Ozuna, certainly a claim
that his identification was manufactured or orchestrated
by the government would be relevant. Similarly, the Rios
sisters’ testimony was proper in the first trial because
22 No. 07-2480
Lumpkin had testified about the events after Ozuna’s flight
from prosecution. However, the government confined
its case in this trial to the facts surrounding the search of
his tractor-trailer. Ozuna has failed to connect any of his
proffered evidence to the government’s actions at that
time or the agents involved in the search. Thus, the
district court did not abuse its discretion in excluding
the evidence.
2. Lumpkin’s Testimony Regarding His Interactions with
Truck Drivers
During a suppression hearing on April 24, 2006, the
district court questioned Agent Lumpkin about Ozuna’s
release. The purpose of this inquiry was to determine
whether Aguilar, who had orchestrated the drug sale,
would have been suspicious that Ozuna was cooperating
with law enforcement because he was released after the
cocaine was seized. Lumpkin stated that sometimes
when trucks travel from Mexico to the United States,
their drivers are unaware of what the warehouse had
put into their trailers when loading produce. He further
commented:
A tractor-trailer holds 60 to 70,000 pounds, and
in four small boxes of . . . what they say could be
limes, they have commingled in there 50 or 80 or a
couple hundred kilos of coke; you may not know.
I mean, through my training and experience of
working on the border, sometimes they—these
guys don’t know. And they followed all the rules,
No. 07-2480 23
they checked their produce and checked it out and
they have got the lock on the back and they’re
doing their job and sometimes it’s not working
for them.
Thus, Lumpkin noted, it would be reasonable for Aguilar
to think that the agents had believed Ozuna when he
said he didn’t know the cocaine was in the truck.
Ozuna sought to admit this testimony at his trial. The
district court refused. The judge noted that the fact that a
truck driver might not know about the presence of con-
trolled substances is self-evident and that expert testi-
mony was not needed. He also commented that the
circumstances regarding the situation Lumpkin described
and Ozuna’s situation were different. Ozuna had no
paperwork for the limes, so they had no legitimate destina-
tion; their only purpose was to conceal the cocaine. Ozuna
claims that this was an “obvious” abuse of discretion
because “[t]he admission of this testimony would make
Mr. Ozuna’s claim that he did not know about the
narcotics in the truck seem more likely to the jury.”
We disagree.
The district court did not abuse its discretion in deter-
mining that Lumpkin’s testimony was not helpful to the
jury. Lumpkin was not addressing whether it was
possible that Ozuna actually knew about the cocaine.
Instead, the purpose of describing this scenario was to
determine whether Aguilar would have suspected
Ozuna’s cooperation with law enforcement because he
was released. He concluded that Aguilar may have be-
lieved Ozuna’s story because sometimes truck drivers are
24 No. 07-2480
unaware their trucks contain cocaine when they are
legitimately transporting produce. Admitting this testi-
mony would have allowed the jury to take Lumpkin’s
remarks out of context. It was therefore not an abuse
of discretion to exclude them.
Furthermore, even if this was an error, it was harm-
less. An error is harmless when it does not affect
the outcome of the trial, in other words, where we are
“convinced that the jury would have convicted even
absent the error.” United States v. Ortiz, 474 F.3d 976, 982
(7th Cir. 2007), cert. denied, 128 S. Ct. 51 (2007). This testi-
mony was one hypothetical postulation about some
truck drivers in scenarios factually different from Ozuna’s.
It had little probative value into Ozuna’s specific circum-
stance. The jury was informed by Ozuna’s arguments
and common sense that some truck drivers could be
unaware that their trucks contain cocaine. We are con-
vinced that the jury would have convicted Ozuna even if
it had been allowed to consider Lumpkin’s testimony.
III. C ONCLUSION
The district court did not err in reopening the suppres-
sion hearing to consider the handwriting testimony. The
court was not required to conduct a Daubert analysis, and
its ruling in light of the expert testimony at the hearing
was not an abuse of discretion. Finally, the court did not
err in excluding Ozuna’s proffered evidence. We A FFIRM .
4-6-09 | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3003009/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 16, 2009
Decided April 17, 2009
Before
JOEL M. FLAUM, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
No. 07‐3332
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 06 CR 697‐1
STEVEN ROBINSON,
Defendant‐Appellant. Robert W. Gettleman,
Judge.
O R D E R
Steven Robinson pleaded guilty to five counts of robbing, and attempting to rob, a
bank, see 18 U.S.C. § 2113(a), for which he received concurrent sentences totaling 84 months’
imprisonment. Robinson filed a timely notice of appeal, but his appointed lawyer asks to
withdraw for lack of a non‐frivolous argument. See Anders v. California, 386 U.S. 738 (1967).
Robinson has not commented on counsel’s motion (though we invited a response, see CIR. R.
51(b)), so we confine our review to the potential issues identified in counsel’s facially
adequate supporting brief. See United States v. Schuh, 289 F.3d 968, 973‐74 (7th Cir. 2002).
No. 07‐3332 Page 2
Robinson stands by his guilty plea, and for that reason counsel does not examine the
adequacy of the plea colloquy or the voluntariness of the plea. See United States v. Knox, 287
F.3d 667, 670‐72 (7th Cir. 2002).
Instead counsel considers whether Robinson might challenge his sentence as
substantively unreasonable. See Gall v. United States, 128 S.Ct. 586, 596‐97 (2007). Robinson
asked the district court for a sentence below the advisory guidelines range of 84 to 105
months because, he insisted, his criminal history was driven in large part by drug addiction
and unresolved mental‐health issues. The court was sympathetic, noting the likelihood of
rehabilitation, Robinson’s “promise,” and the magnitude of his addiction and post‐
traumatic stress disorder. But, the court continued, “Bank robbery is a really serious crime. .
. . . And this wasn’t just one bank robbery. . . . Five times, I mean, you had a lot of time to
think about it.” In light of the need to protect the community, promote respect for the law,
and acknowledge the seriousness of Robinson’s past, the court settled on 84 months, the
bottom of the guidelines range. That makes for a presumptively reasonable sentence on
appeal. See Rita v. United States, 127 S.Ct. 2456, 2462‐64 (2007); United States v. Shannon, 518
F.3d 494, 496 (7th Cir. 2008). And we agree with counsel: attacking that presumption here
would be frivolous.
Counsel also considers whether Robinson could challenge the district court’s failure
to specify a maximum number of drug tests when it imposed participation in a drug
treatment and testing program as a condition of supervised release. Yet Robinson never
objected at sentencing, which would limit our review to plain error. See United States v.
Tejeda, 476 F.3d 471, 473‐74 (7th Cir. 2007). And a court’s failure to specify a maximum
number of drug tests is not plain error under our precedent, see id., so raising this error on
appeal would be fruitless.
Counselʹs motion to withdraw is GRANTED, and the appeal is DISMISSED. | 01-03-2023 | 09-24-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3000910/ | In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 06-3240 & 06-3879
SYED IQBAL ALI,
Petitioner,
v.
ALBERTO R. GONZALES,
Respondent.
____________
Petitions for Review of Orders of
the Board of Immigration Appeals.
No. A95-925-079
____________
ARGUED FEBRUARY 22, 2007—DECIDED SEPTEMBER 14, 2007
____________
Before BAUER, EVANS, and SYKES, Circuit Judges.
SYKES, Circuit Judge. Syed Ali petitions for review of
decisions of the Board of Immigration Appeals (“BIA”)
affirming an immigration judge’s (“IJ”) denial of his
request for a continuance and denying his subsequent
motion for reconsideration. Ali sought to continue his
removal hearing to await a disposition on his son
Zeeshan’s application for American citizenship; once
naturalized, Zeeshan could sponsor Ali’s petition to
adjust his status to that of a lawful permanent resident.
Ali now argues, as he did before the BIA, that the IJ
failed to provide an adequate reason for denying the
continuance. He also contends that the National Security
Entry-Exit Registration System (“NSEERS”) program,
2 Nos. 06-3240 & 06-3879
through which his illegal presence in the United States
was brought to the attention of the immigration authori-
ties in the first place, unconstitutionally targets aliens
from Arab and Muslim countries.
This circuit has previously assumed, without deciding,
that the jurisdiction-stripping provision of § 242(a)(2)(B)(ii)
of the Immigration and Nationality Act (“INA”), 8 U.S.C.
§ 1252(a)(2)(B)(ii), generally precludes judicial review of
continuance decisions of immigration judges. Subhan v.
Ashcroft, 383 F.3d 591, 595 (7th Cir. 2004). The Attor-
ney General now argues, in a change of position, that
§ 1252(a)(2)(B)(ii) does not apply to denials of continu-
ances. We note the concession but disagree.
Section 1252(a)(2)(B)(ii) provides (with an exception not
relevant here) that “no court shall have jurisdiction to
review . . . any other decision or action of the Attorney
General . . . the authority for which is specified under this
subchapter to be in the discretion of the Attorney Gen-
eral.” 8 U.S.C. § 1252(a)(2)(B)(ii) (emphasis added). The
Attorney General’s current view is that this provision is
inapplicable to continuance decisions because an im-
migration judge’s authority to grant continuances is
conferred by regulation, not statute. While it is true that
continuances are specifically mentioned only in the
administrative regulations, see 8 C.F.R. § 1003.29, an
immigration judge’s authority to grant or deny a continu-
ance is statutory; it derives from 8 U.S.C. § 1229a, which
confers upon immigration judges the plenary authority
to conduct removal proceedings. The regulation regard-
ing continuances simply implements the immigration
judge’s statutory authority to control the course of re-
moval proceedings.
Accordingly, as suggested but not decided in Subhan, an
immigration judge’s denial of a continuance motion is a
discretionary “decision or action” the “authority for which”
Nos. 06-3240 & 06-3879 3
is committed to the immigration judge by the relevant
subchapter of the INA, and the jurisdictional bar in
§ 1252(a)(2)(B)(ii) generally precludes judicial review.
Although this is the minority position among the circuits
that have considered the question, we think it the
sound one and now adopt it.1 This position is consistent
with our recent decision in Leguizamo-Medina v. Gonzales,
493 F.3d 772, 775 (7th Cir. 2007), which interpreted the
preceding subsection of the jurisdiction-stripping statute,
§ 1252(a)(2)(B)(i). Leguizamo-Medina held that where
§ 1252(a)(2)(B)(i) removes jurisdiction to review a final
immigration decision (the statute eliminates judicial
review of agency decisions regarding certain forms of
immigration relief), review of continuance denials and
other interim orders leading up to the final decision is
also precluded.
Here, Ali conceded removability but sought a cont-
inuance so he could pursue adjustment of status if his
son’s application for citizenship was approved. He now
seeks review of the denial of the continuance, but our
review is barred by both § 1252(a)(2)(B)(ii) and the logic
of Leguizamo-Medina. Adjustment of status determina-
tions are unreviewable under § 1252(a)(2)(B)(i); the IJ’s
continuance decision is interim to Ali’s contemplated
adjustment of status application, and interim orders
entered along the road to an unreviewable final order are
themselves unreviewable.
1
This opinion has been circulated among all judges of this court
in regular active service pursuant to Circuit Rule 40(e). A
majority did not favor rehearing en banc on the question
of whether the jurisdiction-stripping provision, 8 U.S.C.
§ 1252(a)(2)(B)(ii), applies to continuance decisions of immigra-
tion judges. Judges Ripple, Rovner, Wood, and Williams voted
to rehear this case en banc.
4 Nos. 06-3240 & 06-3879
We also hold that Ali’s case does not fall within the
exception to the jurisdictional bar recognized in Subhan.
Finally, we lack jurisdiction to consider Ali’s constitutional
challenge to the NSEERS program.
I. Background
Ali, a citizen of Pakistan, entered the United States
in 1996 on a six-month visitor’s visa. He overstayed his
visa and in 2003 was placed in removal proceedings. After
a preliminary hearing in April 2003, his case was con-
tinued, and at the next hearing in November, Ali con-
ceded removability. Through counsel, he told the IJ that
his son Zeeshan had a pending application for citizen-
ship and that once he was naturalized, Zeeshan intended
to file a family-based visa petition (I-130) on Ali’s behalf.
Ali also informed the IJ that although he missed the one-
year deadline for seeking asylum, he intended to apply
for withholding of removal and relief under the Conven-
tion Against Torture. (He apparently never did apply
for these forms of relief.) The IJ continued the hearing
twice more, until February 2005.
Meanwhile, Zeeshan—who had not yet been granted
citizenship—filed an I-130 petition on Ali’s behalf.
Zeeshan, a permanent resident, represented that he was
sponsoring Ali as a “parent of U.S. citizen.” Ali moved to
have his removal case continued again, or administra-
tively closed, to await a decision on Zeeshan’s citizenship
application. The government opposed the motion.
At the February 2005 hearing, Ali argued that his son’s
naturalization application was still pending and that it
would be unjust to “tear a father from his son” if Ali could
adjust his status once Zeeshan became a citizen. To
support his request for a continuance, Ali offered into
evidence a “walk-in form” that Zeeshan had submitted to
Nos. 06-3240 & 06-3879 5
the office of United States Senator Richard Durbin re-
questing intervention in his citizenship application. On
that form Zeeshan stated his interview and citizenship
test had been held in January 2004, and his application
for citizenship had been denied on the ground of “poor
moral character.”
Without mentioning this form—evidence submitted by
Ali establishing that Zeeshan’s naturalization application
had already been denied—the IJ concluded that Ali had
not established the requisite “good cause” for a continu-
ance. 8 C.F.R. § 1003.29. The IJ explained that Ali was
not immediately eligible for a visa, that a long continu-
ance had already been granted based on Ali’s representa-
tion that his son’s application would be decided soon, and
that “everyone who appears before me has family ties in
the United States.” The IJ denied the continuance and
granted relief in the form of voluntary departure.
Ali appealed the IJ’s decision to the BIA, arguing that
the denial of a continuance was erroneous under In re
Velarde-Pacheco, 23 I. & N. Dec. 253 (BIA 2002), and
Subhan, 383 F.3d at 593-94. In Velarde-Pacheco, the
BIA determined that a properly filed motion to reopen
for adjustment of status based on a marriage-based visa
petition may be granted in the exercise of discretion as
long as certain criteria are met. 23 I. & N. Dec. at 256.
In Subhan, this court held that an IJ had erred by arbi-
trarily denying a continuance to an alien seeking to adjust
his status based on an employment certification, the
application for which was awaiting action by the state
and federal labor departments. 383 F.3d at 595. The BIA
rejected Ali’s argument that his case was analogous to
either Subhan or Velarde-Pacheco and concluded that
the IJ had given adequate reasons for denying the con-
tinuance. In addition, the BIA held that the continuance
was properly denied based on the evidence Ali submitted
indicating that Zeeshan’s citizenship application had
already been denied due to poor moral character.
6 Nos. 06-3240 & 06-3879
Ali moved for reconsideration. The BIA denied the
motion because Ali merely reiterated the arguments he
made on appeal rather than citing any legal or factual
omission or defect in the BIA’s decision.2 Ali now petitions
for review.
II. Discussion
Ali contends the IJ improperly denied a continuance
simply because no visa was immediately available for him,
a flaw in reasoning that led to our granting the petition
for review in Subhan, which he argues is indistinguish-
able from his case. He also faults the BIA for relying on
the apparent denial of his son’s citizenship application,
which he asserts is still pending and which was not (he
now claims) the only basis for adjusting his status. Ali
asserts that Zeeshan’s permanent resident status pro-
vides an alternate ground to adjust status. Finally, Ali
challenges the constitutionality of the NSEERS program
that brought him to the attention of the Department of
Homeland Security (“DHS”) and led to the commence-
ment of removal proceedings against him.
Before reaching the merits of Ali’s arguments, we
must first consider our jurisdiction to review a denial of
a continuance in a removal proceeding. In Subhan, we
assumed jurisdiction to review continuance decisions
was lacking by virtue of the jurisdiction-stripping provision
of § 1252(a)(2)(B)(ii). But we sidestepped an ultimate
decision on the question, reasoning that if the denial of
a continuance effectively nullified the statutory opportu-
2
Although we are dismissing the petitions for review for lack
of jurisdiction, we note that the BIA’s reason for denying
reconsideration is consistent with Rehman v. Gonzales, 441 F.3d
506, 508 (7th Cir. 2006).
Nos. 06-3240 & 06-3879 7
nity to adjust status, see 8 U.S.C. § 1255, the IJ must
provide a reason for the denial consistent with § 1255, not
just a statement of the procedural posture of the case. 383
F.3d at 593-94. The IJ in Subhan had denied a continuance
simply because the alien’s labor certification had not yet
been processed, which we viewed as “merely a statement
of the obvious,” not a reason. Id. at 593.
While the Attorney General has argued in other cases
that we lack jurisdiction to review continuance denials
(and also has sought to distinguish or limit Subhan), in
this case and others more recently, he “declined to assert”
the jurisdictional bar. We have noted the impropriety of
this position; “jurisdiction always comes ahead of the
merits.” Leguizamo-Medina, 493 F.3d at 774. When
questioned about jurisdiction at oral argument, the
agency’s attorney informed us that the Department of
Justice now takes the position that the jurisdiction-
stripping provision, § 1252(a)(2)(B)(ii), does not apply to
continuance decisions. We asked for supplemental brief-
ing on the matter. We have carefully considered the
Department’s changed position and find ourselves unable
to agree with it.
The jurisdiction-stripping provision at issue here pre-
cludes judicial review of immigration decisions “the
authority for which is specified under this subchapter to be
in the discretion of the Attorney General.” 8 U.S.C.
§ 1252(a)(2)(B)(ii) (emphasis added). By its terms, this
statute removes jurisdiction to review only those deci-
sions the authority for which is committed to the discre-
tion of the Attorney General by 8 U.S.C. §§ 1151-1381
(the statutes comprising subchapter II of Chapter 12 of
the INA). The Attorney General now argues that be-
cause continuances are referenced only in the immigra-
tion regulations, not the statutes, the discretionary
authority to grant or deny a continuance is not “speci-
fied under this subchapter” within the meaning of
8 Nos. 06-3240 & 06-3879
§ 1252(a)(2)(B)(ii), and the jurisdictional bar therefore
does not apply.
It is true that the relevant subchapter of the INA is
silent on the subject of continuances. As we noted in
Subhan, 383 F.3d at 595, continuances are mentioned in
the implementing administrative regulations, at 8 C.F.R.
§§ 1003.29; this regulation provides that an immigration
judge “may grant a motion for continuance for good cause
shown.” But an immigration judge’s authority to grant
or deny a continuance derives not from the regulation
but from a statute, 8 U.S.C. § 1229a, and this statute is
part of the relevant subchapter of the INA. Section
1229a(a)(1) confers on immigration judges the plenary
authority to conduct removal proceedings; § 1229a(b)(1)
describes that authority in general terms (it provides, for
example, that the immigration judge has the authority
to “administer oaths, receive evidence, and interrogate,
examine, and cross-examine the alien and any witnesses”
and “issue subpoenas”). The regulation pertaining to
continuances implements these statutes, but the im-
migration judge’s authority to conduct and control the
course of removal proceedings is “specified in” subchapter
II of the INA, and this necessarily encompasses the
discretion to continue the proceedings, whether on
the motion of a party or sua sponte. The jurisdictional
bar therefore applies to continuance decisions.
We suggested this interpretation in Subhan but did
not affirmatively adopt it. 383 F.3d at 595 (noting that
§ 1229a authorizes immigration judges to conduct re-
moval proceedings and observing that “since orders
denying motions for continuances, like other orders
governing the management of trials, are traditionally and
indeed inevitably discretionary in character[,] . . . it is
apparent that section 1252(a)(2)(B)(ii) withdraws from
the courts the power to review such rulings when made
by an immigration judge”). We now do so. There is a circuit
Nos. 06-3240 & 06-3879 9
split on this question, and we recognize that we
are aligning ourselves with the minority view. The Eighth
and Tenth Circuits have adopted the same interpretation
as we do here. See Yerkovich v. Ashcroft, 381 F.3d 990,
993-95 (10th Cir. 2004); Onyinkwa v. Ashcroft, 376 F.3d
797, 799 (8th Cir. 2004). The First, Second, Third, Fifth,
Sixth, and Eleventh Circuits have accepted the inter-
pretation now asserted by the Attorney General. See
Alsamhouri v. Gonzales, 484 F.3d 117, 122 (1st Cir. 2007);
Zafar v. Att’y Gen., 461 F.3d 1357, 1360-62 (11th Cir.
2006); Khan v. Att’y Gen., 448 F.3d 226, 232-33 (3d Cir.
2006); Ahmed v. Gonzales, 447 F.3d 433, 436-37 (5th Cir.
2006); Sanusi v. Gonzales, 445 F.3d 193, 198-99 (2d Cir.
2006); Abu-Khaliel v. Gonzales, 436 F.3d 627, 633-34 (6th
Cir. 2006). The majority position, however, cannot be
reconciled with our recent opinion in Leguizamo-Medina.
The alien in Leguizamo-Medina had sought a continu-
ance in order to present more testimony on her claim for
cancellation of removal. Her motion was denied and she
petitioned for judicial review. The jurisdictional bar at
issue in Leguizamo-Medina was § 1252(a)(2)(B)(i), the
subsection preceding the statute at issue here. Section
1252(a)(2)(B)(i) eliminates judicial review of “any judg-
ment regarding the granting of relief under section
1182(h), 1182(i), 1229b, 1229c, or 1255 of this title.” The
listed statutes pertain to the Attorney General’s au-
thority to make decisions regarding waiver of inadmissi-
bility, cancellation of removal, voluntary departure, and
adjustment of status. Because § 1252(a)(2)(B)(i) “puts
the [cancellation of removal] decision beyond review,” we
held that the statute also “insulates the choices leading
up to that decision,” including the continuance decision.
Leguizamo-Medina, 493 F.3d at 775. “When a decision is
unreviewable, any opinion one way or the other on the
propriety of the steps that led to that decision would be
an advisory opinion.” Id. (citing Powerex Corp. v. Reliant
10 Nos. 06-3240 & 06-3879
Energy Servs., Inc., 127 S. Ct. 2411, 2419 (2007); Daniels
v. Liberty Mut. Ins. Co., 484 F.3d 884, 887-88 (7th Cir.
2007)).
Here, Ali sought a continuance in order to pursue
adjustment of status if his son naturalized. Of course
we are not reviewing a final decision denying adjust-
ment of status (the case never got that far), but Ali’s
continuance motion was ancillary to his contemplated
petition to adjust status—that is, it was a procedural step
along the way to an unreviewable final decision—and
the denial of the motion is therefore unreviewable.3
This leaves us to consider whether Ali’s case falls within
the exception noted in Subhan. It does not. The BIA
affirmed the IJ’s denial of a continuance based on evid-
ence in the record indicating that Zeeshan’s citizenship
application had already been denied; this is a reason
consistent with the adjustment statute, not merely a
“statement of the obvious.” The “walk-in” form Zeeshan
submitted to Senator Durbin’s office stated that he had
been denied citizenship “on poor moral character.” The BIA
was entitled to rely on this evidence—which was intro-
duced, after all, by Ali himself.
3
Final orders of removal such as the one before us are gen-
erally reviewable pursuant to 8 U.S.C. § 1252(a)(1), but this
general review authority is subject to the jurisdiction-stripping
provisions in subsection (a)(2) of that statute, two of which
we have been discussing here. The prefatory language in
§ 1252(a)(2)(B) states, in pertinent part: “Notwithstanding any
other provision of law (statutory or nonstatutory) . . . and
regardless of whether the judgment, decision, or action is made
in removal proceedings, no court shall have jurisdiction to re-
view . . . .” (emphasis added). Subsections (i) and (ii), under
consideration here, immediately follow this language. We note
also that Ali conceded removability; his petition for review
challenges only the denial of his continuance motion and the
constitutionality of the NSEERS program.
Nos. 06-3240 & 06-3879 11
Ali protests, however, that Zeeshan’s citizenship ap-
plication remains viable, despite the contrary written
evidence he submitted to the IJ. At oral argument, Ali’s
counsel confirmed that Zeeshan’s first application indeed
was denied on moral character grounds.4 Counsel repre-
sented, however, that Zeeshan was able to reapply within
five years and has done so. At the time of oral argument,
no action had been taken on the second application. Ali’s
counsel also told us that all three of Ali’s sons have
pending citizenship applications. And after oral argu-
ment Ali’s attorney sent us a copy of a Notice of Action
on the citizenship application for Haris Ali, one of Ali’s
sons, scheduling an appointment for March 23, 2007. This
form was unaccompanied by any explanation as to its
significance for the case before us, although we assume
that Ali would like to try to adjust his status based on
Haris’s citizenship if it is granted.
These developments are beside the point, however. At
the time the BIA reviewed the denial of the continuance,
the only record evidence concerning Zeeshan’s citizenship
application indicated that it was denied. To the best of the
BIA’s knowledge, it would have been futile to grant a
continuance. See Pede v. Gonzales, 442 F.3d 570, 571 (7th
Cir. 2006) (holding that “ultimate hopelessness” of ap-
plication for adjustment of status is “perfectly acceptable
basis” for denying continuance). Because the denial of a
continuance did not have the effect of nullifying the
4
The Attorney General, however, represented that Zeeshan’s
application was dismissed for lack of prosecution after he failed
to file documents pertaining to his criminal history (which,
according the Attorney General, includes more than one crim-
inal charge). Also, Zeeshan failed to prosecute the administra-
tive appeal of the denial of his citizenship application, and
the appeal was dismissed.
12 Nos. 06-3240 & 06-3879
statutory opportunity to adjust status, the Subhan excep-
tion to the jurisdictional bar does not apply.5
Finally, Ali raises a constitutional challenge to the
NSEERS program that caused him to come to the attention
of the DHS. Ali contends that he was unconstitutionally
targeted for registration and removal based on his religion
and ethnicity. But we have held that under 8 U.S.C.
§ 1252(g), we lack jurisdiction to review a challenge to the
constitutionality of the NSEERS program. See Hadayat v.
Gonzales, 458 F.3d 659, 665 (7th Cir. 2006). Section
1252(g) bars federal courts from hearing claims “by or on
behalf of any alien arising from the decision or action by
the Attorney General to commence proceedings.” Accord-
ingly, selective prosecution claims by aliens are largely
barred. See Reno v. Am.-Arab Anti-Discrimination Comm.,
525 U.S. 471, 491 (1999); Hadayat, 458 F.3d at 665;
Ahmed, 447 F.3d at 439-40. Although a narrow exception
remains for certain “outrageous” cases, see Am.-Arab Anti-
Discrimination Comm., 525 U.S. at 491, Ali’s bare allega-
tions of discrimination are insufficient to invoke that
exception. See Hadayat, 458 F.3d at 665.
For the foregoing reasons, Ali’s petitions for review are
DISMISSED for lack of jurisdiction.
5
Insofar as Ali contends that he could also adjust his status
because Zeeshan (and apparently his other sons) had a green
card, he is simply incorrect. A legal permanent resident may
sponsor a spouse or an unmarried child but not a parent. See
8 U.S.C. § 1153(a)(2).
Nos. 06-3240 & 06-3879 13
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-14-07 | 01-03-2023 | 09-24-2015 |
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